As filed with the Securities and Exchange Commission on June 15, 1995.
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 14, 1995
The Promus Companies Incorporated
(Exact name of registrant as specified in its charter)
Delaware 1-10410 62-1411755
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 762- 8600
Not Applicable
- ----------------------------------------------------------------------
(Former name or former address, if changed since last report)
ITEM 5. Other Events.
The Promus Companies Incorporated ("Promus") intends to distribute
(the "Distribution") in the form of a special dividend to all holders of
Promus's outstanding shares of common stock, on a one-for-two basis, all
outstanding shares of common stock, and the associated stockholders' rights,
of Promus Hotel Corporation ("PHC"), an indirect wholly-owned subsidiary of
Promus. The Distribution will separate Promus's hotel business (the "Hotel
Business") from its casino entertainment business (the "Casino Business").
Prior to the Distribution, Promus will transfer to PHC the stock of certain
subsidiaries principally engaged in the Hotel Business, and consummate certain
other transfers intended to allocate assets and liabilities relating to the
Hotel Business to PHC and assets and liabilities relating to the Casino
Business to Promus. After the Distribution, PHC will operate and develop
the Hotel Business and Promus will operate and develop the Casino Business.
In addition, upon consummation of the Distribution, Promus will change its
name to "Harrah's Entertainment, Inc."
On May 26, 1995, stockholders of Promus approved the Distribution
and Promus's Board of Directors declared a dividend of shares of common
stock of PHC conditioned upon the occurrence of four events prior to
June 19, 1995. On June 14, 1995, Promus announced that the four events had
occurred and that the conditions to the dividend had been satisfied.
The Distribution will occur on June 30, 1995. On that date,
Embassy Suites, Inc., a wholly-owned subsidiary of Promus and the sole
stockholder of PHC, will distribute to Promus all of the outstanding shares
of common stock of PHC and the associated stockholders' rights. Substantially
concurrently therewith, Promus will make the Distribution to stockholders
of record of Promus as of June 21, 1995. Each stockholder will receive one
share of common stock of PHC for every two shares of common stock of Promus
held by such stockholder. Fractional shares will be aggregated and, after the
Distribution, sold in the public market and the aggregate net cash proceeds
will be distributed ratably to those stockholders of record otherwise entitled
to fractional interests.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits.
No.
---
4(1) First Supplemental Indenture dated as of June 2, 1995, with respect to the 8 3/4% Senior
Subordinated Notes due 2000, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
4(2) First Supplemental Indenture dated as of June 2, 1995, with respect to the 10 7/8% Senior
Subordinated Notes due 2002, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
10(1) Form of Plan of Reorganization and Distribution Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(2) Credit Agreement, dated as of June 1, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., various banks and Bankers Trust Company, as Administrative
Agent.
10(3) Tranche A Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(4) Tranche B Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(5) Credit Agreement, dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among The Promus Companies Incorporated, Embassy Suites, Inc., certain
subsidiaries of Embassy Suites, Inc., various banks, Bankers Trust Company, The Bank of
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company, as Administrative Agent.
10(6) Credit Agreement, dated as of June 9, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., certain subsidiaries of Embassy Suites, Inc., various banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-term Credit Bank of Japan, Limited, New York
Branch, NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as Administrative Agent.
10(7) Form of Employee Benefits and Other Employment Matters Allocation Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(8) Form of Risk Management Allocation Agreement, dated June __, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation.
10(9) Form of Tax Sharing Agreement, dated June __, 1995, between The Promus Companies
Incorporated and Promus Hotel Corporation.
10(10) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Executive Deferred
Compensation Plan.
10(11) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Deferred Compensation Plan.
10(12) Amendment, dated as of June 7, 1995, to Escrow Agreement among The Promus Companies
Incorporated, certain subsidiaries thereof and NationsBank.
10(13) Form of Severance Agreement, dated _________, 1995, to be entered into with Bradford W. Morgan.
99(1) Press Release, dated June 14, 1995, announcing the satisfaction of the final
conditions to the Distribution.
FOOTNOTES
(1) Incorporated by reference from the Current Report on Form
8-K of Promus Hotel Corporation, filed June 15, 1995,
File No. 1-11463.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
THE PROMUS COMPANIES INCORPORATED
E.O. ROBINSON, JR.
---------------------------------------
E.O. Robinson, Jr.
Senior Vice President, General Counsel
and Secretary
Dated: June 15, 1995
EXHIBIT INDEX
EXHIBIT
NO. Description
------- -----------
4(1) First Supplemental Indenture dated as of June 2, 1995, with respect to the 8 3/4% Senior
Subordinated Notes due 2000, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
4(2) First Supplemental Indenture dated as of June 2, 1995, with respect to the 10 7/8% Senior
Subordinated Notes due 2002, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
10(1) Form of Plan of Reorganization and Distribution Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(2) Credit Agreement, dated as of June 1, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., various banks and Bankers Trust Company, as Administrative
Agent.
10(3) Tranche A Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(4) Tranche B Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(5) Credit Agreement, dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among The Promus Companies Incorporated, Embassy Suites, Inc., certain
subsidiaries of Embassy Suites, Inc., various banks, Bankers Trust Company, The Bank of
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust as Administrative Agent.
10(6) Credit Agreement, dated as of June 9, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., certain subsidiaries of Embassy Suites, Inc., various banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-term Credit Bank of Japan, Limited, New York
Branch, NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as Administrative Agent.
10(7) Form of Employee Benefits and Other Employment Matters Allocation Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(8) Form of Risk Management Allocation Agreement, dated June __, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation.
10(9) Form of Tax Sharing Agreement, dated June __, 1995, between The Promus Companies
Incorporated and Promus Hotel Corporation.
10(10) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Executive Deferred
Compensation Plan.
10(11) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Deferred Compensation Plan.
10(12) Amendment, dated as of June 7, 1995, to Escrow Agreement among The Promus Companies
Incorporated, certain subsidiaries thereof and NationsBank.
10(13) Form of Severance Agreement, dated _________, 1995, to be entered into with Bradford W. Morgan.
99(1) Press Release, dated June 14, 1995, announcing the satisfaction of the final
conditions to the Distribution.
FOOTNOTES
(1) Incorporated by reference from the Current Report on Form
8-K of Promus Hotel Corporation, filed June 15, 1995,
File No. 1-11463.
Exhibit 4(1)
FIRST SUPPLEMENTAL INDENTURE
dated as of June 2, 1995
-----------
EMBASSY SUITES, INC.,
Issuer
THE PROMUS COMPANIES
INCORPORATED,
Guarantor
and
THE BANK OF NEW YORK,
Trustee
-----------
$200,000,000
8 3/4% Senior Subordinated Notes Due 2000
THIS FIRST SUPPLEMENTAL INDENTURE, entered into as of June 2, 1995,
among Embassy Suites, Inc., a Delaware corporation ("Embassy"), The Promus
Companies Incorporated, a Delaware corporation ("Promus"), and The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, as trustee (the "Trustee").
WHEREAS, Embassy, Promus and the Trustee (collectively, the "Parties")
entered into an Indenture, dated as of August 1, 1993 (as amended from time to
time, the "Indenture"), with respect to Embassy's 8 3/4% Senior Subordinated
Notes due 2000 (the "Securities");
WHEREAS, pursuant to a resolution of the Board of Directors of Embassy
and in accordance with the Indenture, Embassy issued the Securities;
WHEREAS, Embassy desires to distribute (the "Embassy Distribution") to
Promus all outstanding shares of common stock ("PHC Stock") of Promus Hotel
Corporation, a Delaware corporation, and Promus desires to distribute, in the
form of a special dividend to all holders of Promus's outstanding shares of
common stock, all outstanding shares of PHC Stock (the "Distribution" and,
together with the "Embassy Distribution," the "Distributions");
WHEREAS, Promus and Embassy proposed to amend the Indenture to modify
the definition of "Restricted Payments" to permit the Embassy Distribution (the
"Proposed Amendment");
WHEREAS, the Trustee has received the consent of the Holders (as
defined in the Indenture) of not less than a majority in aggregate principal
amount of the Outstanding (as defined in the Indenture) Securities to the
Proposed Amendment; and
2
WHEREAS, the Parties desire to enter into this First Supplemental
Indenture to give effect to the Proposed Amendment.
NOW, THEREFORE, Embassy, Promus and the Trustee agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.
Section 2. The definition of "Restricted Payments" contained in
Section 101 of the Indenture is hereby deleted and replaced with a new
definition which reads in its entirety as follows:
""Restricted Payments" means, with respect to any Person,
(i) any dividend or other distribution on shares of Capital
Stock of the Guarantor, the Company or any Subsidiary of
either, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value of
any shares of Capital Stock of the Guarantor, the Company or
any Subsidiary of either, (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, in
whole or in part, of any Junior Debt and (iv) any loan or
any advance to or investment in the Guarantor; provided,
however, that the term "Restricted Payment" does not include
(i) any dividend, distribution or other payment on account
of shares of Capital Stock of an issuer payable solely in
shares of Capital Stock of such issuer that is at least as
junior in ranking as the Capital Stock on which such
dividend, distribution or other payment is to be made, (ii)
any dividend, distribution or other payment to the Company,
or any of its directly or indirectly owned Subsidiaries, by
any of its directly or indirectly owned Subsidiaries, by any
of the Company's Subsidiaries, (iii) any defeasance,
redemption, repurchase or other acquisition or retirement
for value, in whole or in part, of any Junior Debt of an
issuer payable solely in shares of Capital Stock or Junior
Debt of such issuer, (iv) any payment made by the Guarantor,
the Company or any Subsidiary of either pursuant to the
Credit Documents (as defined in the Credit Agreement, as
amended from time to time), or (v) the distribution of the
outstanding shares of Common Stock, par value $0.10 (and any
associated stockholders' rights) and the assets and
liabilities of Promus Hotel Corporation, a wholly-owned
subsidiary of the Company, to the Guarantor, on the date to
be established by the
3
Company's Board of Directors following the 1995 Annual
Meeting of the Guarantor's stockholders, and any asset
transfers, payments, distributions, purchases, redemptions
or acquisitions related thereto."
Section 3. This First Supplemental Indenture may be executed in any
number of counterparts all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute the instrument by
signing any such counterpart.
Section 4. The effectiveness of the First Supplemental Indenture is
conditioned upon (i) the consummation of the Distributions, and (ii) subject to
waiver by Embassy, the absence of any law or regulation which would, and the
absence of any injunction or action or other proceeding (pending or threatened)
which (in the case of any action or proceeding, if adversely determined) would,
make unlawful or invalid or enjoin the implementation or the Proposed Amendment,
the entering into of this First Supplemental Indenture or the making of any
payments to the registered holders of the Securities who submitted (and did not
revoke) valid consents to the Proposed Amendment, or question the legality or
validity thereof, or otherwise adversely affect the Distributions. If either or
both of the Distributions are not consummated, this First Supplemental Indenture
shall not be effective. This First Supplemental Indenture will terminate by its
terms if the foregoing conditions are not satisfied by September 30, 1995.
Section 5. This First Supplemental Indenture and the rights, powers,
trusts, duties and obligations of the Parties hereunder shall be governed by the
laws of the State of New York (without regard to its conflicts of laws
principles).
4
IN WITNESS WHEREOF, each of the Parties hereto has caused this First
Supplemental Indenture to be duly executed by one of its authorized officers
hereunto duly authorized.
EMBASSY SUITES, INC.
By: __________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE PROMUS COMPANIES INCORPORATED
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE BANK OF NEW YORK
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
5
Exhibit 4(2)
FIRST SUPPLEMENTAL INDENTURE
dated as of June 2, 1995
-----------
EMBASSY SUITES, INC.,
Issuer
THE PROMUS COMPANIES
INCORPORATED,
Guarantor
and
THE BANK OF NEW YORK,
Trustee
-----------
$200,000,000
10 7/8% Senior Subordinated Notes Due 2002
THIS FIRST SUPPLEMENTAL INDENTURE, entered into as of June 2, 1995,
among Embassy Suites, Inc., a Delaware corporation ("Embassy"), The Promus
Companies Incorporated, a Delaware corporation ("Promus"), and The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, as trustee (the "Trustee").
WHEREAS, Embassy, Promus and the Trustee (collectively, the "Parties")
entered into an Indenture, dated as of August 1, 1993 (as amended from time to
time, the "Indenture"), with respect to Embassy's 10 7/8% Senior Subordinated
Notes due 2002 (the "Securities");
WHEREAS, pursuant to a resolution of the Board of Directors of Embassy
and in accordance with the Indenture, Embassy issued the Securities;
WHEREAS, Embassy desires to distribute (the "Embassy Distribution") to
Promus all outstanding shares of common stock ("PHC Stock") of Promus Hotel
Corporation, a Delaware corporation, and Promus desires to distribute, in the
form of a special dividend to all holders of Promus's outstanding shares of
common stock, all outstanding shares of PHC Stock (the "Distribution" and,
together with the "Embassy Distribution," the "Distributions");
WHEREAS, Promus and Embassy proposed to amend the Indenture to modify
the definition of "Restricted Payments" to permit the Embassy Distribution (the
"Proposed Amendment");
WHEREAS, the Trustee has received the consent of the Holders (as
defined in the Indenture) of not less than a majority in aggregate principal
amount of the Outstanding (as defined in the Indenture) Securities to the
Proposed Amendment; and
2
WHEREAS, the Parties desire to enter into this First Supplemental
Indenture to give effect to the Proposed Amendment.
NOW, THEREFORE, Embassy, Promus and the Trustee agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.
Section 2. The definition of "Restricted Payments" contained in
Section 101 of the Indenture is hereby deleted and replaced with a new
definition which reads in its entirety as follows:
""Restricted Payments" means, with respect to any Person,
(i) any dividend or other distribution on shares of Capital
Stock of the Guarantor, the Company or any Subsidiary of
either, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value of
any shares of Capital Stock of the Guarantor, the Company or
any Subsidiary of either, (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, in
whole or in part, of any Junior Debt and (iv) any loan or
any advance to or investment in the Guarantor; provided,
however, that the term "Restricted Payment" does not include
(i) any dividend, distribution or other payment on account
of shares of Capital Stock of an issuer payable solely in
shares of Capital Stock of such issuer that is at least as
junior in ranking as the Capital Stock on which such
dividend, distribution or other payment is to be made, (ii)
any dividend, distribution or other payment to the Company,
or any of its directly or indirectly owned Subsidiaries, by
any of its directly or indirectly owned Subsidiaries, by any
of the Company's Subsidiaries, (iii) any defeasance,
redemption, repurchase or other acquisition or retirement
for value, in whole or in part, of any Junior Debt of an
issuer payable solely in shares of Capital Stock or Junior
Debt of such issuer, (iv) any payment made by the Guarantor,
the Company or any Subsidiary of either pursuant to the
Credit Documents (as defined in the Credit Agreement, as
amended from time to time), or (v) the distribution of the
outstanding shares of Common Stock, par value $0.10 (and any
associated stockholders' rights) and the assets and
liabilities of Promus Hotel Corporation, a wholly-owned
subsidiary of the Company, to the Guarantor, on the date to
be established by the
3
Company's Board of Directors following the 1995 Annual
Meeting of the Guarantor's stockholders, and any asset
transfers, payments, distributions, purchases, redemptions
or acquisitions related thereto."
Section 3. This First Supplemental Indenture may be executed in any
number of counterparts all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute the instrument by
signing any such counterpart.
Section 4. The effectiveness of the First Supplemental Indenture is
conditioned upon (i) the consummation of the Distributions, and (ii) subject to
waiver by Embassy, the absence of any law or regulation which would, and the
absence of any injunction or action or other proceeding (pending or threatened)
which (in the case of any action or proceeding, if adversely determined) would,
make unlawful or invalid or enjoin the implementation or the Proposed Amendment,
the entering into of this First Supplemental Indenture or the making of any
payments to the registered holders of the Securities who submitted (and did not
revoke) valid consents to the Proposed Amendment, or question the legality or
validity thereof, or otherwise adversely affect the Distributions. If either or
both of the Distributions are not consummated, this First Supplemental Indenture
shall not be effective. This First Supplemental Indenture will terminate by its
terms if the foregoing conditions are not satisfied by September 30, 1995.
Section 5. This First Supplemental Indenture and the rights, powers,
trusts, duties and obligations of the Parties hereunder shall be governed by the
laws of the State of New York (without regard to its conflicts of laws
principles).
4
IN WITNESS WHEREOF, each of the Parties hereto has caused this First
Supplemental Indenture to be duly executed by one of its authorized officers
hereunto duly authorized.
EMBASSY SUITES, INC.
By: __________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE PROMUS COMPANIES INCORPORATED
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE BANK OF NEW YORK
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
5
Exhibit 10(1)
PLAN OF REORGANIZATION
AND
DISTRIBUTION AGREEMENT
between
THE PROMUS COMPANIES INCORPORATED
and
PROMUS HOTEL CORPORATION
dated as of
June ___, 1995
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01. General . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Terms Defined Elsewhere in Agreement . . . . . . . 13
ARTICLE II - TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . 14
Section 2.01. Transfer of Assets to PRH; Harrah's Mergers . . . . 14
Section 2.02. Transfers Not Effected Prior to the Distribution . 16
Section 2.03. Cooperation Re: Assets . . . . . . . . . . . . . . 17
Section 2.04. No Representations or Warranties; Consents . . . . 17
Section 2.05. Conveyancing and Assumption Instruments . . . . . . 19
Section 2.06. Cash Allocation . . . . . . . . . . . . . . . . . . 20
Section 2.07. Financing . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III - ASSUMPTION AND SATISFACTION OF LIABILITIES . . . . . . . 22
Section 3.01. Assumption and Satisfaction of Liabilities . . . . 22
ARTICLE IV - THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 23
Section 4.01. Cooperation Prior to the Distribution . . . . . . . 23
Section 4.02. Promus Board Action; Conditions Precedent to the
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.03. The Distribution . . . . . . . . . . . . . . . . . 26
Section 4.04. Cash in Lieu of Fractional Shares . . . . . . . . . 26
ARTICLE V - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.01. Indemnification by Promus . . . . . . . . . . . . . 27
Section 5.02. Indemnification by PRH . . . . . . . . . . . . . . 27
Section 5.03. Insurance Proceeds . . . . . . . . . . . . . . . . 28
Section 5.04. Procedure for Indemnification . . . . . . . . . . . 29
Section 5.05. Remedies Cumulative . . . . . . . . . . . . . . . . 33
Section 5.06. Survival of Indemnities . . . . . . . . . . . . . . 33
i
Page
----
ARTICLE VI - CERTAIN ADDITIONAL MATTERS . . . . . . . . . . . . . . . . 33
Section 6.01. PRH Board . . . . . . . . . . . . . . . . . . . . . 33
Section 6.02. Resignations; Promus Board . . . . . . . . . . . . 34
Section 6.03. Certificate and Bylaws . . . . . . . . . . . . . . 34
Section 6.04. Certain Post-Distribution Transactions . . . . . . 34
Section 6.05. Corporate Name . . . . . . . . . . . . . . . . . . 36
Section 6.06. PRH Rights Plan . . . . . . . . . . . . . . . . . . 36
ARTICLE VII - ACCESS TO INFORMATION AND SERVICES . . . . . . . . . . . 37
Section 7.01. Provision of Corporate Records . . . . . . . . . . 37
Section 7.02. Access to Information . . . . . . . . . . . . . . . 37
Section 7.03. Production of Witnesses . . . . . . . . . . . . . . 38
Section 7.04. Reimbursement . . . . . . . . . . . . . . . . . . . 39
Section 7.05. Retention of Records . . . . . . . . . . . . . . . 39
Section 7.06. Confidentiality . . . . . . . . . . . . . . . . . . 39
Section 7.07. Privileged Matters . . . . . . . . . . . . . . . . 40
ARTICLE VIII - ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . 43
Section 8.01. Non-Competition Agreement . . . . . . . . . . . . . 43
Section 8.02. Hiring of Employees . . . . . . . . . . . . . . . . 45
Section 8.03. Settlement Agreement . . . . . . . . . . . . . . . 45
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.01. Complete Agreement; Construction . . . . . . . . . 45
Section 9.02. Expenses . . . . . . . . . . . . . . . . . . . . . 46
Section 9.03. Accounting Adjustments . . . . . . . . . . . . . . 46
Section 9.04. Governing Law . . . . . . . . . . . . . . . . . . . 46
Section 9.05. Notices . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.06. Amendments . . . . . . . . . . . . . . . . . . . . 47
Section 9.07. Successors and Assigns . . . . . . . . . . . . . . 47
Section 9.08. Termination . . . . . . . . . . . . . . . . . . . . 47
Section 9.09. Subsidiaries . . . . . . . . . . . . . . . . . . . 47
Section 9.10. No Third-Party Beneficiaries . . . . . . . . . . . 48
Section 9.11. Titles and Headings . . . . . . . . . . . . . . . . 48
Section 9.12. Exhibits and Schedules . . . . . . . . . . . . . . 48
Section 9.13. Legal Enforceability . . . . . . . . . . . . . . . 48
Section 9.14. Arbitration of Disputes . . . . . . . . . . . . . . 49
EXHIBITS
SCHEDULES
ii
EXHIBITS
Exhibit A: Employee Benefits Allocation Agreement
Exhibit B-1: Harrah's Entertainment Pro Forma Balance Sheet
Exhibit B-2: Harrah's Entertainment Pro Forma Statement of Income
Exhibit C: Information Technology Agreements
Exhibit C-1: Data Center Lease
Exhibit C-2: Marketing Services Agreement
Exhibit C-3: Satellite Services Agreement
Exhibit C-4: Software Agreement
Exhibit C-5: Transitional Service Agreement
Exhibit C-6: Administrative Systems Services Agreement
Exhibit C-7: Disaster Recovery Agreement
Exhibit D: PRH Bylaws
Exhibit E: PRH Certificate
Exhibit F-1: PRH Pro Forma Balance Sheet
Exhibit F-2: PRH Pro Forma Statement of Income
Exhibit G: Risk Management Allocation Agreement
Exhibit H: Tax Sharing Agreement
Exhibit I: Trademark Assignment Agreement
Exhibit J: Property Tax Services Agreement
Exhibit K: Opinion of James D. Wolfensohn Incorporated
PLAN OF REORGANIZATION AND DISTRIBUTION AGREEMENT
This PLAN OF REORGANIZATION AND DISTRIBUTION AGREEMENT (this
"Agreement") is made as of this __th day of June, 1995 between The Promus
Companies Incorporated, a Delaware corporation ("Promus") and Promus Hotel
Corporation, a Delaware corporation and an indirect wholly-owned subsidiary
of Promus ("PRH").
RECITALS
--------
WHEREAS, Promus, through subsidiaries, develops, manages and owns
a hotel business consisting of the Embassy Suites, Hampton Inn, Hampton Inn
and Suites and Homewood Suites hotel brands (the "PRH Business") and the
Harrah's casino entertainment business (the "Casino Business");
WHEREAS, the Board of Directors of Promus has determined that it
is in the best interests of Promus and the stockholders of Promus to
separate the Casino Business, on the one hand, and the PRH Business, on the
other hand, and, in order to effect such separation, to transfer (or to
cause its subsidiaries to transfer) to PRH or its Subsidiaries the stock of
certain Promus subsidiaries principally engaged in the PRH Business and
certain other assets relating principally to the PRH Business (the "Asset
Transfers"), and thereafter to cause Embassy Suites, Inc., a wholly-owned
subsidiary of Promus ("Embassy"), to distribute all of the outstanding
shares of common stock, par value $0.10 per share, of PRH to Promus (the
"Embassy Distribution") and thereafter to cause Promus to distribute such
PRH common stock to the holders of Promus common stock (the
"Distribution");
WHEREAS, Promus has already effected certain preliminary
transfers and corporate restructurings, which transactions are not
contingent upon consummation of the Distribution and will not be undone if
the Distribution does not occur; and
WHEREAS, in connection with the Distribution, Promus and PRH have
determined that it is necessary and desirable to set forth the principal
corporate transactions required to effect the Asset Transfers and the
Distribution, and to set forth the agreements that will govern certain
matters following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01. General. As used in this Agreement, the following
-------
terms shall have the following meanings:
Action: Any action, claim, suit, arbitration, inquiry,
------
proceeding or investigation by or before any court, any governmental or
other regulatory or administrative agency or commission or any arbitration
tribunal.
Affiliate: Means with respect to any specified Person, any other
---------
Person directly or indirectly controlling or controlled by, or under direct
or indirect common control with, such specified Person. For purposes of
this definition, "control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing. Notwithstanding the foregoing, (i)
the Affiliates of Promus shall not include
2
PRH, the PRH Subsidiaries or any other Person which would be an Affiliate
of Promus by reason of Promus's ownership of the capital stock of PRH prior
to the Distribution or the fact that any officer or director of PRH or any
of the PRH Subsidiaries shall also serve as an officer or director of
Promus or any of the Retained Subsidiaries, and (ii) the Affiliates of PRH
shall not include Promus, the Retained Subsidiaries or any other Person
which would be an Affiliate of PRH by reason of Promus's ownership of the
capital stock of PRH prior to the Distribution or the fact that any officer
or director of PRH or any of the PRH Subsidiaries shall also serve as an
officer or director of Promus or any of the Retained Subsidiaries.
Agent: The distribution agent appointed by Promus to distribute
-----
the PRH Common Stock and cash in lieu of fractional shares pursuant to the
Distribution.
Annual Meeting: The 1995 Annual Meeting of Stockholders of
--------------
Promus held on May 26, 1995, at which the Distribution and certain other
matters relating to the Distribution were ratified and approved by the
holders of a majority of the outstanding shares of Promus Common Stock.
Code: The Internal Revenue Code of 1986, as amended.
----
Commission: The Securities and Exchange Commission.
----------
Conveyancing and Assumption Instruments: Collectively, the
---------------------------------------
various agreements, instruments and other documents to be entered into to
effect the Asset Transfers and the assumption of Liabilities in the manner
contemplated by this Agreement and the Related Agreements.
3
Distribution Date: The date determined by the Promus Board as
-----------------
the date on which the Distribution shall be effected, which Distribution
Date is contemplated by the Promus Board to occur on or about June 30,
1995.
Distribution Record Date: The date established by the Promus
------------------------
Board as the date for taking a record of the Holders of Promus Common Stock
entitled to participate in the Distribution, which Distribution Record Date
has been established as June 21, 1995, subject to the fulfillment on or
before June 18, 1995 of certain conditions to the Distribution as provided
in Section 4.02.
Employee Benefits Allocation Agreement: The Benefits and Other
--------------------------------------
Employment Matters Allocation Agreement between Promus and PRH, which
agreement shall be entered into on or prior to the Distribution Date in
substantially the form of Exhibit A attached hereto.
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Existing Management and Lease Agreements: The existing
----------------------------------------
management or lease agreements with hotel property owners (including those
entities in which Promus or its Subsidiaries are a partner or hold an
equity interest) to which Promus and its Subsidiaries are parties, pursuant
to which Promus or its Subsidiaries lease, manage or operate lodging
properties.
Existing Promus Credit Facilities: The credit facilities of
---------------------------------
Promus set forth on Schedule 1.01(a).
Financing Obligations: All (i) indebtedness for borrowed money,
---------------------
(ii) obligations evidenced by bonds, notes, debentures or similar
instruments, (iii) obligations under capitalized leases and deferred
purchase arrangements, (iv) reimbursement or other
4
obligations relating to letters of credit or similar arrangements, and (v)
obligations to guarantee, directly or indirectly, any of the foregoing
types of obligations on behalf of others.
Franchise Agreements: All license, franchise or other agreements
--------------------
or commitments to which Promus or any of its Subsidiaries is a party
pursuant to which Promus (either directly or through any such Subsidiary)
has granted franchise rights with respect to the operation of hotel
properties, and all other franchise rights either granted or received by
Promus or any of its Subsidiaries relating to the PRH Business.
Harrah's: Harrah's, a Nevada corporation.
--------
Harrah's Club: Harrah's Club, a Nevada corporation.
-------------
Harrah's Entertainment Pro Forma Balance Sheet: The Pro Forma
----------------------------------------------
Consolidated Balance Sheet for Harrah's Entertainment, Inc. as of March 31,
1995 attached hereto as Exhibit B-1.
Harrah's Entertainment Pro Forma Statement of Income: The Pro
----------------------------------------------------
Forma Consolidated Statement of Income for Harrah's Entertainment, Inc. as
of March 31, 1995 attached hereto as Exhibit B-2.
Holders: The holders of record of Promus Common Stock as of the
-------
Distribution Record Date.
Information Technology Agreements: The agreements to be entered
---------------------------------
into between Promus and PRH on or prior to the Distribution Date, providing
for certain matters related to information technology after the
Distribution Date, in substantially the forms of the following: Data
Center Lease attached as Exhibit C-1, Marketing Services Agreement attached
as Exhibit C-2, Satellite Services Agreement attached as Exhibit C-3,
Software
5
Agreement attached as Exhibit C-4, Transitional Service Agreement attached
as Exhibit C-5, Administrative Systems Services Agreement attached as
Exhibit C-6, and Disaster Recovery Agreement attached as Exhibit C-7.
Insurance Proceeds: Those moneys (i) received by an insured from
------------------
an insurance carrier or (ii) paid by an insurance carrier on behalf of the
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost or reserve paid
or held by or for the benefit of such insured.
IRS: The Internal Revenue Service.
---
Liabilities: Any and all debts, liabilities and obligations,
-----------
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all
costs and expenses relating thereto, and including, without limitation,
those debts, liabilities and obligations arising under any law, rule,
regulation, Action, threatened Action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, agreement, commitment or undertaking.
Meeting Record Date: The record date established by the Promus
-------------------
Board for determining stockholders of Promus entitled to vote at the Annual
Meeting.
NYSE: The New York Stock Exchange.
----
6
Person: Any individual, corporation, partnership, limited
------
liability company, association, trust, estate or other entity or
organization, including any governmental entity or authority.
PHI: Promus Hotels, Inc., a Delaware corporation and a wholly-
---
owned subsidiary of PRH.
Pre-Paid Transaction Expenses: Amounts paid by Promus prior to
-----------------------------
the allocation of cash pursuant to Section 2.06 for legal, investment
banking, accounting, filing, printing and related expenses incurred by
Promus in connection with the Distribution.
PRH Board: The Board of Directors of PRH.
---------
PRH Books and Records: The books and records (including
---------------------
computerized records) of PRH and the PRH Subsidiaries and all books and
records owned by Promus and its Subsidiaries which relate to the PRH
Business or are necessary to operate the PRH Business including, without
limitation, all such books and records relating to PRH Employees, all files
relating to any Action being assumed by PRH as part of the PRH Liabilities,
original corporate minute books, stock ledgers and certificates and
corporate seals, and all licenses, leases, agreements and filings, relating
to PRH, the PRH Subsidiaries or the PRH Business (but not including the
Promus Books and Records, provided that PRH shall have access to, and have
the right to obtain duplicate copies of, the Promus Books and Records in
accordance with the provisions of Article VII).
PRH Business: The businesses conducted by PRH and the PRH
------------
Subsidiaries and the businesses conducted pursuant to or utilizing the PRH
Assets, including without limitation the management, operation and
franchising of hotels, including all hotels in the
7
"Embassy Suites," "Hampton Inn," "Homewood Suites," and "Hampton Inn and
Suites" hotel chains.
PRH Bylaws: The Bylaws of PRH, substantially in the form of
----------
Exhibit D, to be in effect at the Distribution Date.
PRH Certificate: The Restated Certificate of Incorporation of
---------------
PRH, substantially in the form of Exhibit E, to be in effect at the
Distribution Date.
PRH Common Stock: The common stock, par value $0.10 per share,
----------------
of PRH (together with any PRH Rights issued pursuant to the PRH Rights
Plan).
PRH Credit Agreement: The Credit Agreement between NationsBank,
--------------------
N.A., Embassy, PHI, the Guarantors and the Several Lenders referred to
therein, dated as of June 7, 1995, and all documents evidencing or securing
such Credit Agreement or executed and delivered by the parties to such
Credit Agreement in connection therewith.
PRH Employees: The meaning specified in the Employee Benefits
-------------
Allocation Agreement.
PRH Group: PRH and the PRH Subsidiaries, collectively.
---------
PRH Liabilities: (i) All of the Liabilities of the PRH Group
---------------
under, or to be retained or assumed by PRH or any of the PRH Subsidiaries
pursuant to, this Agreement or any of the Related Agreements, including
those set forth on Schedule 1.01(b), (ii) all of the Liabilities under the
PRH Credit Agreement, (iii) all Liabilities for payment of outstanding
drafts of Promus attributable to the PRH Business existing as of the
Distribution Date, and (iv) all other Liabilities (excluding Embassy
liabilities with respect to the Excluded Assets) arising out of or in
connection with any of the PRH Assets or the PRH Business, determined on a
basis consistent with the determination of the Liabilities of PRH included
on the PRH
8
Pro Forma Balance Sheet (as reflected in the "Distribution Pro Forma
column") (including, without limitation, any liabilities arising out of or
related to the transfer to PRH or its Affiliates of the PRH Assets or the
PRH Business).
PRH Pro Forma Balance Sheet: The Pro Forma Consolidated Balance
---------------------------
Sheet for PRH as of March 31, 1995 attached hereto as Exhibit F-1.
PRH Pro Forma Statement of Income: The Pro Forma Combined
---------------------------------
Statement of Income for PRH as of March 31, 1995 attached hereto as
Exhibit F-2.
PRH Subsidiaries: The Transferred Subsidiaries and all
----------------
Subsidiaries of PRH or the Transferred Subsidiaries at the time of the
Distribution.
Privileges: All privileges regarding Information or use of
----------
lawyers, accountants or other service providers that may be asserted under
applicable law including, without limitation, privileges or rights arising
under or relating to the attorney-client relationship (including but not
limited to the attorney-client and work product privileges and waivers of
conflicts of interest), the accountant-client privilege, and privileges
relating to internal valuative processes.
Privileged Information: All Information as to which Promus, PRH
----------------------
or any of their Subsidiaries are entitled to assert the protection of a
Privilege.
Promus Board: The Board of Directors of Promus.
------------
Promus Books and Records: The books and records (including
------------------------
computerized records) of Promus and the Retained Subsidiaries and all books
and records owned by Promus and its Subsidiaries which relate to the
Retained Business, are necessary to operate the Retained Business, or are
required by law to be retained by Promus, including, without limitation,
all such books and records relating to Retained Employees, all files
relating to any
9
Action pertaining to the Retained Liabilities, all records required to be
maintained by Promus under the Settlement Agreement, original corporate
minute books, stock ledgers and certificates and corporate seals, and all
licenses, leases, agreements and filings, relating to Promus, the Retained
Subsidiaries or the Retained Business (but not including the PRH Books and
Records, provided that Promus shall have access to, and shall have the
right to obtain duplicate copies of, the PRH Books and Records in
accordance with the provisions of Article VII).
Promus Common Stock: The common stock, par value $0.10 per
-------------------
share, of Promus.
Promus Group: Promus and the Retained Subsidiaries,
------------
collectively.
Property Tax Services Agreement: The Property Tax Services
-------------------------------
Agreement between PRI and Embassy, which agreement shall be entered into on
or prior to the Distribution Date in substantially the form of Exhibit J
attached hereto.
Proxy Statement: The proxy statement dated April 25, 1995
---------------
provided to the holders of Promus Common Stock as of the Meeting Record
Date in connection with the Annual Meeting.
Related Agreements: All of the agreements, contracts,
------------------
instruments, understandings, assignments or other arrangements which are
entered into in connection with the transactions contemplated hereby and
which are set forth in a writing, including, without limitation: the
Conveyancing and Assumption Instruments, the Employee Benefits Allocation
Agreement, the Tax Sharing Agreement, the Trademark Assignment Agreement,
the Information Technology Agreements, the Risk Management Allocation
Agreement, and the Property Tax Services Agreement.
Retained Assets: The assets of Promus other than the PRH Assets,
---------------
including without limitation (i) the capital stock of the Retained
Subsidiaries, (ii) the Retained Real Property, (iii) assets relating to the
Retained Business, determined on a basis consistent with
10
the determination of assets included on the Harrah's Entertainment Pro
Forma Balance Sheet (as reflected in the "Distribution Pro Forma" column),
(iv) all of the assets expressly allocated to Promus or any of the Retained
Subsidiaries under this Agreement or the Related Agreements, including
those set forth on Schedule 1.01(c), (v) any other assets of Promus and its
Affiliates relating to the Retained Business, and (vi) the Excluded Assets
set forth on Schedule 2.01(a).
Retained Business: The businesses conducted by Promus and its
-----------------
Affiliates other than the PRH Business, including without limitation, the
Casino Business.
Retained Employees: The meaning specified in the Employee
------------------
Benefits Allocation Agreement.
Retained Liabilities: (i) All of the Liabilities arising out of
--------------------
or in connection with the Retained Assets or the Retained Business
determined on a basis consistent with the determination of the Liabilities
of Promus included on the Harrah's Entertainment Pro Forma Consolidated
Balance Sheet (as reflected in the "Distribution Pro Forma" column), (ii)
all of the Liabilities of Promus under, or to be retained or assumed by
Promus or any of the Retained Subsidiaries pursuant to, this Agreement or
any of the Related Agreements, including those set forth on
Schedule 1.01(d), (iii) any Financing Obligations not constituting PRH
Liabilities (including, without limitation, the Existing Promus Credit
Facilities identified on Schedule 1.01(a)), (iv) all Liabilities for the
payment of outstanding drafts of Promus attributable to the Retained
Business existing as of the Distribution Date, (v) all debts, liabilities
or other obligations, including any related claims that may be asserted,
whether prior to or after the Distribution Date, arising from the
Settlement Agreement and (vi) all other Liabilities of Promus not
constituting PRH Liabilities.
11
Retained Real Property: The ownership interests of Promus and
----------------------
its Affiliates in real property that is not Transferred Real Property,
including the real property identified on Schedule 1.01(e).
Retained Subsidiaries: All Subsidiaries of Promus, except PRH
---------------------
and the PRH Subsidiaries.
Risk Management Allocation Agreement: The Risk Management
------------------------------------
Allocation Agreement between Promus and PRH, which agreement shall be
entered into on or prior to the Distribution Date in substantially the form
of Exhibit G hereto.
Securities Act: the Securities Act of 1933, as amended.
--------------
Senior Subordinated Notes: The 10-7/8% Senior Subordinated Notes
-------------------------
due 2002 and the 8-3/4% Senior Subordinated Notes due 2000 of Embassy.
Settlement Agreement: The Settlement Agreement dated March 17,
--------------------
1995, whereby Plaintiff and defendant settled the litigation styled Bass
----
Public Limited Company, Bass International Holdings N.V., (U.S.A.)
- ------------------------------------------------------------------
Incorporated, Holiday Corporation and Holiday Inns, Inc. v. The Promus
- ----------------------------------------------------------------------
Companies Incorporated formerly pending in the United States District Court
- ----------------------
for the Southern District of New York (92 Civ. 0969).
Subsidiary: With respect to any Person, (a) any corporation of
----------
which at least a majority in interest of the outstanding voting stock
(having by the terms thereof voting power under ordinary circumstances to
elect a majority of the directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
or controlled by such Person, by one or more Subsidiaries of such Person,
or by such Person and one or more of its
12
Subsidiaries, or (b) any non-corporate entity in which such Person, one or
more Subsidiaries of such Person, or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest.
Tax Sharing Agreement: The Tax Sharing Agreement between PRH and
---------------------
Promus, which agreement shall be entered into on or prior to the
Distribution Date in substantially the form of Exhibit H attached hereto.
Trademark Assignment Agreement: The Trademark Assignment
------------------------------
Agreement between Promus and PRH, pursuant to which Promus will convey
certain intellectual property rights to PRH, which agreement shall be
entered into on or prior to the Distribution Date in substantially the form
of Exhibit I attached hereto.
Transferred Joint Venture Interests: The partnership and joint
-----------------------------------
venture interests and minority equity interests identified on
Schedule 1.01(f).
Transferred Real Property: The real property identified on
-------------------------
Schedule 1.01(g).
Transferred Subsidiaries: The Subsidiaries identified on
------------------------
Schedule 1.01(h).
Transferred Subsidiary Stock: All of the issued and outstanding
----------------------------
capital stock of the Transferred Subsidiaries.
Section 1.02. Terms Defined Elsewhere in Agreement.
------------------------------------
Each of the following terms is defined in the Section set forth
opposite such term:
13
Term Section
---- -------
Asset Transfers Recitals
Consents 4.01
Distribution Recitals
Embassy Distribution Recitals
Form 10 Registration Statement 4.02
Indemnifiable Loss 5.01
Indemnifying Party 5.03
Indemnitee 5.03
Information 7.02
Promus Recitals
Promus Indemnitees 5.02
PRH Recitals
PRH Assets 2.01
PRH Indemnitees 5.01
PRH Rights 6.06
PRH Rights Plan 6.06
Third-Party Claim 5.04
ARTICLE II
TRANSFER OF ASSETS
------------------
Section 2.01. Transfer of Assets to PRH; Harrah's Mergers.
-------------------------------------------
(a) Prior to the Distribution Date, Promus shall take or cause
to be taken all actions necessary to cause the transfer, assignment,
delivery and conveyance to PRH or its Subsidiaries (as directed by PRH) of
all of Promus's and its Subsidiaries' right, title and interest in the PRH
Assets. The "PRH Assets" shall consist of the following assets:
(i) the Transferred Subsidiary Stock;
(ii) the trademarks, service marks, goodwill and other
intangible properties and rights to be conveyed to PRH
pursuant to the Trademark Assignment Agreement;
14
(iii) the Existing Management and Lease Agreements;
(iv) the Franchise Agreements;
(v) the Transferred Real Property;
(vi) the Transferred Joint Venture Interests;
(vii) the PRH Books and Records;
(viii) all licenses and permits relating to the PRH
Business;
(ix) the two U.S. Dollar Swap Transactions between Embassy
and NationsBank, N.A., each with the notional amount of
$50 million, effective on March 20, 1995 and January
26, 1995, respectively;
(x) all of the other assets to be assigned to PRH under
this Agreement or the Related Agreements; and
(xi) all other assets relating to the PRH Business,
determined on a basis consistent with the determination
of the assets included on the PRH Pro Forma Combined
Balance Sheet (as reflected in the "Distribution Pro
Forma" column);
provided, that the PRH Assets shall exclude any rights of Embassy pursuant
- --------
to the agreements set forth on Schedule 2.01(a).
(b) Following the consummation of the Asset Transfers described
in Section 2.01(a) and prior to the Distribution Date, Promus shall take or
cause to be taken all actions necessary to cause Casino Holding Company to
be merged with and into Harrah's Club (with Harrah's Club as the surviving
corporation) and to cause Embassy to contribute to
15
the capital of Harrah's (which shall in turn contribute to the capital of
Harrah's Club) all of Embassy's right, title and interest in its Northern
Nevada and Las Vegas casino properties.
Section 2.02. Transfers Not Effected Prior to the Distribution.
------------------------------------------------
To the extent that any transfers contemplated by this Article II
shall not have been fully effected on the Distribution Date, the parties
shall cooperate to effect such transfers as promptly as shall be
practicable following the Distribution Date. Nothing herein shall be
deemed to require the transfer of any assets or the assumption of any
Liabilities which by their terms or operation of law cannot be transferred
or assumed; provided, however, that Promus and PRH and their respective
-------- -------
Subsidiaries and Affiliates shall cooperate in seeking to obtain any
necessary consents or approvals for the transfer of all assets and
Liabilities contemplated to be transferred pursuant to this Article II. In
the event that any such transfer of assets or Liabilities has not been
consummated effective as of the Distribution Date, the party retaining such
asset or Liability shall thereafter hold such asset in trust for the use
and benefit of the party entitled thereto (at the expense of the party
entitled thereto) and retain such Liability for the account of the party by
whom such Liability is to be assumed pursuant hereto, and take such other
actions as may be reasonably required in order to place the parties,
insofar as reasonably possible, in the same position as would have existed
had such asset been transferred or such Liability been assumed as
contemplated hereby. As and when any such asset or Liability becomes
transferable, such transfer and assumption shall be effected forthwith.
The parties agree that, except as set forth in this subsection (a), as of
the Distribution Date, each party hereto shall be deemed to have acquired
complete and sole beneficial ownership over all of the assets, together
with all
16
rights, powers and privileges incidental thereto, and shall be deemed to
have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incidental
thereto, which such party is entitled to acquire or required to assume
pursuant to the terms of this Agreement.
Section 2.03. Cooperation Re: Assets.
-----------------------
In the case that at any time after the Distribution Date, PRH
reasonably determines that any of the Retained Assets (other than the
assets set forth on Schedule 2.01(a)) are essential for the conduct of the
PRH Business, or Promus reasonably determines that any of the PRH Assets
are essential for the conduct of the Retained Business, and the nature of
such assets makes it impracticable for PRH or Promus, as the case may be,
to obtain substitute assets or to make alternative arrangements on
commercially reasonable terms to conduct their respective businesses, and
reasonable provisions for the use thereof are not already included in the
Related Agreements, then PRH (with respect to the PRH Assets) and Promus
(with respect to the Retained Assets) shall cooperate to make such assets
available to the other party on commercially reasonable terms, as may be
reasonably required for such party to maintain normal business operations
(provided that such assets shall be required to be made available only
until such time as the other party may reasonably obtain substitute assets
or make alternative arrangements on commercially reasonable terms to permit
it to maintain normal business operations).
Section 2.04. No Representations or Warranties; Consents. Each
------------------------------------------
of the parties hereto understands and agrees that no party hereto is, in
this Agreement or in any other agreement or document contemplated by this
Agreement or otherwise, representing or
17
warranting in any way (i) as to the value or freedom from encumbrance of,
or any other matter concerning, any assets of such party or (ii) as to the
legal sufficiency to convey title to any asset transferred pursuant to this
Agreement or any Related Agreement, including, without limitation, any
Conveyancing or Assumption Instruments. It is also agreed and understood
that there are no warranties whatsoever, express or implied, given by
either party to the Agreement, as to the condition, quality,
merchantability or fitness of any of the assets, businesses or other rights
either transferred to or retained by the parties, as the case may be, and
all such assets, businesses or other rights shall be "as is, where is" and
"with all faults" (provided, however, that the absence of warranties given
by the parties shall not negate the allocation of Liabilities under this
Agreement and shall have no effect on any manufacturers', sellers', or
other third parties' warranties which are intended to be transferred with
such assets). Similarly, each party hereto understands and agrees that no
party hereto is, in this Agreement or in any other agreement or document
contemplated by this Agreement or otherwise, representing or warranting in
any way that the obtaining of any consents or approvals, the execution and
delivery of any amendatory agreements and the making of any filings or
applications contemplated by this Agreement will satisfy the provisions of
any or all applicable laws or judgments or other instruments or agreements
relating to such assets. Notwithstanding the foregoing, the parties shall
use their good faith efforts to obtain all consents and approvals, to enter
into all reasonable amendatory agreements and to make all filings and
applications which may be reasonably required for the consummation of the
transactions contemplated by this Agreement, and shall take all such
further actions as shall be deemed reasonably necessary to preserve for
each of the PRH Group and the Promus
18
Group, to the greatest extent reasonably feasible, consistent with this
Agreement, the economic and operational benefits of the allocation of
assets and Liabilities provided for in this Agreement. In case at any time
after the Distribution Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall take all such necessary or desirable
action, provided, that any financial cost shall be borne by the party
--------
receiving the benefit of the action.
Section 2.05. Conveyancing and Assumption Instruments. In
---------------------------------------
connection with the Asset Transfers and the assumptions of Liabilities
contemplated by this Agreement, the parties shall execute or cause to be
executed by the appropriate entities the Conveyancing and Assumption
Instruments in such forms as the parties shall reasonably agree, including
the transfer of the Transferred Real Property with deeds as may be
appropriate, the assignment of trademarks and franchise rights and the
assignment and assumption of the Existing Management and Lease Agreements,
Transferred Joint Venture Interests, and the Franchise Agreements. The
transfer of capital stock shall be effected by means of delivery of stock
certificates and executed stock powers and notation on the stock record
books of the corporation or other legal entities involved and, to the
extent required by applicable law, by notation on public registries.
19
Section 2.06. Cash Allocation.
---------------
(a) Cash Allocation on the Distribution Date.
----------------------------------------
The allocation between Promus and PRH of all domestic and
international cash bank balances and short-term investments ("cash") of
Promus and its Subsidiaries recorded per the books of Promus and its
Subsidiaries as of the close of business on the Distribution Date (the
"Pre-Distribution Cash Balance") shall be in accordance with the following:
(i) all petty cash accounts of hotel properties on the
Distribution Date shall be transferred to PRH;
(ii) all cash received in and deposits made to the local
deposit accounts for business activities relating to
the PRH Business to and including the Distribution Date
which has not previously been transferred to Promus
shall be remitted to Promus no later than five business
days following the Distribution Date; and
(iii) all Liabilities for payment of outstanding drafts
drawn on accounts allocated to PRH shall be paid
by PRH (except that, with respect to outstanding
drafts relating to Existing Management and Lease
Agreements, including Transferred Joint Venture
Interests, Promus shall reimburse PRH for such
outstanding drafts net of any corresponding
receivable transferred to PRH).
(b) Cash Management After the Distribution Date. PRH shall
-------------------------------------------
establish and maintain a separate cash management system and accounting
records with respect to the PRH
20
Business effective as of 12:01 a.m. on the day following the Distribution
Date; thereafter, (i) any payments by Promus or its Retained Subsidiaries
on behalf of PRH or the PRH Subsidiaries in connection with the PRH
Business (including, without limitation, any such payments in respect of
Liabilities or other obligations of PRH or the PRH Subsidiaries under the
Employee Benefits Allocation Agreement) shall be recorded in the accounts
of the PRH Group as a payable from the PRH Group to the Promus Group; (ii)
any payments by PRH or the PRH Subsidiaries on behalf of Promus or its
Retained Subsidiaries in connection with the Retained Business (including,
without limitation, any such payments in respect to Liabilities or other
obligations of Promus or its Retained Subsidiaries under the Employee
Benefits Allocation Agreement) shall be recorded in the accounts of the
Promus Group as a payable from the Promus Group to the PRH Group; (iii) any
cash payments received by Promus and the Retained Subsidiaries relating to
the PRH Business or the PRH Assets shall be recorded in the accounts of the
Promus Group as a payable from the Promus Group to the PRH Group; (iv) any
cash payments received by PRH or the PRH Subsidiaries relating to the
Retained Business or the Retained Assets shall be recorded in the accounts
of the PRH Group as a payable from the PRH Group to the Promus Group; (v)
PRH and Promus shall make adjustments for late deposits, checks returned
for not sufficient funds and other post-Distribution Date transactions as
shall be reasonable under the circumstances consistent with the purpose and
intent of this Agreement; and (vi) the net balance due to the Promus Group
or the PRH Group, as the case may be, in respect of the aggregate amounts
of clauses (i), (ii), (iii), (iv) and (v) shall be paid by PRH or Promus,
as appropriate, as promptly as practicable. For purposes of this Section
2.06(b), the parties contemplate that the Retained
21
Business and the PRH Business, including but not limited to the
administration of accounts payable and accounts receivable, will be
conducted in the normal course.
(c) All transactions contemplated in this Section 2.06 shall be
subject to audit by the parties, and any dispute thereunder shall be
resolved by Arthur Andersen LLP ("Arthur Andersen") (or, if Arthur Andersen
is not available, by such other independent firm of certified public
accounts mutually acceptable to Promus and PRH), whose decision shall be
final and unappealable.
Section 2.07. Financing.
---------
Prior to the Asset Transfers and other transactions described in
this Article II, Embassy shall enter into the PRH Credit Agreement and
shall borrow $215 million in cash under the PRH Credit Agreement. Embassy
shall use the net proceeds of the borrowings under the PRH Credit Agreement
to retire a portion of its indebtedness outstanding under the Existing
Promus Credit Facilities.
ARTICLE III
ASSUMPTION AND SATISFACTION OF LIABILITIES
------------------------------------------
Section 3.01. Assumption and Satisfaction of Liabilities.
------------------------------------------
(a) Except as set forth in the Employee Benefits Allocation
Agreement, the Tax Sharing Agreement or other Related Agreements, effective
as of and after the Distribution Date, (i) PRH shall, and/or shall cause
the PRH Subsidiaries to, assume, pay, perform, and discharge in due course
all of the PRH Liabilities and (ii) Promus shall, and/or shall cause the
Retained Subsidiaries to, pay, perform and discharge in due course all of
the Retained Liabilities.
22
(b) Effective as of and after the Distribution Date, PRH shall
cause Embassy to be released and discharged from any and all Liabilities
under the PRH Credit Agreement.
ARTICLE IV
THE DISTRIBUTION
----------------
Section 4.01. Cooperation Prior to the Distribution.
-------------------------------------
(a) Promus and PRH shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are appropriate to reflect the establishment of,
or amendments to, any employee benefit plans and other plans contemplated
by the Employee Benefits Allocation Agreement.
(b) Promus and PRH shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement and the Related Agreements.
(c) Promus and PRH shall use all reasonable efforts to obtain
any third-party consents or approvals necessary or desirable in connection
with the transactions contemplated hereby ("Consents").
(d) Promus and PRH will use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or desirable under applicable law, to consummate the transactions
contemplated under this Agreement.
23
Section 4.02. Promus Board Action; Conditions Precedent to the
------------------------------------------------
Distribution. The Promus Board shall, in its discretion, establish any
- ------------
appropriate procedures in connection with the Distribution. In no event
shall the Distribution occur unless the following conditions shall have
been satisfied:
(i) each of the Distribution Proposals (as defined in the
Proxy Statement) having been approved by Promus's
stockholders;
(ii) the Promus Board having received an opinion from Latham
& Watkins to the effect that the Embassy Distribution
and the Distribution will qualify as a tax-free
transaction under Section 355 of the Code;
(iii) the transfers of assets and Liabilities
contemplated by this Agreement having been
consummated in all material respects;
(iv) the PRH Common Stock and associated PRH Rights having
been approved for listing on the New York Stock
Exchange subject to official notice of issuance;
(v) the PRH Board, comprised as contemplated by
Section 6.01, having been elected by Embassy, as sole
stockholder of PRH, and the PRH Certificate and the PRH
Bylaws, as each will be in effect after the
Distribution, having been adopted and being in effect;
(vi) PRH having entered into the PRH Credit Agreement;
24
(vii) the Registration Statement on Form 10 with respect
to the PRH Common Stock (the "Form 10 Registration
Statement") having become effective under the
Exchange Act;
(viii) all third party consents to the transactions
contemplated by the Distribution Proposals having
been obtained (including, without limitation,
consents having been obtained from holders of the
Senior Subordinated Notes to certain amendments to
the covenants contained in such Notes), except for
those the failure of which to obtain would not
have a material adverse effect on PRH or Harrah's
Entertainment;
(ix) Embassy having obtained from its lenders under the
Existing Promus Credit Facilities consents to the
transactions contemplated by the Distribution
Proposals; and
(x) James D. Wolfensohn Incorporated having delivered an
updated opinion to the Promus Board, dated as of the
Distribution Date, in substantially the same form as
the opinion set forth in Exhibit K;
provided, however, that (i) any such condition may be waived by the Promus
- -------- -------
Board in its sole discretion, and (ii) the satisfaction of such conditions
shall not create any obligation on the part of Promus or any other party
hereto to effect the Distribution or in any way limit Promus's power of
termination set forth in Section 9.07 or alter the consequences of any such
termination from those specified in such Section.
25
Section 4.03. The Distribution. On the Distribution Date,
----------------
subject to the conditions and rights of termination set forth in this
Agreement, PRH shall issue and deliver to Embassy, and Embassy shall assign
and deliver to Promus, and Promus shall endorse in blank and deliver to the
Agent, a share certificate for PRH Common Stock representing a number of
such shares which, when taken together with the shares of PRH Common Stock
already owned by Embassy, will result in Embassy owning one share of PRH
Common Stock for each two shares of Promus Common Stock issued and
outstanding on the Distribution Record Date. Promus shall instruct the
Agent to distribute, on or as soon as practicable following the
Distribution Date, to the Holders one share of the PRH Common Stock for
each two shares of Promus Common Stock held by such Holders and cash in
lieu of fractional shares of PRH Common Stock as provided in Section 4.04.
PRH agrees to provide all share certificates that the Agent shall require
in order to effect the Distribution.
Section 4.04. Cash in Lieu of Fractional Shares.
---------------------------------
No certificate or scrip representing fractional shares of PRH
Common Stock shall be issued as part of the Distribution and in lieu
thereof, each holder of PRH Common Stock who would otherwise be entitled to
receive a fractional share of the PRH Common Stock will receive cash for
such fractional share. Promus shall instruct the Agent to determine the
number of whole shares and fractional shares of PRH Common Stock allocable
to each holder of record of the Promus Common Stock as of the Distribution
Record Date. Promus shall instruct the Agent to aggregate all such
fractional shares into whole shares and sell the whole shares obtained
thereby in the open market as soon as practicable following the
Distribution Date at then prevailing prices on behalf of Holders who
otherwise would be
26
entitled to receive fractional share interests and to distribute to each
such Holder such Holder's ratable share of the proceeds of such sale as
soon as practicable after the Distribution Date. Promus shall bear the
costs of commissions incurred in connection with such sales.
ARTICLE V
INDEMNIFICATION
---------------
Section 5.01. Indemnification by Promus. Except as otherwise
-------------------------
expressly set forth in a Related Agreement, Promus shall indemnify, defend
and hold harmless PRH and each of the PRH Subsidiaries, and each of their
respective directors, officers, employees, agents and Affiliates and each
of the heirs, executors, successors and assigns of any of the foregoing
(the "PRH Indemnitees") from and against the Retained Liabilities and any
and all losses, Liabilities and damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or
threatened Actions (collectively, "PRH Indemnifiable Losses" and,
individually, a "PRH Indemnifiable Loss") of the PRH Indemnitees arising
out of or due to the failure or alleged failure of Promus or any of its
Affiliates (i) to pay, perform or otherwise discharge in due course any of
the Retained Liabilities, or (ii) comply with the provisions of Section
6.04.
Section 5.02. Indemnification by PRH. Except as otherwise
----------------------
expressly set forth in a Related Agreement (other than a deed giving effect
to a transfer of the Transferred Real Property), PRH shall indemnify,
defend and hold harmless Promus and each of the Retained Subsidiaries, and
each of their directors, officers, employees, agents
27
and Affiliates and each of the heirs, executors, successors and assigns of
any of the foregoing (the "Promus Indemnitees") from and against the PRH
Liabilities and any and all losses, Liabilities, damages, including,
without limitation, the costs and expenses of any and all Actions,
threatened Actions, demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending
against any such Actions or threatened Actions (collectively, "Promus
Indemnifiable Losses" and, individually, a "Promus Indemnifiable Loss") of
the Promus Indemnitees arising out of or due to the failure or alleged
failure of PRH or any of its Affiliates to (i) pay, perform or otherwise
discharge in due course any of the PRH Liabilities or (ii) comply with the
provisions of Section 6.04. The "PRH Indemnifiable Losses" and the "Promus
Indemnifiable Losses" are collectively referred to as the "Indemnifiable
Losses."
Section 5.03. Insurance Proceeds. The amount which any party
------------------
(an "Indemnifying Party") is or may be required to pay to any other Person
(an "Indemnitee") pursuant to Section 5.01 or Section 5.02 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in
reduction of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party
in respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds, or other amounts in respect of such Indemnifiable Loss
as specified above, then such Indemnitee shall pay to such Indemnifying
Party a sum equal to the amount of such Insurance Proceeds or other amounts
actually received.
28
Section 5.04. Procedure for Indemnification.
-----------------------------
(a) Except as may be set forth in a Related Agreement, if an
Indemnitee shall receive notice or otherwise learn of the assertion by a
Person (including, without limitation, any governmental entity) who is not
a party to this Agreement or to any of the Related Agreements of any claim
or of the commencement by any such Person of any Action (a "Third-Party
Claim") with respect to which an Indemnifying Party may be obligated to
provide indemnification pursuant to this Agreement, such Indemnitee shall
give such Indemnifying Party written notice thereof promptly after becoming
aware of such Third-Party Claim; provided, that the failure of any
--------
Indemnitee to give notice as required by this Section 5.04 shall not
relieve the Indemnifying Party of its obligations under this Article V,
except to the extent that such Indemnifying Party is prejudiced by such
failure to give notice. Such notice shall describe the Third-Party Claim
in reasonable detail, and shall indicate the amount (estimated if
necessary) of the Indemnifiable Loss that has been or may be sustained by
such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to
settle or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third-Party Claim, provided that the
Indemnifying Party must confirm in writing that it agrees that the
Indemnitee is entitled to indemnification hereunder in respect of such
Third-Party Claim. Within 30 days of the receipt of notice from an
Indemnitee in accordance with Section 5.04(a) (or sooner, if the nature of
such Third-Party Claim so requires), the Indemnifying Party shall notify
the Indemnitee of its election whether to assume responsibility for such
Third-Party Claim (provided that if the Indemnifying Party
29
does not so notify the Indemnitee of its election within 30 days after
receipt of such notice from the Indemnitee, the Indemnifying Party shall be
deemed to have elected not to assume responsibility for such Third-Party
Claim), and such Indemnitee shall cooperate in the defense or settlement or
compromise of such Third-Party Claim. After notice from an Indemnifying
Party to an Indemnitee of its election to assume responsibility for a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Article V for any legal or other expenses (except
expenses approved in advance by the Indemnifying Party) subsequently
incurred by such Indemnitee in connection with the defense thereof;
provided, that if the defendants or parties against which relief is sought
- --------
in any such claim include both the Indemnifying Party and one or more
Indemnitees and in such Indemnitees' reasonable judgment a conflict of
interest between such Indemnitees and such Indemnifying Party exists in
respect of such claim, such Indemnitees shall have the right to employ
separate counsel and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel reasonably
satisfactory to the Indemnifying Party) shall be paid by such Indemnifying
Party. If an Indemnifying Party elects not to assume responsibility for a
Third-Party Claim (which election may be made only in the event of a good
faith dispute that a claim was inappropriately tendered under Section 5.01
or 5.02, as the case may be) such Indemnitee may defend or (subject to the
following sentence) seek to compromise or settle such Third-Party Claim.
Notwithstanding the foregoing, an Indemnitee may not settle or compromise
any claim without prior written notice to the Indemnifying Party, which
shall have the option within ten days following the receipt of such notice
(i) to disapprove the settlement and assume all past and future
responsibility for the claim,
30
including reimbursing the Indemnitee for prior expenditures in connection
with the claim, or (ii) to disapprove the settlement and continue to
refrain from participation in the defense of the claim, in which event the
Indemnifying Party shall have no further right to contest the amount or
reasonableness of the settlement if the Indemnitee elects to proceed
therewith, or (iii) to approve the amount of the settlement, reserving the
Indemnifying Party's right to contest the Indemnitee's right to indemnity,
or (iv) to approve and agree to pay the settlement. In the event the
Indemnifying Party makes no response to such written notice from the
Indemnitee, the Indemnifying Party shall be deemed to have elected option
(ii).
(c) If an Indemnifying Party chooses to defend or to seek to
compromise any Third-Party Claim, the Indemnitee shall make available to
such Indemnifying Party any personnel and any books, records or other
documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense or compromise.
(d) Notwithstanding anything else in this Section 5.04 to the
contrary, an Indemnifying Party shall not settle or compromise any Third-
Party Claim unless such settlement or compromise contemplates as an
unconditional term thereof the giving by such claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of such
Third-Party Claim (and provided further that such settlement may not
provide for any non-monetary relief by Indemnitee without the written
consent of Indemnitee) and unless such settlement or compromise does not
involve any new or additional contractual or other burdens on the
Indemnitee. In the event the Indemnitee shall notify the Indemnifying
Party in writing that such Indemnitee declines to accept any such
settlement or compromise, such
31
Indemnitee may continue to contest such Third-Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole
expense. In such event, the obligation of such Indemnifying Party to such
Indemnitee with respect to such Third-Party Claim shall be equal to (i) the
costs and expenses of such Indemnitee prior to the date such Indemnifying
Party notifies such Indemnitee of the offer to settle or compromise (to the
extent such costs and expenses are otherwise indemnifiable hereunder) plus
----
(ii) the lesser of (A) the amount of any offer of settlement or compromise
which such Indemnitee declined to accept and (B) the actual out-of-pocket
amount such Indemnitee is obligated to pay subsequent to such date as a
result of such Indemnitee's continuing to pursue such Third-Party Claim.
(e) Any claim on account of an Indemnifiable Loss which does not
result from a Third-Party Claim shall be asserted by written notice given
by the Indemnitee to the applicable Indemnifying Party. Such Indemnifying
Party shall have a period of 15 days after the receipt of such notice
within which to respond thereto. If such Indemnifying Party does not
respond within such 15-day period, such Indemnifying Party shall be deemed
to have refused to accept responsibility to make payment. If such
Indemnifying Party does not respond within such 15-day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party under applicable law or
under this Agreement.
(f) In addition to any adjustments required pursuant to Section
5.03, if the amount of any Indemnifiable Loss shall, at any time subsequent
to the payment required by this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such
32
reduction, less any expenses incurred in connection therewith, shall
promptly be repaid by the Indemnitee to the Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such
Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right or claim relating to such Third-Party Claim
against any claimant or plaintiff asserting such Third-Party Claim. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable
manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 5.05. Remedies Cumulative. The remedies provided in
-------------------
this Article V shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 5.06. Survival of Indemnities. The obligations of each
-----------------------
of PRH and Promus under this Article V shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities, with respect to any Indemnifiable Loss of the other related to
such assets, businesses or Liabilities.
Section 5.07. After-Tax Indemnification Payments. Except as
----------------------------------
otherwise expressly provided herein or in a Related Agreement, any
indemnification payment made by either party under this Article V shall give
effect to, and be reduced by the value of, any and all applicable deductions,
losses, credits, offsets or other items for Federal, state or other tax
purposes attributable to the payment of the indemnified liability by the
Indemnitee in a matter consistent with the treatment of tax indemnity payments
under the Tax Sharing Agreement.
Section 5.08. Characterization of Payments. Any payment (other
----------------------------
than interest thereon) made by either party under this Article V shall be
treated by all parties for tax purposes to the extent permitted by law, and
for accounting purposes to the extent permitted by generally accepted
accounting principles, as non-taxable dividend distributions or capital
contributions made prior to the close of business on the Closing Date.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
--------------------------
Section 6.01. PRH Board. PRH and Promus shall take all actions
---------
which may be required to constitute, effective as of the Distribution Date,
the following persons as the directors of PRH: Michael D. Rose, Ronald
Terry, Ben C. Peternell, Raymond E. Schultz,
33
David Sullivan, U. Bertram Ellis, Jr., Debra J. Fields, Christopher W.
Hart, C. Warren Neel, Michael I. Roth, and Jay Stein.
Section 6.02. Resignations; Promus Board. PRH shall cause all
--------------------------
of its directors and PRH Employees to resign, effective as of the
Distribution Date, from all boards of directors or similar governing bodies
of Promus or any of its Retained Subsidiaries on which they serve, and from
all positions as officers or employees of Promus or any of its Retained
Subsidiaries in which they serve, except that (i) Michael D. Rose shall
serve as a director and Chairman of Promus and as a director and Chairman
of PRH, and (ii) Ben C. Peternell shall serve as an executive officer of
Promus (as well an officer of Embassy) and as a director of PRH. Promus
shall cause all of its directors and the Retained Employees to resign from
all boards of directors or similar governing bodies of PRH or any of its
subsidiaries on which they serve, and from all positions as officers or
employees of PRH or any of its subsidiaries in which they serve, except to
the extent specified in the preceding sentence.
Section 6.03. Certificate and Bylaws. On or prior to the
----------------------
Distribution Date, PRH shall adopt the PRH Certificate and the PRH Bylaws,
and shall file the PRH Certificate with the Secretary of State of the State
of Delaware.
Section 6.04. Certain Post-Distribution Transactions.
--------------------------------------
(a) PRH. (i) PRH shall, and shall cause each of the PRH
---
Subsidiaries to, comply with each representation and statement made, or to
be made, to Latham & Watkins in connection with its tax opinion or any
other opinion obtained, or to be obtained, by Promus and PRH acting
together, from any tax counsel with respect to any transaction
34
contemplated by this Agreement and (ii) until the second anniversary of the
Distribution Date, neither PRH nor any of its subsidiaries shall (A)
liquidate, merge with any other corporation or sell or otherwise dispose of
a material portion of its assets, except in the ordinary course of
business and except for contributions of hotel real estate to ventures or
entities in which PRH will continute to own an equity interest and with
respect to which hotel real estate PRH retains a contractual right to serve
as manager or franchisor, (B) repurchase or issue any PRH capital stock
(other than stock issued pursuant to employee plans), or (C) cease the active
conduct of a material portion of its business independently, with its own
employees and without material change, unless, in each of cases (A), (B) and
(C), in the opinion of counsel to PRH, which opinion shall be reasonably
satisfactory to Promus, or pursuant to a favorable IRS ruling letter reasonably
satisfactory to Promus, such act or omission would not adversely affect the
tax consequences of the Distribution to Promus or the stockholders of
Promus, as set forth in any tax opinion issued by Latham & Watkins; and PRH
has no present intention to take any such actions.
(b) Promus. (i) Promus shall, and shall cause each of its
------
subsidiaries to, comply with each representation and statement made, or to
be made, to Latham & Watkins in connection with its tax opinion or any
other opinion obtained, by Promus and PRH acting together, from any tax
counsel with respect to any transaction contemplated by this Agreement; and
(ii) until the second anniversary of the Distribution Date, neither Promus
nor any of its subsidiaries shall (A) liquidate, merge with any other
corporation or sell or otherwise dispose of a material portion of its
assets (other than the PRH Assets), except in the ordinary course of
business, (B) repurchase or issue any capital stock of Promus (other than
stock issued pursuant to employee plans), or (C) cease the active conduct
of a material portion of its business independently, with its own employees
and without material change, unless, in each of cases (A), (B) and (C), in
the opinion of counsel to Promus, which opinion
35
shall be reasonably satisfactory to PRH, or pursuant to a favorable IRS
ruling letter reasonably satisfactory to PRH, such act or omission would
not adversely affect the tax consequences of the Distribution to PRH or the
stockholders of PRH, as set forth in any opinion issued by Latham &
Watkins; and Promus has no present intention to take any such actions.
Section 6.05. Corporate Name. Effective as of the Distribution
--------------
Date, Promus shall change its corporate name to "Harrah's Entertainment,
Inc." and Embassy shall change its corporate name to "Harrah's Operating
Company, Inc." All references to Promus and Embassy herein shall be
references to each such corporation both before and after such corporate
name change.
Section 6.06. PRH Rights Plan. Prior to the Distribution Date,
---------------
the PRH Board may elect, in its sole discretion, to recommend that PRH
adopt a stockholder rights plan (the "PRH Rights Plan"). The PRH Rights
Plan will provide for the distribution of preferred share purchase rights
("PRH Rights") with respect to each share of PRH Common Stock. The PRH
Rights will be attached to the PRH Common Stock and will not be
exercisable, or transferable apart from the PRH Common Stock, unless and
until certain events occur. If certain events occur relating to the
acquisition by an acquiring person of PRH Common Stock, or a merger or
other combination of PRH with an acquiring person, the PRH Rights will
entitle holders (other than the acquiring person) to purchase either PRH
Common Stock or common stock of the acquiring person at a discount. The
specific terms of the PRH Rights will be determined by the Board of
Directors of PRH consistent with the description thereof in the Proxy
Statement.
36
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
----------------------------------
Section 7.01. Provision of Corporate Records.
------------------------------
(a) Except as may otherwise be provided in a Related Agreement,
Promus shall arrange as soon as practicable following the Distribution
Date, to the extent not previously delivered in connection with the
transactions contemplated in Article II, for the transportation (at PRH's
cost) to PRH of the PRH Books and Records in its possession, except to the
extent such items are already in the possession of PRH or a PRH Subsidiary.
Such PRH Books and Records shall be the property of PRH, but shall be
available to Promus for review and duplication until Promus shall notify
PRH in writing that such records are no longer of use to Promus or until
the 10th anniversary of this Agreement.
(b) Except as otherwise provided in a Related Agreement, PRH
shall arrange as soon as practicable following the Distribution Date, to
the extent not previously delivered in connection with the transactions
contemplated in Article II, for the transportation (at Promus's cost) to
Promus of the Promus Books and Records in its possession, except to the
extent such items are already in the possession of Promus. The Promus
Books and Records shall be the property of Promus, but shall be available
to PRH for review and duplication until PRH shall notify Promus in writing
that such records are no longer of use to PRH or until the 10th anniversary
of this Agreement.
Section 7.02. Access to Information. Except as otherwise
---------------------
provided in a Related Agreement, from and after the Distribution Date,
Promus shall afford to PRH and its authorized accountants, counsel and
other designated representatives reasonable access
37
(including using reasonable efforts to give access to persons or firms
possessing information) and duplicating rights during normal business hours
to all records, books, contracts, instruments, computer data and other data
and information relating to pre-Distribution operations (collectively,
"Information") within Promus's possession insofar as such access is
reasonably required by PRH for the conduct of its business, subject to
appropriate restrictions for confidential or Privileged Information.
Similarly, except as otherwise provided in a Related Agreement, PRH shall
afford to Promus and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable
efforts to give access to persons or firms possessing information) and
duplicating rights during normal business hours to Information within PRH's
possession, insofar as such access is reasonably required by Promus for the
conduct of its business, subject to appropriate restrictions for
confidential or Privileged Information. Information may be requested under
this Article VII for the legitimate business purposes of either party,
including without limitation, audit, accounting, claims (including claims
for indemnification hereunder), litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations and for
performing this Agreement and the transactions contemplated hereby.
Section 7.03. Production of Witnesses. At all times from and
-----------------------
after the Distribution Date, each of PRH and Promus shall use reasonable
efforts to make available to the other, upon written request, its and its
subsidiaries' officers, directors, employees and agents as witnesses to the
extent that such persons may reasonably be required in connection with any
Action.
38
Section 7.04. Reimbursement. Except to the extent otherwise
-------------
contemplated in any Related Agreement, a party providing Information or
witness services to the other party under this Article VII shall be
entitled to receive from the recipient, upon the presentation of invoices
therefor, payments of such amounts, relating to supplies, disbursements and
other out-of-pocket expenses (at cost) and direct and indirect expenses of
employees who are witnesses or otherwise furnish assistance (at cost), as
may be reasonably incurred in providing such Information or witness
services.
Section 7.05. Retention of Records. Except as otherwise
--------------------
required by law or agreed to in a Related Agreement or otherwise in
writing, each of Promus and PRH may destroy or otherwise dispose of any of
the Information, which is material Information and is not contained in
other Information retained by Promus or PRH, as the case may be, at any
time after the 10th anniversary of this Agreement, provided that, prior to
such destruction or disposal, (a) it shall provide no less than 90 or more
than 120 days prior written notice to the other, specifying in reasonable
detail the Information proposed to be destroyed or disposed of and (b) if a
recipient of such notice shall request in writing prior to the scheduled
date for such destruction or disposal that any of the Information proposed
to be destroyed or disposed of be delivered to such requesting party, the
party proposing the destruction or disposal shall promptly arrange for the
delivery of such of the Information as was requested at the expense of the
party requesting such Information.
Section 7.06. Confidentiality. Each of Promus and its
---------------
Subsidiaries on the one hand, and PRH and its Subsidiaries on the other
hand, shall hold, and shall cause its consultants and advisors to hold, in
strict confidence, all Information concerning the other in
39
its possession or furnished by the other or the other's representatives
pursuant to this Agreement (except to the extent that such Information has
been (i) in the public domain through no fault of such party or (ii) later
lawfully acquired from other sources by such party), and each party shall
not release or disclose such Information to any other person, except its
auditors, attorneys, financial advisors, rating agencies, bankers and other
consultants and advisors, unless compelled to disclose by judicial or
administrative process or by other requirements of law or regulation, or
unless such Information is reasonably required to be disclosed in
connection with (x) any litigation with any third parties or litigation
between the Promus Group and the PRH Group, (y) any contractual agreement
to which the Promus Group or the PRH Group are currently parties, or (z) in
exercise of either party's rights hereunder.
Section 7.07. Privileged Matters. Promus and PRH recognize that
------------------
legal and other professional services that have been and will be provided
prior to the Distribution Date have been and will be rendered for the
benefit of both the Promus Group and the PRH Group and that both the Promus
Group and the PRH Group should be deemed to be the client for the purposes
of asserting all Privileges. To allocate the interests of each party in
the Privileged Information, the parties agree as follows:
(a) Promus shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged
Information which relates solely to the Retained Business, whether or not
the Privileged Information is in the possession of or under the control of
Promus or PRH. Promus shall also be entitled, in perpetuity, to control
the assertion or waiver of all Privileges in connection with Privileged
Information that relates
40
solely to the subject matter of any claims constituting Retained
Liabilities, now pending or which may be asserted in the future, in any
lawsuits or other proceedings initiated against or by Promus, whether or
not the Privileged Information is in the possession of or under the control
of Promus or PRH.
(b) PRH shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged
Information which relates solely to the PRH Business, whether or not the
Privileged Information is in the possession of or under the control of
Promus or PRH. PRH shall also be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged
Information which relates solely to the subject matter of any claims
constituting PRH Liabilities, now pending or which may be asserted in the
future, in any lawsuits or other proceedings initiated against or by PRH,
whether or not the Privileged Information is in the possession of PRH or
under the control of Promus or PRH.
(c) Promus and PRH agree that they shall have a shared
Privilege, with equal right to assert or waive, subject to the restrictions
in this Section 7.07, with respect to all Privileges not allocated pursuant
to the terms of Sections 7.07(a) and (b). All Privileges relating to any
claims, proceedings, litigation, disputes, or other matters which involve
both Promus and PRH in respect of which Promus and PRH retain any
responsibility or liability under this Agreement, shall be subject to a
shared Privilege.
(d) No party may waive any Privilege which could be asserted
under any applicable law, and in which the other party has a shared
Privilege, without the consent of the other party, except to the extent
reasonably required in connection with any litigation
41
with third parties or as provided in subsection (e) below. Consent shall
be in writing, or shall be deemed to be granted unless written objection is
made within 20 days after notice upon the other party requesting such
consent.
(e) In the event of any litigation or dispute between a member
of the Promus Group and a member of the PRH Group, either party may waive a
Privilege in which the other party has a shared Privilege, without
obtaining the consent of the other party, provided that such waiver of a
shared Privilege shall be effective only as to the use of Information or
counsel with respect to the litigation or dispute between the Promus Group
and the PRH Group, and shall not operate as a waiver of the shared
Privilege with respect to third parties.
(f) If a dispute arises between the parties regarding whether a
Privilege should be waived to protect or advance the interest of either
party, each party agrees that it shall negotiate in good faith, shall
endeavor to minimize any prejudice to the rights of the other party, and
shall not unreasonably withhold consent to any request for waiver by the
other party. Each party specifically agrees that it will not withhold
consent to waiver for any purpose except to protect its own legitimate
interests.
(g) Upon receipt by any party of any subpoena, discovery or
other request which arguably calls for the production or disclosure of
Information subject to a shared Privilege or as to which the other party
has the sole right hereunder to assert a Privilege, or if any party obtains
knowledge that any of its current or former directors, officers, agents or
employees have received any subpoena, discovery or other requests which
arguably calls for the production or disclosure of such Privileged
Information, such party shall promptly notify
42
the other party of the existence of the request and shall provide the other
party a reasonable opportunity to review the Information and to assert any
rights it may have under this Section 7.07 or otherwise to prevent the
production or disclosure of such Privileged Information.
(h) The transfer of the PRH Books and Records and the Promus
Books and Records and other Information between Promus and its Subsidiaries
and PRH and its Subsidiaries, is made in reliance on the agreement of
Promus and PRH, as set forth in Sections 7.06 and 7.07, to maintain the
confidentiality of Privileged Information and to assert and maintain all
applicable Privileges with respect to third parties. The access to
information being granted pursuant to Sections 7.01 and 7.02 hereof, the
agreement to provide witnesses and individuals pursuant to Section 7.03
hereof and the transfer of Privileged Information between Promus and its
Subsidiaries and PRH and its Subsidiaries pursuant to this Agreement shall
not be deemed a waiver of any Privilege that has been or may be asserted
under this Agreement or otherwise.
ARTICLE VIII
ADDITIONAL COVENANTS
--------------------
Section 8.01. Non-Competition Agreement.
-------------------------
(a) PRH. Until 5 years after the Distribution Date, PRH and its
---
Affiliates shall not, without the express written consent of Harrah's
Entertainment, compete with the Casino Business of Harrah's Entertainment,
provided (i) that two years after the Distribution Date and for the
- --------
remaining term of this covenant, such restrictions shall not prevent PRH or
any of its Affiliates from competing with the Casino Business in geographic
areas where Harrah's Entertainment is prohibited, by law or by contract,
from operating casino facilities
43
(or any additional casino facilities) and (ii) that such restrictions shall
not prevent PRH or any of its Affiliates from operating the Hotel Business
in competition with Harrah's Entertainment's casino facilities or from
operating a limited scale casino (no more than 10,000 square feet or 300
gaming positions) in a predominantly hotel facility. In the event that PRH
or any of its Affiliates determines to operate a limited scale casino as
described above, PRH shall offer to Harrah's Entertainment the right to
provide management or consulting services to PRH in connection therewith.
In the event that PRH determines not to accept such services on the terms
specified by Harrah's Entertainment, then PRH and its Affiliates shall not
enter into any management or consulting agreement with any other person on
terms and conditions that are less favorable to PRH than the terms offered
by Harrah's Entertainment, without first offering such terms to Harrah's
Entertainment.
(b) Harrah's Entertainment. Until 5 years after the
----------------------
Distribution Date, Harrah's Entertainment and its Affiliates shall not,
without the express written consent of PRH, compete with the Hotel Business
of PRH, provided that such restrictions shall not prevent or impair the
operation or ownership by Harrah's Entertainment or any of its Affiliates
of any hotel facility related to or supporting a casino facility as such
hotel facility may be operated presently or in the future.
(c) As used in this Section 8.01, the term "Affiliates" includes
any entity in which PRH or Harrah's Entertainment owns a 20% or greater
interest, but excludes any entity owning a controlling or other interest in
either company (now or in the future). PRH and Harrah's Entertainment will
not be permitted to unreasonably withhold their consent to transactions
involving Affiliates that are not controlled by the other Company.
44
Section 8.02. Hiring of Employees. 8.02(ii) In order to provide
-------------------
opportunities for increased line-level responsibility and career growth to
field operations employees of Promus and PRH at the manager, director and
vice-president officer levels, Promus and PRH and their respective Affiliates
may employ any employee of the other company in the following categories:
(1) General manager or assistant general manager of any Embassy
Suites, Hampton Inn, Hampton Inn and Suites or Homewood Suites
hotel.
(2) Manager, director or vice president of any Harrah's casino
operation.
Section 8.03. Settlement Agreement. PRH and Promus shall
--------------------
cooperate with each other in respect of the Settlement Agreement by making
available to each other such documents or other information and facilities
which, in the reasonable opinion of the party requesting such documents or
other information and facilities, may be necessary. PRH shall promptly
advise Promus upon receipt of any notices or other communications related
to the Settlement Agreement. Promus agrees to pay all of the out-of-pocket
expenses (including any reasonable fees of legal counsel) of PRH related to
such cooperation. PRH agrees that the defense or prosecution of the claims
pursuant to the Settlement Agreement shall be solely under the direction
and control of Promus; provided that, without PRH's consent, Promus may not
--------
settle any claims or enter into any agreements in connection therewith if
doing so would prejudice PRH in a manner not adequately compensated by the
indemnification provided in Section 5.01.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.01. Complete Agreement; Construction. This Agreement,
--------------------------------
including the Schedules and Exhibits and the Related Agreements and other
agreements and documents
45
referred to herein or delivered pursuant hereto, shall constitute the
entire agreement between the parties with respect to the subject matter
hereof and thereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
Notwithstanding any other provisions in this Agreement to the contrary, in
the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the provisions of the Related Agreements,
then the Related Agreements shall control; provided, however, that this
Agreement shall control in the event of any conflict between the provisions
of this Agreement and the deeds which effect the transfer of the
Transferred Real Property.
Section 9.02. Expenses. Except as otherwise set forth in this
--------
Agreement or any Related Agreement, all costs and expenses incurred through
the Distribution Date in connection with the preparation, execution,
delivery and implementation of this Agreement, the Distribution and with
the consummation of the transactions contemplated by this Agreement shall
be charged to Promus (other than the costs and expenses of the PRH Credit
Agreement, which shall be charged to PRH). Except as otherwise set forth
in this Agreement or any Related Agreement, all costs and expenses incurred
following the Distribution Date in connection with implementation of the
transactions contemplated in this Agreement shall be charged to the party
for whose benefit the expenses are incurred, with any expenses which cannot
be allocated on such basis to be split equally between the parties.
Section 9.03. Accounting Adjustments. Except as otherwise set
----------------------
forth in this Agreement or any Related Agreement, Promus and PRH agree (i)
after the Distribution Date, to cooperate in finalizing any adjustments
required to finalize accounting allocations and entries made to account for
the transactions contemplated by this Agreement and the Related Agreements,
and (ii) that any such adjustments shall be finalized by December 31, 1995.
Subsequent to December 31, 1995, any accounting
46
required to adjust either PRH's or Promus's books and records shall be the
responsibility of the respective companies and no adjustments will be made
to account for the transactions contemplated by this Agreement and the
Related Agreements. This Section 9.03 is not intended to impact any other
sections of this Agreement or any of the Related Agreements.
Section 9.04. Governing Law. This Agreement shall be governed
-------------
by and construed in accordance with the laws of the State of Tennessee,
without regard to the principles of conflicts of laws thereof.
Section 9.05. Notices. All notices and other communications
-------
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which
such notice is received:
To PRH:
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, TN 38138
Attention: Ralph B. Lake
General Counsel
To Promus:
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
Attention: Corporate Secretary
47
Section 9.06. Amendments. This Agreement may not be modified or
----------
amended except by an agreement in writing signed by the parties.
Section 9.07. Successors and Assigns. This Agreement and all of
----------------------
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
Section 9.08. Termination. This Agreement may be terminated and
-----------
the Distribution abandoned at any time prior to the Distribution Date by
and in the sole discretion of the Promus Board without the approval of PRH
or of Promus's stockholders. In the event of such termination, no party
shall have any liability to any other party pursuant to this Agreement.
Section 9.09. Subsidiaries. Each of the parties hereto shall
------------
cause to be performed, and hereby guarantees the performance of, all
actions, agreements and obligations set forth herein to be performed by any
Subsidiary of such party which is contemplated to be a Subsidiary of such
party on and after the Distribution Date.
Section 9.10. No Third-Party Beneficiaries. This Agreement is
----------------------------
solely for the benefit of the parties hereto and their respective
Subsidiaries and Affiliates and should not be deemed to confer upon third
parties any remedy, claim, Liability, reimbursement, claim of action or
other right in excess of those existing without reference to this
Agreement.
Section 9.11. Titles and Headings. Titles and headings to
-------------------
sections herein are inserted for the convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
48
Section 9.12. Exhibits and Schedules. The Exhibits and
----------------------
Schedules shall be construed with and as an integral part of this Agreement
to the same extent as if the same had been set forth verbatim herein.
Section 9.13. Legal Enforceability. Any provision of this
--------------------
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof.
Any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. Without prejudice to any rights or remedies otherwise
available to any party hereto, each party hereto acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
Section 9.14. Arbitration of Disputes. (a) Any controversy or
-----------------------
claim arising out of this Agreement, or any breach of this Agreement,
including any controversy relating to a determination of whether specific
assets constitute PRH Assets or Retained Assets or whether specific
Liabilities constitute PRH Liabilities or Retained Liabilities, but
excluding any controversy relating to the matters set forth in Section
2.06, shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association then in effect, as modified by this
Section 9.13 or by the further agreement of the parties.
(b) Such arbitration shall be conducted in Memphis, Tennessee.
(c) Any judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The arbitrators shall
not, under any
49
circumstances, have any authority to award punitive, exemplary or similar
damages, and may not, in any event, make any ruling, finding or award that
does not conform to the terms and conditions of this Agreement.
(d) Nothing contained in this Section 9.13 shall limit or
restrict in any way the right or power of a party at any time to seek
injunctive relief in any court and to litigate the issues relevant to such
request for injunctive relief before such court (i) to restrain the other
party from breaching this Agreement or (ii) for specific enforcement of
this Section 9.13. The parties agree that any legal remedy available to a
party with respect to a breach of this Section 9.13 will not be adequate
and that, in addition to all other legal remedies, each party is entitled
to an order specifically enforcing this Section 9.13.
(e) The Parties hereby consent to the jurisdiction of the
federal courts located in Memphis, Tennessee for all purposes.
(f) Neither party nor the arbitrators may disclose the existence
or results of any arbitration under this Agreement or any evidence
presented during the course of the arbitration without the prior written
consent of both parties, except as required to fulfill applicable
disclosure and reporting obligations, or as otherwise required by law.
(g) Each party shall bear its own costs incurred in the
arbitration. If either party refuses to submit to arbitration any dispute
required to be submitted to arbitration pursuant to this Section 9.13, and
instead commences any other proceeding, including, without limitation,
litigation, then the party who seeks enforcement of the obligation to
arbitrate shall be entitled to its attorneys' fees and costs incurred in
any such proceeding.
50
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
THE PROMUS COMPANIES INCORPORATED,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PROMUS HOTEL CORPORATION,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
51
SCHEDULES
1.01(a) Existing Promus Credit Facilities
1.01(b) PRH Liabilities
1.01(c) Retained Assets
1.01(d) Retained Liabilities
1.01(e) Retained Real Property
1.01(f) Transferred Joint Venture Interest
1.01(g) Transferred Real Property
1.01(h) Transferred Subsidiaries
2.01(a) Excluded Assets
Schedule 1.01(a)
Existing Promus Credit Facilities
---------------------------------
1. Credit Agreement dated as of July 22, 1993 among The Promus
Companies Incorporated, Embassy Suites, Inc., Certain
Subsidiaries of Embassy Suites, Inc., Various Banks, Bankers
Trust Company, The Bank of New York, Credit Lyonnais, Atlanta
Agency and The Sumitomo Bank, Limited, New York Branch, as
Agents, and Bankers Trust Company, as Administrative Agent.
As amended and restated pursuant to: Amended and Restated
Credit Agreement dated as of June 9, 1995 among The Promus
Companies Incorporated, Embassy Suites, Inc., Certain
Subsidiaries of Embassy Suites, Inc., Various Banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (to be
effective upon the satisfaction of certain conditions set
forth therein on or before the Distribution Date)
2. Credit Agreement dated as of June 9, 1995 among The Promus
Companies Incorporated, Embassy Suites, Inc., Certain
Subsidiaries of Embassy Suites, Inc., Various Banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (to be
effective upon the satisfaction of certain conditions set
forth therein on or before the Distribution Date)
3. Credit Agreement dated as of June 1, 1994 among The Promus
Companies Incorporated, Embassy Suites, Inc., Various Banks
and Bankers Trust Company as Administrative Agent
Schedule 1.01(b)
PRH Liabilities
---------------
1. Capital Leases
Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $ 1,773,302
Marketing Services Center $ 68,061
2. Notes
Embassy - DeBanks Henwood $ 917,641
Hampton - San Francisco land $ 296,724
3. Guarantees
Meadowlands Land Lease $ 29,356,749
Chicago Lombard $ 500,000
Embassy Pacific Partner LP,
Embassy Atlanta Buckhead Partners LP
and Embassy LaJolla Partners LP $ 4,000,000
Executive Life Guarantee [Not to exceed $8,100,000]
4. Executive Life Guarantee, based on amounts allocable to PRH
employee, not to exceed $8,100,000
5. Executive Deferred Compensation Plans and Deferred Compensation
Plan
6. Commitment to purchase $25,000,000 of shares in Felcor Suites
Hotels, Inc. or units in Felcor Suites Hotels Limited
Partnership
7. Indemnity for hotel-related letters of credit issued under
Bankers Trust facility
Schedule 1.01
Retained Assets
---------------
- - Aircraft
- - Hangar and related facilities at Memphis airport
- - Cherry Road office (including all furniture, fixtures and
equipment located thereat or associated therewith)
- - Racquet Club Membership and suite
- - Memphis State Basketball tickets
- - Pyramid Arena Suite
- - Equitable portion of other purchased tickets, memberships,
subscriptions and the like
- - Vehicles related principally to the Cherry road offices
- - Antique automobiles
- - Proceeds of Joe Francis life insurance in escrow
Schedule 1.01 (d)
Retained Liabilities
--------------------
1. Hotel-related letters of credit issued under the Bankers Trust
facility and covered by an indemnity agreement from PRH
2. Other hotel-related liabilities covered by an indemnity
agreement from PRH
Schedule 1.01(e)
Retained Real Property
----------------------
1. Casino in Reno, Nevada
2. Casino in Las Vegas, Nevada
3. Casino in Lake Tahoe, Nevada
4. Bill's Casino in Lake Tahoe, Nevada
5. Cherry Road campus in Memphis, Tennessee
6. Chalfonte property in Atlantic City, New Jersey
7. Camelot property in Atlantic City, New Jersey
Schedule 1.01(f)
Transferred Joint Venture Interests
-----------------------------------
1. Barshop-HII Joint Venture, a Texas general partnership formed
-------------------------
pursuant to that certain Joint Venture Agreement dated
January 17, 1984 and amended by that certain Amendment to Joint
Venture Agreement dated February 1, 1995 between Embassy Suites,
Inc. and PMB Associates, Ltd.
2. Embassy AKERS Venture, a Georgia general partnership formed
---------------------
pursuant to that certain Joint Venture Agreement dated March 2,
1984 among Embassy Suites, Inc., George H. Johnson, and Charles
C. Barton.
3. SES/D.C. Venture, a District of Columbia general partnership
----------------
formed pursuant to that certain Amended and Restated Joint
Venture Agreement dated April 8, 1988 between Embassy Suites,
Inc., CHS/D.C. One Associates and Shuwa Hotel Joint Venture.
4. Embassy/GACL Lombard Venture, an Illinois general partnership
----------------------------
formed pursuant to that certain Joint Venture Agreement dated
July 28, 1987 as amended by that certain First Amendment to
Joint Venture Agreement of Embassy/GACL Lombard Venture dated
June 30, 1992 between Embassy Suites, Inc., Embassy Development
Corporation and GACL Lombard, Inc.
5. Embassy Shaw/Parsippany Venture, a New Jersey general
-------------------------------
partnership formed pursuant to that certain Joint Venture
Agreement dated January 4, 1986 between Embassy Suites, Inc. and
CHS Parsippany Associates, L.P.
6. Embassy Shaw/Rochester Venture, a New York general partnership
------------------------------
formed pursuant to that certain Joint Venture Agreement dated
April 7, 1989 between Embassy Suites, Inc. and CHS Investment
Company, Inc.
7. EPT Atlanta-Perimeter Center Limited Partnership, a Delaware
------------------------------------------------
limited partnership, formed pursuant to that certain Limited
Partnership Agreement dated December 3, 1987 among Suite Life,
Inc. and APCGEPT Realty Corporation as general partners and
Embassy Suites, Inc. and EPT Hotel Equities Ltd. as limited
partners.
8. EPT Austin Limited Partnership, a Delaware limited partnership
------------------------------
formed pursuant to that certain Limited Partnership Agreement
dated July 11, 1986 as amended by that certain First Amendment
to Limited Partnership Agreement dated December 12, 1986 among
Suite Life, Inc. and ATEPT Realty Corporation as general
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
9. EPT Bloominqton Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated July 11, 1986 as amended by that certain First
Amendment to Limited Partnership Agreement dated December 12,
1986 among Suite Life, Inc. and BMEPT Realty Corporation as
general partners and Embassy Suites, Inc. and EPT Hotel Equities
Ltd. as limited partners.
10. EPT Covina Limited Partnership, a Delaware limited partnership
------------------------------
formed pursuant to that certain Limited Partnership Agreement
dated July 11, 1986 as amended by that certain First Amendment
to Limited Partnership Agreement dated December 12, 1986 among
Suite Life, Inc. and CCEPT Realty Corporation as general
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
11. EPT Crystal City Land Limited Partnership, a Delaware
-----------------------------------------
limited partnership formed pursuant to that certain
Limited Partnership Agreement dated June 27, 1989 among
Suite Life, Inc. and CCVEPT Realty Corporation as
general partners and Embassy Suites, Inc. and EPT Hotel
Equities Ltd. as limited partners.
12. EPT Kansas City Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated July 11, 1986 as amended by that certain First
Amendment to Limited Partnership Agreement dated December 12,
1986 among Suite Life, Inc. and KCMEPT Realty Corporation as
general partners and Embassy Suites, Inc. and EPT Hotel Equities
Ltd. as limited partners.
13. EPT Meadowlands Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated December 3, 1987 among Suite Life, Inc. and
MNJEPT Realty Corporation as general partners and Embassy
Suites, Inc. and EPT Hotel Equities Ltd. as limited partners.
14. EPT Omaha Limited Partnership, a Delaware limited partnership
-----------------------------
formed pursuant to that certain Limited Partnership Agreement
dated July 11, 1986 as amended by that certain First Amendment
to Limited Partnership Agreement dated December 12, 1986, among
Suite Life, Inc. and ONEPT Realty Corporation as general
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
15. EPT Overland Park Limited Partnership, a Delaware limited
-------------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated December 3, 1987 among Suite Life, Inc. and
OPKEPT Realty Corporation as general partners and Embassy
Suites, Inc. and EPT Hotel Equities Ltd. as limited partners.
16. EPT Raleiqh Limited Partnership, a Delaware limited partnership
-------------------------------
formed pursuant to that certain Limited Partnership Agreement
dated December 3, 1987 among Suite Life, Inc. and RNCEPT Realty
Corporation as general partners and Embassy Suites, Inc. and EPT
Hotel Equities Ltd. as limited partners.
17. EPT San Antonio Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated July 11, 1986 and amended by that certain First
Amendment to Limited Partnership Agreement December 12, 1986
among Suite Life, Inc. and SATEPT Realty Corporation as general;
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
18. E.S. Philadelphia Airport Joint Venture, a Pennsylvania general
---------------------------------------
partnership formed pursuant to that certain Joint Venture
Agreement dated February 2, 1989 between Embassy Suites, Inc.
and ES/PA, L.P.
19. Granada Royale Hometel-Tucson, an Arizona limited partnership
-----------------------------
formed pursuant to that certain Certificate and Agreement of
Limited Partnership dated March 3, 1975, amended by that certain
Amendment to Certificate and Agreement of Limited Partnership
dated August 18, 1975, and amended by that certain Second
Amendment to Certificate and Agreement of Limited Partnership on
December 10, 1975, among Embassy Suites, Inc. as general partner
and certain limited partners.
20. Granada Royale Hometel-West, an Arizona limited partnership,
---------------------------
formed pursuant to that certain Certificate and Agreement of
Limited Partnership dated January 1, 1976, amended by that
certain Amended, Restated and Refiled Certificate and Agreement
of Limited Partnership dated March 30, 1984, and amended by that
certain Amendment to Certificate and Agreement of Limited
Partnership dated March 28, 1985, among Embassy Suites, Inc. as
general partner and certain limited partners.
21. Kinq Street Station Hotel Associates, L.P., a Virginia limited
------------------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated April 28, 1989 among The Oliver Carr Company and
Duke Street Partnership L.P. as general partners and Embassy
Suites, Inc. as limited partner.
22. MHV Joint Venture, a Texas general partnership formed pursuant
-----------------
to that certain Joint Venture Agreement dated January 6, 1989
between Embassy Suites, Inc. and Submarin, L.P.
23. Pacific Market Investment Company, a California general
---------------------------------
partnership formed pursuant to that certain Joint Venture
Agreement dated December 19, 1986 between Harbor Drive Company
and Embassy Suites, Inc.
24. Riverview/Embassy Joint Venture, an inactive joint
-------------------------------
venture in which Embassy Suites has a 50% interest.
25. Embassy Suites Club No. Two, Inc., a Texas corporation in
---------------------------------
which Embassy Suites, Inc. has a 49% ownership interest.
Schedule 1.01(g)
Transferred Real Property
-------------------------
1. Orlando - Lake Buena Vista (fee interest)
2. Phoenix - 24th & Thomas Road (ground lease interest)
3. Dallas - Market Center (leasehold interest)
4. Data Center Building (fee interest)
5. Ridgeway Center Offices - 850 Ridge Lake Boulevard, Memphis,
Tennessee (multiple leasehold interests)
6. Ridgeway Center Offices - 860 Ridge Lake Boulevard, Memphis,
Tennessee (multiple leasehold interests)
7. Ridgeway Center Offices - 959 Ridgeway Loop, Memphis, Tennessee
(multiple leasehold interests)
8. Southwind - 8245 Tournament Drive, Memphis, Tennessee (multiple
leasehold interests)
9. Southwind - 3239 Players Club Parkway, Memphis, Tennessee
(leasehold interest)
10. 6800 Poplar, Memphis, Tennessee (leasehold interest)
Schedule 1.01(h)
Transferred Subsidiaries
------------------------
1. Buckleigh, Inc. (100% owned by ESI)
2. ATM Hotels (50% owned by ESI; 50% owned by Pacific Hotels, Inc.)
3. Compass, Inc. (100% owned by ESI)
4. EJP Corporation (100% owned by ESI)
5. Embassy Development Corporation (100% owned by ESI)
6. Embassy Equity Development Corporation (100% owned by ESI)
7. Embassy Memphis Corporation (100% owned by ESI)
8. Embassy Pacific Equity Corporation (100% owned by ESI)
9. Embassy Suites Club No. 1, Inc. (100% owned by ESI)
10. Embassy Suites Club No. Three, Inc. (100% owned by ESI)
11. Embassy Suites De Mexico, S.A., De C.V. (96% owned by ESI)
12. Embassy Suites (Isla Verde), Inc. (100% owned by ESI)
13. Embassy Suites (Puerto Rico), Inc. (100% owned by ESI)
14. Embassy Vacation Resorts, Inc. (100% owned by ESI)
15. EPAM Corporation (100% owned by ESI)
16. ESI Development, Inc. (100% owned by ESI)
17. ESI Mortgage Development Corporation (100% owned by ESI)
18. ESI Mortgage Development Corporation II (100% owned by ESI)
19. E.S. Philadelphia Airport Venture (ESI owns a 90% interest)
20. GOL (Heathrow), Inc. (100% owned by ESI)
21. Granada Royale Hometel-West, a limited partnership (ESI owns
a 50.003% interest)
22. Granada Royale Hometel-Tucson, a limited partnership (ESI
owns a 65% interest)
23. Hampton Inns, Inc. (100% owned by ESI)
24. Old Town Hotel Corporation (100% owned by ESI)
25. Pacific Hotels, Inc. (100% owned by ESI)
Schedule 2.01(a)
Excluded Assets
---------------
Interests in those partnerships necessary to avoid Internal Revenue Code
Section 708 tax terminations.
Exhibit B-1
HARRAH'S ENTERTAINMENT, INC.
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS PRO FORMA
------------- ------------ -------------
ASSETS
Current assets
Cash and cash equivalents....................................... $ 71,200 $ (6,560)(a) $ 71,200
6,560 (b)
Receivables, including notes receivable of $658 and less
allowance for doubtful accounts of $10,417.................... 40,932 -- 40,932
Deferred income taxes........................................... 19,363 -- 19,363
Prepayments..................................................... 6,494 -- 6,494
Supplies........................................................ 11,194 -- 11,194
Other........................................................... 16,565 -- 16,565
------------- ------------ -------------
Total current assets....................................... 165,748 -- 165,748
------------- ------------ -------------
Land, buildings riverboats and equipment.......................... 1,621,398 -- 1,621,398
Less: Accumulated depreciation and amortization................... (489,919) -- (489,919)
------------- ------------ -------------
1,131,479 -- 1,131,479
Net assets of discontinued operations............................. 160,332 (5,000)(c) --
(3,170)(d)
(152,162)(e)
Investments in and advance to nonconsolidated affiliates.......... 111,499 -- 111,499
Deferred costs and other.......................................... 174,034 3,170 (d) 177,204
------------- ------------ -------------
$ 1,743,092 $ (157,162) $ 1,585,930
------------- ------------ -------------
------------- ------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................................ $ 56,563 $ -- $ 56,563
Accrued litigation settlement and related costs................. 1,873 -- 1,873
Construction payables........................................... 2,589 -- 2,589
Accrued expenses................................................ 167,321 (2,752)(a) 164,569
Current portion of long-term debt............................... 1,330 -- 1,330
------------- ------------ -------------
Total current liabilities.................................. 229,676 (2,752) 226,924
Long-term debt.................................................... 758,150 6,560 (b) 759,710
(5,000)(c)
Deferred credits and other........................................ 73,259 -- 73,259
Deferred income taxes............................................. 8,792 -- 8,792
------------- ------------ -------------
1,069,877 (1,192) 1,068,685
------------- ------------ -------------
Minority interests................................................ 20,002 -- 20,002
------------- ------------ -------------
Stockholders' equity
Common Stock.................................................... 10,252 (5)(f) 10,247
Capital surplus................................................. 358,456 (755)(f) 357,701
Retained earnings............................................... 288,676 (5,000)(a) 131,514
(152,162)(e)
Deferred compensation related to restricted stock................. (4,171) 1,192 (a) (2,219)
760 (f)
------------- ------------ -------------
Total stockholders' equity................................. 653,213 (155,970) 497,243
------------- ------------ -------------
$ 1,743,092 $ (157,162) $ 1,585,930
------------- ------------ -------------
------------- ------------ -------------
See accompanying notes to pro forma financial statements.
1
Exhibit B-2
HARRAH'S ENTERTAINMENT, INC.
PRO FORMA STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ -----------
Revenues
Casino............................................................... $ 298,532 $ -- $ 298,532
Rooms................................................................ 24,654 -- 24,654
Food and beverage.................................................... 41,885 -- 41,885
Management fees...................................................... 2,977 -- 2,977
Other................................................................ 23,390 -- 23,390
Less: casino promotional allowances.................................. (34,957) -- (34,957)
---------- ------------ -----------
Total revenues.................................................. 356,481 -- 356,481
---------- ------------ -----------
Operating expense
Direct
Casino............................................................ (144,550) -- (144,550)
Rooms............................................................. (7,640) -- (7,640)
Food and beverage................................................. (18,942) -- (18,942)
Depreciation of buildings and equipment.............................. (18,249) -- (18,249)
Development costs.................................................... (4,248) -- (4,248)
Other................................................................ (85,049) (600)(g) (85,649)
---------- ------------ -----------
Total operating expenses........................................ (278,678) (600) (279,278)
---------- ------------ -----------
77,803 (600) 77,203
Corporate expense...................................................... (5,382) 288 (g) (5,094)
---------- ------------ -----------
Operating income....................................................... 72,421 (312) 72,109
Interest expense, net of interest capitalized.......................... (22,064) (123)(h) (22,187)
Other.................................................................. 2,033 -- 2,033
---------- ------------ -----------
Income before income taxes and minority interest....................... 52,390 (435) 51,955
Provision for income taxes............................................. (20,357) 170 (i) (20,187)
Minority interest...................................................... (3,337) -- (3,337)
---------- ------------ -----------
Income from continuing operations...................................... $ 28,696 $ (265) $ 28,431
---------- ------------ -----------
---------- ------------ -----------
Income from continuing operations per share............................ $ 0.28 $ -- $ 0.28
---------- ------------ -----------
---------- ------------ -----------
Average shares outstanding............................................. 103,014 -- 103,014
---------- ------------ -----------
---------- ------------ -----------
See accompanying notes to pro forma financial statements.
2
HARRAH'S ENTERTAINMENT, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1995
(a) Reflects estimated incremental costs of the Distribution to be paid by
Harrah's Entertainment and reported as a component of income from
discontinued hotel operations in the second quarter 1995 consolidated income
statement of Harrah's Entertainment and are not included in the pro forma
statement of income.
(b) Reflects additional revolver borrowings incurred to fund payments made in
(a).
(c) Records the allocation of an additional $5.0 million of existing corporate
debt to PRH by Promus prior to the Distribution.
(d) Records the transfer to Harrah's Entertainment of the March 31, 1995,
deferred finance charge balance which had been allocated to PRH.
(e) Reflects Distribution of PRH Common Stock to Promus' stockholders.
(f) Reflects cancellation of unvested RSP shares of PRH employees.
(g) Reflects estimated net incremental operating costs of Harrah's Entertainment
of approximately $0.3 million, before income taxes, expected to be incurred
after the Distribution primarily related to information technology and risk
management functions.
(h) Reflects additional interest expense incurred as a result of additional
revolver borrowings in (b).
(i) Reflects income tax effect of the pro forma adjustments to income at a 39.0%
marginal tax rate.
3
Exhibit F-1
PROMUS HOTEL CORPORATION
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ------------ -----------
ASSETS
Current assets
Cash and cash equivalents........................................... $ 2,087 $ -- $ 2,087
Receivables, including notes receivable of $581, less allowance for
doubtful accounts of $1,272....................................... 21,650 -- 21,650
Deferred income taxes............................................... 2,863 -- 2,863
Prepayments......................................................... 1,464 -- 1,464
Supplies............................................................ 3,114 -- 3,114
Other............................................................... 197 -- 197
----------- ------------ -----------
Total current assets........................................... 31,375 -- 31,375
----------- ------------ -----------
Land, buildings and equipment......................................... 441,485 -- 441,485
Less: Accumulated depreciation and amortization....................... (94,978) -- (94,978)
----------- ------------ -----------
346,507 -- 346,507
Investments in and advances to nonconsolidated affiliates............. 35,740 -- 35,740
Deferred costs and other.............................................. 44,208 (3,170)(a) 44,538
3,000 (b)
500 (c)
----------- ------------ -----------
$ 457,830 $ 330 $ 458,160
----------- ------------ -----------
----------- ------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.................................................... $ 16,928 $ -- $ 16,928
Accrued expenses.................................................... 14,870 -- 14,870
Current portion of long-term debt................................... 1,073 -- 1,073
----------- ------------ -----------
Total current liabilities...................................... 32,871 -- 32,871
Long-term debt........................................................ 211,458 3,000 (b) 219,958
500 (c)
5,000 (d)
Deferred credits and other............................................ 29,421 -- 29,421
Deferred income taxes................................................. 23,748 -- 23,748
----------- ------------ -----------
297,498 8,500 305,998
----------- ------------ -----------
Stockholders' equity
Common Stock........................................................ -- 5,126 (e) 5,131
5 (f)
Capital surplus..................................................... 147,036 (e) 147,791
-- 755 (f)
Retained earnings................................................... -- -- --
Deferred compensation related to restricted stock................... -- (760)(f) (760)
Parent company investment........................................... 160,332 (3,170)(a) --
(5,000)(d)
(152,162)(e)
----------- ------------ -----------
Total stockholders' equity..................................... 160,332 (8,170) 152,162
----------- ------------ -----------
$ 457,830 $ 330 $ 458,160
----------- ------------ -----------
----------- ------------ -----------
See accompanying notes to pro forma financial statements.
4
Exhibit F-2
PROMUS HOTEL CORPORATION
PRO FORMA STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ -----------
Revenues
Rooms................................................................ $ 29,469 $ -- $ 29,469
Food and beverage.................................................... 1,892 -- 1,892
Franchise and management fees........................................ 17,496 -- 17,496
Other................................................................ 14,361 -- 14,361
---------- ------------ -----------
Total revenues.................................................. 63,218 -- 63,218
---------- ------------ -----------
Operating expense
Direct
Rooms............................................................. (13,600) -- (13,600)
Food and beverage................................................. (1,702) -- (1,702)
Depreciation of buildings and equipment.............................. (6,760) -- (6,760)
Other................................................................ (15,047) (714)(g) (15,786)
(25)(h)
---------- ------------ -----------
Total operating expenses........................................ (37,109) (739) (37,848)
---------- ------------ -----------
26,109 (739) 25,370
General and administrative............................................. (868) (928)(g) (1,796)
Property transactions.................................................. (298) -- (298)
---------- ------------ -----------
Operating income....................................................... 24,943 (1,667) 23,276
Interest expense, net of interest capitalized.......................... (8,407) 4,853 (i) (7,928)
(4,374)(j)
Other.................................................................. 51 -- 51
---------- ------------ -----------
Income before income taxes............................................. 16,587 (1,188) 15,399
Provision for income taxes............................................. (6,983) 463 (k) (6,520)
---------- ------------ -----------
Income from continuing operations...................................... $ 9,604 $ (725) $ 8,879
---------- ------------ -----------
---------- ------------ -----------
Income from continuing operations per share............................ $ 0.17
-----------
-----------
Average shares outstanding............................................. 51,507 (e) 51,507
------------ -----------
------------ -----------
See accompanying notes to pro forma financial statements.
5
PROMUS HOTEL CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1995
(a) Records the transfer back to Promus through parent company investment of the
balance of historical unamortized deferred finance charges allocated by
Promus to PRH as of March 31, 1995, based on the percentage of Promus'
existing corporate debt expected to be retired using proceeds drawn under
the PRH Bank Credit Facilities.
(b) Records the estimated $3.0 million of deferred finance charges expected to
be incurred at the inception of the PRH Bank Credit Facilities and paid with
funds drawn on the Facilities.
(c) Records the payment by PRH of estimated organization costs using funds drawn
under the PRH Bank Credit Facilities.
(d) Records the allocation of an additional $5.0 million of existing corporate
debt to PRH by Promus prior to the Distribution.
(e) Records the issuance of 51,259,000 shares of PRH Common Stock at the time of
the Distribution.
(f) Records the issuance of approximately 50,000 shares of restricted stock to
PRH employees at the time of the Distribution. These shares replace Promus
restricted shares held by these employees immediately prior to and cancelled
upon consummation of the Distribution.
(g) Records the estimated incremental costs, primarily for information
technology, insurance programs and administrative support functions,
expected to be incurred by PRH to support its stand-alone operations.
(h) Records amortization of estimated organization costs (see Note (c)) on a
straight-line basis over five years.
(i) Reflects the reversal of historical interest expense allocated by
Promus to PRH.
(j) Reflects a full quarter of interest expense arising from the PRH Bank
Credit Facilities, including:
i. interest on outstanding balance computed at LIBOR plus 0.55%. The
LIBOR rate as of the date of receipt of the PRH Bank Credit
Facilities commitment (6.75%) has been used as the basis for
computing interest expense for this pro forma income statement.
ii. commitment fee on unused revolver balance at 0.20%.
iii. amortization of deferred finance charges incurred at inception of
the PRH Bank Credit Facilities (see Note (b)) following the
interest method over the expected five-year term of the debt.
iv. impact on PRH interest expense of the assumption from Promus of
two interest rate swaps with a combined notional amount of $100
million effectively converting a portion of PRH's floating rate
bank debt to a fixed rate.
(k) Reflects income tax effect of the pro forma adjustments to income at the 39%
marginal income tax rate.
6
Exhibit 10(2)
===========================================================
CREDIT AGREEMENT
among
THE PROMUS COMPANIES INCORPORATED,
EMBASSY SUITES, INC.,
VARIOUS BANKS
and
BANKERS TRUST COMPANY,
as Administrative Agent
__________________________________
Dated as of June 1, 1995
__________________________________
===========================================================
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . 1
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 2
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . 2
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . 4
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . 4
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . 5
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . 6
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . 9
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . 10
SECTION 2. Fees; Reductions of Revolving Loan
Commitments. . . . . . . . . . . . . . . . . . . . . . . 10
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.02 Voluntary Termination of Unutilized Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Mandatory Reduction of Revolving Loan Commitments . . . . . 11
SECTION 3. Prepayments; Payments; Taxes. . . . . . . . . . . . . . . . 11
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 11
3.02 Mandatory Repayments . . . . . . . . . . . . . . . . . . . 12
3.03 Method and Place of Payment; Net Payments . . . . . . . . . 12
SECTION 4. Conditions Precedent to the Effective
Date and Revolving Loans . . . . . . . . . . . . . . . . . 13
4.01 Execution of Agreement, Revolving Notes . . . . . . . . . . 13
4.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . 13
4.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . 13
4.04 Corporate Documents; Proceedings . . . . . . . . . . . . . 13
4.05 Adverse Change . . . . . . . . . . . . . . . . . . . . . . 14
4.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 14
4.07 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.08 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.09 No Default; Representations and Warranties . . . . . . . . 15
4.10 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 15
(i)
Page
----
SECTION 5. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 16
5.01 Corporate or Partnership Status . . . . . . . . . . . . . . 16
5.02 Corporate or Partnership Power and Authority . . . . . . . 16
5.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . 17
5.04 Governmental Approvals . . . . . . . . . . . . . . . . . . 17
5.05 Financial Statements; Financial Condition; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . 17
5.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 18
5.07 True and Complete Disclosure . . . . . . . . . . . . . . . 19
5.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . 19
5.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . 19
5.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 20
5.11 Properties . . . . . . . . . . . . . . . . . . . . . . . . 20
5.12 Compliance with Statutes, etc. . . . . . . . . . . . . . . 20
5.13 Investment Company Act . . . . . . . . . . . . . . . . . . 21
5.14 Public Utility Holding Company Act . . . . . . . . . . . . 21
5.15 Environmental Matters . . . . . . . . . . . . . . . . . . . 21
5.16 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 22
5.17 Patents, Licenses, Franchises and Formulas . . . . . . . . 22
5.18 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.01 Incorporation by Reference . . . . . . . . . . . . . . . . 23
SECTION 7. Events of Default . . . . . . . . . . . . . . . . . . . . . 24
7.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.02 Representations, etc. . . . . . . . . . . . . . . . . . . . 25
7.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.04 Default Under Other Agreements . . . . . . . . . . . . . . 25
7.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . 26
7.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.07 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.08 Gaming Authority . . . . . . . . . . . . . . . . . . . . . 27
7.09 Changes of Control . . . . . . . . . . . . . . . . . . . . 27
SECTION 8. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9. The Administrative Agent. . . . . . . . . . . . . . . . . . 33
9.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 33
9.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . 33
9.03 Lack of Reliance on the Administrative Agent . . . . . . . 33
(ii)
Page
----
9.04 Certain Rights of the Administrative Agent . . . . . . . . 34
9.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . 34
9.07 The Administrative Agent in its Individual Capacity . . . . 35
9.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.09 Resignation by the Administrative Agent . . . . . . . . . . 35
SECTION 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 36
10.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . 36
10.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . 38
10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . 39
10.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . 43
10.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . 43
10.07 Calculations; Computations . . . . . . . . . . . . . . . . 44
10.08 Governing Law; Submission to Jurisdiction; Venue; Waiver
of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 44
10.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 45
10.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 46
10.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . 46
10.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . 46
10.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . 47
10.15 Application of Gaming Regulations. . . . . . . . . . . . . 47
10.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 48
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B Form of Revolving Note
EXHIBIT C Form of Officers' Certificate
EXHIBIT D Form of Assignment and Assumption Agreement
(iii)
CREDIT AGREEMENT, dated as of June 1, 1995, among THE PROMUS
COMPANIES INCORPORATED, a Delaware corporation ("Parent"), EMBASSY SUITES,
INC., a Delaware corporation (the "Borrower"), the financial institutions
party hereto from time to time (the "Banks"), and Bankers Trust Company, as
Administrative Agent (in such capacity, and together with any successor
agent, the "Administrative Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 8 shall have the
respective meanings provided in said Section 8, and all other capitalized
terms used herein and defined in the Existing Promus/Embassy Credit
Agreement (as defined in said Section 8) shall have the respective meanings
provided in said Existing Promus/Embassy Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. Subject to and upon the terms and
---------------
conditions set forth herein, each Bank severally agrees to make, from time
to time on or after the Effective Date and prior to the Final Maturity
Date, a revolving loan or revolving loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans
(i) shall, at the option of the Borrower, be Base Rate Loans or Eurodollar
Loans, provided that, except as otherwise specifically provided in Section
--------
1.10(b), all Revolving Loans comprising the same Borrowing shall at all
times be of the same Type, (ii) may be repaid and reborrowed in accordance
with the provisions hereof and (iii) shall not exceed for any Bank at any
time outstanding that aggregate principal amount which equals the Revolving
Loan Commitment of such Bank at such time.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of Revolving Loans shall not be less than
$500,000. More than one Borrowing may
occur on the same date, but at no time shall there be outstanding more than
five Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. Whenever the Borrower desires to make
-------------------
a Borrowing of Revolving Loans hereunder, it shall give the Administrative
Agent at its Notice Office at least one Business Day's prior written notice
of each Base Rate Loan and at least three Business Days' prior written
notice of each Eurodollar Loan to be made hereunder, provided that any such
--------
notice shall be deemed to have been given on a certain day only if given
before 12:00 Noon (New York time) on such day. Each such notice (each a
"Notice of Borrowing"), except as otherwise expressly provided in Section
1.10, shall be irrevocable and shall be given by the Borrower in the form
of Exhibit A, appropriately completed to specify the aggregate principal
amount of the Revolving Loans to be made pursuant to such Borrowing, the
date of such Borrowing (which shall be a Business Day), whether the
Revolving Loans being made pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans,
the initial Interest Period to be applicable thereto. The Administrative
Agent shall promptly give each Bank notice of such proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters required
by the immediately preceding sentence to be specified in the Notice of
Borrowing.
1.04 Disbursement of Funds. Except as otherwise specifically
---------------------
provided in the immediately succeeding sentence, not later than 10:00 A.M.
(New York time) on the date specified in each Notice of Borrowing, each
Bank will make available its pro rata portion of each such Borrowing
--- ----
requested to be made on such date. All such amounts shall be made avail-
able in Dollars and in immediately available funds at the Payment Office of
the Administrative Agent, and the Administrative Agent will make available
to the Borrower at the Payment Office the aggregate of the amounts so made
available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of
any Borrowing to be made on such date, the Administrative Agent may assume
that such Bank has made such amount available to the Administrative Agent
on such date of Borrowing and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from
-2-
such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the Borrower and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover on demand from such Bank or the
Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower until the date such
corresponding amount is recovered by the Administrative Agent, at a rate
per annum equal to (i) if recovered from such Bank, at the overnight
Federal Funds Rate and (ii) if recovered from the Borrower, the rate of
interest applicable to the respective Borrowing, as determined pursuant to
Section 1.08. Nothing in this Section 1.04 shall be deemed to relieve any
Bank from its obligation to make Revolving Loans hereunder or to prejudice
any rights which the Borrower may have against any Bank as a result of any
failure by such Bank to make Revolving Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
-----
of, and interest on, the Revolving Loans made by each Bank shall be
evidenced by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B with blanks appropriately completed
in conformity herewith (each, a "Revolving Note" and, collectively, the
"Revolving Notes").
(b) The Revolving Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank and be dated the
Effective Date, (iii) be in a stated principal amount equal to the Revolv-
ing Loan Commitment of such Bank and be payable in the principal amount of
the outstanding Revolving Loans evidenced thereby, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (vi) be subject to voluntary and mandatory
repayment as provided in Sections 3.01 and 3.02 and (vii) be entitled to
the benefits of this Agreement and the other Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Revolving Loan made by it and each payment in respect thereof and will
prior to any transfer of any of its Revolving Notes endorse on the reverse
side thereof the outstanding principal amount of Revolving Loans evidenced
thereby. Failure to make any such notation or any error in
-3-
any such notation or endorsement shall not affect the Borrower's obli-
gations in respect of such Revolving Loans.
1.06 Conversions. The Borrower shall have the option to
-----------
convert, on any Business Day, all or a portion equal to at least $500,000
of the outstanding principal amount of Revolving Loans made pursuant to one
or more Borrowings of one or more Types of Revolving Loans into a Borrowing
of another Type of Revolving Loan, provided that (i) except as otherwise
--------
provided in Section 1.10(b), Eurodollar Loans may be converted into Base
Rate Loans only on the last day of an Interest Period applicable to the
Revolving Loans being converted and no such partial conversion of
Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than $500,000,
(ii) Base Rate Loans may only be converted into Eurodollar Loans if no
Default or Event of Default is in existence on the date of the conversion
and (iii) no conversion pursuant to this Section 1.06 shall result in a
greater number of Borrowings of Eurodollar Loans than is permitted under
Section 1.02. Each such conversion shall be effected by the Borrower
giving the Administrative Agent at its Notice Office prior to 12:00 Noon
(New York time) at least three Business Days' prior notice (each a "Notice
of Conversion") specifying the Revolving Loans to be so converted, the Bor-
rowing(s) pursuant to which such Revolving Loans were made and, if to be
converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt
notice of any such proposed conversion affecting any of its Revolving
Loans. Upon any such conversion, the proceeds thereof will be deemed to be
applied directly on the day of such conversion to prepay the outstanding
principal amount of the Revolving Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans
-------------------
under this Agreement shall be incurred from the Banks pro rata on the basis
--- ----
of their Revolving Loan Commitments. It is understood that no Bank shall
be responsible for any default by any other Bank of its obligation to make
Revolving Loans hereunder and that each Bank shall be obligated to make the
Revolving Loans provided to be made by it hereunder, regardless of the
failure of any other Bank to make its Revolving Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
--------
respect of the unpaid principal amount of each Base Rate Loan from the date
the proceeds thereof are made available to the Borrower until the maturity
thereof (whether
-4-
by acceleration or otherwise) at a rate per annum which shall be equal to
the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof
are made available to the Borrower until the maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall be equal to the
sum of the Applicable Margin plus the Eurodollar Rate for such Interest
Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Revolving Loan and any other overdue
amount payable hereunder shall, in each case, bear interest at a rate per
annum equal to the greater of (x) 2% per annum in excess of the Base Rate
in effect from time to time and (y) the rate which is 2% in excess of the
rate then borne by such Revolving Loans, in each case with such interest to
be payable by the Borrower on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and (iii) in respect of each Revolving Loan, on any repayment or
prepayment (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period
applicable to Eurodollar Loans and shall promptly notify the Borrower and
the Banks thereof. Each such determination shall, absent manifest error,
be final and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrower gives any
----------------
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion into, any Eurodollar Loan (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar Loan (in the
case of any subsequent Interest Period), the Borrower shall have the right
to elect, by giving the Administrative Agent notice thereof, the interest
period (each an "Interest Period") applicable to such Eurodollar Loan,
which Interest Period shall, at the option of the Borrower, be a one, two
or three-month period, provided that:
--------
-5-
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Revolving Loan of a
different Type) and each Interest Period occurring thereafter in
respect of such Eurodollar Loan shall commence on the day on which the
next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
-------- -------
Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default or an Event of Default is then in existence; and
(vi) no Interest Period shall be selected which extends beyond
the Final Maturity Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such
Eurodollar Loans as provided above, the Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
---------------------------------
any Bank shall have determined in good faith (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto but, with
-6-
respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the
date of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regu-
lation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any
Bank of the principal of or interest on such Eurodollar Loan or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is
located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the date
of this Agreement affecting such Bank or the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone
confirmed in writing) to the Borrower
-7-
and, except in the case of clause (i) above, to the Administrative Agent of
such determination (which notice the Administrative Agent shall promptly
transmit to each of the other Banks). Thereafter (x) in the case of clause
(i) above, Eurodollar Loans shall no longer be available until such time as
the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by
the Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower agrees to pay
to such Bank, upon written demand therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating,
interest or otherwise as such Bank in its sole discretion shall determine)
as shall be required to compensate such Bank for such increased costs or
reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Borrower by such Bank in good faith
shall, absent manifest error, be final and conclusive and binding on all
the parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii) above, the Borrower
may (and in the case of a Eurodollar Loan affected by the circumstances
described in Section 1.10(a)(iii) above shall) either (x) if the affected
Eurodollar Loan is then being made initially or pursuant to a conversion,
cancel the respective Borrowing by giving the Administrative Agent
telephonic notice (confirmed in writing) on the same date that the Borrower
was notified by the affected Bank or the Administrative Agent pursuant to
Section 1.10(a)(ii) or (iii) above or (y) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' written notice to
the Administrative Agent, require the affected Bank to convert such
Eurodollar Loan into a Base Rate Loan, provided that, if more than one Bank
--------
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction of
or any change in any applicable law or governmental rule, regulation,
order, guideline, directive or
-8-
request (whether or not having the force of law and including, without
limitation, those announced or published prior to the Effective Date)
concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or
comparable agency, will have the effect of increasing the amount of capital
required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Revolving Loan
Commitment hereunder or its obligations hereunder, then the Borrower agrees
to pay to such Bank, upon its written demand therefor, such additional
amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation
or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and
will use averaging and attribution methods which are reasonable, provided
--------
that such Bank's reasonable good faith determination of compensation owing
under this Section 1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank, upon deter-
mining that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which
notice shall show the basis for calculation of such additional amounts.
1.11 Compensation. The Borrower agrees to compensate each Bank,
------------
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding any
loss of anticipated profit) which such Bank may sustain: (i) if for any
reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur
on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repay-
ment made pursuant to Section 3.01 or 3.02 or a result of an acceleration
of the Revolving Loans pursuant to Section 7) or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period with respect thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default
-9-
by the Borrower to repay Revolving Loans when required by the terms of this
Agreement or any Revolving Note held by such Bank or (y) any election made
pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of
Section 1.10(a)(ii), 1.10(a)(iii), 1.10(c) or 3.03 with respect to such
Bank, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Bank) to designate
another lending office for any Revolving Loans affected by such event,
provided that such designation is made on such terms that such Bank and its
- --------
lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the
operation of such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any Bank
provided in Sections 1.10 and 3.03.
SECTION 2. Fees; Reductions of Revolving Loan Commitments.
----------------------------------------------
2.01 Fees. (a) The Borrower agrees to pay to the Administrative
----
Agent for distribution to each Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date to but
excluding the Final Maturity Date (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), computed at a rate
for each day equal to the Applicable Commitment Commission Percentage on
the daily average Unutilized Revolving Loan Commitment of such Bank.
Accrued Commitment Commission shall be due and payable quarterly in arrears
on the last Business Day of each March, June, September and December and on
the Final Maturity Date or such earlier date upon which the Total Revolving
Loan Commitment is terminated.
(b) The Borrower shall pay to the Administrative Agent, for its
own account, such fees as have been agreed to in writing by the Borrower
and the Administrative Agent.
2.02 Voluntary Termination of Unutilized Revolving Loan
--------------------------------------------------
Commitments. Upon at least two Business Days' prior written notice to the
- -----------
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall
have the right, at any time or from time to time, without premium or
penalty, to terminate the Total Unutilized Revolving Loan Commitment, in
whole or in part, in integral multiples of $500,000 in the case of partial
reductions to the Total Un
-10-
utilized Revolving Loan Commitment, provided that each such reduction shall
--------
apply proportionately to permanently reduce the Revolving Loan Commitment
of each Bank.
2.03 Mandatory Reduction of Revolving Loan Commitments. (a) The
-------------------------------------------------
Total Revolving Loan Commitment (and the Revolving Loan Commitment of each
Bank) shall terminate in its entirety on the Final Maturity Date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on the 15th day after the date on which any
Change of Control occurs, the Total Revolving Loan Commitment shall be
reduced to zero unless the Required Banks otherwise agree in writing in
their sole discretion.
(c) The Total Revolving Loan Commitment shall be reduced, and
the Revolving Loan Commitment of the respective Former Bank shall be
terminated, in the amount and at the times provided in Section 10.04(d).
SECTION 3. Prepayments; Payments; Taxes.
----------------------------
3.01 Voluntary Prepayments. The Borrower shall have the right
---------------------
to prepay the Revolving Loans made to it, without premium or penalty, in
whole or in part at any time and from time to time on the following terms
and conditions:
(i) the Borrower shall give the Administrative Agent prior to
12:00 Noon (New York time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans and (y)
at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, the amount of such prepayment and the Types of
Revolving Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, which
notice the Administrative Agent shall promptly transmit to each of the
Banks;
(ii) each prepayment shall be in an aggregate principal amount of
at least $500,000, provided that, if any partial prepayment of
--------
Eurodollar Loans made pursuant to any Borrowing shall reduce the out-
standing Eurodollar Loans made pursuant to such Borrowing to an amount
less than $500,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Loans and any election of
-11-
an Interest Period with respect thereto given by the Borrower shall
have no force or effect; and
(iii) each prepayment in respect of any Revolving Loans made pur-
suant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans.
3.02 Mandatory Repayments. (a) On any day on which the sum of
--------------------
the aggregate outstanding principal amount of Revolving Loans exceeds the
Total Revolving Loan Commitment as then in effect, there shall be required
to be repaid on such date that principal amount of Revolving Loans equal to
such excess.
(b) With respect to each repayment of Revolving Loans required
by this Section 3.02, the Borrower may designate the Types of Revolving
Loans which are to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings pursuant to which made, provided that:
--------
(i) repayments of Eurodollar Loans pursuant to this Section 3.02 may only
be made on the last day of an Interest Period applicable thereto unless all
Eurodollar Loans with Interest Periods ending on such date of required
repayment and all Base Rate Loans have been paid in full; (ii) if any
repayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to
an amount less than $500,000 such Borrowing shall be converted at the end
of the then current Interest Period into a Borrowing of Base Rate Loans;
and (iii) each repayment of any Revolving Loans made pursuant to a Borrow-
ing shall be applied pro rata among such Revolving Loans. In the absence
--- ----
of a designation by the Borrower as described in the preceding sentence,
the Administrative Agent shall, subject to the above, make such designation
in its sole discretion.
(c) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, all then outstanding Revolving Loans shall be repaid in
full on the Final Maturity Date.
3.03 Method and Place of Payment; Net Payments. All payments
-----------------------------------------
made by the Borrower hereunder or under any Revolving Note shall be on the
same basis as payments by the Borrower are made under Sections 4.03 and
4.04 of the Existing Promus/Embassy Credit Agreement, and the Borrower
hereby agrees to pay all increased amounts, and all indemnities, as
provided in said Sections, with necessary reference changes to relate to
this Agreement, the Revolving Notes and the Revolving Loans hereunder.
-12-
SECTION 4. Conditions Precedent to the Effective Date and
----------------------------------------------
Revolving Loans. The occurrence of the Effective Date pursuant to Section
- ---------------
10.10, and the obligation of each Bank to make Revolving Loans hereunder
(including Revolving Loans made on the Effective Date) is subject, at the
time of the Effective Date and each such Revolving Loan (except as
hereinafter indicated), to the satisfaction of the following conditions:
4.01 Execution of Agreement, Revolving Notes. On or prior to
---------------------------------------
the Effective Date, (i) this Agreement shall have been executed and
delivered as provided in Section 10.12 and (ii) there shall have been
delivered to the Administrative Agent for the account of each Bank the
appropriate Revolving Notes executed by the Borrower, in the amount,
maturity and as otherwise provided herein.
4.02 Officer's Certificate. On the Effective Date, the
---------------------
Administrative Agent shall have received a certificate dated the Effective
Date signed on behalf of the Borrower by the President, any Senior Vice
President or any Vice President of the Borrower stating that all of the
conditions in Sections 4.05, 4.06, 4.07 and 4.09 have been satisfied on
such date.
4.03 Opinions of Counsel. On the Effective Date, the Adminis-
-------------------
trative Agent shall have received (i) from Latham & Watkins, counsel to the
Credit Parties, an opinion addressed to the Administrative Agent and each
of the Banks and dated the Effective Date, in form and substance satisfac-
tory to the Administrative Agent and the Required Banks and (ii) from E.O.
Robinson, Jr., General Counsel to the Credit Parties, an opinion addressed
to the Administrative Agent and each of the Banks in form and substance
satisfactory to the Administrative Agent and the Required Banks.
4.04 Corporate Documents; Proceedings. (a) On the Effective
--------------------------------
Date, the Administrative Agent shall have received a certificate, dated the
Effective Date, signed by the President, any Senior Vice President or any
Vice President of each Credit Party, and attested to by the Secretary or
any Assistant Secretary of such Credit Party, in the form of Exhibit C with
appropriate insertions, together with the resolutions of such Credit Party
referred to in such certificate, and the foregoing shall be acceptable to
the Administrative Agent in its reasonable discretion.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transac-
-13-
tions contemplated by this Agreement shall be satisfactory in form and
substance to the Administrative Agent and the Required Banks, and the
Administrative Agent shall have received all information and copies of all
other documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down tele-
grams, if any, which the Administrative Agent reasonably may have requested
in connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
4.05 Adverse Change. On or prior to the Effective Date, nothing
--------------
shall have occurred (and the Banks shall have become aware of no facts or
conditions not previously known) which the Administrative Agent or the
Required Banks shall determine has, or could reasonably be expected to
have, a material adverse effect on the rights or remedies of the Admin-
istrative Agent or the Banks, or on the ability of any Credit Party to per-
form its obligations to the Administrative Agent and the Banks or which
has, or could reasonably be expected to have, a materially adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole.
4.06 Litigation. On the Effective Date, no litigation by any
----------
entity (private or governmental) shall be pending or threatened with
respect to this Agreement or any documentation executed in connection
herewith or the transactions contemplated hereby, or with respect to any
material Indebtedness of Parent or any of its Subsidiaries or which the
Administrative Agent or the Required Banks shall determine could reasonably
be expected to have a materially adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
4.07 Approvals. (a) On or prior to the Effective Date, all
---------
necessary governmental (domestic and foreign) and third party approvals (in
any event including all approvals required of Gaming Authorities) in
connection with the transactions contemplated by this Agreement and
otherwise referred to herein shall be satisfied and no New Jersey or Nevada
gaming license, authorization, qualification, waiver or exemption of the
Banks is required on or prior to the Effective Date by reason of this
Agreement.
(b) Parent, its shareholders and Subsidiaries shall have
received any qualifications required under
-14-
applicable Gaming Regulations in connection with this Agreement and each
Credit Party shall have received all other approvals, authorizations or
consents of, or notices to or registrations with any governmental body and
required releases and consents from other appropriate Persons in connection
with this Agreement and shall have provided copies or other satisfactory
evidence of all approvals, authorizations or consents referred to above to
the Administrative Agent.
4.08 Fees, etc. On the Effective Date, the Borrower shall have
----------
paid to the Administrative Agent and the Banks all costs, fees and expenses
(including, without limitation, legal fees and expenses of counsel to the
Administrative Agent only) payable to the Administrative Agent and the
Banks to the extent then due.
4.09 No Default; Representations and Warranties. On the
------------------------------------------
Effective Date and at the time of each Revolving Loan and also after giving
effect thereto (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein and in the other
Credit Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made
on the Effective Date and on the date of the making of such Revolving Loans
(it being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such a specified date).
4.10 Notice of Borrowing. Prior to the making of each Revolving
-------------------
Loan, the Administrative Agent shall have received a Notice of Borrowing
meeting the requirements of Section 1.03.
The occurrence of the Effective Date and the incurrence of each
Revolving Loan shall constitute a representation and warranty by Parent and
the Borrower to the Administrative Agent and each of the Banks that all of
the applicable conditions specified in this Section 4 have been satisfied
as of that time. All of the Revolving Notes, certificates, legal opinions
and other documents and papers referred to in this Section 4, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the
Revolving Notes, in sufficient counterparts for each of the Banks and shall
be in form and substance satisfactory to the Required Banks.
-15-
SECTION 5. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Revolving
Loans as provided herein, each of Parent and the Borrower makes the follow-
ing representations, warranties and agreements, all of which shall survive
the execution and delivery of this Agreement and the Revolving Notes and
the making of the Revolving Loans, with the occurrence of the Effective
Date and the incurrence of each Revolving Loan on or after the Effective
Date being deemed to constitute a representation and warranty that the
matters specified in this Section 5 are true and correct in all material
respects on and as of the Effective Date and on the date of the incurrence
of each such Revolving Loan (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only
as of such specified date).
5.01 Corporate or Partnership Status. Each of Parent and each
-------------------------------
of its Subsidiaries (i) is a duly organized and validly existing corpora-
tion or partnership in good standing under the laws of the jurisdiction of
its organization, (ii) has the corporate or partnership power and authority
to own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of
its business requires such qualifications except for failures to be so
qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole.
5.02 Corporate or Partnership Power and Authority. Each Credit
--------------------------------------------
Party has the corporate or partnership power and authority to execute,
deliver and perform the terms and provisions of this Agreement and the
other Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it
of each of this Agreement and the other Credit Documents to which it is a
party. Each Credit Party has duly executed and delivered this Agreement
and the other Credit Documents to which it is a party, and this Agreement
and the other Credit Documents to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their terms,
except to the extent that the enforceability thereof may be limited by
applicable bank-
-16-
ruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
5.03 No Violation. Neither the execution, delivery or
------------
performance by any Credit Party of this Agreement or the other Credit
Documents to which it is a party, nor compliance by it with the terms and
provisions hereof or thereof, (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or
assets of Parent or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or
any other material agreement, contract or instrument, to which Parent or
any of its Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the certificate of incorporation, partnership agreement or by-
laws of Parent or any of its Subsidiaries.
5.04 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made), or exemption by,
any governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Agreement or the other Credit
Documents or (ii) the legality, validity, binding effect or enforceability
of this Agreement or the other Credit Documents.
5.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities. (a) The statements of financial condition of Parent and its
- -----------
Consolidated Subsidiaries at December 31, 1994 and March 31, 1995, and the
related statements of income and cash flow and changes in shareholders'
equity of Parent and its Consolidated Subsidiaries for the fiscal year and
three-month period ended on such date, and furnished to the Banks prior to
the Effective Date present fairly the financial condition of Parent and its
Consolidated Subsidiaries at the date of such statements of financial
condition and the results of the operations of Parent and its Consolidated
Subsidiaries for such fiscal year. All such
-17-
financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently applied. Since
December 31, 1994, there has been no material adverse change in the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
(b) On and as of the Effective Date, after giving effect to all
Indebtedness (including the Revolving Loans) being incurred or assumed by
the Credit Parties in connection herewith, (a) the sum of the assets, at a
fair valuation, of each of the Borrower and the Borrower and its
Subsidiaries taken as a whole will exceed their respective debts; (b) none
of the Borrower or the Borrower and its Subsidiaries taken as a whole has
incurred, nor do they intend to incur or believe that they will incur,
debts beyond their ability to pay such debts as such debts mature; and (c)
each of the Borrower and the Borrower and its Subsidiaries taken as a whole
will have sufficient capital with which to conduct its respective business.
For purposes of this Section 5.05(b), "debt" means any liability on a
claim, and "claim" means (i) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 5.05(a), there were as of the Effective Date
no liabilities or obligations with respect to Parent or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in aggregate, would be material to Parent and its Subsidiaries taken as
a whole. As of the Effective Date, neither Parent nor the Borrower knows
of any basis for the assertion against Parent or any of its Subsidiaries of
any liability or obligation of any nature whatsoever that is not fully
disclosed in the financial statements delivered pursuant to Section 5.05(a)
which, either individually or in the aggregate, is material to Parent and
its Subsidiaries taken as a whole.
5.06 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of Parent or
-18-
the Borrower, threatened (i) with respect to this Agreement or the other
Credit Documents, (ii) with respect to any material Indebtedness of Parent
or any of its Subsidiaries or (iii) that could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent or
any of its Subsidiaries taken as a whole.
5.07 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) furnished by or on behalf of Parent or the Borrower in
writing to the Administrative Agent or any Bank for purposes of or in con-
nection with this Agreement, the other Credit Documents or any transaction
contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the Borrower in
writing to the Administrative Agent or any Bank will be, true and accurate
in all material respects on the date as of which such information is dated
or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such
information was provided.
5.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
-----------------------------------
the Revolving Loans shall be used by the Borrower (i) to pay fees and
expenses related to this Agreement and (ii) for the Borrower's and its
Subsidiaries' general corporate purposes.
(b) No part of the proceeds of any Revolving Loan will be used
to purchase or carry any Margin Stock or to extend credit for the purpose
of purchasing or carrying any Margin Stock. Neither the making of any
Revolving Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
5.09 Tax Returns and Payments. Each of Parent and its
------------------------
Subsidiaries and each Person for whose tax Parent or any of its
Subsidiaries could be liable has filed or caused to be filed with the
appropriate taxing authority, all Returns required to be filed by it and
has paid or caused to be paid (i) all material taxes due for the periods
covered thereby and (ii) all taxes pursuant to any assessment received by
Parent, any of its Subsidiaries or any such Person, excluding, in each
case, any such taxes that have been contested in good faith and for which
adequate reserves have been established in accordance with generally
accepted accounting principles.
-19-
5.10 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither Parent nor any Subsidiary of Parent nor
any ERISA Affiliate has incurred any material liability to or on account of
a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or expects to incur any liability under any of the foregoing
Sections with respect to any Plan; no proceedings have been instituted by
the PBGC to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to Parent or any Subsidiary
of Parent or any ERISA Affiliate of incurring a liability to or on account
of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
lien imposed under the Code or ERISA on the assets of Parent or any
Subsidiary of Parent or any ERISA Affiliate exists or is likely to arise on
account of any Plan; and Parent and its Subsidiaries may cease
contributions to or terminate any employee benefit plan maintained by any
of them without incurring any material liability to any person interested
therein other than for accrued benefits; it being understood that any
representation or warranty made in this Section 5.10 with respect to any
multiemployer plan (labor union) is to the best knowledge of Parent and the
Borrower.
5.11 Properties. Parent and each of its Subsidiaries have good
----------
title to all material properties owned by them, free and clear of all
Liens, other than Liens permitted by Section 9.01 of the Existing
Promus/Embassy Credit Agreement as such Section is incorporated herein by
reference.
5.12 Compliance with Statutes, etc. Each of Parent and each of
------------------------------
its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condi-
-20-
tion (financial or otherwise) or prospects of Parent and its Subsidiaries
taken as a whole.
5.13 Investment Company Act. Neither Parent nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
5.14 Public Utility Holding Company Act. Neither Parent nor any
----------------------------------
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
5.15 Environmental Matters. (a) Parent and each of its
---------------------
Subsidiaries have complied with, and on the Effective Date and the date of
such Revolving Loan are in compliance with, all applicable Environmental
Laws and the requirements of any permits issued under such Environmental
Laws. There are no pending or, to the best knowledge of Parent or the
Borrower after due inquiry, past or threatened Environmental Claims against
Parent or any of its Subsidiaries or any Real Property owned or operated by
Parent or any of its Subsidiaries that individually or in the aggregate
could reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
There are no facts, circumstances, conditions or occurrences on any Real
Property owned or operated by Parent or any of its Subsidiaries or, to the
best knowledge of Parent or the Borrower after due inquiry, on any property
adjoining or in the vicinity of any such Real Property that, to the best
knowledge of Parent or the Borrower after due inquiry, could reasonably be
expected (i) to form the basis of an Environmental Claim against Parent or
any of its Subsidiaries or any such Real Property that individually or in
the aggregate could reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole, or (ii) to cause any such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such
Real Property by Parent or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property
owned or operated by Parent or any of
-21-
its Subsidiaries where such generation, use, treatment or storage has
violated or could reasonably be expected to violate any Environmental Law.
Hazardous Materials have not at any time been Released on or from any Real
Property owned or operated by Parent or any of its Subsidiaries where such
Release has violated or could reasonably be expected to violate any
applicable Environmental Law. There are not now any underground storage
tanks located on any Real Property owned or operated by Parent or any of
its Subsidiaries which are not in compliance with all Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section
5.15, the representations made in this Section 5.15 shall only be untrue if
the aggregate effect of all failures and noncompliances of the types
described above could reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
5.16 Labor Relations. Neither Parent nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against Parent or any of its Subsidiaries or, to the best
knowledge of Parent or the Borrower, threatened against any of them, before
the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
so pending against Parent or any of its Subsidiaries or, to the best knowl-
edge of Parent or the Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or the Borrower,
threatened against Parent or any of its Subsidiaries and (iii) to the best
knowledge of Parent or the Borrower, no union representation question
existing with respect to the employees of Parent or any of its
Subsidiaries, except (with respect to any matter specified in clause (i),
(ii) or (iii) above, either individually or in the aggregate) such as could
not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
5.17 Patents, Licenses, Franchises and Formulas. Each of Parent
------------------------------------------
and its Subsidiaries own all the patents, trademarks, permits, service
marks, trade names, copyrights,
-22-
licenses, franchises and formulas, or rights with respect to the foregoing,
and has obtained assignments of all leases and other rights of whatever
nature, necessary for the present conduct of its business, without any
known conflict with the rights of others which, or the failure to obtain
which, as the case may be, would result in a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
5.18 Subordinated Debt. The subordination pro-visions of the
-----------------
Subordinated Debt are enforceable against the respective borrower or
guarantor thereunder, as the case may be, and all Obligations hereunder and
under the other Credit Documents are within the definition of "Senior Debt"
included in such subordination provisions, as the case may be.
SECTION 6. Covenants. Each of Parent and the Borrower covenants
---------
and agrees that on and after the Effective Date and until the Total
Revolving Loan Commitment has terminated and the Revolving Loans and
Revolving Notes, together with interest and all other obligations incurred
hereunder and thereunder, are paid in full:
6.01 Incorporation by Reference. Each of Parent and the
--------------------------
Borrower will comply with each of the covenants contained in Sections 8.01
through 8.10 of the Existing Promus/Embassy Credit Agreement and Sections
9.01 through 9.15 of the Existing Promus/Embassy Credit Agreement, which
Sections, together with all definitions in the Existing Promus/Embassy
Credit Agreement applicable to such Sections, are hereby incorporated by
reference as if set forth herein in their entirety, provided that:
--------
(a) all references to "Parent" therein shall mean and be a
reference to "Parent" herein;
(b) all references to "the Company" therein shall mean and be a
reference to the "Borrower" herein;
(c) all references to the "Borrower" or "Borrowers" therein
shall mean and be a reference to the "Borrower" herein;
(d) all references to "this Agreement," "herein," "hereunder"
and words of similar import therein shall mean and be a reference to
this "Agreement";
-23-
(e) all references to "Parent and the Borrowers" therein shall
mean and be a reference to "Parent and the Borrower" herein;
(f) all references to "Parent or any Borrower" therein shall
mean and be a reference to "Parent or the Borrower" herein;
(g) all references to the "Administrative Agent" therein shall
mean and be a reference to the "Administrative Agent" herein;
(h) all references to any "Bank" or the "Banks" therein shall
mean and be a reference to any "Bank" or the "Banks" herein;
(i) all references to the "Required Banks" therein shall mean
and be a reference to the "Required Banks" herein;
(j) all references to a "Default" therein shall mean and be a
reference to a "Default" herein;
(k) all references to an "Event of Default" therein shall mean
and be a reference to an "Event of Default" herein;
(l) Section 9.04 of the Existing Promus/Embassy Credit Agreement
as incorporated herein by reference shall include Indebtedness
incurred under this Agreement and the Revolving Notes; and
(m) if, and for so long as, the Existing
Promus/Embassy Credit Agreement remains in effect, any provision of
Section 9.02 or 9.05 of the Existing Promus/Embassy Credit Agreement
as incorporated herein by reference which would give rise to a
violation of Section 9.11 of the Existing Promus/Embassy Credit
Agreement shall be deemed modified to the extent (but only to the
extent) that the incorporation by reference of such Sections herein
would not give rise to such a violation.
SECTION 7. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
7.01 Payments. The Borrower shall (i) default in the payment
--------
when due of any principal of any Revolving Loan
-24-
or any Revolving Note or (ii) default, and such default shall continue un-
remedied for three or more days, in the payment when due of any interest on
any Revolving Loan or Revolving Note, or (iii) default, and such default
shall continue unremedied for five or more days after written notice to the
Borrower by the Administrative Agent or any Bank, in the payment when due
of any other amounts owing hereunder or under any other Credit Document,
provided, however, that such notice shall not be required to be given if a
- -------- -------
Default or an Event of Default under Section 7.05 shall have occurred and
be continuing; or
7.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed
made; or
7.03 Covenants. Any Credit Party shall (i) default in the due
---------
performance or observance by it of any term, covenant or agreement con-
tained in Section 8.01(e)(i), 8.08 or 9 of the Existing Promus/Embassy
Credit Agreement as such Sections are incorporated herein by reference or
(ii) default in the due performance or observance by it of any other term,
covenant or agreement contained in this Agreement and such default shall
continue unremedied for a period of 30 days after written notice to the
Borrower by the Administrative Agent or any Bank; or
7.04 Default Under Other Agreements. (i) Parent or any
------------------------------
Subsidiary of Parent shall (x) default in any payment of any Indebtedness
(other than the Revolving Notes) beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (y) default in the observance or performance of any agreement or
condition relating to any Indebtedness (other than the Revolving Notes) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause (determined without regard to whether any
notice is required), any such Indebtedness to become due prior to its
stated maturity, or (ii) any Indebtedness (other than the Revolving Notes)
of Parent or any Subsidiary of Parent shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated
-25-
maturity thereof, provided that it shall not be a Default or an Event of
--------
Default under this Section 7.04 unless the aggregate principal amount of
all Indebtedness as described in preceding clauses (i) and (ii) is at least
$25,000,000; or
7.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under the Bankruptcy Code; or
an involuntary case is commenced against Parent or any Subsidiary of
Parent, and the petition is not controverted within 10 days, or is not dis-
missed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all
or substantially all of the property of Parent or any Subsidiary of Parent,
or Parent or any Subsidiary of Parent commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Parent or any Subsidiary of
Parent, or there is commenced against Parent or any Subsidiary of Parent
any such proceeding which remains undismissed for a period of 60 days, or
Parent or any Subsidiary of Parent is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or Parent or any Subsidiary of Parent suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or Parent or any
Subsidiary of Parent makes a general assignment for the benefit of credi-
tors; or any corporate action is taken by Parent or any Subsidiary of
Parent for the purpose of effecting any of the foregoing; or
7.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had a trustee appointed
by the PBGC to administer such Plan, any Plan is, shall have been or is
likely to be terminated or to be the subject of termination proceedings
under ERISA, any Plan shall have an Unfunded Current Liability, Parent or
any Subsidiary of Parent or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, or Parent or any Subsidiary of Parent
has incurred or is likely to incur liabilities pursuant to one or more em-
ployee welfare benefit plans (as defined in Section 3(1) of ERISA) which
provide benefits to retired employees (other
-26-
than as required by Section 601 of ERISA) or employee pension benefit plans
(as defined in Section 3(2) of ERISA); (b) there shall result from any such
event or events the imposition of a lien, the granting of a security inter-
est, or a liability or a material risk of incurring a liability; and (c)
which lien, security interest or liability, in the opinion of the Required
Banks, could reasonably be expected to have a material adverse effect upon
the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole; or
7.07 Judgments. One or more judgments or decrees shall be
---------
entered against Parent or any Subsidiary of Parent involving in the aggre-
gate for Parent and its Subsidiaries a liability (not paid or fully covered
by a reputable insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or
stayed or bonded pending appeal for any period of 30 consecutive days, and
the aggregate amount of all such judgments exceeds $10,000,000; or
7.08 Gaming Authority. Any Gaming Authority having jurisdiction
----------------
over any Casino Property shall determine that Parent or any of its
Subsidiaries that is required to be qualified under the Gaming Regulations
does not qualify, or that the qualification or license of any of them with
respect to any Casino Property should be revoked, not renewed or suspended
for more than 30 days, or any such Gaming Authority shall have appointed a
conservator, supervisor or trustee to oversee any of the operations of any
of them; or
7.09 Changes of Control. Any Change of Control shall have
------------------
occurred;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the
written request of the Required Banks, shall by written notice to the
Borrower, take any or all of the following actions, without prejudice to
the rights of the Administrative Agent, any Bank or the holder of any
Revolving Note to enforce its claims against either Credit Party (provided
--------
that, if an Event of Default specified in Section 7.05 shall occur with re-
spect to Parent or the Borrower, the result which would occur upon the giv-
ing of written notice by the Administrative Agent to the Borrower as spec-
ified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Revolving Loan
Commitment terminated, whereupon the
-27-
Revolving Loan Commitment of each Bank shall forthwith terminate immedi-
ately; and (ii) declare the principal of and any accrued interest in re-
spect of all Revolving Loans and the Revolving Notes and all Obligations
owing hereunder and thereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party.
SECTION 8. Definitions. The following terms shall have the
-----------
meanings herein specified. Such definitions shall be equally applicable to
the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
thereof), extended, renewed, refinanced or replaced from time to time.
"Applicable Commitment Commission Percentage" shall mean a
percentage per annum equal to the Applicable Commitment Commission
Percentage in effect from time to time under the Existing Promus/Embassy
Credit Agreement.
"Applicable Margin" shall mean a percentage per annum equal to
the Applicable Margin in effect from time to time under the Existing
Promus/Embassy Credit Agreement.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit D
(appropriately completed).
"Bank" shall mean each of the financial institutions listed on
Schedule I, as well as any Person which becomes a "Bank" hereunder pursuant
to Section 10.04(b) or (c).
"Base Rate Loan" shall mean each Revolving Loan designated or
deemed designated as such by the Borrower at the time of the incurrence
thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean the borrowing of one Type of Revolving
Loan from all the Banks having Revolving Loan
-28-
Commitments on a given date (or resulting from a conversion or conversions
on such date) having in the case of Eurodollar Loans the same Interest
Period, provided that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of the related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action
to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) above and
which is also a day for trading by and between banks in the New York inter-
bank Eurodollar market.
"Commitment Commission" shall have the meaning provided in
Section 2.01(a).
"Credit Documents" shall mean this Agreement and the Revolving
Notes.
"Credit Party" shall mean Parent and the Borrower.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Effective Date" shall have the meaning provided in Section
10.10.
"Eurodollar Loan" shall mean each Revolving Loan designated as
such by the Borrower at the time of incurrence thereof or conversion
thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-
class banks in the New York interbank Eurodollar market by the
Administrative Agent for Dollar deposits of amounts in immediately
available funds comparable to the outstanding principal amount of the
Eurodollar Loan of the Administrative Agent with maturities comparable to
the Interest Period applicable to such Eurodollar Loan commencing two
Business Days thereafter as of 10:00 A.M. (New York time) on the date
which is two Business Days prior to the commencement of such Interest
Period, divided by (b) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without limitation,
-29-
any marginal, emergency, supplemental, special or other reserves required
by applicable law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 7.
"Existing Promus/Embassy Credit Agreement" shall mean the Credit
Agreement, dated as of July 22, 1993, among Parent, the Borrower, certain
Subsidiaries of the Borrower, various lenders, Bankers Trust Company, The
Bank of New York, Credit Lyonnais, Atlanta Agency, and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust Company, as Admin-
istrative Agent, as such Credit Agreement is in effect on the Effective
Date and without giving effect to any amendments, modifications,
supplements or terminations thereof or thereto after the Effective Date
unless, and to the extent, the Required Banks specifically agree that the
respective change will be given effect to for purposes of this Agreement.
Notwithstanding anything to the contrary contained above, for purposes of
determining whether the Existing Promus/Embassy Credit Agreement remains in
effect or has terminated, amendments, modifications, supplements or
terminations thereof shall be given effect to.
"Fees" shall mean all amounts payable pursuant to or referred to
in Section 2.01.
"Final Maturity Date" shall mean the earlier of (x) the
consummation of the Hotel Spin-Off and (y) September 29, 1995.
"Former Bank" shall have the meaning provided in Section
10.04(c).
"Hotel Spin-Off" shall mean the consummation of the spin-off by
Parent to its shareholders of the Hotel Business of the Borrower and its
Subsidiaries as contemplated by Parent's Schedule 14A as filed with the SEC
on March 22, 1995.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
-30-
"Interest Period" shall have the meaning provided in Section
1.09.
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention:
Patricia Rapisarda, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent or any Bank pursuant to the terms of this Agreement or any other
Credit Document.
"Parent" shall have the meaning provided in the first paragraph
of this Agreement.
"Payment Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, New York, New York 10006, or such
other office as the Administrative Agent may hereafter designate in writing
as such to the other parties hereto.
"Qualified Person" shall mean, with respect to any Bank party to
this Agreement on the Effective Date or that becomes a Bank pursuant to
Section 10.04(b) or 10.04(c), a banking or other licensed lending
institution within the meaning of the New Jersey Gaming Regulations or a
financial source or qualifier approved under the Gaming Regulations of the
State of New Jersey applicable to lenders (or waived or exempted from the
applicable requirements thereof) and which shall not have been found
unsuitable under the Gaming Regulations of the State of Nevada applicable
to lenders and which meets the requirements of all other jurisdictions
regulating the gaming business of Parent and its Subsidiaries to the extent
that the Borrower has so notified the Banks of such requirements of such
other jurisdiction pursuant to Section 10.04(e).
"Required Banks" shall mean Banks, the sum of whose Revolving
Loan Commitments (or after the termination thereof, outstanding Revolving
Loans) represent an amount greater than fifty percent of the sum of the
Total Revolving Loan
-31-
Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans).
"Revolving Loan" shall have the meaning provided in Section 1.01.
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as the same may be (x) reduced from
time to time pursuant to Sections 2.02, 2.03 and/or 7 or (y) adjusted from
time to time as a result of assignments to or from such Bank pursuant to
Section 10.04.
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Substitute Bank" shall have the meaning provided in Section
10.04(c).
"Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment less (y) the sum of the aggregate principal amount of Revolving
Loans then outstanding.
"Type" shall mean the type of Revolving Loan determined with
regard to the interest option applicable thereto, i.e., whether a Base Rate
----
Loan or a Eurodollar Loan.
"Unutilized Revolving Loan Commitment" with respect to any Bank,
at any time, shall mean such Bank's Revolving Loan Commitment at such time
less an amount equal to the aggregate outstanding principal amount of all
Revolving Loans made by such Bank.
"Withdrawal Period" shall have the meaning provided in Section
10.04(d).
-32-
SECTION 9. The Administrative Agent.
------------------------
9.01 Appointment. The Banks hereby designate Bankers Trust
-----------
Company as Administrative Agent to act as specified herein and in the other
Credit Documents. Each Bank hereby irrevocably authorizes, and each holder
of any Revolving Note by the acceptance of such Revolving Note shall be
deemed irrevocably to authorize, the Administrative Agent to take such
action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of
the Administrative Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Administrative Agent may
perform any of its duties hereunder by or through its officers, directors,
agents or employees.
9.02 Nature of Duties. The Administrative Agent shall not have
----------------
any duties or responsibilities except those expressly set forth in this
Agreement. Neither the Administrative Agent nor any of its officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent
shall be mechanical and administrative in nature; the Administrative Agent
shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any
Revolving Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose
upon the Administrative Agent any obligations in respect of this Agreement
or any other Credit Document except as expressly set forth herein or
therein.
9.03 Lack of Reliance on the Administrative Agent. Independ-
--------------------------------------------
ently and without reliance upon the Administrative Agent, each Bank and the
holder of each Revolving Note, to the extent it deems appropriate, has made
and shall continue to make (i) its own independent investigation of the
financial condition and affairs of Parent and its Subsidiaries in connec-
tion with the making and the continuance of the Revolving Loans and the
taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of Parent and its Subsidiaries and,
except as expressly provided in this Agreement, the Administrative Agent
shall not have any duty or responsibility, either initially
-33-
or on a continuing basis, to provide any Bank or the holder of any
Revolving Note with any credit or other information with respect thereto,
whether coming into its possession before the making of the Revolving Loans
or at any time or times thereafter. The Administrative Agent shall not be
responsible to any Bank or the holder of any Revolving Note for any
recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection here-
with or for the execution, effectiveness, genuineness, validity, enforce-
ability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of Parent
or any of its Subsidiaries or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document, or the financial
condition of Parent or any of its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
9.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks
with respect to any act or action (including failure to act) in connection
with this Agreement or any other Credit Document, the Administrative Agent
shall be entitled to refrain from such act or taking such action unless and
until the Administrative Agent shall have received instructions from the
Required Banks; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no
Bank or holder of any Revolving Note shall have any right of action what-
soever against the Administrative Agent as a result of the Administrative
Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
9.05 Reliance. The Administrative Agent shall be entitled to
--------
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent believed
to be the proper Person, and, with respect to all legal matters pertaining
to this Agreement and any other Credit Document and its duties hereunder
and thereunder, upon advice of counsel selected by the Administrative
Agent.
9.06 Indemnification. To the extent the Administrative Agent is
---------------
not reimbursed and indemnified by the Credit Parties, the Banks will
reimburse and indemnify the Adminis-
-34-
trative Agent, in proportion to their respective "percentages" as used in
determining the Required Banks, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed
on, asserted against or incurred by the Administrative Agent in performing
its duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
provided that no Bank shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
9.07 The Administrative Agent in its Individual Capacity. With
---------------------------------------------------
respect to its obligation to make Revolving Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required
Banks," "holders of Revolving Notes" or any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent in
its individual capacity. The Administrative Agent may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or
other business with any Credit Party or any Subsidiary or Affiliate of any
Credit Party as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Credit Party for services
in connection with this Agreement and otherwise without having to account
for the same to the Banks.
9.08 Holders. The Administrative Agent may deem and treat the
-------
payee of any Revolving Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is
the holder of any Revolving Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of
such Revolving Note or of any Revolving Note or Revolving Notes issued in
exchange therefor.
9.09 Resignation by the Administrative Agent. (a) The
---------------------------------------
Administrative Agent may resign from the performance of all its functions
and duties hereunder and/or under the
-35-
other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Borrower and the Banks. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Borrower shall
appoint a successor Administrative Agent hereunder or thereunder who shall
be a commercial bank or trust company reasonably acceptable to the Required
Banks (it being understood and agreed that any Bank is deemed to be accept-
able to the Required Banks), provided that, if a Default or an Event of
--------
Default exists at the time of such resignation, the Required Banks shall
appoint such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Borrower, shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Borrower or Required Banks, as
the case may be, appoint a successor Administrative Agent as provided
above.
(d) If no successor Administrative Agent has been appointed pur-
suant to clause (b) or (c) above by the 30th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks
shall thereafter perform all the duties of the Administrative Agent here-
under and/or under any other Credit Document until such time, if any, as
the Required Banks appoint a successor Administrative Agent.
SECTION 10. Miscellaneous.
-------------
10.01 Payment of Expenses, etc. (a) The Borrower shall: (i)
-------------------------
whether or not the transactions herein contemplated are consummated, pay
all reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of
White & Case) in connection with the preparation, execution and delivery of
this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or
consent relating hereto or thereto, of the Administrative Agent in
connection with its syndication efforts with respect to this Agreement and
of the Administrative Agent and each of
-36-
the Banks in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel (including allocated costs of in-house counsel)
for the Administrative Agent and for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp, excise and other similar taxes with respect to the foregoing matters
and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iii)
indemnify the Administrative Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' (including allocated costs of in-house
counsel) and consultants' fees and disbursements) incurred by, imposed on
or assessed against any of them as a result of, or arising out of, or in
any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a
party thereto) related to the entering into and/or performance of this
Agreement or any other Credit Document or the use of the proceeds of any
Revolving Loans or the consummation of any transactions contemplated herein
or in the other Credit Documents (including, without limitation, the
exercise of any of their rights or remedies provided herein or in the other
Credit Documents), or (b) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the surface or
subsurface of any Real Property owned, leased or at any time operated by
Parent or any of its Subsidiaries, the Release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any loca-
tion, whether or not owned or operated by Parent or any of its Subsidi-
aries, the non-compliance of any Real Property with foreign, federal, state
and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
relating in any way to Parent or any of its Subsidiaries, their operations,
or any Real Property owned, leased or at any time operated by Parent or any
of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding
(but excluding any losses, liabilities, claims, damages or expenses to the
-37-
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless the Administrative Agent or any Bank set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
(b) The Borrower further agrees to pay the reasonable legal fees
of gaming counsel for the Administrative Agent in New Jersey and Nevada and
any other relevant state and all reasonable costs (including costs of
investigation) associated with any qualification (or exemption or waiver
therefrom) of any Bank under, or compliance in connection with, the Gaming
Regulations in connection with this Agreement and further syndication under
this Agreement after the Effective Date, provided that in the event that
--------
any assignee Bank or potential assignee Bank is not already a Qualified
Person (before giving effect to any actions taken to become such in
connection with this Agreement), then all costs associated with such Person
becoming a Qualified Person shall be borne by the respective assignee Bank
or potential assignee Bank.
10.02 Right of Setoff. In addition to any rights now or
---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
each Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing
by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of the
Credit Parties against and on account of the Obligations and liabilities of
the Credit Parties to such Bank under this Agreement or under any Revolving
Note, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 10.06(b), and all other claims of any
nature or description arising out of or connected with this Agreement or
any such other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, lia-
bilities or claims, or any of them, shall be contingent or unmatured.
-38-
10.03 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to
Parent or the Borrower at such Credit Party's address specified opposite
its signature below; if to any Bank, at its address specified opposite its
name on Schedule II; and if to the Administrative Agent, at its Notice
Office; or, as to Parent, the Borrower or the Administrative Agent, at such
other address as shall be designated by such party in a written notice to
the other parties hereto and, as to each Bank, at such other address as
shall be designated by such Bank in a written notice to the Borrower and
the Administrative Agent. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the tele-
graph company, cable company or overnight courier, as the case may be, or
sent by telex or telecopier, except that notices and communications to the
Administrative Agent and the Borrower shall not be effective until received
by the Administrative Agent or the Borrower, as the case may be.
10.04 Benefit of Agreement. (a) This Agreement shall be
--------------------
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto; provided, however,
-------- -------
the Borrower may not assign or transfer any of its rights, obligations or
interest hereunder or under any other Credit Document without the prior
written consent of the Administrative Agent and the Banks and, provided
--------
further, that, although any Bank may transfer, assign or grant participa-
- -------
tions in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of
its Revolving Loan Commitments hereunder except as provided in Section
10.04(b)) and the transferee, assignee or participant, as the case may be,
shall not constitute a "Bank" hereunder and, provided further, that no Bank
----------------
shall transfer or grant any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
extend the final scheduled maturity of any Revolving Loan or Revolving
Note in which such participant is participating, or reduce the rate or
extend the time of payment of interest or Fees thereon (except in connec-
tion with a waiver of applicability of any post-default increase in
interest rates) or reduce the principal amount thereof, or increase the
amount of the
-39-
participant's participation over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Total Revolving Loan Commitment shall not
constitute a change in the terms of such participation, and that an
increase in any Revolving Loan Commitment or Revolving Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof). In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights
against such Bank in respect of such participation to be those set forth in
the agreement executed by such Bank in favor of the participant relating
thereto) and the Borrower shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement and the other Credit Documents and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation. Any agreement pursuant to which any Bank may grant such a
participation shall be in a form approved by the Administrative Agent and
Parent and shall be satisfactory under the Gaming Regulations of the State
of New Jersey so as not to require participants to be approved financial
sources or qualified under such Gaming Regulations applicable to lenders.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of
its Revolving Loan Commitments and related outstanding Obligations
hereunder to its parent company and/or any affiliate of such Bank which is
at least 50% owned by such Bank or its parent company or to one or more
Banks or (y) assign all, or if less than all, a portion equal to at least
$5,000,000 in the aggregate for the assigning Bank or assigning Banks, of
such Revolving Loan Commitments and related outstanding Obligations
hereunder, in either case to one or more Qualified Persons, each of which
assignees shall become a party to this Agreement as a Bank by execution of
an Assignment and Assumption Agreement, provided that, (i) at such time
--------
Schedule I shall be deemed modified to reflect the Revolving Loan
Commitments of such new Bank and of the existing Banks, (ii) new Revolving
Notes will be issued to such new Bank and to the assigning Bank upon the
request of such new Bank or assigning Bank, such new Revolving Notes to be
in conformity with the requirements of Section 1.05 to the extent needed to
reflect the revised Revolving Loan Commitments, (iii) the consent of the
Administrative Agent shall be required in connection with any assignment
(which consent shall not be unreasonably withheld) and (iv) the Adminis-
-40-
trative Agent shall receive at the time of each such assignment, from
either the assigning or assignee Bank or Banks, the payment of a non-
refundable assignment fee of $3,500 in the case of any assignment to a
Qualified Person which is not a Bank immediately prior to such assignment
or $1,000 in the case of any assignment to a then existing Bank. To the
extent of any assignment pursuant to this Section 10.04(b), the assigning
Bank shall be relieved of its obligations hereunder with respect to its
assigned Revolving Loan Commitments. At the time of each assignment
pursuant to this Section 10.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrower in the case of a Bank described in clause (ii) or
(iv) of Section 4.04(b) of the Existing Promus/Embassy Credit Agreement,
the forms described in such clause (ii) or (iv), as the case may be. To
the extent that an assignment of all or any portion of a Bank's Revolving
Loan Commitments and related outstanding Obligations pursuant to this
Section 10.04(b) would, at the time of such assignment, result in increased
costs under Section 1.11, 1.12 or 3.03 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall
not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) If the New Jersey Gaming Authorities shall determine that
any Bank is not qualified as an approved financial source or otherwise does
not meet the standards pursuant to the Gaming Regulations in New Jersey, or
the Nevada Gaming Authorities shall determine that any Bank does not meet
the Suitability Standards under the Nevada Gaming Regulations or any other
Gaming Authority with jurisdiction over the gaming business of Parent and
its Subsidiaries shall determine that any Bank does not meet its
suitability standards (in any such case, a "Former Bank"), the Admin-
istrative Agent or the Borrower shall have the right (but not the duty) to
designate a bank or banks (in each case, a "Substitute Bank," which may be
any Bank or Banks that agree to become a Substitute Bank) that has agreed
to assume the rights and obligations of the Former Bank, subject to receipt
by the Administrative Agent of evidence that such Substitute Bank is a
Qualified Person. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an
Assignment and Assumption Agreement,
-41-
which assumption shall be required to comply with, and shall become
effective in accordance with, the provisions of Section 10.04(b), provided
--------
that the purchase price to be paid by the Substitute Bank to the
Administrative Agent for the account of the Former Bank for such assumption
shall equal the sum of (i) the unpaid principal amount of any Revolving
Notes held or Revolving Loans made by the Former Bank plus accrued interest
thereon plus (ii) such Former Bank's pro rata share of accrued Fees to the
--- ----
date of the assumption, and, provided further, the Borrower shall pay all
----------------
obligations owing to the Former Bank under the Credit Documents (including
all obligations, if any, owing pursuant to Section 1.11, but excluding
those amounts in respect of which the purchase price is being paid as
provided above). Each Bank agrees that if it becomes a Former Bank, upon
payment to it by the Borrower of all such amounts, if any, owing to it
under the Credit Documents, it will execute and deliver an Assignment and
Assumption Agreement, upon payment of such purchase price.
(d) Notwithstanding the provisions of subsection (c) of this
Section 10.04, if any Bank becomes a Former Bank, and if the Administrative
Agent or the Borrower fails to find a Substitute Bank pursuant to
subsection (c) of this Section within any time period specified by the
appropriate Gaming Authority for the withdrawal of a Former Bank (the
"Withdrawal Period"), the Borrower shall, immediately (i) prepay in full
the outstanding principal amount of each Revolving Note held or Revolving
Loan made by such Former Bank, together with accrued interest thereon to
the earlier of (x) the date of payment or (y) the last day of any With-
drawal Period, and (ii) if no Default or Event of Default then exists,
terminate the Revolving Loan Commitment of such Former Bank.
(e) Subject to the last sentence of this Section 10.04(e), each
Bank agrees that all participations and assignments made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable
to lenders. The Borrower hereby acknowledges that unless the Borrower has
provided the Banks with a written opinion of counsel as to the suitability
standards applicable to lenders of any relevant Gaming Authority (excluding
New Jersey and Nevada except to the extent that the suitability standards
set forth in the Gaming Regulations of such States change from those in
effect on the Effective Date) with jurisdiction over the Gaming Business of
Parent and its Subsidiaries, no Bank shall have the responsibility of
determining whether or
-42-
not a potential assignee of such Bank would be a Qualified Person under the
Gaming Regulations of any such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Revolving Loans and Revolving Notes hereunder to a
Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank.
10.05 No Waiver; Remedies Cumulative. No failure or delay on
------------------------------
the part of the Administrative Agent or any Bank or any holder of any
Revolving Note in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between any Credit
Party and the Administrative Agent or any Bank or the holder of any
Revolving Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder.
The rights, powers and remedies herein or in any other Credit Document
expressly provided are cumulative and not exclusive of any rights, powers
or remedies which the Administrative Agent or any Bank or the holder of any
Revolving Note would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver
of the rights of the Administrative Agent or any Bank or the holder of any
Revolving Note to any other or further action in any circumstances without
notice or demand.
10.06 Payments Pro Rata. (a) Except as otherwise provided in
-----------------
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
--- ----
any such payment) pro rata based upon their respective shares, if any, of
--- ----
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Revolving Loans or Commitment
-43-
Commission, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligation
then owed and due to such Bank bears to the total of such Obligation then
owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without
recourse or warranty from the other Banks an interest in the Obligations of
the respective Party to such Banks in such amount as shall result in a
proportional participation by all the Banks in such amount; provided that
--------
if all or any portion of such excess amount is thereafter recovered from
such Bank, such purchase shall be rescinded and the purchase price restored
to the extent of such recovery, but without interest.
10.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by Parent
to the Banks); provided that, except as otherwise specifically provided
--------
herein, all computations determining compliance with Sections 9.03 through
9.05, inclusive, and Sections 9.07 through 9.10, inclusive, of the Existing
Promus/Embassy Credit Agreement, as such Sections are incorporated herein
by reference, shall utilize accounting principles and policies in conform-
ity with those used to prepare the historical financial statements
delivered to the Banks pursuant to Section 5.05.
(b) All computations of interest, Commitment Commission and
other Fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest, Commitment Commission
or other Fees are payable.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
--------------------------------------------------------
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
- -------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROP-
-44-
ERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH CREDIT PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER SUCH CREDIT PARTY, AND AGREES NOT TO
PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH CREDIT PARTY.
EACH CREDIT PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER
CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER OF ANY REVOLVING NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
(b) EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.09 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrower and the Administrative Agent.
-45-
10.10 Effectiveness. This Agreement shall become effective on
-------------
the date (the "Effective Date") and at the time on which (i) Parent, the
Borrower and the Banks shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered the same to the
Administrative Agent at its Notice Office or, in the case of the Banks,
shall have given to the Administrative Agent telephonic (confirmed in
writing), written or telex notice (actually received) at such office that
the same has been signed and mailed to it and (ii) the conditions contained
in Section 4 are met to the satisfaction of the Administrative Agent and
the Required Banks. Unless the Administrative Agent has received actual
notice from any Bank that the conditions contained in Section 4 have not
been met to its satisfaction, upon the satisfaction of the condition
described in clause (i) of the immediately preceding sentence and upon the
Administrative Agent's good faith determination that the conditions
described in clause (ii) of the immediately preceding sentence have been
met, then the Effective Date shall have been deemed to have occurred,
regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the
Effective Date shall not release any Credit Party from any liability for
failure to satisfy one or more of the applicable conditions contained in
Section 4). The Administrative Agent will give Parent, the Borrower and
each Bank prompt written notice of the occurrence of the Effective Date.
10.11 Headings Descriptive. The headings of the several
--------------------
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
10.12 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or ter-
mination is in writing signed by the respective Credit Parties party
thereto and the Required Banks, provided that no such change, waiver,
--------
discharge or termination shall, without the consent of each Bank (with
Obligations being directly affected thereby), (i) extend the final sched-
uled maturity of any Revolving Loan or Revolving Note, or reduce the rate
or extend the time of payment of interest or Fees thereon, or reduce the
principal amount thereof, (ii) amend, modify or waive any provision of this
Section 10.12, (iii) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, additional extensions of
-46-
credit pursuant to this Agreement may be included in the determination of
the Required Banks on substantially the same basis as the extensions of
Revolving Loan Commitments are included on the Restatement Effective Date)
or (iv) consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement; provided further, that no such
----------------
change, waiver, discharge or termination shall (x) increase the Revolving
Loan Commitment of any Bank over the amount thereof then in effect without
the consent of such Bank (it being understood that waivers or modifications
of conditions precedent, covenants, Defaults or Events of Default or of a
mandatory reduction in the Total Revolving Loan Commitment shall not
constitute an increase of the Revolving Loan Commitment of any Bank, and
that an increase in the available portion of any Revolving Loan Commitment
of any Bank shall not constitute an increase in the Revolving Loan
Commitment of such Bank) or (y) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 9 or any other
provision as same relates to the rights or obligations of the
Administrative Agent.
10.13 Survival. All indemnities set forth herein including,
--------
without limitation, in Sections 1.10, 1.11, 3.03, 9.06 and 10.01, shall
survive the execution, delivery and termination of this Agreement and the
Revolving Notes, and the making and repayment of the Revolving Loans.
10.14 Domicile of Loans. Each Bank may transfer and carry its
-----------------
Revolving Loans at, to or for the account of any office, Subsidiary or
Affiliate of such Bank. Notwithstanding anything to the contrary contained
herein, to the extent that a transfer of Revolving Loans pursuant to this
Section 10.14 would, at the time of such transfer, result in increased
costs under Section 1.10, 1.11 or 3.03 (as a result of any of the events
set forth in Section 4.04 of the Existing Promus/Embassy Credit Agreement,
as such Section is incorporated herein by reference) from those being
charged by the respective Bank prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower
shall be obligated to pay any other increased costs of the type described
above resulting from changes after the date of the respective transfer).
10.15 Application of Gaming Regulations. Parent, the Borrower
---------------------------------
and the Banks acknowledge that the consummation of the transactions contem-
plated by the Credit Documents is subject to the Gaming Regulations (and
Parent and the
-47-
Borrower represent and warrant that all requisite approvals thereunder have
been duly obtained).
10.16 Confidentiality. (a) Subject to the provisions of clause
---------------
(b) of this Section 10.16, each Bank agrees that it will use its best
effort not to disclose without the prior consent of the Borrower (other
than to its employees, auditors or counsel or to another Bank if the Bank
or such Bank's holding or parent company in its sole discretion determines
that any such party should have access to such information) any information
with respect to Parent or any of its Subsidiaries which is now or in the
future furnished pursuant to this Agreement or any other Credit Document
and which is designated by the Borrower to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a)
--------
as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or
ruling applicable to such Bank, and (e) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Revolving Notes or Revolving Loan Commitments
or any interest therein by such Bank, provided, that such prospective
--------
transferee executes an agreement with such Bank containing provisions
substantially identical to those contained in this Section.
(b) The Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to Parent or
any of its Subsidiaries (including, without limitation, any nonpublic
customer information regarding the creditworthiness of Parent and its
Subsidiaries).
-48-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
ADDRESSES
- ---------
1023 Cherry Road THE PROMUS COMPANIES INCORPORATED
Memphis, TN 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attn: Treasurer By
-------------------------------
(with a copy at the Title:
same address to the
Corporate Secretary)
1023 Cherry Road EMBASSY SUITES, INC.
Memphis, TN 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attn: Treasurer By
------------------------------
(with a copy at the Title:
same address to the
Corporate Secretary)
BANKERS TRUST COMPANY, Individually
and as Administrative Agent
By
------------------------------
Title:
-49-
SCHEDULE I
----------
REVOLVING LOAN COMMITMENTS
--------------------------
Revolving Loan
Bank Commitment
- ---- --------------
Bankers Trust Company $25,000,000
-----------
Total: $25,000,000
===========
SCHEDULE II
-----------
BANK ADDRESSES
--------------
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094
Telecopier No.: (212) 250-7218
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
Bankers Trust Company, as
Administrative Agent for
the Banks party to
the Credit Agreement
referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention: ______________________
Gentlemen:
The undersigned, Embassy Suites, Inc. (the
"Borrower"), refers to the Credit Agreement, dated as of June
1, 1995 (as amended from time to time, the "Credit Agree-
ment", the terms defined therein being used herein as therein
defined), among The Promus Companies Incorporated, the
Borrower, the financial institutions from time to time party
thereto, and you, as Administrative Agent, and hereby gives
you notice, irrevocably, pursuant to Section 1.03 of the
Credit Agreement, that the undersigned hereby requests a
Borrowing of Revolving Loans under the Credit Agreement, and
in that connection sets forth below the information relating
to such Borrowing (the "Proposed Borrowing") as required by
Section 1.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
_________, 19__.1/
-
(ii) The aggregate principal amount of the Proposed
Borrowing is $___________.
____________________
1/ Shall be a Business Day at least one Business Day in
- -
the case of Base Rate Loans and three Business Days in the
case of Eurodollar Rate Loans, in each case, after the date
hereof.
EXHIBIT A
Page 2
(iii) The Revolving Loans to be made pursuant to
the Proposed Borrowing shall be initially maintained as
[Base Rate Loans] [Eurodollar Loans].
(iv) The initial Interest Period for the Proposed
Borrowing is ___ month(s).2/
-
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on
the date of the Proposed Borrowing:
(A) the representations and warranties contained
in the Credit Agreement and in the other Credit
Documents are and will be true and correct in all
material respects, both before and after giving effect
to the Proposed Borrowing and to the application of the
proceeds thereof, as though made on such date (it being
understood and agreed that any representation or
warranty which by its terms is made as of a specified
date shall be required to be true and correct in all
material respects only as of such specified date); and
(B) no Default or Event of Default has occurred
and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds there-
of.
Very truly yours,
EMBASSY SUITES, INC.
By____________________________
Name:
Title:
____________________
2/ To be included for a Proposed Borrowing of Eurodollar
- -
Loans.
EXHIBIT B
---------
REVOLVING NOTE
$_________________ New York, New York
______ __, 1995
FOR VALUE RECEIVED, EMBASSY SUITES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay
to the order of ___________________________ (the "Bank"), in
lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company
located at One Bankers Trust Plaza, New York, New York 10006
on the Final Maturity Date (as defined in the Agreement
referred to below) the principal sum of _______________
DOLLARS ($______________) or, if less, the then unpaid
principal amount of all Revolving Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the
unpaid principal amount hereof in like money at said office
from the date hereof until paid at the rates and at the times
provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to
in the Credit Agreement, dated as of June 1, 1995, among The
Promus Companies Incorporated, Embassy Suites, Inc., the
financial institutions from time to time party thereto
(including the Bank) and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the
"Agreement"), and is entitled to the benefits thereof and of
the other Credit Documents (as defined in the Agreement).
As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the
Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the
Agreement) shall occur and be continuing, the principal of
and accrued interest on this Note may be declared to be due
and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Note.
EXHIBIT B
Page 2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
EMBASSY SUITES, INC.
By_____________________________
Title:
EXHIBIT C
---------
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, [President/Senior Vice
President/Vice President] of [Name of Credit Party], a corpo-
ration organized and existing under the laws of the State of
_________ (the "Company"), do hereby certify that:
1. This Certificate is furnished pursuant to the
Credit Agreement, dated as of June 1, 1995, among The Promus
Companies Incorporated, Embassy Suites, Inc., the financial
institutions from time to time party thereto and Bankers
Trust Company, as Administrative Agent (such Credit Agree-
ment, as in effect on the date of this Certificate, being
herein called the "Credit Agreement"). Unless otherwise
defined herein, capitalized terms used in this Certificate
shall have the meanings set forth in the Credit Agreement.
2. The individuals named on Exhibit A hereto are
elected officers of the Company or Authorized Signatories,
and each either holds the office of the Company set forth
opposite such officer's name and has held such office at
least since _______________, 1995, or has been designated an
Authorized Signatory pursuant to the resolutions described in
paragraph 5 hereof. The signature written opposite the name
and title of each such officer or Authorized Signatory is
such officer's or Authorized Signatory's correct signature.
3. Attached hereto as Exhibit B is a true and
correct copy of resolutions which were duly adopted on
__________, 19__ [by unanimous written consent of the Board
of Directors of the Company] [by a meeting of the Board of
Directors of the Company at which a quorum was present and
acting throughout] [as required by the Partnership
Agreement], and said resolutions have not been rescinded,
amended or modified. Except as attached hereto as Exhibit D,
no resolutions have been adopted by [the Board of Directors
of] the Company which deal with the execution, delivery or
performance of any of the Credit Documents to which the
Company is a party.
EXHIBIT C
Page 2
[4. On the date hereof, all of the conditions in
Sections 4.05, 4.06, 4.07 and 4.09 of the Credit Agreement
have been satisfied.](1)
[4.][5.] There is no proceeding for the dissolu-
tion or liquidation of the Company or threatening its
existence.
IN WITNESS WHEREOF, I have hereunto set my hand
this ___ day of __________, 1995.
______________________________
Name:
Title:
- --------------------
(1) To be included in the Certificate delivered by Embassy
Suites, Inc.
[NAME OF CREDIT PARTY]
I, the undersigned, [Secretary/Assistant Secretary] of the
Company, do hereby certify that:
1. [Name of Person making above certifications]
is the duly elected and qualified [President/Senior Vice
President/Vice President] of the Company and the signature
above is his genuine signature.
2. The certifications made by [name of Person
making above certifications] in Items 2, 3 and 4 above are
true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand
this _____ day of _________, 1995.
____________________________
Name:
Title:
Exhibit A
to Officers' Certificate
------------------------
Office/
Authorized
Name(2) Signatory Signature
---- --------- ---------
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
--------------------
2 Include name, office and signature of each officer who
will sign any Credit Document, including the officer who
will sign the certification at the end of this Certificate.
EXHIBIT D
---------
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, 19__
Reference is made to the Credit Agreement described
in Item 2 of Annex I hereto (as such Credit Agreement may
hereafter be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"). Unless defined in
Annex I hereto, terms defined in the Credit Agreement are
used herein as therein defined. ___________ (the "Assignor")
and __________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee without recourse and without representation or war-
ranty (other than as expressly provided herein), and the
Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obliga-
tions under the Credit Agreement as of the date hereof which
represents the percentage interest specified in Item 4 of
Annex I hereto (the "Assigned Share") of all of the outstand-
ing rights and obligations under the Credit Agreement relat-
ing to the Revolving Loan Commitment of the Assignor, in-
cluding, without limitation, all rights and obligations with
respect to the Assigned Share of the Revolving Loans.
2. The Assignor (i) represents and warrants that
it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and
clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in con-
nection with the Credit Agreement or the other Credit Docu-
ments or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or
the other Credit Documents or any other instrument or docu-
ment furnished pursuant thereto; and (iii) makes no repre-
sentation or warranty and assumes no responsibility with
respect to the financial condition of Parent or any of its
Subsidiaries or the performance or observance by any Credit
Party of any of its respective obligations under the Credit
Agreement or the other Credit Documents to which it is a
party or any other instrument or document furnished pursuant
thereto.
EXHIBIT D
Page 2
3. The Assignee (i) confirms that it has received
a copy of the Credit Agreement and the other Credit Docu-
ments, together with copies of the financial statements re-
ferred to therein and such other documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agree-
ment; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any
other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the
Credit Agreement; (iii) confirms that it is a Qualified
Person; (iv) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit
Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably
incidental thereto; [and] (v) agrees that it will perform in
accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be per-
formed by it as a Bank[; and (vi) to the extent legally
entitled to do so, attaches the forms described in the
penultimate sentence of Section 10.04(b) of the Credit
Agreement]1/.
-
4. Following the execution of this Assignment and
Assumption Agreement by the Assignor and the Assignee, an
executed original hereof (together with all attachments) will
be delivered to the Administrative Agent. The effective date
of this Assignment and Assumption Agreement shall be the date
of execution hereof by the Assignor and the Assignee and the
receipt of the consent of the Administrative Agent and
receipt by the Administrative Agent of the administrative fee
referred to in such Section 10.04(b), unless otherwise
specified in Item 5 of Annex I hereto (the "Settlement
Date").
5. Upon the delivery of a fully executed original
hereof to the Administrative Agent, as of the Settlement
Date, (i) the Assignee shall be a party to the Credit Agree-
ment and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a
Bank thereunder and under the other Credit Documents and (ii)
the Assignor shall, to the extent provided in this Assignment
and Assumption Agreement, relinquish its rights and be re-
- --------------------
1/ Include if the Assignee is organized under the laws of
- -
a jurisdiction outside of the United States.
EXHIBIT D
Page 3
leased from its obligations under the Credit Agreement and
the other Credit Documents.
6. It is agreed that the Assignee shall be enti-
tled to (x) all interest on the Assigned Share of the
Revolving Loans at the rates specified in Item 6 of Annex I;
and (y) all Commitment Commission on the Assigned Share of
the Total Revolving Loan Commitment at the rate specified in
Item 7 of Annex I hereto, which, in each case, accrue on and
after the Settlement Date; such interest and Commitment
Commission to be paid by the Administrative Agent directly to
the Assignee. It is further agreed that all payments of
principal made on the Assigned Share of the Revolving Loans
which occur on and after the Settlement Date will be paid
directly by the Administrative Agent to the Assignee. Upon
the Settlement Date, the Assignee shall pay to the Assignor
an amount specified by the Assignor in writing which repre-
sents the Assigned Share of the principal amount of the re-
spective Revolving Loans made by the Assignor pursuant to the
Credit Agreement which are outstanding on the Settlement
Date, net of any closing costs, and which are being assigned
hereunder. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit
Agreement for periods prior to the Settlement Date directly
between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
EXHIBIT D
Page 4
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Assignment and Assumption Agreement, as of the date first
above written, such execution also being made on Annex I
hereto.
Accepted this _____ day [NAME OF ASSIGNOR]
of ____________, 19__ as Assignor
By_____________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By_____________________________
Title:
Acknowledged and Agreed:
BANKERS TRUST COMPANY,
as Administrative Agent
By__________________________
Title:
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower:
Embassy Suites, Inc.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of June 1, 1995, among The
Promus Companies Incorporated, the Borrower, the Banks
party thereto from time to time and Bankers Trust
Company, as Administrative Agent.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
Revolving
Loan Com-
mitment
---------
a. Aggregate Amount
for all Banks $___________
b. Assigned Share2/ ___________%
-
c. Amount of
Assigned Share $___________
5. Settlement Date: ______ __, 199_
6. Rate of Interest As set forth in Section 1.08
to the Assignee: of the Credit Agreement (unless
otherwise agreed to by the Assignor
and the Assignee)3/
-
- --------------------
2/ Percentage taken to 12 decimal places.
- -
3/ The Borrower and the Administrative Agent shall direct
- -
the entire amount of the interest to the Assignee at the
rate set forth in Section 1.08 of the Credit Agreement,
(continued...)
Annex I
Page 2
7. Commitment As set forth in Section 2.01(a) of the
Commission: Credit Agreement (unless otherwise
agreed to by the Assignor and the
Assignee)4/
-
8. Notice:
ASSIGNOR:
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
ASSIGNOR:
_____________________
_____________________
_____________________
Attention:
- --------------------
3/(...continued)
- -
with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to
the Assignor.
4/ The Borrower and the Administrative Agent shall direct
- -
the entire amount of the Commitment Commission to the
Assignee at the rate set forth in Section 2.01(a) of the
Credit Agreement, with the Assignor and the Assignee
effecting the agreed upon sharing of Commitment Commission
through payment by the Assignee to the Assignor.
Annex I
Page 3
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By_______________________ By______________________
_______________________ ______________________
(Print Name and Title) (Print Name and Title)
Exhibit 10(5)
==============================================================================
CREDIT AGREEMENT
among
THE PROMUS COMPANIES INCORPORATED (which will be renamed
"HARRAH'S ENTERTAINMENT, INC."),
EMBASSY SUITES, INC. (which will be renamed
"HARRAH'S OPERATING COMPANY, INC."),
CERTAIN SUBSIDIARIES OF EMBASSY SUITES, INC.,
VARIOUS BANKS,
BANKERS TRUST COMPANY,
THE BANK OF NEW YORK,
CIBC INC.,
CREDIT LYONNAIS, ATLANTA AGENCY,
FIRST INTERSTATE BANK
OF CALIFORNIA,
THE LONG-TERM CREDIT
BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
NATIONSBANK OF GEORGIA, N.A.,
SOCIETE GENERALE
and
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH,
as AGENTS
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
__________________________________
Dated as of July 22, 1993
and
Amended and Restated
as of June 9, 1995
__________________________________
==============================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . 6
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . 6
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . 7
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . 10
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . 11
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . 12
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . 16
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 18
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 18
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . 20
2.03 Letter of Credit Requests . . . . . . . . . . . . . . . . . . 20
2.04 Letter of Credit Participations . . . . . . . . . . . . . . . 20
2.05 Agreement to Repay Letter of Credit Drawings . . . . . . . . . 24
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 25
2.07 Responsibility of Letter of Credit Issuers; Reimbursement of
Expenses and Disclaimer of Liability . . . . . . . . . . . . 26
SECTION 3. Commitment Commission; Fees; Reductions of Revolving Loan
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.02 Voluntary Termination of Unutilized Revolving Loan Commit-
ments . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.03 Mandatory Reduction of Revolving Loan Commitments . . . . . . 30
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . 32
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . 32
4.02 Mandatory Repayments. . . . . . . . . . . . . . . . . . . . 33
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . 35
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5. Conditions Precedent to the Restatement
(i)
Page
----
Effective Date . . . . . . . . . . . . . . . . . . . . . . . 38
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . 38
5.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 39
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 39
5.04 Corporate Documents; Proceedings . . . . . . . . . . . . . . . 39
5.05 Master Collateral Agreement . . . . . . . . . . . . . . . . . 40
5.06 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . 40
5.07 Security Agreement . . . . . . . . . . . . . . . . . . . . . . 40
5.08 Company/Sub Guaranty . . . . . . . . . . . . . . . . . . . . . 41
5.09 Mortgages; Title Insurance; Surveys; etc. . . . . . . . . . . 41
5.10 Assignment of Partnership Interests Agreement . . . . . . . . 42
5.11 Assignment of Leases . . . . . . . . . . . . . . . . . . . . . 42
5.12 Net Lease Agreements . . . . . . . . . . . . . . . . . . . . . 42
5.13 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . 42
5.14 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 42
5.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.16 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . . 43
5.17 Approvals, etc. . . . . . . . . . . . . . . . . . . . . . . . 44
5.18 Solvency Certificate; Evidence of Insurance . . . . . . . . . 45
5.19 Payment of Fees, Etc. . . . . . . . . . . . . . . . . . . . . 46
5.20 364-Day Credit Agreement. . . . . . . . . . . . . . . . . . . 46
5.21 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6. Conditions Precedent to All Credit Events . . . . . . . . . . 47
6.01 No Default; Representations and Warranties . . . . . . . . . . 47
6.02 Notice of Borrowing; Letter of Credit Request . . . . . . . . 47
6.03 Election to Become a Subsidiary Borrower . . . . . . . . . . . 47
SECTION 7. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.01 Corporate or Partnership Status . . . . . . . . . . . . . . . 50
7.02 Corporate or Partnership Power and Authority . . . . . . . . . 50
7.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . 51
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. . . . . . . . . . . . . . . . 51
7.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . 53
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . 53
7.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . 54
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . 54
(ii)
Page
----
7.11 The Collateral Documents . . . . . . . . . . . . . . . . . . . 55
7.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 57
7.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.15 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . 57
7.16 Investment Company Act . . . . . . . . . . . . . . . . . . . . 58
7.17 Public Utility Holding Company Act . . . . . . . . . . . . . . 58
7.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . 58
7.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . 59
7.20 Patents, Licenses, Franchises and Formulas . . . . . . . . . . 60
7.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . 60
7.22 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . . 60
7.23 No Other Ventures . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . 61
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . 61
8.02 Books, Records and Inspections . . . . . . . . . . . . . . . . 64
8.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . 65
8.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . 66
8.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . 67
8.06 Compliance with Environmental Laws . . . . . . . . . . . . . . 67
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . 69
8.09 Performance of Obligations . . . . . . . . . . . . . . . . . . 69
8.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . 69
8.11 Registry . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.12 Additional Guarantors; Additional Collateral; etc . . . . . . 70
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . 72
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . 76
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . 84
9.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . 85
9.07 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . 85
9.08 Consolidated Interest Coverage Ratio . . . . . . . . . . . . . 86
9.09 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . 86
9.10 Limitation on Payments and Modifications of Subordinated
Debt; Modifications of Certificate of Incorporation,
Partnership Agreements and By-Laws. . . . . . . . . . . . . 86
9.11 Limitation on Certain Restrictions on Subsidiaries . . . . . . 88
(iii)
Page
----
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . 88
9.13 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . 89
9.15 Special Purpose Corporation . . . . . . . . . . . . . . . . . 89
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . 89
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . 90
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . 90
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . 90
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
10.07 Collateral Documents . . . . . . . . . . . . . . . . . . . . 92
10.08 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.10 Gaming Authority . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 11. Definitions and Accounting Terms . . . . . . . . . . . . . . 93
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 12. The Administrative Agent and Agents. . . . . . . . . . . . . 128
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 128
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . 128
12.03 Lack of Reliance on the Administrative Agent and Agents . . . 129
12.04 Certain Rights of the Administrative Agent . . . . . . . . . 130
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . 130
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 130
12.07 The Administrative Agent and the Agents in their Individual
Capacities . . . . . . . . . . . . . . . . . . . . . . . . . 131
12.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
12.09 Resignation by the Administrative Agent and Agents . . . . . 131
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 132
13.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . 132
13.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . 134
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . 135
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . 140
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . 140
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . 141
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 142
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 143
(iv)
Page
----
13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . 143
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . 144
13.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . 144
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 146
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . 146
13.15 Application of Gaming Regulations. . . . . . . . . . . . . . 146
13.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 147
13.17 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 147
13.18. Certain Agreements with Respect to Existing Indentures . . . 148
SECTION 14. Parent Guaranty . . . . . . . . . . . . . . . . . . . . . . 150
14.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . 150
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 151
14.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . 151
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . 152
14.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 152
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . 153
14.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . 153
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
SCHEDULE I Revolving Loan Commitments
SCHEDULE II Existing Letters of Credit
SCHEDULE III Tax Matters
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Joint Ventures
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Hotel Subsidiaries
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Revolving Note
EXHIBIT B-2 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(iii) Certificate
EXHIBIT E Officers' Certificate
EXHIBIT F First Amendment to the Master Collateral
Agreement
EXHIBIT G-1 First Amendment to the Parent Pledge
Agreement
EXHIBIT G-2 First Amendment to the Company/Sub
Pledge Agreement
EXHIBIT H First Amendment to the Security Agreement
EXHIBIT I First Amendment to the Company/Sub Guaranty
(v)
EXHIBIT J-1 First Amendment to the Atlantic City Mortgage
EXHIBIT J-2 First Amendment to the Nevada Mortgages
EXHIBIT K First Amendment to the Assignment of
Partnership Interests Agreement
EXHIBIT L First Amendment to the Assignment of Leases
EXHIBIT M Consent Letter
EXHIBIT N Solvency Certificate
EXHIBIT O 364-Day Credit Agreement
EXHIBIT P Election to Become a Subsidiary Borrower
EXHIBIT Q Assignment and Assumption Agreement
(vi)
CREDIT AGREEMENT, dated as of July 22, 1993 and Amended and
Restated as of June 9, 1995, among THE PROMUS COMPANIES INCORPORATED (which
will be renamed "HARRAH'S ENTERTAINMENT, INC."), a Delaware corporation
("Parent"), EMBASSY SUITES, INC. (which will be renamed "HARRAH'S OPERATING
COMPANY, INC."), a Delaware corporation (the "Company"), each Subsidiary
Borrower (together with the Company, each a "Borrower" and, collectively, the
"Borrowers"), the Banks party hereto from time to time, BANKERS TRUST
COMPANY, THE BANK OF NEW YORK, CIBC INC., CREDIT LYONNAIS, ATLANTA AGENCY,
FIRST INTERSTATE BANK OF CALIFORNIA, THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, NATIONSBANK OF GEORGIA, N.A., SOCIETE GENERALE, and
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH, as Agents, and BANKERS TRUST
COMPANY, as Administrative Agent (all capitalized terms used herein and
defined in Section 11 are used herein as therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Parent, the Borrowers, the Banks, the Agents and the
Administrative Agent are party to a Credit Agreement, dated as of July 22,
1993 (as the same has been amended, modified or supplemented to, but not
including, the Restatement Effective Date, the "Original Credit Agreement");
WHEREAS, the Original Credit Agreement refinanced and replaced the
Existing Credit Facilities (as defined in the Original Credit Agreement); and
WHEREAS, the parties hereto wish to amend and restate and refinance
the Original Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
---------------
conditions set forth herein, each Bank severally agrees, (A) to convert, on
the Restatement Effective Date, Original Revolving Loans made by such Bank to
the respective Borrowers pursuant to the Original Credit
Agreement and outstanding on the Restatement Effective Date into a Borrowing
of Revolving Loans hereunder to such Borrowers (as so converted, together
with all Revolving Loans made pursuant to following clause (B), the
"Revolving Loans" and each, a "Revolving Loan") and (B) at any time and from
time to time on and after the Restatement Effective Date and prior to the
Final Maturity Date, to make one or more additional Revolving Loans to one or
more Borrowers, all of which Revolving Loans made pursuant to preceding
clauses (A) and (B):
(i) shall, at the option of the respective Borrower, be Base Rate
Loans or Eurodollar Loans, provided that, except as otherwise
--------
specifically provided in Section 1.10(b), all Revolving Loans comprising
the same Borrowing shall at all times be of the same Type;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x) such
Bank's Adjusted Percentage and (y) the sum of (I) the aggregate amount
of all Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the incurrence
of, the respective incurrence of Revolving Loans) at such time and (II)
the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultane-
ously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals (1) if such Bank is a Non-Defaulting
Bank, the Adjusted Revolving Loan Commitment of such Bank at such time
and (2) if such Bank is a Defaulting Bank, the Revolving Loan Commitment
of such Bank at such time;
(iv) shall not exceed for all Non-Defaulting Banks at any time
outstanding that aggregate principal amount which, when added to (x) the
amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) at such
time and (y) the aggregate principal amount of all Swingline Loans
(exclusive of Swingline Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then out-
-2-
standing, equals the Adjusted Total Revolving Loan Commitment at such
time;
(v) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to (x) the amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) at such time and (y) the
aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultane-
ously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the Total Revolving Loan Commitment at
such time; and
(vi) shall not exceed for any Subsidiary Borrower at any time
outstanding that aggregate principal amount which, when added to (x) the
amount of all Letter of Credit Outstandings (exclusive of Unpaid Draw-
ings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) of such
Subsidiary Borrower at such time and (y) the aggregate principal amount
of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) of such Subsidiary Borrower
then outstanding, equals such Subsidiary Borrower's Sub-Limit.
(b) Subject to and upon the terms and conditions set forth herein,
BTCo in its individual capacity agrees (A) to convert, on the Restatement
Effective Date, Original Swingline Loans made by BTCo to the respective
Borrowers pursuant to the Original Credit Agreement and outstanding on the
Restatement Effective Date into a Borrowing of Swingline Loans hereunder to
such Borrowers (as so converted, together with all Swingline Loans made
pursuant to following clause (B), the "Swingline Loans" and each, a
"Swingline Loan") and (B) to make at any time and from time to time on and
after the Restatement Effective Date and prior to the Swingline Expiry Date,
one or more additional Swingline Loans to one or more Borrowers, which Swing-
line Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
-3-
(iii) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks then outstanding and all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) at such time, an amount
equal to the Adjusted Total Revolving Loan Commitment at such time
(after giving effect to any reductions to the Adjusted Total Revolving
Loan Commitment on such date);
(iv) shall not exceed for any Subsidiary Borrower at any time
outstanding that aggregate principal amount which, when combined with
the aggregate principal amount of all Revolving Loans of such Subsidiary
Borrower then outstanding and the Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) of such Subsidiary Borrower at such time, equals such
Subsidiary Borrower's Sub-Limit; and
(v) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
Notwithstanding anything to the contrary in this Section 1.01(b),
BTCo will not make a Swingline Loan after it has received written notice from
the Required Banks stating that a Default or an Event of Default is then in
existence and specifically requesting that BTCo not make any Swingline Loans,
provided that BTCo may continue making Swingline Loans at such time
thereafter as the respective Default or Event of Default has been cured or
waived in accordance with the requirements of this Agreement or the Required
Banks have withdrawn the written notice described above in this sentence.
(c) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with
one or more Borrowings of Revolving Loans (with the Borrowers thereof being
the respective Borrowers of the Swingline Loans) (provided that such notice
--------
shall be deemed to have been automatically given upon the occurrence of an
Event of Default under Section 10.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 10), in which case one or
more Borrowings of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be
-4-
funded on the immediately succeeding Business Day by all Banks (without
giving effect to any reductions thereto pursuant to the last paragraph of
Section 10) pro rata based on each Bank's Adjusted Percentage (determined
--- ----
before giving effect to any termination of the Revolving Loan Commitments
pursuant to the last paragraph of Section 10) and the proceeds thereof shall
be applied directly to BTCo to repay BTCo for such outstanding Swingline
Loans. Each Bank hereby irrevocably agrees to make Revolving Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount and
in the manner specified in the preceding sentence and on the date specified
in writing by BTCo notwithstanding (i) the amount of the Mandatory Borrowing
may not comply with the minimum amount for Borrowings otherwise required
hereunder, (ii) whether any conditions specified in Section 6 are then satis-
fied, (iii) whether a Default or an Event of Default then exists, (iv) the
date of such Mandatory Borrowing and (v) the Total Revolving Loan Commitment
or the Adjusted Total Revolving Loan Commitment at such time. In the event
that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to any
Borrower), then each Bank hereby agrees that it shall forthwith purchase (as
of the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the respective Borrower on or after
such date and prior to such purchase) from BTCo such participations in the
outstanding Swingline Loans as shall be necessary to cause the Banks to share
in such Swingline Loans ratably based upon their respective Adjusted Percen-
tages (determined before giving effect to any termination of the Revolving
Loan Commitments pursuant to the last paragraph of Section 10), provided that
--------
(x) all interest payable on the Swingline Loans shall be for the account of
BTCo until the date as of which the respective participation is required to
be purchased and, to the extent attributable to the purchased participation,
shall be payable to the participant from and after such date and (y) at the
time any purchase of participations pursuant to this sentence is actually
made, the purchasing Bank shall be required to pay BTCo interest on the
principal amount of participation purchased for each day from and including
the day upon which the Mandatory Borrowing would otherwise have occurred to
but excluding the date of payment for such participation, at the overnight
Federal Funds Rate for the first three days and at the rate otherwise
applicable to Revolving Loans maintained as Base Rate Loans hereunder for
each day thereafter.
-5-
(d) Notwithstanding anything to the contrary contained in this
Agreement, on the Restatement Effective Date (and concurrently with the
repayment of any Original Revolving Loans contemplated by the Hotel
Transaction Documents) the Borrowers shall, in coordination with the
Administrative Agent and the Banks, repay outstanding Revolving Loans (after
giving effect to the conversion of Original Revolving Loans on such date) of
certain Banks and, if necessary, incur additional Revolving Loans from other
Banks in each case so that the Banks participate in each Borrowing of
Revolving Loans pro rata on the basis of their Revolving Loan Commitments.
--- ----
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of Revolving Loans shall not be less than $5,000,000
and, if greater, shall be in an integral multiple of $1,000,000; provided
--------
that Mandatory Borrowings shall be made in the amounts required by Section
1.01(c). The aggregate principal amount of each Borrowing of Swingline Loans
shall not be less than $1,000,000 and, if greater, shall be in an integral
multiple of $500,000. More than one Borrowing may occur on the same date,
but at no time shall there be outstanding more than ten Borrowings of
Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever a Borrower desires to
-------------------
make a Borrowing of Revolving Loans hereunder (excluding Borrowings of
Revolving Loans pursuant to a Mandatory Borrowing), it shall give the
Administrative Agent at its Notice Office at least one Business Day's prior
notice of each Base Rate Loan and at least three Business Days' prior notice
of each Eurodollar Loan to be made hereunder, provided that any such notice
--------
shall be deemed to have been given on a certain day only if given before
12:00 Noon (New York time) on such day. Each such notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by such Borrower in the form of Exhibit A,
appropriately completed to specify the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, the date of such Bor-
rowing (which shall be a Business Day), whether the Revolving Loans being
made pursuant to such Borrowing are to be initially maintained as Base Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly
give each Bank written notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by the immedi-
ately
-6-
preceding sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever a Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo not later than 12:00 Noon (New
York time) on the date that a Swingline Loan is to be made, written notice or
telephonic notice confirmed in writing of each Swingline Loan to be made
hereunder. Each such notice shall be irrevocable and specify in each case
(A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be made pursuant to such
Borrowing.
(ii) Without in any way limiting the obligation of such Borrower to
confirm in writing any telephonic notice of such Borrowing of Swingline
Loans, BTCo may act without liability upon the basis of telephonic notice of
such Borrowing, believed by BTCo in good faith to be from a President, a
Senior Vice President, a Vice President, a Treasurer or an Assistant
Treasurer of such Borrower, or any other person designated in writing by any
two of the foregoing officers who has appropriate signature cards on file
with BTCo, prior to BTCo's receipt of such written confirmation. In each
such case, such Borrower hereby waives the right to dispute BTCo's record of
the terms of such telephonic notice of such Borrowing of Swingline Loans.
(iii) Mandatory Borrowings shall be made upon the notice specified
in Section 1.01(c), with the respective Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of the Mandatory Borrowings
as set forth in Section 1.01(c).
1.04 Disbursement of Funds. Except as otherwise specifically
---------------------
provided in the immediately succeeding sentence, not later than 10:00 A.M.
(New York time) on the date specified in each Notice of Borrowing (or (x) in
the case of Swingline Loans, not later than 2:00 P.M. (New York time) on the
date specified pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory
Borrowings, not later than 12:00 Noon (New York time) on the date specified
in Section 1.01(c)), each Bank will make available its pro rata portion of
--- ----
each such Borrowing requested to be made on such date (or in the case of
Swingline Loans, BTCo shall make available the full amount thereof). All
such amounts shall be made available in Dollars and in immediately available
funds at the Payment Office of the Administrative Agent, and the
Administrative Agent will make available to the respective Borrower at the
Payment Office the aggregate of the amounts so made available
-7-
by the Banks. Unless the Administrative Agent shall have been notified by
any Bank prior to the date of Borrowing that such Bank does not intend to
make available to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that
such Bank has made such amount available to the Administrative Agent on such
date of Borrowing and the Administrative Agent may, in reliance upon such
assumption, make available to the respectiveBorrower a corresponding amount.
If such corresponding amount is not in fact made available to the Adminis-
trative Agent by such Bank, the Administrative Agent shall be entitled to re-
cover such corresponding amount on demand from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the
respective Borrower and such Borrower shall immediately pay such corre-
sponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover on demand from such Bank or such Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the
Administrative Agent to such Borrower until the date such corresponding
amount is recovered by the Administrative Agent, at a rate per annum equal to
(i) if recovered from such Bank, the overnight Federal Funds Rate and (ii) if
recovered from such Borrower, the rate of interest applicable to the respec-
tive Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the respective Borrower may
have against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 Notes. (a) Each Borrower's obligation to pay the principal
-----
of, and interest on, the Loans made by each Bank to such Borrower shall be
evidenced (i) if Revolving Loans, by a promissory note duly executed and
delivered by such Borrower substantially in the form of Exhibit B-1, with
blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes") and (ii) if Swingline Loans,
by a promissory note duly executed and delivered by such Borrower substan-
tially in the form of Exhibit B-2, with blanks appropriately completed in
conformity herewith (each a "Swingline Note" and, collectively, the
"Swingline Notes").
(b) The Revolving Note issued by each Borrower to each Bank shall
(i) be payable to the order of such Bank and be dated the Restatement
Effective Date, (ii) be in a stated
-8-
principal amount equal to the Revolving Loan Commitment of such Bank and be
payable in the principal amount of the outstanding Revolving Loans evidenced
thereby, (iii) mature on the Final Maturity Date, (iv) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (v)
be subject to mandatory repayment as provided in Section 4.02 and (vi) be
entitled to the benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued by each Borrower to BTCo shall (i)
be payable to the order of BTCo and be dated the Restatement Effective Date,
(ii) be in a stated principal amount equal to the Maximum Swingline Amount
and be payable in the principal amount of the outstanding Swingline Loans
evidenced thereby from time to time, (iii) mature on the Swingline Expiry
Date, (iv) bear interest as provided in the appropriate clause of Section
1.08 in respect of the Base Rate Loans evidenced thereby, (v) be subject to
mandatory repayment as provided in Section 4.02 and (vi) be entitled to the
benefits of this Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation (or any error in such notation) shall not affect any Borrower's
obligations in respect of such Loans.
1.06 Conversions. Each Borrower shall have the option to convert,
-----------
on any Business Day, at least $5,000,000 of the outstanding principal amount
of the Revolving Loans made pursuant to one or more Borrowings of one or more
Types of Revolving Loans into a Borrowing of another Type of Revolving Loan,
provided that (i) except as otherwise provided in Section 1.10(b), Eurodollar
--------
Loans may be converted into Base Rate Loans only on the last day of an
Interest Period applicable to the Revolving Loans being converted and no such
conversion of Eurodollar Loans shall reduce the outstanding principal amount
of such Eurodollar Loans made pursuant to a single Borrowing to less than
$5,000,000, (ii) unless the Required Banks otherwise agree, Base Rate Loans
may only be converted into Eurodollar Loans if no Event of Default is in
existence on the date of the conversion and (iii) no conversion pursuant to
this Section 1.06 shall result in a greater number of Borrowings of Euro-
dollar Loans than is permitted under Section 1.02. Each such
-9-
conversion shall be effected by the respective Borrower by giving the
Administrative Agent at its Notice Office prior to 12:00 Noon (New York time)
at least three Business Days' prior notice (each a "Notice of Conversion")
specifying the Revolving Loans to be so converted, the Borrowing(s) pursuant
to which such Revolving Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall give each Bank prompt written notice of any
such proposed conversion affecting any of its Revolving Loans. Upon any such
conversion the proceeds thereof will be deemed to be applied directly on the
day of such conversion to prepay the outstanding principal amount of the
Revolving Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans under
-------------------
this Agreement shall be incurred from the Banks pro rata on the basis of
--- ----
their Revolving Loan Commitments; provided that all Borrowings of Revolving
--------
Loans made pursuant to a Mandatory Borrowing shall be incurred from the Banks
pro rata on the basis of their Adjusted Percentages. It is understood that
--- ----
no Bank shall be responsible for any default by any other Bank of its obli-
gation to make Revolving Loans hereunder and that each Bank shall be obli-
gated to make the Revolving Loans provided to be made by it hereunder, re-
gardless of the failure of any other Bank to make its Revolving Loans here-
under.
1.08 Interest. (a) Each Borrower agrees to pay interest in
--------
respect of the unpaid principal amount of each Base Rate Loan from the date
the proceeds thereof are made available to such Borrower until the maturity
thereof (whether by acceleration or otherwise) at a rate per annum which
shall be equal to the Base Rate in effect from time to time.
(b) Each Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof
are made available to such Borrower until the maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall, during each
Interest Period applicable thereto, be equal to the sum of the Applicable
Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to the
greater of (x) 2% per annum in excess of the Base Rate in effect from time
-10-
to time and (y) the rate which is 2% in excess of the rate then borne by such
Loans, in each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on the last Business
Day of each March, June, September and December, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each
date occurring at three month intervals after the first day of such Interest
Period and (iii) in respect of each Loan, on any repayment (on the amount re-
paid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable
to Eurodollar Loans and shall promptly notify the respective Borrower and the
Banks thereof. Each such determination shall, absent manifest error, be
final and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of
an Interest Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), each Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of such Borrower, be a one, two, three or six month
period, provided that:
--------
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Loan (including the date of
any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Loan shall com-
mence on the day on which the next preceding Interest Period applicable
thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numer-
-11-
ically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period
-------- -------
for a Eurodollar Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(v) unless the Required Banks otherwise agree, no Interest Period
may be selected at any time when an Event of Default is then in
existence;
(vi) no Interest Period shall be selected which extends beyond the
Final Maturity Date; and
(vii) no Interest Period in respect of any Borrowing of Revolving
Loans shall be selected which extends beyond any date upon which a
mandatory repayment of the Revolving Loans will be required to be made
under Section 4.02(a), as a result of reductions to the Total Revolving
Loan Commitment pursuant to Section 3.03(b), unless the aggregate
principal amount of Revolving Loans which are Base Rate Loans or which
have Interest Periods which will expire on or before such date will be
sufficient to make such required prepayment.
If upon the expiration of any Interest Period applicable to a Bor-
rowing of Eurodollar Loans, the respective Borrower has failed to elect, or
is not permitted to elect, a new Interest Period to be applicable to such
Eurodollar Loans as provided above, such Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective as of
the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
---------------------------------
Bank shall have determined (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties hereto but, with respect
to clause (i) below, may be made only by the Administrative Agent):
-12-
(i) on any Interest Determination Date that, by reason of any
changes arising after the Restatement Effective Date affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loan because of (x) any change since the Restatement
Effective Date in any applicable law or governmental rule, regulation,
order, guideline or request (whether or not having the force of law) or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the principal
of or interest on the Notes or any other amounts payable hereunder
(except for changes in the rate of tax on, or determined by reference
to, the net income or profits of such Bank pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office
or applicable lending office is located or any subdivision thereof or
therein) or (B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the Restatement Effective Date affecting such Bank
or the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by any Bank in good
faith with any governmental request (whether or not having force of law)
or (z) impracticable as a result of a contingency occurring after the
Restatement Effective Date which materially and adversely affects the
interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give telephonic notice (confirmed in
writing) to the respective Borrower and, except in the case of clause (i)
above, to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the
-13-
other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Administrative
Agent notifies the respective Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and
any Notice of Borrowing or Notice of Conversion given by such Borrower with
respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by such Borrower, (y) in the
case of clause (ii) above, the respective Borrower shall pay to such Bank,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to such Borrower by such Bank shall, absent manifest
error, be final and conclusive and binding on all the parties hereto) and (z)
in the case of clause (iii) above, the respective Borrower shall take one of
the actions specified in Section 1.10(b) as promptly as possible and, in any
event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the respective
Borrower may (and in the case of any Eurodollar Loan affected by the
circumstances described in Section 1.10(a)(iii) shall) either (x) if the
affected Eurodollar Loan is then being made initially or pursuant to a
conversion, cancel the respective Borrowing by giving the Administrative
Agent telephonic notice (confirmed in writing) on the same date that such
Borrower was notified by the affected Bank or the Administrative Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' written notice
to the Administrative Agent, require the affected Bank to convert such
Eurodollar Loan into a Base Rate Loan; provided that, if more than one Bank
--------
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction of or
any change in any applicable law or governmental rule, regulation, order,
guideline, directive or request (whether or not having the force of law and
including, without limitation, those announced or published prior to the
Restatement Effective Date) concerning capital
-14-
adequacy, or any change in interpretation or administration thereof by any
governmental authority, central bank or comparable agency, will have the
effect of increasing the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank based on the
existence of such Bank's Revolving Loan Commitment hereunder or its obli-
gations hereunder, then the Borrowers shall pay (and shall be jointly and
severally obligated to pay) to such Bank, upon its written demand therefor,
such additional amounts as shall be required to compensate such Bank or such
other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and will
use averaging and attribution methods which are reasonable, provided that
--------
such Bank's determination of compensation owing under this Section 1.10(c)
shall, absent manifest error, be final and conclusive and binding on all the
parties hereto. Each Bank, upon determining that any additional amounts will
be payable pursuant to this Section 1.10(c), will give prompt written notice
thereof to the Borrowers, which notice shall show the basis for calculation
of such additional amounts.
1.11 Compensation. The respective Borrower shall compensate each
------------
Bank, upon its written request (which request shall (x) set forth the basis
for requesting such compensation and (y) absent manifest error, be final and
conclusive and binding upon all the parties hereto), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Bank to fund its Eurodollar Loans)
which such Bank may sustain: (i) if for any reason (other than a default by
such Bank or the Administrative Agent) a Borrowing of Eurodollar Loans, or
conversion from or into Eurodollar Loans, does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by such Borrower or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment (including any repayment made pursuant to Section 4.01
or 4.02 or a result of an acceleration of the Loans pursuant to Section 10)
or conversion of any of its Eurodollar Loans occurs on a date which is not
the last day of an Interest Period with respect thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by such Borrower; or (iv) as a consequence of
(x) any other default by such Borrower to repay its Loans when required by
the terms of this Agreement or any Note held
-15-
by such Bank or (y) any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such
Bank, it will, if requested by the Company, use reasonable efforts (subject
to overall policy considerations of such Bank) to designate another lending
office for any Loans or Letters of Credit affected by such event, provided
--------
that such designation is made on such terms that such Bank and its lending
office suffer no economic, legal or regulatory disadvantage, with the object
of avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of any Borrower or the right of any Bank provided in
Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. If any Bank (1) becomes a Defaulting
--------------------
Bank or otherwise defaults in its obligations to make Loans or fund Unpaid
Drawings, (2) is incurring or is reasonably expected to incur costs which are
or would be material in amount and are associated with a Gaming Authority's
investigation of whether or not such Bank is a Qualified Person or (3)
refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 13.12(b), the Company shall have the
right, if no Default or Event of Default will exist immediately after giving
effect to such replacement, to replace such Bank (the "Replaced Bank") with
one or more other Qualified Person or Persons, none of whom shall constitute
a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank"), acceptable to the Administrative Agent and each Letter
of Credit Issuer, provided that:
--------
(i) at the time of any replacement pursuant to this Section
1.13, the Replacement Bank shall enter into one or more Assignment
and Assumption Agreements pursuant to, and in accordance with the
terms of, Section 13.04(b) (and with all fees payable pursuant to
said Section 13.04(b) to be paid by the Replacement Bank) pursuant
to which the Replacement Bank shall acquire the Revolving Loan
Commitment and all outstanding Revolving Loans of, and in each case
participations in Letters of Credit by, the Replaced Bank and, in
connection
-16-
therewith, shall pay to (x) the Replaced Bank in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and
all accrued interest on, all outstanding Revolving Loans of the Replaced
Bank, (B) an amount equal to all Unpaid Drawings that have been funded
by (and not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (C) an amount
equal to all accrued, but theretofore unpaid, Fees owing to the Replaced
Bank pursuant to Section 3.01, (y) the respective Letter of Credit
Issuer an amount equal to such Replaced Bank's Adjusted Percentage (for
this purpose, determined as if the adjustment described in clause (y) of
the immediately succeeding sentence had been made with respect to such
Replaced Bank) of any applicable Unpaid Drawing (which at such time re-
mains an Unpaid Drawing) with respect to Letters of Credit issued by
such Letter of Credit Issuer to the extent such amount was not
theretofore funded by such Replaced Bank and (z) BTCo an amount equal to
such Replaced Bank's Adjusted Percentage of any Mandatory Borrowing to
the extent such amount was not theretofore funded by such Replaced Bank;
and
(ii) all obligations of the Borrowers owing to the Replaced
Bank (including all obligations, if any, owing pursuant to Section
1.11, but excluding those obligations specifically described in
clause (i) above in respect of which the assignment purchase price
has been, or is concurrently being, paid) shall be paid in full to
such Replaced Bank concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements,
the payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Revolving Notes executed by the Borrowers, (x) the Replacement
Bank shall become a Bank hereunder and the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections
1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to such
Replaced Bank and (y) if such Replaced Bank is a Defaulting Bank, the
Adjusted Percentages of the Banks shall be automatically adjusted at such
time to give effect to such
-17-
replacement (and to give effect to the replacement of a Defaulting Bank with
one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions set forth herein, any Borrower may request that a Letter of Credit
Issuer issue, at any time and from time to time on and after the Restatement
Effective Date and prior to the Final Maturity Date, for the account of such
Borrower and for the benefit of any holder (or any trustee, agent or other
similar representative for any such holder) of L/C Supportable Indebtedness
of such Borrower or any of its Subsidiaries, an irrevocable standby letter of
credit, in a form customarily used by such Letter of Credit Issuer or in such
other form as has been approved by such Letter of Credit Issuer (each such
standby letter of credit, a "Letter of Credit") in support of such L/C
Supportable Indebtedness. It is hereby acknowledged and agreed that each of
the letters of credit which were issued under the Original Credit Agreement
prior to the Restatement Effective Date and which remain outstanding on the
Restatement Effective Date (the "Existing Letters of Credit") shall, from and
after the Restatement Effective Date, constitute a "Letter of Credit" for
purposes of this Agreement. Each Existing Letter of Credit and the Stated
Amount thereof, together with the account party and beneficiary thereunder,
is set forth on Schedule II.
(b) Each Letter of Credit Issuer hereby agrees that it will, at
any time and from time to time on or after the Restatement Effective Date and
prior to the Final Maturity Date, following its receipt of the respective
Letter of Credit Request, issue for the account of the respective Borrower
one or more Letters of Credit in support of such L/C Supportable Indebtedness
of such Borrower or any of its Subsidiaries as is permitted to remain
outstanding without giving rise to a Default or an Event of Default, provided
--------
that no Letter of Credit Issuer shall be under any obligation to issue any
Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter
of Credit Issuer from issuing such Letter of Credit or any requirement
of law applicable to such Letter of Credit Issuer or any request or
directive (whether or not having the force of law) from any governmental
authority with jurisdiction over such Letter of Credit Issuer shall
prohibit, or request that such Letter of Credit Issuer refrain from,
-18-
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Letter of Credit Issuer with
respect to such Letter of Credit any restriction or reserve or capital
requirement (for which such Letter of Credit Issuer is not otherwise
compensated) not in effect on the date hereof, or any unreimbursed loss,
cost or expense which was not applicable, in effect or known to such
Letter of Credit Issuer as of the date hereof and which such Letter of
Credit Issuer in good faith deems material to it; or
(ii) such Letter of Credit Issuer shall have received notice from
the Required Banks prior to the issuance of such Letter of Credit of the
type described in the penultimate sentence of Section 2.03(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall
hereafter be issued the Stated Amount of which, when added to the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the
date of, and prior to the issuance of, the respective Letter of Credit) at
such time, would exceed, when added to the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks and all Swingline Loans then
outstanding, an amount equal to the Adjusted Total Revolving Loan Commitment
at such time, (ii) no Letter of Credit shall hereafter be issued the Stated
Amount of which, when added to the Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid on the date of, and prior to the issuance
of, the respective Letter of Credit) at such time, would exceed $50,000,000,
(iii) no Letter of Credit shall hereafter be issued for the account of any
Subsidiary Borrower the Stated Amount of which, when added to the sum of (A)
the Letter of Credit Outstandings for such Subsidiary Borrower (exclusive of
Unpaid Drawings which are repaid on the date of, and prior to the issuance
of, the respective Letter of Credit) at such time and (B) the aggregate
principal amount of all Revolving Loans and Swingline Loans then outstanding
for such Subsidiary Borrower, would exceed such Subsidiary Borrower's Sub-
Limit and (iv) each Letter of Credit hereafter issued shall by its terms
terminate on or before the earlier of (x) the date which occurs 12 months
after the date of the issuance thereof (although any such Letter of Credit
may be extendable for successive periods of up to 12 months, but not beyond
the Final Maturity Date, on terms acceptable to the respective Letter of
Credit Issuer) and (y) the Final Maturity Date.
-19-
2.02 Minimum Stated Amount. The Stated Amount of each Letter of
---------------------
Credit shall be not less than $500,000 or such lesser amount as is acceptable
to the respective Letter of Credit Issuer.
2.03 Letter of Credit Requests. (a) Whenever a Borrower desires
-------------------------
that a Letter of Credit be issued for its account, such Borrower shall give
the Administrative Agent and the respective Letter of Credit Issuer at least
five Business Days' (or such shorter period as is acceptable to such Letter
of Credit Issuer in any given case) written notice thereof. Each notice
shall be in the form of Exhibit C (each a "Letter of Credit Request"). The
Administrative Agent shall promptly transmit copies of each Letter of Credit
Request to each Bank.
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the respective Borrower that such Letter
of Credit may be issued in accordance with, and will not violate the
requirements of, Section 2.01(c). Unless the respective Letter of Credit
Issuer has received written notice from the Required Banks before it issues a
Letter of Credit that one or more of the conditions specified in Section 5 or
Section 6 are not then satisfied, or that the issuance of such Letter of
Credit would violate Section 2.01(c), then such Letter of Credit Issuer may
issue the requested Letter of Credit for the account of the respective Bor-
rower in accordance with such Letter of Credit Issuer's usual and customary
practices. Upon its issuance of any Letter of Credit, the respective Letter
of Credit Issuer shall promptly notify each Bank of such issuance, which
notice shall be accompanied by a copy of the Letter of Credit actually
issued.
2.04 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit (or upon the
Restatement Effective Date with respect to the Existing Letters of Credit),
such Letter of Credit Issuer shall be deemed to have sold and transferred to
each Bank, other than such Letter of Credit Issuer (each such Bank, in its
capacity under this Section 2.04, a "Participant"), and each such Participant
shall be deemed irrevocably and unconditionally to have purchased and
received from such Letter of Credit Issuer, without recourse or warranty, an
undivided interest and participation, to the extent of such Participant's Ad-
justed Percentage, in such Letter of Credit, each drawing made thereunder and
the obligations of the respective Borrower under this Agreement with respect
thereto, and any security therefor or guaranty pertaining
-20-
thereto. This Agreement is intended by the parties to effect an immediate
purchase by each Participant and sale by the respective Letter of Credit
Issuer of such Participant's Adjusted Percentage of such rights and
obligations in each Letter of Credit issued hereunder, and it is not to be
construed as a loan or a commitment to make a loan by such Participant to
such Letter of Credit Issuer, and the relationship between such Participant
and such Letter of Credit Issuer shall notbe a debtor-creditor relationship.
Each Participant hereby absolutely and unconditionally assumes and agrees to
pay and discharge when due, ratably in accordance with its Adjusted
Percentage, the obligations of each Letter of Credit Issuer under the Letters
of Credit issued by it, by paying to such Letter of Credit Issuer in
accordance with and to the extent provided by clause (c) of this Section
2.04, its ratable share of all amounts advanced by such Letter of Credit
Issuer subsequent to the date hereof in connection with any Letter of Credit
issued by it. Upon any change in the Revolving Loan Commitments or Adjusted
Percentages of the Banks pursuant to Section 1.13 or 13.04 or as a result of
a Bank Default, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment
to the participations pursuant to this Section 2.04 to reflect the new
Adjusted Percentages of the assignor and assignee Bank or of all Banks, as
the case may be.
(b) In determining whether to pay under any Letter of Credit, the
respective Letter of Credit Issuer shall have no obligation relative to the
Participants other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by the respective Letter of
Credit Issuer under or in connection with any Letter of Credit if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for such Letter of Credit Issuer any resulting liability to any
Borrower or any Participant.
(c) In the event that any Letter of Credit Issuer makes any
payment under any Letter of Credit (including any Existing Letter of Credit)
and the respective Borrower shall not have reimbursed such amount in full to
such Letter of Credit Issuer pursuant to Section 2.05(a), such Letter of
Credit Issuer shall promptly notify the Administrative Agent, which shall
promptly notify each Participant of such failure, and each Participant shall
absolutely and unconditionally pay to the Administrative Agent for the
account of such Letter of
-21-
Credit Issuer the amount of such Participant's Adjusted Percentage of such
unreimbursed payment. Each Participant required to fund a payment pursuant
to the preceding sentence shall do so in Dollars and in same day funds,
without reduction for any setoff or counterclaim of any nature whatsoever, on
the Business Day on which the Administrative Agent so notified such
Participant, if such notice was given before 11:00 A.M. (New York time), or
if such notice was not given by such time, on the Business Day next following
such notice. If and to the extent such Participant shall not have so made
its Adjusted Percentage of the amount of such payment available as aforesaid,
such Participant agrees to pay to the Administrative Agent for the account of
such Letter of Credit Issuer, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to such Letter of Credit Issuer at the overnight Federal Funds Rate.
The failure of any Participant to make available to the respective Letter of
Credit Issuer its Adjusted Percentage of any payment under any Letter of
Credit shall not relieve any other Participant of its obligation hereunder to
make available as aforesaid, its Adjusted Percentage of any Letter of Credit
on the date required, as specified above, nor shall any Participant be
relieved of its obligations to make such payments by reason of noncompliance
by any other party to and with the terms of the other Credit Documents or for
any other reason, but no Participant shall be responsible for the failure of
any other Participant to make available to such Letter of Credit Issuer such
other Participant's Adjusted Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which it has received any payments from any
Participant pursuant to clause (c) of this Section 2.04 such Letter of Credit
Issuer shall promptly pay such amount in Dollars and in same day funds, less
the proportion of such amount due to such Letter of Credit Issuer, to the
Administrative Agent for the account of each Participant which has paid its
Adjusted Percentage thereof, whereupon the Administrative Agent shall
promptly distribute the amount so paid to each such Participant ratably in
accordance with its proportion of the aggregate amount theretofore funded by
all Participants.
(e) Upon the request of any Participant, the respective Letter of
Credit Issuer shall furnish to such Participant copies of any Letter of
Credit issued by it and such other documentation as may reasonably be
requested by such Participant.
-22-
(f) The obligations of the Participants to make payments as
provided in clause (c) of this Section 2.04 with respect to Letters of Credit
issued by it shall be irrevocable and not subject to any counterclaim, set-
off, other defense or any qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which the respective Borrower or Participant may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Participant, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or therein or any unrelated
transactions (including any underlying transaction between the
respective Borrower and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
(g) If any Participant shall fail to make any payment required
pursuant to this Agreement in respect of any Letter of Credit at the time, in
the funds and at the place provided, the respective Letter of Credit Issuer
may, but shall not be obligated to, advance funds on behalf of such
Participant (the "Defaulting Participant"). Each such advance shall be
secured by the Defaulting Participant's interest in all payments and remedies
under this Agreement and the other Credit Documents, the respective Letter of
Credit Issuer shall be subrogated to the rights of the Defaulting Participant
in this Agreement and the other Credit
-23-
Documents and, at the request of the respective Letter of Credit Issuer, the
Administrative Agent shall cause such advance to be repaid by application of
payments which the Defaulting Participant would otherwise be entitled to
receive under this Agreement and the other Credit Documents. Notwithstanding
clause (c) of this Section 2.04, any amount not paid by the Defaulting
Participant to the respective Letter of Credit Issuer as provided herein and
each advance made by such Letter of Credit Issuer hereunder shall bear
interest for each day from the date each such payment was due or such advance
was made until such payment shall be made in full or advance repaid in full
at the overnight Federal Funds Rate for the first three days during which the
Defaulting Participant is in default, and thereafter at the Prime Lending
Rate.
2.05 Agreement to Repay Letter of Credit Drawings. (a) Each
--------------------------------------------
Borrower hereby agrees to reimburse the respective Letter of Credit Issuer,
by making payment to the Administrative Agent for the account of such Letter
of Credit Issuer in immediately available funds at the Payment Office, for
any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued for such Borrower's account (each such amount, so
paid until reimbursed, an "Unpaid Drawing"), immediately after, and in any
event on the date of, such payment or disbursement, with interest on the
amount so paid or disbursed by such Letter of Credit Issuer, to the extent
not reimbursed prior to 12:00 Noon (New York time) on the date of such
payment or disbursement, from and including the date paid or disbursed to but
excluding the date such Letter of Credit Issuer was reimbursed by such
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time, provided, however, to the extent such amounts are not
-------- -------
reimbursed prior to 12:00 Noon (New York time) on the third Business Day
following notice to the Company by the Administrative Agent or the respective
Letter of Credit Issuer of such payment or disbursement, interest shall
thereafter accrue on the amounts so paid or disbursed by such Letter of
Credit Issuer (and until reimbursed by such Borrower) at a rate per annum
which shall be the Base Rate in effect from time to time plus 2%, in each
such case, with interest to be payable on demand, it being understood and
agreed, however, that the notice referred to in the immediately preceding
proviso shall not be required to be given if a Bankruptcy Event shall have
occurred and be continuing and, in such case, interest shall accrue on and
after such third Business Day at the rate provided in such proviso. The
respective Letter of Credit Issuer shall give the respective Borrower prompt
notice of each Drawing under any Letter of
-24-
Credit, provided that the failure to give any such notice shall in no way
--------
affect, impair or diminish such Borrower's obligations hereunder.
(b) The obligations of each Borrower under this Section 2.05 to
reimburse the respective Letter of Credit Issuer with respect to Unpaid Draw-
ings (including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which such Borrower may have or have had
against any Bank (including in its capacity as issuer of the Letter of Credit
or as Participant), including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit (each a "Drawing") to conform
to the terms of the Letter of Credit or any nonapplication or misapplication
by the beneficiary of the proceeds of such Drawing; provided, however, that
-------- -------
such Borrower shall not be obligated to reimburse such Letter of Credit
Issuer for any wrongful payment made by such Letter of Credit Issuer under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Letter of Credit Issuer.
2.06 Increased Costs. If at any time the introduction of or any
---------------
change in any applicable law, rule, regulation, order, guideline or request
or in the interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by any Letter of Credit Issuer or any Participant with any request
or directive by any such authority (whether or not having the force of law),
or any change in generally accepted accounting principles, shall either
(i) impose, modify or make applicable any reserve, deposit, capital adequacy
or similar requirement against letters of credit issued by such Letter of
Credit Issuer or participated in by any Participant, or (ii) impose on such
Letter of Credit Issuer or any Participant any other conditions relating,
directly or indirectly, to this Agreement or any Letter of Credit; and the
result of any of the foregoing is to increase the cost to such Letter of
Credit Issuer or any Participant of issuing, maintaining or participating in
any Letter of Credit, or reduce the amount of any sum received or receivable
by such Letter of Credit Issuer or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of Credit, then, upon
demand to the respective Borrower by such Letter of Credit Issuer or any
Participant (a copy of which demand shall be sent by such Letter of Credit
Issuer or such Participant to the Administrative Agent), such Borrower shall
pay (and the Borrowers shall be
-25-
jointly and severally obligated to pay) to such Letter of Credit Issuer or
such Participant such additional amount or amounts as will compensate such
Letter of Credit Issuer or such Participant for such increased cost or re-
duction in the amount receivable or reduction on the rate of return on its
capital. Any Letter of Credit Issuer or any Participant, upon determining
that any additional amounts will be payable pursuant to this Section 2.06,
will give prompt written notice thereof to the respective Borrower, which
notice shall include a certificate submitted to such Borrower by such Letter
of Credit Issuer or such Participant (a copy of which certificate shall be
sent by such Letter of Credit Issuer or such Participant to the
Administrative Agent), setting forth in reasonable detail the basis for the
calculation of such additional amount or amounts necessary to compensate such
Letter of Credit Issuer or such Participant. The certificate required to be
delivered pursuant to this Section 2.06 shall, absent manifest error, be
final and conclusive and binding on the respective Borrower.
2.07 Responsibility of Letter of Credit Issuers; Reimbursement of
------------------------------------------------------------
Expenses and Disclaimer of Liability. (a) Each Letter of Credit Issuer, in
------------------------------------
dealing with the participation share granted to any Participant under this
Agreement, shall have no duties or responsibilities except for those that are
expressly set forth in this Agreement. The duties of each Letter of Credit
Issuer shall be ministerial and administrative in nature; no Letter of Credit
Issuer shall have by reason of this Agreement or any other agreement a
fiduciary relationship with any Participant.
(b) Each Letter of Credit Issuer will handle all matters
concerning this Agreement in accordance with its usual practice in managing
its own affairs in the ordinary course of business, and will not be liable to
any Participant, except for its gross negligence or willful misconduct.
Without limiting the generality of the foregoing limitation of liability, and
subject to the obligation to handle matters in accordance with the respective
Letter of Credit Issuer's usual practice in managing its own affairs in the
ordinary course of business, such Letter of Credit Issuer (i) shall not be
responsible to any Participant for any statement, representation or warranty
made in this Agreement, (ii) shall not be responsible for the due execution,
effectiveness, legality, validity, binding effect, enforceability or
sufficiency of this Agreement, (iii) shall not be bound to ascertain or
inquire as to the performance of any of the terms, provisions or conditions
of this Agreement
-26-
on the part of any Person, (iv) shall be entitled to rely upon any writing,
statement or notice or any telegraph, telex or teletyped message reasonably
believed by it to be genuine and correct and believed by it to be signed and
sent by the proper person, (v) may consult with legal counsel, independent
public accountants, architects and any other experts such Letter of Credit
Issuer may select with reasonable care and shall be fully protected in any
action taken or omitted to be taken by it in accordance with the advice or
opinion of such counsel, accountants, architects or experts, (vi) may employ
agents or attorneys-in-fact and shall not be liable for the default or
misconduct of any such person selected by such Letter of Credit Issuer with
reasonable care and (vii) shall not be responsible for the performance of the
repayment obligations under this Agreement, provided that clauses (i), (ii)
--------
and (iii) of this clause (b) shall not be interpreted to relieve any Letter
of Credit Issuer of its own responsibility in such matters under this
Agreement.
(c) No Letter of Credit Issuer has made nor does it make any
express or implied representations or warranties with respect to the past,
present or future financial condition of any Credit Party or with respect to
the legality, enforceability, validity, genuineness, subsistence, priority or
value of the repayment obligations of any Credit Party under (i) this
Agreement or any other Credit Document or (ii) any security therefor.
(d) Each Participant will reimburse the respective Letter of
Credit Issuer on demand, ratably in accordance with such Participant's
Adjusted Percentage, against any and all reasonable costs, losses,
liabilities, expenses and disbursements that may be incurred or made by such
Letter of Credit Issuer in connection with any action that may be necessary
or advisable to be taken by such Letter of Credit Issuer to recover amounts
owed with respect to any Letter of Credit issued by such Letter of Credit
Issuer or the other Credit Documents for which such Letter of Credit Issuer
has not been reimbursed. Each Participant will reimburse the respective
Letter of Credit Issuer on demand, ratably in accordance with such
Participant's Adjusted Percentage, against any and all reasonable costs,
losses, liabilities, expenses and disbursements that may be incurred by such
Letter of Credit Issuer in connection with the performance of its duties
under this Agreement, provided that no Participant will be liable for any
--------
such costs, losses, liabilities, expenses and disbursements which arise
solely out of the
-27-
gross negligence or willful misconduct of such Letter of Credit Issuer.
(e) Nothing contained in this Agreement shall confer upon any
Letter of Credit Issuer or any Participant any interest in, or subject any
Letter of Credit Issuer or any Participant to any liability for, the assets
or liabilities of the other parties to the Credit Documents, except as to the
transactions referred to in this Agreement. No Letter of Credit Issuer
assumes any liability to any Participant for the repayment of its
participation except to the extent that such Participant shall be entitled to
receive payments in accordance with Section 2.04 of this Agreement.
SECTION 3. Commitment Commission; Fees; Reductions of Revolving
----------------------------------------------------
Loan Commitment.
---------------
3.01 Fees. (a) The Company agrees to pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank a commitment commission
(the "Commitment Commission") for the period from the Restatement Effective
Date to but excluding the Final Maturity Date (or such earlier date as the
Total Revolving Loan Commitment shall have been terminated), computed at a
rate for each day equal to the Applicable Commitment Commission Percentage on
the daily average Unutilized Revolving Loan Commitment of such Non-Defaulting
Bank. Accrued Commitment Commission shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December
and on the Final Maturity Date or such earlier date upon which the Total
Revolving Loan Commitment is terminated.
(b) The Company agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank (based on their respective Adjusted
Percentages) a fee in respect of each Letter of Credit issued hereunder,
including each Existing Letter of Credit (the "Letter of Credit Fee"), for
the period from and including the date of issuance of such Letter of Credit
(or, in the case of the Existing Letters of Credit, from the Restatement
Effective Date) to and including the termination of such Letter of Credit,
computed at a rate per annum equal to the Applicable Margin for Eurodollar
Loans, as in effect from time to time, on the daily average Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December and upon the first day on or after the termination of
the Total Revolving Loan Commitment upon which no Letters of Credit remain
outstanding.
-28-
(c) The Company agrees to pay to each Letter of Credit Issuer, for
its own account, a facing fee in respect of each Letter of Credit issued by
it hereunder, including each Existing Letter of Credit (the "Facing Fee"),
for the period from and including the date of issuance of such Letter of
Credit (or, in the case of the Existing Letters of Credit, from the
Restatement Effective Date) to and including the termination of such Letter
of Credit, computed at a rate equal to 1/8 of 1% per annum of the daily
average Stated Amount of such Letter of Credit. Accrued Facing Fees shall be
due and payable quarterly in arrears on the last Business Day of each March,
June, September and December and upon the first day on or after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(d) The Company agrees to pay to each Letter of Credit Issuer,
upon each drawing under, issuance of, or amendment to, any Letter of Credit
issued by such Letter of Credit Issuer, such amount as shall at the time of
such event be the administrative charge which such Letter of Credit Issuer is
generally imposing in connection with such occurrence with respect to letters
of credit.
(e) Each Borrower agrees to pay to the Administrative Agent, for
its own account, such other fees as have been agreed to in writing by such
Borrower and the Administrative Agent.
3.02 Voluntary Termination of Unutilized Revolving Loan Commit-
----------------------------------------------------------
ments. (a) Upon at least two Business Days' prior written notice to the
-----
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Company shall have
the right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in whole or in
part, in integral multiples of $5,000,000 in the case of partial reductions
to the Total Unutilized Revolving Loan Commitment, provided that (i) each
--------
such reduction shall apply to reduce the remaining Scheduled Commitment
Reductions in direct order of maturity (based upon the amount of each such
remaining Scheduled Commitment Reduction), (ii) each such reduction shall
apply proportionately to permanently reduce the Revolving Loan Commitment of
each Bank and (iii) the reduction to the Total Unutilized Revolving Loan
Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any Bank to be reduced (as required by preceding clause
(ii)) by an amount which exceeds the remainder of (x) the
-29-
Unutilized Revolving Loan Commitment of such Bank as in effect immediately
before giving effect to such reduction minus (y) such Bank's Adjusted
Percentage of the aggregate principal amount of Swingline Loans then
outstanding.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 13.12(b), the Company shall have the right, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the
Banks), to terminate the entire Revolving Loan Commitment of such Bank, so
long as all Revolving Loans, together with accrued and unpaid interest, Fees
and all other amounts owing to such Bank are repaid concurrently with the
effectiveness of such termination (at which time Schedule I shall be deemed
modified to reflect such changed amounts), and at such time, such Bank shall
no longer constitute a "Bank" for purposes of this Agreement, except with
respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall
survive as to such repaid Bank.
3.03 Mandatory Reduction of Revolving Loan Commitments. (a) In
-------------------------------------------------
addition to any other mandatory commitment reductions pursuant to this
Section 3.03, the Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate in its entirety on the Final
Maturity Date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, but subject to reduction as provided in clause
(i) of the proviso set forth in Section 3.02(a), on each date set forth
below, the Total Revolving Loan Commitment shall be reduced by the amount set
forth opposite such date (each reduction required by this Section 3.03(b), a
"Scheduled Commitment Reduction"):
Date Amount
---- ------
July 31, 1998 $50,000,000
January 31, 1999 $75,000,000
July 31, 1999 $75,000,000
January 31, 2000 $100,000,000
-30-
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on the 15th day after the date on which any
Change of Control occurs, the Total Revolving Loan Commitment shall be
reduced to zero unless the Required Banks otherwise agree in writing in their
sole discretion.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Restatement Effective
Date upon which Parent or any of its Subsidiaries receives any proceeds from
any incurrence by Parent or any of its Subsidiaries of Permitted Designated
Indebtedness, the Total Revolving Loan Commitment shall be reduced by an
amount equal to its Share of the cash proceeds of the respective incurrence
of Permitted Designated Indebtedness (net of underwriting or placement
discounts and commissions and other reasonable costs associated therewith),
provided that in the case of each incurrence of Existing Casino Non-Recourse
--------
Financing, the Total Revolving Loan Commitment shall only be reduced by an
amount equal to its Share of the Minimum Proceeds Amount for the respective
Casino Property; provided further, to the extent that the 364-Day Banks do
not require that their full Share be applied to reduce the Total 364-Day
Revolving Loan Commitment, the amount of their Share not so applied shall
instead be applied to reduce the Total Revolving Loan Commitment as required
by clause (f) of this Section 3.03.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Restatement Effective
Date upon which Parent or any of its Subsidiaries receives proceeds from any
sale of assets constituting Collateral (but excluding (i) sales of inventory,
materials and equipment in the ordinary course of business and (ii) sales of
obsolete, uneconomic or worn-out equipment or materials), the Total Revolving
Loan Commitment shall be reduced by an amount equal to its Share of 100% of
the Net Sale Proceeds thereof, provided that, in the case of any sale of a
Casino Property, the Total Revolving Loan Commitment shall only be reduced by
an amount equal to its Share of the Minimum Proceeds Amount for the
respective Casino Property or Casino Owner thereof; provided further, to the
extent that the 364-Day Banks do not require that their full Share be applied
to reduce the Total 364-Day Revolving Loan Commitment, the amount of their
Share not so applied instead be applied to reduce the Total Revolving Loan
Commitment as required by clause (f) of this Section 3.03.
-31-
(f) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, following any mandatory commitment reduction
required by Section 3.03(d) or (e) with respect to which the Shares of the
various Issues of Senior Debt have been calculated in accordance with clause
(A) of the definition of "Share," on the first date thereafter upon which it
is subsequently determined that the amount which will actually be required to
mandatorily reduce the Total 364-Day Revolving Loan Commitment is less than
the Share applicable thereto (whether because the 364-Day Banks elected not
to require such reduction or otherwise), then the amount which will not be so
required to mandatorily reduce the Total 364-Day Revolving Loan Commitment
shall instead be required to reduce the Total Revolving Loan Commitment as
required by Section 3.03(d) or (e), as the case may be.
(g) The Total Revolving Loan Commitment shall be reduced, and the
Revolving Loan Commitment of the respective Former Bank shall be terminated,
in the amount and at the times provided in Section 13.04(d).
(h) Except as otherwise provided in clause (g) of this Section
3.03, each reduction to the Total Revolving Loan Commitment pursuant to this
Section 3.03 shall be applied proportionately to reduce the Revolving Loan
Commitment of each Bank.
SECTION 4. Prepayments; Payments; Taxes.
----------------------------
4.01 Voluntary Prepayments. Each Borrower shall have the right to
---------------------
prepay the Loans made to it, without premium or penalty, in whole or in part
at any time and from time to time on the following terms and conditions:
(i) such Borrower shall give the Administrative Agent prior to
12:00 Noon (New York time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans (or same
day notice in the case of Swingline Loans provided such notice is given
prior to 12:00 Noon (New York time) on such Business Day) and (y) at
least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay Eurodollar Loans,
whether Revolving Loans or Swingline Loans shall be prepaid, the amount
of such prepayment and the Types of Loans to be prepaid and, in the case
of Eurodollar Loans, the specific Borrowing or Borrowings
-32-
pursuant to which made, which notice the Administrative Agent shall
promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of
at least $5,000,000 (or $1,000,000 in the case of Swingline Loans),
provided that, if any partial prepayment of Eurodollar Loans made
--------
pursuant to any Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $5,000,000, then
such Borrowing may not be continued as a Borrowing of Eurodollar Loans
and any election of an Interest Period with respect thereto given by the
Borrower shall have no force or effect;
(iii) each prepayment in respect of any Revolving Loans made pur-
suant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans, provided that, at the respective Borrower's election in connec-
--------
tion with any prepayment of Revolving Loans pursuant to this Section
4.01, such prepayment shall not be applied to any Revolving Loan of a
Defaulting Bank; and
(iv) in the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the Required Banks
as provided in Section 13.12(b), the Borrowers shall have the right,
upon five Business Days' prior written notice to the Administrative
Agent at its Notice Office (which notice the Administrative Agent shall
promptly transmit to each of the Banks) repay all Revolving Loans,
together with accrued and unpaid interest, Fees, and other amounts owing
to such Bank in accordance with said Section 13.12(b) so long as (A) the
Revolving Loan Commitment of such Bank is terminated concurrently with
such repayment (at which time Schedule I shall be deemed modified to
reflect the changed Revolving Loan Commitments) and (B) the consents
required by Section 13.12(b) in connection with the repayment pursuant
to this clause (iv) have been obtained.
4.02 Mandatory Repayments. (a)(i) On any day on which the sum of
--------------------
the aggregate outstanding principal amount of Revolving Loans made by Non-
Defaulting Banks, Swingline Loans and the Letter of Credit Outstandings
exceeds the Adjusted Total Revolving Loan Commitment as then in effect, there
shall be required to be repaid on such date that principal amount of
Swingline Loans and, after all Swingline Loans have been repaid in full,
Revolving Loans of Non-
-33-
Defaulting Banks in an amount equal to such excess. If, after giving effect
to the repayment of all outstanding Swingline Loans and Revolving Loans of
Non-Defaulting Banks, the aggregate amount of the Letter of Credit Out-
standings exceeds the Adjusted Total Revolving Loan Commitment as then in
effect, the Company shall pay to the Administrative Agent at the Payment
Office on such date an amount of cash or cash equivalents equal to the amount
of such excess (up to a maximum amount equal to the Letter of Credit
Outstandings at such time), such cash or cash equivalents to be held as
security for all obligations of the Borrowers to Non-Defaulting Banks
hereunder in a cash collateral account to be established by the
Administrative Agent.
(ii) On any day on which the sum of the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans made to any
Subsidiary Borrower and the Letter of Credit Outstandings in respect of
Letters of Credit issued for the account of such Subsidiary Borrower exceeds
such Subsidiary Borrower's Sub-Limit, such Subsidiary Borrower shall repay
principal of its Swingline Loans and, after the Swingline Loans have been
repaid in full, its Revolving Loans in an amount equal to such excess. If,
after giving effect to the repayment of all of its outstanding Swingline
Loans and Revolving Loans, the aggregate amount of its Letter of Credit
Outstandings exceeds such Subsidiary Borrower's Sub-Limit, such Subsidiary
shall pay to the Administrative Agent at the Payment Office on such date an
amount of cash or cash equivalents equal to the amount of such excess (up to
a maximum amount equal to its Letter of Credit Outstandings at such time),
such cash or cash equivalents to be held as security for all obligations of
such Subsidiary Borrower hereunder in a cash collateral account to be
established by the Administrative Agent.
(iii) On any day on which the aggregate outstanding principal amount
of Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Borrowers shall repay principal of
Revolving Loans of such Defaulting Bank in an amount equal to such excess.
(b) With respect to each repayment of Revolving Loans required by
this Section 4.02, the respective Borrower may designate the Types of
Revolving Loans which are to be repaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, provided that:
--------
(i) repayments of Eurodollar Loans pursuant to this Section 4.02 may only be
made on the last day of an Interest Period applicable thereto unless all
Eurodollar Loans with
-34-
Interest Periods ending on such date of required repayment and all Base Rate
Loans have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $5,000,000, such
Borrowing shall be converted on such day into a Borrowing of Base Rate Loans;
(iii) each repayment of any Revolving Loans made by Non-Defaulting Banks
pursuant to a Borrowing shall be applied pro rata among such Revolving Loans;
--- ----
and (iv) each repayment of any Revolving Loans made by Defaulting Banks
pursuant to a Borrowing shall be applied pro rata among suchRevolving Loans.
--- ----
In the absence of a designation by any Borrower as described in the preceding
sentence, the Administrative Agent shall, upon telephonic notice to the
Company and subject to the above, make such designation in its sole
discretion.
(c) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, (i) all then outstanding Swingline Loans shall be repaid
in full on the Swingline Expiry Date and (ii) all then outstanding Revolving
Loans shall be repaid in full on the Final Maturity Date.
4.03 Method and Place of Payment. Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement or under any
Note shall be made to the Administrative Agent for the account of the Bank or
Banks entitled thereto not later than 12:00 Noon (New York time) on the date
when due and shall be made in Dollars in immediately available funds at the
Payment Office of the Administrative Agent. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
4.04 Net Payments. (a) All payments made by any Borrower
------------
hereunder or under any Note, will be made without setoff, counterclaim or
other defense. Except as provided in Section 4.04(b), all such payments will
be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect
to such payments (but excluding, except as provided in the immediately
succeeding sentence, any tax imposed on or measured by the net income or
profits of a Bank pursuant to
-35-
the laws of the United States and the jurisdiction in which it is organized
or in which the principal office or applicable lending office of such Bank is
located or any subdivision or taxing authority thereof or therein) and all
interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the Borrowers agree to reimburse
each Bank, upon the written request of such Bank, for taxes imposed on or
measured by the net income of such Bank pursuant to the laws of the jurisdic-
tion in which the principal office or applicable lending office of such Bank
is located or under the laws of any political subdivision or taxing authority
of any such jurisdiction in which the principal office or applicable lending
office of such Bank is located and for any withholding of income or similar
taxes imposed by the United States of America as such Bank shall determine
are payable by, or withheld from, such Bank in respect of such amounts so
paid to or on behalf of such Bank pursuant to the preceding sentence and in
respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence. If any Taxes are so levied or imposed, the Borrowers agree to pay
the full amount of such Taxes, and such additional amounts as may be neces-
sary so that every payment of all amounts due under this Agreement or under
any Note, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein or in such Note. The
Borrowers will furnish to the Administrative Agent within 45 days after the
date the payment of any Taxes is due pursuant to applicable law copies of
official tax receipts received from the relevant taxing authority evidencing
such payment by the Borrowers. The Borrowers agree to indemnify and hold
harmless each Bank, and reimburse such Bank upon its written request, for the
amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees (i) in the case of any such Bank that is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and which constitutes a Bank
hereunder on the Restatement Effective Date, to provide to the Company and
the Administrative Agent within five days after the Restatement Effective
Date two original signed copies of Internal Revenue Service Form 4224 or Form
1001 certifying to such Bank's entitlement to an exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, (ii) in the case of any such Bank that is a "bank" within the
meaning of
-36-
Section 881(c)(3)(A) of the Code, that, to the extent legally entitled to do
so, (x) with respect to a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.13 or 13.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), within five days after such assignment or transfer
to such Bank, and (y) with respect to any such Bank, from time to time upon
the reasonable written request of the Company or the Administrative Agent
after the Restatement Effective Date, such Bank will provide to the Company
and the Administrative Agent two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 (or any successor forms) certifying to such
Bank's entitlement to an exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, (iii) in the case of any such Bank (other than a Bank
described in clause (i) or (ii) above) which constitutes a Bank hereunder on
the Restatement Effective Date, to provide to the Company and the
Administrative Agent, within five days after the Restatement Effective Date
(x) a certificate substantially in the form of Exhibit D (any such certi-
ficate, a "Section 4.04(b)(iii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8, certi-
fying to such Bank's entitlement at the date of such certificate (assuming
compliance by the Company with Section 8.11) to an exemption from United
States withholding tax under the provisions of Section 881(c) of the Code
with respect to payments to be made under this Agreement and under any Note
and (iv) in the case of any such Bank (other than a Bank described in clause
(i) or (ii) above), to the extent legally entitled to do so, (x) with respect
to a Bank that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or transfer),
within five days after such assignment or transfer to such Bank, and (y) with
respect to any such Bank, from time to time upon the reasonable written re-
quest of the Company or the Administrative Agent after the Restatement Ef-
fective Date, to provide to the Company and the Administrative Agent such
other forms as may be required in order to establish the entitlement of such
Bank to an exemption from withholding with respect to payments under this
Agreement and under any Note. Notwithstanding anything to the contrary
contained in Section 4.04(a), but subject to the immediately succeeding
sentence, each Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from
-37-
interest, fees or other amounts payable hereunder (without any obligation to
pay the respective Bank additional amounts with respect thereto) for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes and which has not provided to the Company such forms required to be
provided to the Company pursuant to the first sentence of this Section
4.04(b). Notwithstanding anything to the contrary contained in the preceding
sentence and except as set forth in Section 13.04(b), each Borrower agrees to
indemnify each Bank in the manner set forth in Section 4.04(a) in respect of
any amounts deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Restatement Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline
or order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
(c) If any Borrower pays any additional amount under this Section
4.04 to a Bank and such Bank determines that it has received or realized in
connection therewith any refund or any reduction of, or credit against, its
Tax liabilities in or with respect to the taxable year in which the
additional amount is paid, such Bank shall pay to the respective Borrower an
amount that the Bank shall, in its sole discretion, determine is equal to the
net benefit, after tax, which was obtained by the Bank in such taxable year
as a consequence of such refund, reduction or credit.
SECTION 5. Conditions Precedent tothe Restatement Effective Date.
-----------------------------------------------------
The occurrence of the Restatement Effective Date pursuant to Section 13.10,
and the obligation of each Bank to make Loans, and the obligation of any
Letter of Credit Issuer to issue Letters of Credit, on the Restatement
Effective Date is subject to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the
-----------------------------
Restatement Effective Date, (i) this Agreement shall have been executed and
delivered as provided in Section 13.10 and (ii) there shall have been
delivered to the Administrative Agent for the account of each Bank the
appropriate Revolving Notes executed by the respective Borrowers, and to BTCo
the appropriate Swingline Notes executed by such Borrowers, in each case in
the amount, maturity and as otherwise provided herein.
-38-
5.02 Officer's Certificate. On the Restatement Effective Date,
---------------------
the Administrative Agent shall have received a certificate dated the
Restatement Effective Date signed on behalf of the Company by the President,
any Senior Vice President or any Vice President of the Company stating that
all of the conditions in Sections 5.14, 5.15, 5.16, 5.17, 5.19, 5.20 and 6.01
have been satisfied on such date.
5.03 Opinions of Counsel. On the Restatement Effective Date, the
-------------------
Administrative Agent shall have received (i) from Latham & Watkins, counsel
to Parent, the Company and the Subsidiary Borrowers, an opinion addressed to
the Administrative Agent and each of the Banks and dated the Restatement
Effective Date in form and substance satisfactory to the Administrative Agent
and the Required Banks, (ii) from E.O. Robinson, Jr., General Counsel to
Parent and the Company, an opinion addressed to the Administrative Agent and
each of the Banks and dated the Restatement Effective Date in form and
substance satisfactory to the Administrative Agent and the Required Banks and
(iii) from local counsel reasonably satisfactory to the Administrative Agent,
opinions each of which shall be in form and substance satisfactory to the
Administrative Agent and the Required Banks and shall cover the New Jersey
and Nevada Gaming Regulations and the perfection and priority of the security
interests granted pursuant to the Security Agreement and the Mortgages
(except that no opinion need be given with respect to the priority of the
Lien of any Mortgage) and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request.
5.04 Corporate Documents; Proceedings. (a) On the Restatement
--------------------------------
Effective Date, the Administrative Agent shall have received a certificate,
dated the Restatement Effective Date, signed by the President, any Senior
Vice President or any Vice President of each of the Credit Parties, and
attested to by the Secretary or any Assistant Secretary of each such Credit
Party, in the form of Exhibit E with appropriate insertions, together with
copies of the certificate of incorporation, partnership agreement and by-laws
of such Credit Party, as the case may be, and the resolutions of such Credit
Party referred to in such certificate, and the foregoing shall be acceptable
to the Administrative Agent in its reasonable discretion.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement, the other Credit Documents and the Hotel Transaction Documents
shall be
-39-
satisfactory in form and substance to the Administrative Agent and the
Required Banks, and the Administrative Agent shall have received true and
correct copies of all Hotel Transaction Documents, together with all infor-
mation and copies of all other documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams, if any, which the Administrative Agent reasonably may
have requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate or governmental authorities.
5.05 Master Collateral Agreement. On the Restatement Effective
---------------------------
Date, the Administrative Agent, the Collateral Agent and each Collateral
Grantor shall have entered into an amendment to the Master Collateral
Agreement in the form of Exhibit F, and the Master Collateral Agreement, as
so amended, shall be in full force and effect.
5.06 Pledge Agreements. (a) On the Restatement Effective Date,
-----------------
the Collateral Agent and Parent shall have entered into an amendment to the
Parent Pledge Agreement in the form of Exhibit G-1, and the Parent Pledge
Agreement, as so amended, shall be in full force and effect. On the Re-
statement Effective Date, the Collateral Agent, as Pledgee, shall have in its
possession all the Pledged Securities referred to in the Parent Pledge
Agreement then owned by Parent, together with executed and undated stock
powers.
(b) On the Restatement Effective Date, the Collateral Agent and
each Collateral Grantor party to the Company/Sub Pledge Agreement shall have
entered into an amendment to the Company/Sub Pledge Agreement in the form of
Exhibit G-2, and the Company/Sub Pledge Agreement, as so amended, shall be in
full force and effect. On the Restatement Effective Date, the Collateral
Agent, as Pledgee, shall have in its possession all the Pledged Securities
referred to in the Company/Sub Pledge Agreement then owned by the respective
Collateral Grantor, together with executed and undated stock powers.
5.07 Security Agreement. On the Restatement Effective Date, the
------------------
Collateral Agent and each Collateral Grantor party to the Security Agreement
shall have entered into an amendment to the Security Agreement in the form of
Exhibit H, and the Security Agreement, as so amended, shall be in full force
and effect. On the Restatement Effective Date, no filings, recordings or
registrations (other than those made prior to the Restatement Effective Date)
shall be
-40-
necessary or required to perfect (or maintain the perfection and priority of)
the security interest created under the Security Agreement.
5.08 Company/Sub Guaranty. On the Restatement Effective Date, the
--------------------
Collateral Agent, the Company and each other Guarantor (other than Parent)
shall have entered into an amendment to the Company/Sub Guaranty in the form
of Exhibit I, and the Company/Sub Guaranty, as so amended, shall be in full
force and effect.
5.09 Mortgages; Title Insurance; Surveys; etc. On the Restatement
-----------------------------------------
Effective Date, the Collateral Agent shall have received:
(i) fully executed counterparts of amendments (each a "Mortgage
Amendment" and, collectively, the "Mortgage Amendments") to each of the
Mortgages in the form of Exhibit J-1 in the case of the Atlantic City
Property and Exhibit J-2 in the case of the other Casino Properties,
together with evidence that counterparts of the Mortgage Amendments have
been delivered to the title insurance company insuring the Lien of such
Mortgages for recording in all places to the extent necessary or desir-
able, in the judgment of the Collateral Agent, effectively to create or
maintain a valid and enforceable first priority mortgage lien on each
such Mortgaged Property in favor of the Collateral Agent for the benefit
of the Secured Parties;
(ii) endorsements to the Mortgage Policies issued by First American
Title Insurance Company or such other title insurers reasonably
satisfactory to the Administrative Agent in amounts satisfactory to the
Administrative Agent assuring the Administrative Agent that the
Mortgages on the Mortgaged Properties are valid and enforceable first
priority mortgage liens on the respective Mortgaged Properties, free and
clear of all defects and encumbrances except Permitted Encumbrances and
such endorsements shall otherwise be in form and substance satisfactory
to the Administrative Agent, and shall include, as appropriate, an
endorsement for future advances under this Agreement and the Notes and
for any other matter that the Administrative Agent in its discretion may
reasonably request, shall not include an exception for mechanics' liens,
and shall provide for affirmative insurance and such reinsurance as the
Administrative Agent in its discretion may reasonably request; and
-41-
(iii) either (x) an officer's certificate of the Company with
respect to each Mortgaged Property certifying that there has been no
material alterations or improvements to such Mortgaged Property, which
certificate shall be in form and substance satisfactory to the
Administrative Agent or (y) in the case of any Mortgaged Property for
which the foregoing certification cannot be made, an updated survey for
such Mortgaged Property, in form and substance reasonably satisfactory
to the Administrative Agent, certified by a licensed professional
surveyor reasonably satisfactory to the Administrative Agent.
5.10 Assignment of Partnership Interests Agreement. On the
---------------------------------------------
Restatement Effective Date, the Collateral Agent, Marina, Harrah's Atlantic
City and Harrah's New Jersey shall have entered into an amendment to the
Assignment of Partnership Interests Agreement in the form of Exhibit K, and
the Assignment of Partnership Interests Agreement, as so amended, shall be in
full force and effect.
5.11 Assignment of Leases. On the Restatement Effective Date,
--------------------
the Collateral Agent and Marina shall have entered into an amendment to the
Assignment of Leases in the form of Exhibit L, and the Assignment of Leases,
as so amended, shall be in full force and effect.
5.12 Net Lease Agreements. On the Restatement Effective Date,
--------------------
each of the Net Lease Agreements shall be in full force and effect, provided
--------
that, to the extent the Company transfers its ownership interest in any of
the Casino Properties located in Nevada to Harrah's Club as permitted by
Section 9.02(a), the Net Lease Agreement with respect to each such Casino
Property may be terminated.
5.13 Consent Letter. On the Restatement Effective Date, the
--------------
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019, substantially
in the form of Exhibit M, indicating its consent to its appointment by each
Credit Party as its agent to receive service of process as specified in
Section 13.08.
5.14 Adverse Change. On or prior to the Restatement Effective
--------------
Date, nothing shall have occurred (and the Banks shall have become aware of
no facts or conditions not previously known) which the Administrative Agent
or the Required Banks shall determine has, or could reasonably be expected to
have, a material adverse effect on the rights or
-42-
remedies of the Administrative Agent, the Collateral Agent, or the Banks, or
on the ability of Parent or any Borrower or any other Credit Party to perform
its obligations to the Administrative Agent, the Collateral Agent and the
Banks or which has, or could reasonably be expected to have, a materially
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
5.15 Litigation. On the Restatement Effective Date, no litigation
----------
by any entity (private or governmental) shall be pending or threatened with
respect to this Agreement, the Hotel Transaction or any documentation
executed in connection herewith or therewith or the transactions contemplated
hereby or thereby, or with respect to any material Indebtedness of Parent or
any of its Subsidiaries or which the Administrative Agent or the Required
Banks shall determine could reasonably be expected to have a materially
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
5.16 Hotel Transaction. (a) On the Restatement Effective Date,
-----------------
Parent shall have changed its legal corporate name to "Harrah's
Entertainment, Inc.", and the Company shall have changed its legal corporate
name to "Harrah's Operating Company, Inc."
(b) On the Restatement Effective Date, the Company and the Hotel
Subsidiaries shall have entered into the Hotel Facility, no default or event
of default shall exist thereunder and the Company shall have incurred not
less than $210,000,000 of loans thereunder.
(c) On the Restatement Effective Date, the Company shall have
consummated the Hotel Transfer.
(d) On the Restatement Effective Date, in consideration of the
Hotel Transfer described in clause (c) of this Section 5.16, the Company
shall have irrevocably and unconditionally assigned to the Hotel Company, and
the Hotel Company shall have irrevocably and unconditionally assumed from the
Company, and the Company shall have been irrevocably and unconditionally
released from, all of the Company's rights and obligations under the Hotel
Facility.
(e) On the Restatement Effective Date, Parent and the Company
shall have declared and paid the Hotel Stock Dividend.
-43-
5.17 Approvals, etc. (a) On or prior to the Restatement Effective
---------------
Date, all necessary governmental (domestic and foreign) and third party
approvals (including, without limitation, the approval of the holders of the
8-3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes) in
connection with the transactions contemplated by this Agreement, the Hotel
Transaction Documents and otherwise referred to herein or therein shall have
been obtained and remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent authority which
restrains, prevents or imposes materially adverse conditions upon the
consummation of the transactions contemplated by this Agreement, the Hotel
Transaction Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other re-
straint pending or notified prohibiting or imposing materially adverse con-
ditions upon the consummation of the transactions contemplated by this
Agreement, the Hotel Transaction Documents or otherwise referred to herein or
therein.
(b) On or prior to the Restatement Effective Date, the Company
shall have received sufficient Consents to authorize the execution and
delivery of the indenture supplements to the 8-3/4% Senior Subordinated Notes
Indenture and the 10-7/8% Senior Subordinated Notes Indenture and such
indenture supplements shall have been duly executed and delivered by the
Company and the respective indenture trustee thereunder and all conditions to
the effectiveness thereof shall have been satisfied. All of the terms and
conditions of the Consents and the respective indenture supplements shall be
reasonably satisfactory to the Administrative Agent and the Required Banks
and in compliance with the applicable Hotel Transaction Documents and all
applicable laws (including, without limitation, Federal and state securities
laws).
(c) On or prior to the Restatement Effective Date, the
Administrative Agent shall have received evidence that the Banks are
qualified under the New Jersey Gaming Regulations as financial sources or
qualifiers, or are exempt or waived therefrom, and shall be satisfied that no
other New Jersey or Nevada gaming license, authorization, qualification,
waiver or exemption of the Banks is required on or prior to the Restatement
Effective Date by reason of this Agreement or the Collateral Documents. The
Administrative Agent also shall be satisfied in its discretion with any
conditions or requirements imposed by the
-44-
New Jersey, Nevada or other relevant Gaming Authorities upon the Banks, this
Agreement, the Collateral Documents, the Collateral or the Hotel Transaction.
(d) Parent, its shareholders and Subsidiaries shall have received
any qualifications required under applicable Gaming Regulations in connection
with this Agreement, the Collateral Documents and the Hotel Transaction, and
the Borrowers and the Guarantors shall have received all other approvals,
authorizations or consents of, or notices to or registrations with any
governmental body and required releases and consents from other appropriate
Persons (including, without limitation, the shareholders of Parent) in
connection with this Agreement, the Collateral Documents and the Hotel
Transaction and shall have provided copies or other satisfactory evidence of
all approvals, authorizations or consents referred to above to the
Administrative Agent.
(e) On or prior to the Restatement Effective Date, the Company
shall have demonstrated (including by providing appropriate legal opinions
and, in the case of the 8-3/4% Senior Subordinated Notes Indenture, a
certificate of its Chief Financial Officer, Treasurer or Controller) to the
Administrative Agent's and the Required Banks' satisfaction that loans in
aggregate principal amount equal to the sum of the Total Revolving Loan
Commitment and the Total 364-Day Revolving Loan Commitment may be incurred on
the Restatement Effective Date without violating the terms of the 8-3/4%
Senior Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and, in the case of the 8-3/4% Senior Subordinated Notes Indenture,
that loans in the amount specified above would be permitted to be incurred on
the Restatement Effective Date pursuant to the second paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture (and that the
Consolidated Fixed Charge Ratio referred to therein would be at least equal
to 2.0 to 1 after giving effect thereto).
5.18 Solvency Certificate; Evidence of Insurance. On the
-------------------------------------------
Restatement Effective Date, there shall have been delivered to the
Administrative Agent (i) a certificate in the form of Exhibit N, addressed to
the Administrative Agent and each of the Banks and dated the Restatement
Effective Date, from the chief financial officer of Parent, providing the
opinion of such chief financial officer as to the solvency of Parent, the
Company, each Subsidiary Borrower and Parent and its Subsidiaries taken as a
whole, and (ii) evidence of insurance (A) satisfactory to the Administrative
Agent that insurance is in effect with respect to each of the
-45-
Mortgaged Properties and covering such risks and in such amounts and with
such coverages as required by the Administrative Agent and (B) that each
insurance policy covering the Collateral and each other material insurance
policy is effective as required in accordance with the requirements of
Section 8.03 for the business and properties of Parent and its Subsidiaries,
in scope, form and substance satisfactory to the Administrative Agent and the
Required Banks and naming the Collateral Agent, in the case of Collateral, as
an additional insured and/or loss payee, and stating that such insurance
shall not be cancelled or revised without at least 30 days' prior written
notice by the respective insurer to the Collateral Agent.
5.19 Payment of Fees, Etc. (a) On the Restatement Effective
---------------------
Date, all interest and Fees accrued (and not theretofore paid) under the
Original Credit Agreement shall be paid in full, and all other costs, fees
and expenses owing to any of the Banks or the Administrative Agent under the
Original Credit Agreement shall be paid to the extent due. Furthermore, on
the Restatement Effective Date, all costs, fees and expenses (including,
without limitation, legal fees and expenses) and other compensation
contemplated hereby or otherwise agreed and payable to the Banks or the
Administrative Agent shall have been paid to the extent due.
(b) On the Restatement Effective Date, all Interest Periods with
respect to any outstanding Original Revolving Loans shall have expired in
accordance with the terms thereof or shall have been terminated by the
Borrowers.
5.20 364-Day Credit Agreement. On the Restatement Effective Date,
------------------------
Parent, the Company, the Subsidiary Borrowers, the 364-Day Banks and the
Administrative Agent shall have entered into the 364-Day Credit Agreement in
the form of Exhibit O, and the 364-Day Credit Agreement shall be in full
force and effect. On the Restatement Effective Date, the Company shall have
delivered to the Administrative Agent a true and correct copy of the 364-Day
Credit Agreement, which shall be required to be in form and substance
satisfactory to the Administrative Agent and the Required Banks.
5.21 Schedules. On the Restatement Effective Date, the Company
---------
shall have delivered to each of the Banks true and complete copies of
Schedules II through IX, which Schedules shall be in form and substance
satisfactory to the Administrative Agent and the Required Banks.
-46-
SECTION 6. Conditions Precedent to All Credit Events. The
-----------------------------------------
obligation of each Bank to make Loans (including Loans made on the
Restatement Effective Date, but excluding Mandatory Borrowings made
thereafter, which shall be made as provided in Section 1.01(c)), and the
obligation of each Letter of Credit Issuer to issue any Letter of Credit, is
subject, at the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time of
------------------------------------------
each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default (it being understood and agreed,
however, that an Unpaid Drawing will not prevent a Borrowing of Revolving
Loans so long as the proceeds thereof are applied to repay in full all then
outstanding Unpaid Drawings and no other Default or Event of Default then
exists) and (ii) all representations and warranties contained herein and in
the other Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on the date of the making of such Credit Event (it being understood and
agreed that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to
---------------------------------------------
the making of each Revolving Loan (excluding Revolving Loans made pursuant to
a Mandatory Borrowing), the Administrative Agent shall have received a Notice
of Borrowing meeting the requirements of Section 1.03(a). Prior to the
making of any Swingline Loan, BTCo shall have received the notice required by
Section 1.03(b)(i).
(b) Prior to the issuance of any Letter of Credit, the
Administrative Agent and the respective Letter of Credit Issuer shall have
received a Letter of Credit Request meeting the requirements of Section 2.03.
6.03 Election to Become a Subsidiary Borrower. Prior to the
----------------------------------------
incurrence of any Loans by, or the issuance of any Letter of Credit for the
account of, a Subsidiary Borrower which is not a Subsidiary Borrower on the
Restatement
-47-
Effective Date, the following additional conditions shall be satisfied:
(i) such new Subsidiary Borrower shall have duly authorized,
executed and delivered to the Administrative Agent an Election to Become
a Subsidiary Borrower in the form of Exhibit P, which shall be in full
force and effect;
(ii) such Subsidiary Borrower shall have duly authorized, executed
and delivered to (A) the Administrative Agent for the account of each of
the Banks the appropriate Revolving Note and (B) to BTCo the appropriate
Swingline Note, in each case in the amount, maturity and as otherwise
provided herein; and
(iii) to the extent not previously accomplished, such Subsidiary
Borrower shall have duly authorized, executed and delivered to the
Administrative Agent counterparts of the Company/Sub Guaranty and each
Collateral Document to the extent applicable, together with (x) such
financing statements and instruments required to be delivered by the
respective Collateral Documents and (y) such other documents,
certificates, resolutions, opinions and writings that would have been
required to be delivered pursuant to Sections 5.03 and 5.04 of this
Agreement and Section 5.19 of the Original Credit Agreement if such
Subsidiary Borrower had been subject to such Sections on the Restatement
Effective Date, all of which shall be in form and substance satisfactory
to the Administrative Agent.
Section 6.04. Additional Conditions to Certain Credit Events. If
----------------------------------------------
at any time after the Restatement Effective Date and prior to the repayment
in full of the
8-3/4% Senior Subordinated Notes, the Total Outstandings are reduced to an
amount which is less than the remainder of $150,000,000 less the 364-Day
Revolving Loan Commitment Reduction Amount, if any, at such time, then as a
condition precedent to any Credit Event which would cause the Total
Outstandings to exceed the Lowest Outstanding Amount then in effect by more
than $450,000,000 plus the 364-Day Revolving Loan Commitment Reduction
Amount, if any, at such time, the Company shall have first delivered to the
Agent and each of the Banks a satisfactory (to the Agent) legal opinion and
certificate of its Chief Financial Officer, Treasurer or Controller, each in
form and scope satisfactory to the Administrative Agent demonstrating in
reasonable detail that
-48-
such Credit Event may be incurred without violating the terms of the 8-3/4%
Senior Subordinated Notes Indenture.
The occurrence of the Restatement Effective Date and the acceptance
of the proceeds of each Credit Event shall constitute a representation and
warranty by Parent and the respective Borrower to the Administrative Agent
and each of the Banks that all the conditions specified in Section 5 and in
this Section 6 and applicable to such Credit Event have been satisfied as of
that time. All of the Notes, certificates, legal opinions and other docu-
ments and papers referred to in Section 5 and in this Section 6, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the Notes,
in sufficient counterparts for each of the Banks and shall be in form and
substance satisfactory to the Required Banks.
Notwithstanding anything to the contrary contained above or in
Section 13.10, if the Restatement Effective Date does not occur on or prior
to September 30, 1995, then it shall not thereafter occur (unless the
Required Banks agree in writing to an extension of such date), and this
Agreement shall cease to be of any force or effect and the Original Credit
Agreement shall continue to be effective, as the same may have been, or may
thereafter be, amended, modified or supplemented from time to time.
SECTION 7. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Loans, and
issue (or participate in) the Letters of Credit as provided herein, each of
Parent, the Company and each Subsidiary Borrower makes the following
representations, warranties and agreements, in each case after giving effect
to the Hotel Transaction, all of which shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans and
issuance of the Letters of Credit, with the occurrence of the Restatement
Effective Date and the occurrence of each Credit Event on or after the
Restatement Effective Date being deemed to constitute a representation and
warranty that the matters specified in this Section 7 are true and correct on
and as of the Restatement Effective Date and on the date of each such Credit
Event (it being understood and agreed that (i) any representation or warranty
which by its terms is made as of a specified date shall be required to be
true and correct in all material respects only as of such specified date and
(ii) for purposes of making any representation or warranty in
-49-
this Section 7 after the Restatement Effective Date the term Documents shall
not include the Hotel Transaction Documents).
7.01 Corporate or Partnership Status. Each of Parent and its
-------------------------------
Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate or partnership power and authority to
own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction where
the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole.
7.02 Corporate or Partnership Power and Authority. Each Credit
--------------------------------------------
Party has the corporate or partnership power and authority to execute,
deliver and perform the terms and provisions of each of the Documents to
which it is party and has taken all necessary corporate or partnership action
to authorize the execution, delivery and performance by it of each of such
Documents. Each Credit Party has duly executed and delivered each of the
Documents to which it is party, and each of such Documents constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance
------------
by any Credit Party of the Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, (i) will contravene any pro-
vision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality, (ii) will conflict
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pur-
suant to the Collateral Documents and, in the case of the Hotel Company and
the Hotel Subsidiaries, pursuant to the Hotel Facility) upon any of the
property or assets of Parent
-50-
or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, credit agreement or loan agreement, or any other material
agreement, contract or instrument, to which Parent or any of its Subsidiaries
is a party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) will violate any provision of the
certificate of incorporation, partnership agreement or by-laws of Parent or
any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Restatement
Effective Date), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the Hotel Transaction, (ii) the execution,
delivery and performance of any Document or (iii) the legality, validity,
binding effect or enforceability of any such Document.
7.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The statements of financial condition of
------------------------------
Parent and its Consolidated Subsidiaries at December 31, 1994 (including the
December 31, 1994 financial statements contained in the Proxy Statement which
show the Hotel Business as discontinued operations) and March 31, 1995, and
the related statements of income and cash flow and changes in shareholders'
equity of Parent and its Consolidated Subsidiaries for the fiscal year and
three-month period ended on such date, as the case may be, and furnished to
the Banks prior to the Restatement Effective Date present fairly the
financial condition of Parent and its Consolidated Subsidiaries at the date
of such statements of financial condition and the results of the operations
of Parent and its Consolidated Subsidiaries for the respective fiscal year or
three-month period, as the case may be. All such financial statements have
been prepared in accordance with generally accepted accounting principles and
practices consistently applied. Since December 31, 1994 (but after giving
effect to the Hotel Transaction), there has been no material adverse change
in the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken as
a whole.
(b) On and as of the Restatement Effective Date, both before and
after giving effect to the Hotel Transaction and to all Indebtedness
(including the Loans) being incurred or assumed and Liens created by Parent
and its Subsidiaries in connection therewith, (a) the sum of the assets, at a
fair
-51-
valuation, of each of Parent, the Company, each Subsidiary Borrower, Parent
and its Subsidiaries taken as a whole and the Company and its Subsidiaries
taken as a whole will exceed their respective debts; (b) none of Parent, the
Company, any Subsidiary Borrower, Parent and its Subsidiaries taken as a
whole or the Company and its Subsidiaries taken as a whole has incurred, nor
do they intend to incur or believe that they will incur, debts beyond their
ability to pay such debts as such debts mature; and (c) each of Parent, the
Company, each Subsidiary Borrower, Parent and its Subsidiaries taken as a
whole and the Company and its Subsidiaries taken as a whole will have
sufficient capital with which to conduct its respective business. For
purposes of this Section 7.05(b), "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right
to an equitable remedy for breach of performance if such breach gives rise to
a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Restatement
Effective Date no liabilities or obligations with respect to Parent or any of
its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or
in aggregate, would be material to Parent and its Subsidiaries taken as a
whole. As of the Restatement Effective Date, neither Parent nor any Borrower
knows of any basis for the assertion against Parent or any of its
Subsidiaries of any liability or obligation of any nature whatsoever that is
not fully disclosed in the financial statements delivered pursuant to Section
7.05(a) which, either individually or in the aggregate, is material to Parent
and its Subsidiaries taken as a whole.
(d) On and as of the Restatement Effective Date, (i) the financial
projections (the "Projections") prepared by the Company and delivered to the
Banks by the Administrative Agent prior to the Restatement Effective Date
were prepared based upon the assumptions concerning various industry trends
described therein for the periods presented, (ii) the Projections were based
on good faith assumptions and estimates, and (iii) although a range of
possible different assumptions and estimates might also be reasonable, the
Company is not aware of any facts that would lead it to believe that the
assump-
-52-
tions and estimates on which the Projections were based are not reasonable;
provided that no assurance can be given that the projected results will be
realized or with respect to the ability of the Company to achieve the
projected results, and while the Projections are necessarily presented with
numerical specificity, the actual results achieved during the periods
presented in all likelihood will differ from the projected results and such
differences may be material.
7.06 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of Parent or any Borrower, threatened (i)
with respect to any Document or the Hotel Transaction, (ii) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (iii) that
could reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of Parent and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information (taken
----------------------------
as a whole) furnished by or on behalf of Parent or its Subsidiaries in
writing to the Administrative Agent or any Bank (including, without
limitation, all information contained in the Credit Documents) for purposes
of or in connection with this Agreement, the other Credit Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Parent
or its Subsidiaries in writing to the Administrative Agent or any Bank will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which
such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
-----------------------------------
the Loans shall be used by the Borrowers (i) to pay fees and expenses related
to this Agreement and (ii) for the Borrowers' and their Subsidiaries' general
corporate purposes.
(b) No part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit for the purpose of purchasing
or carrying any Margin Stock. Neither the making of any Loan nor the use of
the proceeds thereof nor the occurrence of any other Credit Event will
violate or be inconsistent with the provisions of Regu-
-53-
lation G, T, U or X of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of Parent and its
------------------------
Subsidiaries and each Person for whose tax Parent or any of its Subsidiaries
could be liable has filed or caused to be filed with the appropriate taxing
authority, all Federal and all other material returns, statements, forms and
reports for all taxes (the "Returns") required to be filed by it and has paid
or caused to be paid (i) all material taxes due for the periods covered
thereby and (ii) all taxes pursuant to any assessment received by Parent, any
of its Subsidiaries or any such Person, excluding, in each case, any such
taxes that have been contested in good faith and for which adequate reserves
have been established in accordance with generally accepted accounting
principles. Except as disclosed on Schedule III, as of the Restatement
Effective Date, there is no action, suit, proceeding, investigation, audit,
or claim now pending or, to the knowledge of Parent or any of its
Subsidiaries, threatened by any governmental or taxing authority regarding
any material taxes relating to Parent or any of its Subsidiaries. Except as
disclosed on Schedule III, as of the Restatement Effective Date, neither
Parent nor any of its Subsidiaries has entered into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
any material taxes of Parent or any of its Subsidiaries.
7.10 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither Parent nor any Subsidiary of Parent nor any
ERISA Affiliate has incurred any material liability to or on account of a
Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code
or expects to incur any liability under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted by the PBGC to
terminate or appoint a trustee to administer any Plan; no condition exists
which presents a material risk to Parent or any Subsidiary of Parent or any
ERISA Affiliate of incurring a liability to or on account of a Plan pursuant
to the foregoing provisions of ERISA and the Code; no lien imposed under the
Code or ERISA on the assets of Parent or any Subsidiary
-54-
of Parent or any ERISA Affiliate exists or is likely to arise on account of
any Plan; and Parent and its Subsidiaries may cease contributions to or
terminate any employee benefit plan maintained by any of them without
incurring any material liability to any person interested therein other than
accrued benefits; it being understood that any representation or warranty
made in this Section 7.10 with respect to any multiemployer plan (labor
union) is to the best knowledge of Parent, the Company and each Subsidiary
Borrower.
7.11 The Collateral Documents. (a) The provisions of the
------------------------
Security Agreement are effective to create in favor of the Collateral Agent
for the benefit of the Secured Parties a legal, valid and enforceable
security interest in all right, title and interest of the Collateral Grantors
in the Security Agreement Collateral described therein, and the Security
Agreement creates a fully perfected first lien on, and security interest in,
all right, title and interest of the Collateral Grantors, in all of the
Security Agreement Collateral described therein, subject to no other Liens
other than Permitted Liens. The recordation of the Security Agreement in the
United States Patent and Trademark Office together with filings on Form UCC-1
made pursuant to the Security Agreement will be effective, under federal law,
to perfect the security interest granted to the Collateral Agent in the
trademarks and patents covered by the Security Agreement and the filing of
the Security Agreement with the United States Copyright Office together with
filings on Form UCC-1 made pursuant to the Security Agreement will be
effective under federal law to perfect the security interest granted to the
Collateral Agent in the copyrights covered by the Security Agreement. Each
Collateral Grantor has good and marketable title to all Security Agreement
Collateral described therein, free and clear of all Liens except those
described above in this clause (a).
(b) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Pledge Agreements
constitute first perfected security interests in the Pledged Securities
described in the Pledge Agreements, subject to no security interests of any
other Person. No filings or recordings are required in order to perfect (or
maintain the perfection or priority of) the security interests created in the
Pledged Securities under the Pledge Agreements.
(c) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Assignment of
Partnership Interests Agreement constitute
-55-
first perfected security interests in the Partnership Interests described in
the Assignment of Partnership Interests Agreement, subject to no security
interests of any other Person. Except for filings that have been made prior
to the Restatement Effective Date, no filings or recordings are required in
order to perfect (or maintain the perfection or priority of) the security
interests created in the Partnership Interests under the Assignment of
Partnership Interests Agreement.
(d) The Mortgages create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and mortgage lien on all of the Mortgaged Properties in favor of
the Collateral Agent for the benefit of the Secured Parties, superior to and
prior to the rights of all third Persons (except that the security interest
and mortgage lien created in the Mortgaged Properties may be subject to the
Permitted Encumbrances related thereto) and subject to no other Liens (other
than Liens permitted under Section 9.01). The Company or Harrah's Club, as
the case may be, has good and marketable title to the following three
Mortgaged Properties, Harrah's Reno Hotel Casino, Harrah's Lake Tahoe Hotel
Casino (including Bill's Casino) and Harrah's Las Vegas Hotel Casino; Marina
has good and marketable title to the Mortgaged Property at the Harrah's
Atlantic City Hotel Casino; and Harrah's Laughlin has good and marketable
title to the Mortgaged Property at Harrah's Laughlin Hotel Casino, in each
case free and clear of all Liens except those described in the first sentence
of this subsection (d).
(e) The Assignment of Leases and, to the extent not theretofore
terminated, the Net Lease Agreements create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on the respective Collateral covered thereby in favor of
the Collateral Agent for the benefit of the Secured Parties, superior to and
prior to the rights of all third Persons and subject to no other Liens.
(f) Pursuant to the Collateral Documents, perfected security
interests have been created in favor of the Collateral Agent for the benefit
of the Secured Parties in all of the Required Collateral.
7.12 Properties. Parent and each of its Subsidiaries have good
----------
title to all material properties owned by them, free and clear of all Liens,
other than Liens permitted by Section 9.01.
-56-
7.13 Capitalization. (a) On the Restatement Effective Date, the
--------------
authorized capital stock of Parent shall consist of 360,000,000 shares of
common stock, $1.50 par value per share, of which, as of March 31, 1995,
102,518,639 shares shall be issued and outstanding. All such outstanding
shares have been duly and validly issued, are fully paid and nonassessable
and are free of preemptive rights. As of the Restatement Effective Date and
except as disclosed in the most recent report on Form 10-K or 10-Q filed by
Parent with the SEC, Parent does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock.
(b) On the Restatement Effective Date, the authorized capital
stock of the Company shall consist of 1,000 shares of common stock, $1.00 par
value per share, all of which shares were issued and outstanding and owned by
Parent. All such outstanding shares have been duly and validly issued, are
fully paid and nonassessable and are free of preemptive rights. The Company
does not have outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to purchase,
or any options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, its capital stock.
7.14 Subsidiaries. Except as otherwise agreed by the Required
------------
Banks, Parent has no Subsidiaries other than (i) the Company and its
Subsidiaries and (ii) Aster Insurance Ltd. All Subsidiaries of the Company
as of the Restatement Effective Date, and the direct owner of the capital
stock thereof, are listed on Schedule IV. Schedule IV also accurately shows,
as of the Restatement Effective Date, with respect to each Subsidiary (i)
whether such Subsidiary is a Material Subsidiary and (ii) whether such
Subsidiary is a Guarantor.
7.15 Compliance with Statutes, etc. Each of Parent and its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environ-
-57-
mental standards and controls), except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its Sub-
sidiaries taken as a whole.
7.16 Investment Company Act. Neither Parent nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
7.17 Public Utility Holding Company Act. Neither Parent nor any
----------------------------------
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.18 Environmental Matters. (a) Parent and each of its
---------------------
Subsidiaries have complied with, and on the date of such Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws. There are no pending or,
to the best knowledge of Parent or any Borrower after due inquiry, past or
threatened Environmental Claims against Parent or any of its Subsidiaries or
any Real Property owned or operated by Parent or any of its Subsidiaries that
individually or in the aggregate could reasonably be expected to materially
and adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole. There are no facts, circumstances, conditions
or occurrences on any Real Property owned or operated by Parent or any of its
Subsidiaries or, to the best knowledge of Parent or any Borrower after due
inquiry, on any property adjoining or in the vicinity of any such Real Prop-
erty that, to the best knowledge of Parent or any Borrower after due inquiry,
could reasonably be expected (i) to form the basis of an Environmental Claim
against Parent or any of its Subsidiaries or any such Real Property that in-
dividually or in the aggregate could reasonably be expected to materially and
adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole, or (ii) to cause any such Real Property to be
subject to any restrictions on the ownership, occupancy, use or transfer-
ability of such Real Property by Parent or any of its Subsidiaries under any
applicable Environmental Law.
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(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Parent or any of its Subsidiaries where such generation, use,
treatment or storage has violated or could reasonably be expected to violate
any Environmental Law. Hazardous Materials have not at any time been
Released on or from any Real Property owned or operated by Parent or any of
its Subsidiaries where such Release has violated or could reasonably be
expected to violate any applicable Environmental Law. There are not now any
underground storage tanks located on any Real Property owned or operated by
Parent or any of its Subsidiaries which are not in compliance with all
Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section 7.18,
the representations made in this Section 7.18 shall only be untrue if the
aggregate effect of all failures and noncompliances of the types described
above could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
7.19 Labor Relations. Neither Parent nor any of its Subsidiaries
---------------
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on Parent and its Subsidiaries taken as a
whole. There is (i) no unfair labor practice complaint pending against
Parent or any of its Subsidiaries or, to the best knowledge of the Parent or
any Borrower, threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or any Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Parent or any of its Subsidiaries or, to the best
knowledge of Parent or any Borrower, threatened against Parent or any of its
Subsidiaries and (iii) to the best knowledge of Parent or any Borrower, no
union representation question existing with respect to the employees of
Parent or any of its Subsidiaries, except (with respect to any matter speci-
fied in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
-59-
7.20 Patents, Licenses, Franchises and Formulas. Each of Parent
------------------------------------------
and its Subsidiaries own all the patents, trademarks, permits, service marks,
trade names, copyrights, licenses, franchises and formulas, or rights with
respect to the foregoing, and has obtained assignments of all leases and
other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, would result in a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
7.21 Existing Indebtedness. Schedule V sets forth a true and
---------------------
complete list of all Indebtedness of Parent and its Subsidiaries as of the
Restatement Effective Date and which is to remain outstanding after giving
effect thereto, in each case showing the respective borrower thereof (ex-
cluding Indebtedness under this Agreement and the 364-Day Credit Agreement),
with Part A of such Schedule V to indicate that Indebtedness which
constitutes "Existing Indebtedness" under (and as defined in) the Original
Credit Agreement and Part B of such Schedule V to indicate all such other
Indebtedness outstanding on the Restatement Effective Date. The subordin-
ation provisions of the Subordinated Debt set forth on Schedule V are
enforceable against the respective borrower or guarantor thereunder, as the
case may be, and all Obligations hereunder and under the other Credit
Documents are within the definition of "Senior Debt," "Guarantor Senior
Debt", "Designated Senior Debt" and "Designated Senior Debt of the Guarantor"
included in such subordination provisions, as the case may be.
7.22 Hotel Transaction. At the time of consummation thereof, the
-----------------
Hotel Transaction shall have been consummated in accordance with the terms of
the respective Hotel Transaction Documents and all applicable laws and all
conditions precedent thereto shall have been satisfied, or waived with the
consent of the Required Banks. At the time of consummation thereof, all
consents and approvals of, and filings and registrations with, and all other
actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Hotel
Transaction have been obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained). All applicable waiting periods with respect thereto have or,
prior to the time when required, will have, expired without, in all such
cases, any action being taken by any competent
-60-
authority which restrains, prevents, or imposes material adverse conditions
upon the Hotel Transaction. Additionally, there does not exist any judgment,
order or injunction prohibiting or imposing material adverse conditions upon
the Hotel Transaction, or the occurrence of any Credit Event or the
performance by Parent or any other Credit Party of their obligations under
the respective Documents. All actions taken by Parent and its Subsidiaries
pursuant to or in furtherance of the consummation of the Hotel Transaction
have been taken in compliance with the respective documents therefor and all
applicable laws. The Hotel Transaction has been consummated in accordance
with the terms of the Hotel Transaction Documents and all applicable laws.
7.23 No Other Ventures. Except as set forth on Schedule VI, as of
-----------------
the Restatement Effective Date, neither Parent nor any of its Subsidiaries is
engaged in any Joint Venture or partnership with any other Person.
SECTION 8. Affirmative Covenants. Each of Parent, the Company and
---------------------
each Subsidiary Borrower covenants and agrees that on and after the
Restatement Effective Date and until the Total Revolving Loan Commitment and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Draw-
ings, together with interest, Fees and all other obligations incurred here-
under and thereunder, are paid in full:
8.01 Information Covenants. Parent will furnish to each Bank:
---------------------
(a) Quarterly Financial Statements. Within 45 days after the
------------------------------
close of the first three quarterly accounting periods in each fiscal
year of Parent and within 90 days after the close of the fourth
quarterly accounting period in each fiscal year of Parent, the
consolidated balance sheet of Parent and its Consolidated Subsidiaries
as at the end of such quarterly accounting period and the related
consolidated statements of income and statement of cash flows, in each
case for such quarterly accounting period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly accounting
period, in each case setting forth comparative figures for the related
periods in the prior fiscal year, all of which shall be certified by the
chief financial officer, controller or treasurer of Parent, subject to
normal year-end audit adjustments.
-61-
(b) Annual Financial Statements. Within 120 days after the close
---------------------------
of each fiscal year of Parent, the consolidated balance sheet of Parent
and its Consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
statement of cash flows for such fiscal year setting forth comparative
figures for the preceding fiscal year and certified by Arthur Andersen &
Co. or such other independent certified public accountants of recognized
national standing reasonably acceptable to the Required Banks, together
with a statement of the firm of such independent accountants as to
whether, in conducting their audit, anything came to their attention to
cause them to believe that Parent and the Company were not in compliance
with Sections 9.07, 9.08 and 9.09, insofar as such Sections relate to
accounting and auditing matters, on the date of such statements.
(c) Budgets. No later than 90 days after the commencement of each
-------
fiscal year of Parent, a budget which shall include an annual balance
sheet for such fiscal year, quarterly statements of income and sources
and uses of cash for each of the four fiscal quarters of such fiscal
year, together with a business plan for such fiscal year, in each case
consolidated for Parent and its Subsidiaries, and accompanied by a
statement of the chief financial officer, controller or treasurer of
Parent that the budget has been approved by the Board of Directors of
Parent or the Company.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 8.01(a) and (b), a
certificate of the chief financial officer, controller or treasurer of
Parent to the effect that, to the best of such officer's knowledge, no
Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate shall set forth (i) the
calculations required to establish whether Parent and the Borrowers were
in compliance with the provisions of Sections 3.03(d) and (e), 9.03(v),
9.04(vi), (ix) through and including (xii), (xiv) and (xv), 9.05 and
9.07 through 9.09, inclusive, at the end of such fiscal quarter or year,
as the case may be and (ii) the Senior Implied Indebtedness ratings, if
any, assigned by Moody's and S&P to the Company's Indebtedness at the
end of such fiscal quarter or year, as the case may be.
-62-
(e) Notice of Default or Litigation. Promptly upon, and in any
-------------------------------
event within three Business Days after, an officer of Parent or any
Borrower obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding (including any
investigation by any Gaming Authority) pending (x) against Parent or any
of its Subsidiaries which could reasonably be expected to materially and
adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent
and its Subsidiaries taken as a whole, (y) with respect to any material
Indebtedness of Parent or any of its Subsidiaries or (z) with respect to
any Credit Document.
(f) Other Reports and Filings. Promptly, (i) copies of all
-------------------------
financial statements, reports and proxy materials which Parent has
mailed to its shareholders generally, (ii) copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-
Q and 8-K (or their equivalent) which Parent or any of its Subsidiaries
shall file with the Securities and Exchange Commission or any successor
thereof (the "SEC") and (iii) to the extent not otherwise provided to
the Banks, copies of all notices, reports and financial statements which
Parent or any of its Subsidiaries shall deliver to holders of any issue
of Indebtedness if the aggregate principal amount thereof exceeds (or
upon the utilization of any used commitments may exceed) $25,000,000
pursuant to the terms of the documentation governing any such issue of
Indebtedness (or any trustee, agent or other representative therefor).
(g) Environmental Matters. Promptly upon, and in any event within
---------------------
ten Business Days after, an officer of Parent or any Borrower obtains
knowledge thereof, notice of one or more of the following environmental
matters, unless such environmental matters could not, individually or
when aggregated with all other such environmental matters, be reasonably
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole: (i) any
pending or threatened Environmental Claim against Parent or any of its
Subsidiaries or any Real Property owned or operated by Parent or any of
its
-63-
Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by Parent or any of its Subsidiaries
that (a) results in noncompliance by Parent or any of its Subsidiaries
with any applicable Environmental Law or (b) could reasonably be
expected to form the basis of an Environmental Claim against Parent or
any of its Subsidiaries or any such Real Property; (iii) any condition
or occurrence on any Real Property owned or operated by Parent or any of
its Subsidiaries that could reasonably be expected to cause such Real
Property to be subject to any restrictions on the ownership, occupancy,
use or transferability by Parent or any of its Subsidiaries of such Real
Property under any Environmental Law; and (iv) the taking of any removal
or remedial action in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned or operated by Parent or
any of its Subsidiaries as required by any Environmental Law or any
governmental or other administrative agency; provided that in any event
--------
Parent shall deliver to each Bank all notices received by Parent or any
of its Subsidiaries from any government or governmental agency under, or
pursuant to, CERCLA. All such notices shall describe in reasonable
detail the nature of the claim, investigation, condition, occurrence or
removal or remedial action and Parent's or such Subsidiary's response
thereto. In addition, Parent will provide the Banks with copies of all
material written communications by Parent or any of its Subsidiaries
with any government or governmental agency relating to Environmental
Laws, all material written communications with any person relating to
Environmental Claims, and such detailed reports of any Environmental
Claim as may reasonably be requested by the Banks.
(h) Other Information. From time to time, such other information
-----------------
or documents (financial or otherwise) with respect to Parent or its
Subsidiaries as the Administrative Agent or any Bank may reasonably
request.
8.02 Books, Records and Inspections. Parent will, and will cause
------------------------------
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. Parent
will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Administrative Agent or any Bank to visit
and inspect, at the Admin-
-64-
istrative Agent's or such Bank's expense and under guidance of officers of
Parent or such Subsidiary, any of the properties of Parent or such Sub-
sidiary, and to examine the books of account of Parent or such Subsidiary and
discuss the affairs, finances and accounts of Parent or such Subsidiary with,
and be advised as to the same by, its and their officers and independent
public accountants, provided that a representative of Parent or such
--------
Subsidiary is present, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or such Bank may request,
provided that the Administrative Agent and the Banks shall have no right
--------
pursuant to this Section 8.02 to obtain any information relating to (i) the
identity of gaming patrons obligated under Markers or (ii) any filings made
pursuant to Regulation 6A or 6.090 of the Regulations of the Nevada Gaming
Commission (except that the Administrative Agent and the Banks may review the
reports of an independent auditor with respect to such filings).
8.03 Maintenance of Property; Insurance. (a) Parent will, and
----------------------------------
will cause each of its Material Subsidiaries to, keep all property necessary
in the reasonable conduct of its business in good working order and condi-
tion.
(b) Schedule VII sets forth a true and complete listing of all
insurance maintained by Parent and its Subsidiaries as of the Restatement
Effective Date. Parent will maintain, and will cause each of its Material
Subsidiaries to maintain, (i) physical damage insurance on all real and
personal property on an all risk basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for business interruption and extra expense, and
(ii) such other insurance coverage in such amounts and with respect to such
risks as the Administrative Agent or the Required Banks may reasonably
request; provided, however, that flood, earthquake and business interruption
-------- -------
insurance will be required only to the extent available on a commercially
reasonable basis and so long as it is consistent with reasonable and prudent
insurance underwriting practices. All such insurance shall be provided by
insurers having an A.M. Best general policyholders service rating of not less
than "B+VI" or such other insurers as the Administrative Agent may approve in
writing. In addition, all insurance with respect to the Collateral shall
name the Collateral Agent as loss payee, for the benefit of the Secured
Parties, and shall provide that (a) the proceeds thereof shall be paid
directly to the Collateral Agent, subject to Section 3.01(c) of each Mortgage
and Section 11 of the Security Agreement and (b) no cancellation,
-65-
material change or reduction thereof shall be effective until at least 30
days after receipt by the Collateral Agent of written notice thereof. Parent
will deliver to the Banks (i) upon request of any Bank through the
Administrative Agent from time to time full information as to the insurance
carried, (ii) for insurance with respect to the Collateral and all other
material insurance, within five days of receipt of notice from any insurer, a
copy of any notice of cancellation or material change in coverage from that
existing on the date of this Agreement and (iii) forthwith, notice of any
cancellation or nonrenewal of any insurance coverage of Parent or any of its
Material Subsidiaries with respect to the Collateral or any other material
insurance coverage of Parent or any of its Subsidiaries. Nothing in this
Section 8.03(b) shall be construed to restrict the right of Parent or any
Material Subsidiaries from obtaining blanket insurance as permitted under the
Mortgages, or self insurance of certain risks to the extent such insurance is
consistent with the past practices of Parent or such Material Subsidiary and
consistent with reasonable and prudent insurance underwriting practices. The
provisions of this Section 8.03(b) shall be deemed supplemental to, but not
duplicative of, the provisions of the Security Agreement and the Mortgages.
If Parent or any of its Material Subsidiaries shall fail to insure its
property in accordance with this Section 8.03(b), the Collateral Agent shall
have the right (but shall be under no obligation) upon notice to Parent or
the respective Material Subsidiary to procure such insurance and Parent and
each Borrower agrees to reimburse the Collateral Agent for all costs and
expenses of procuring such insurance.
8.04 Corporate Franchises. Parent will, and will cause each of
--------------------
its Material Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
-------- -------
this Section 8.04 shall prevent (i) sales of stock or assets by Parent or any
of its Subsidiaries in accordance with Section 9.02, (ii) the withdrawal by
Parent or any of its Subsidiaries of its qualification as a foreign
corporation in any jurisdiction where such withdrawal could not reasonably be
expected to have a material adverse effect on the business, operations, prop-
erty, assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole or (iii) the taking of any
action respecting any right, franchise, license or patent determined by the
management of Parent or such Subsidiary to be in the best interest of Parent
or such Subsidiary.
-66-
8.05 Compliance with Statutes, etc. Parent will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes, regulations
(including Gaming Regulations) and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations, prop-
erty, assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) Parent will comply,
----------------------------------
and will cause each of its Subsidiaries to comply, in all material respects
with all Environmental Laws applicable to ownership or use of the Required
Collateral now or hereafter owned or operated by Parent or any of its Sub-
sidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in such compliance, and will keep or cause to be kept all such
Required Collateral free and clear of any Liens imposed pursuant to such
Environmental Laws other than Liens which could not materially detract from
the value of any such Required Collateral. Neither Parent nor any of its
Subsidiaries will generate, use, treat, store, release or dispose of, or
permit (to the extent within Parent's or such Subsidiary's reasonable
control) the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
managed by Parent or any of its Subsidiaries, or transport or permit (to the
extent within Parent's or such Subsidiary's reasonable control) the trans-
portation of Hazardous Materials to or from any such Real Property except as
in material compliance with all applicable Environmental Laws and reasonably
required in connection with the operation, use and maintenance of any such
Real Property in the conduct of Parent's or such Subsidiary's business.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after either (i) an Event of
Default shall have occurred and be continuing or (ii) the Banks shall have
received notice under Section 8.01(g) for any event for which notice is
required to be delivered for any such Real Property, Parent will provide, at
Parent's sole cost and expense, an environmental site assessment report con-
cerning any Real Property, prepared by an environmental consulting firm
approved by the Required Banks, indicating the presence
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or absence of Hazardous Materials and the potential cost of any removal or
remedial action in connection with any Hazardous Materials on such Real
Property. If Parent fails to provide the same ninety (90) days after such
request was made, the Administrative Agent may order the same, and Parent and
each Borrower shall grant and hereby grants to the Administrative Agent and
the Banks and their agents access to such Real Property and specifically
grants the Administrative Agent and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake such an assessment,
all at Parent's and the Borrowers' expense.
8.07 ERISA. As soon as possible and, in any event, within 10 days
-----
after Parent or any Borrower or any ERISA Affiliate knows or has reason to
know of the occurrence of any of the following, Parent will deliver to each
of the Banks a certificate of the chief financial officer, controller or
treasurer of Parent setting forth details as to such occurrence and the
action, if any, which Parent, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed
to be given to or filed with or by Parent, such Subsidiary, such ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency has been incurred or an application may be or has been
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with
respect to a Plan; that a Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA; that a Plan has an
Unfunded Current Liability giving rise to a lien under ERISA or the Code;
that proceedings may be or have been instituted by the PBGC to terminate or
appoint a trustee to administer a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Plan; that Parent, any Subsidiary of Parent or any ERISA Affiliate will or
may incur any liability (including any contingent, or secondary liability) to
or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971 or 4975 of the Code or Section 409 or 502(i)
or 502(l) of ERISA. Parent will deliver to each of the Banks a complete copy
of the annual report (Form 5500) of each Plan (including, to the extent
required to be filed with Form 5500, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and
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information) required to be filed with the Internal Revenue Service. In
addition to any certificates or notices delivered to the Banks pursuant to
the first sentence hereof, copies of annual reports and any notices received
by Parent or any Subsidiary of Parent or any ERISA Affiliate with respect to
any Plan shall be delivered to the Banks no later than 10 days after the date
such report has been filed with the Internal Revenue Service or such notice
has been received by Parent, the Subsidiary or the ERISA Affiliate, as
applicable.
8.08 End of Fiscal Years; Fiscal Quarters. Parent and the Company
------------------------------------
will cause (i) each of its fiscal years to end on December 31, and (ii) each
of its fiscal quarters to end on March 31, June 30, September 30 and December
31.
8.09 Performance of Obligations. Parent will, and will cause each
--------------------------
of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, indenture, security agreement and other debt instrument by
which it is bound, except such non-performances as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. Parent will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, in each case on a timely
basis, and all lawful claims which, if unpaid, might become a lien or charge
upon any properties of Parent or any of its Subsidiaries; provided that
--------
neither Parent nor any of its Subsidiaries shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves with respect
thereto in accordance with generally accepted accounting principles.
8.11 Registry. The Company hereby covenants that it shall
--------
maintain a register on which it will record the Revolving Loan Commitments
from time to time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the Loans of each
Bank. Failure to make any such recordation, or any error in such recordation
shall not affect any Borrower's obligations in respect of such Loans. Upon
the written request of the Com-
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pany, the Administrative Agent hereby agrees to use its reasonable efforts to
provide to the Company such information, not otherwise available to the
Company, as the Company shall reasonably request from time to time in order
to enable it to fulfill its obligations pursuant to this Section 8.11 and the
Company shall have no obligation to make any such recordation until it
receives such requested information from the Administrative Agent. Without
limiting the Company's obligations hereunder, the Company shall indemnify any
Bank described in Section 4.04(b)(iii) or (iv) for any losses (including
withholding of Taxes required) arising as a result of the Company's failure
to comply with this Section 8.11. With respect to any Bank described in Sec-
tion 4.04(b)(iii) or (iv), (a) the transfer of the Revolving Loan Commitments
of such Bank and the rights to the principal of, and interest on, any Loan
made pursuant to such Revolving Loan Commitments shall not be effective until
such transfer is recorded on the register maintained by the Company with
respect to ownership of such Revolving Loan Commitments and Loans and prior
to such recordation all amounts owing to the transferor with respect to such
Revolving Loan Commitments and Loans shall remain owing to the transferor and
(b) the Company shall immediately record all such transfers when notified
thereof by the transferor Bank and such transfer shall be made only through
(x) the surrender of a Note and the reissuance of such Note by the Company to
the new holder of the old Note or the issuance by the Company of a new Note
to the new holder (the "Issuance System") or (y) a register maintained by the
Company and referred to in the first sentence of this Section (the "Book
Entry System"). The Borrowers jointly and severally agree to indemnify any
transferee Bank from and against any and all losses, claims, damages and
liabilities (including, without limitation, any amounts paid by the trans-
feree to the transferor in connection with the transfer and all amounts which
would otherwise be owing to the transferee if the transfer had been properly
recorded) resulting from the Company's failure to record any such transfer
through either the Issuance System or the Book Entry System.
8.12 Additional Guarantors; Additional Collateral; etc. (a) In
--------------------------------------------------
the event that at any time after the Restatement Effective Date any Person
becomes (x) a First-Tier Material Subsidiary, (y) a Material Subsidiary
pursuant to clause (b) of this Section 8.12 or clause (ii) of the definition
thereof or (z) a guarantor under the 364-Day Credit Agreement, then Parent
and the Company will, except as otherwise provided in the last sentence of
this clause (a), cause such Person (each such Person a "Required Additional
Guarantor"), within 30 days after it becomes a Required
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Additional Guarantor, to duly authorize, execute and deliver to the
Administrative Agent counterparts of the Company/Sub Guaranty, together with
such other documents, certificates, resolutions, opinions and writings that
would have been required to be delivered pursuant to Sections 5.03, 5.04 and
5.13 if such Subsidiary had been a Guarantor on the Restatement Effective
Date and subject to such Sections on such date, all of which shall be in form
and substance satisfactory to the Administrative Agent. Notwithstanding the
foregoing, any Subsidiary of the Company which is not a Wholly-Owned
Subsidiary or which has incurred then outstanding Non-Recourse Indebtedness
pursuant to Section 9.04(ix) or (x) shall not be required to become a
Guarantor pursuant to the Company/Sub Guaranty.
(b) In the event that at any time after the Restatement Effective
Date Parent or any of its Subsidiaries acquires any Required Collateral, or
it is determined that any Required Collateral is not then subject to a
perfected security interest pursuant to the relevant Collateral Documents or
any additional collateral is provided under the 364-Day Revolving Credit
Agreement, then in each such case perfected security interests shall
immediately be granted in such Required Collateral or other collateral
pursuant to the respective Collateral Documents and, to the extent reasonably
determined necessary or desirable by the Administrative Agent, additional
security documents shall be entered into in order to effectively grant such
perfected security interests (all such additional security documents entered
into pursuant to this Section 8.12(b), "Additional Collateral Documents"),
together with such other documents, certificates, resolutions, instruments,
financing statements, opinions and writings that would have been required to
be delivered pursuant to Sections 5.03 and 5.04 of this Agreement and
Sections 5.06 through 5.13 of the Original Credit Agreement, as applicable,
if perfected security interests had been created in respect of such Required
Collateral or other collateral on or prior to the Restatement Effective Date,
all of which shall be in form and substance satisfactory to the
Administrative Agent.
(c) In the event that the Administrative Agent or the Required
Banks at any time after the Restatement Effective Date determine in its or
their good faith discretion (as a result of events or circumstances affecting
the Collateral Agent or the Required Banks after the Restatement Effective
Date) that real estate appraisals satisfying the requirements set forth in 12
C.F.R., Part 34-Subpart C, or any successor or similar statute, rule,
regulation, guideline
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or order (any such appraisal a "Required Appraisal") are or were required to
be obtained, or should be obtained, in connection with any Mortgaged Property
or Mortgaged Properties, then, within 120 days after receiving written notice
thereof from the Administrative Agent or the Required Banks, as the case may
be, such Required Appraisal shall be delivered, at the expense of the
Company, to the Administrative Agent, which Required Appraisal, and the
respective appraiser, shall be satisfactory to the Administrative Agent.
SECTION 9. Negative Covenants. Each of Parent, the Company and
------------------
each Subsidiary Borrower covenants and agrees that on and after the
Restatement Effective Date and until the Total Revolving Loan Commitment and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Draw-
ings, together with interest, Fees and all other Obligations incurred here-
under and thereunder, are paid in full:
9.01 Liens. Parent will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or intan-
gible) of Parent or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to Parent or any of its
Subsidiaries), or assign any right to receive income or permit the filing of
any financing statement under the UCC or any other similar notice of Lien
under any similar recording or notice statute; provided that the provisions
--------
of this Section 9.01 shall not prevent the creation, incurrence, assumption
or existence of the following (Liens described below are herein referred to
as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges
or levies not yet due or Liens for taxes, assessments or governmental
charges or levies being contested in good faith and by appropriate pro-
ceedings for which adequate reserves have been established in accordance
with generally accepted accounting principles;
(ii) Liens in respect of property or assets of Parent or any of its
Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary
-72-
course of business, and (x) which do not in the aggregate materially
detract from the value of Parent's or such Subsidiary's property or
assets or materially impair the use thereof in the operation of the
business of Parent or such Subsidiary or (y) which are being contested
in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) Liens permitted pursuant to Section 9.01(iii) of the Original
Credit Agreement which remain in existence on the Restatement Effective
Date and which are listed, and the property subject thereto described,
in Schedule VIII, but only to the respective date, if any, set forth in
such Schedule VIII for the removal and termination of any such Liens,
without any renewals or extensions thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Collateral Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of Parent or any of its
Subsidiaries or materially detracting from the value of the respective
assets of Parent or such Subsidiary;
(vii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security in the ordinary course of
business;
(viii) Liens placed upon equipment or machinery used in the ordinary
course of business of the Company or any of its Subsidiaries at the time
of acquisition thereof by the Company or any such Subsidiary or within
90 days thereafter to secure Indebtedness incurred to pay all or a
portion of the purchase price thereof provided that (x) the aggregate
principal amount of all Indebtedness secured by Liens permitted by this
clause (viii) incurred in any fiscal year of Parent does not exceed
$1,000,000 and (y) in all events, the Lien encumbering the equipment or
machinery so acquired does not encumber any other asset of Parent or
such Subsidiary;
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(ix) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies, in
each case not securing Indebtedness and not materially interfering with
the conduct of the business of Parent or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(xi) Liens arising out of judgments or awards in respect of which
Parent or any of its Subsidiaries shall in good faith be prosecuting an
appeal or proceedings for review in respect of which there shall have
been secured a subsisting stay of execution pending such appeal or
proceedings provided that the aggregate amount of all such judgments or
awards (and any cash and the fair market value of any property subject
to such Liens) does not exceed $15,000,000 at any time outstanding;
(xii) statutory and common law landlords' liens under leases to
which Parent or any of its Subsidiaries is a party;
(xiii) Liens incurred or deposits made to secure the performance of
tenders, bids, statutory obligations, government contracts, performance
and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations
for the payment of borrowed money);
(xiv) Liens securing reimbursement obligations with respect to
commercial and standby letters of credit incurred by the Company or any
of its Subsidiaries in the ordinary course of business provided that (x)
each such letter of credit is in a face amount of less than $1,000,000
and (y) the aggregate face amount of all such letters of credit does not
exceed $5,000,000;
(xv) restrictions pursuant to legends on stock required by (x)
Gaming Regulations and (y) the partnership agreement for Harrah's Jazz
(as such partnership agreement is in effect on the Restatement Effective
Date, which restrictions, in any event, do not prohibit the granting of
the Liens on any Required Collateral or the exercise of remedies
pursuant to the Collateral Documents), in each case to the extent such
restrictions constitute a Lien;
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(xvi) Liens securing Existing Casino Non-Recourse Financing
permitted under Section 9.04(ix) so long as such Liens only encumber the
Casino Property or the two Casino Properties (including the furniture,
fixtures and equipment related thereto) in respect of which Existing
Casino Non-Recourse Financing is then being or has theretofore been
obtained, provided that such Liens may attach to any Casino Property
only upon the occurrence of the respective Casino Release in accordance
with the terms hereof;
(xvii) any Lien existing on any asset of any corporation at the time
such corporation becomes a Subsidiary of Parent so long as any such Lien
was not created in contemplation of such event;
(xviii) any Lien existing on any asset prior to the acquisition
thereof by the Company or any of its Subsidiaries so long as any such
Lien was not created in contemplation of such acquisition;
(xix) Liens on equipment or machinery subject to Capitalized Lease
Obligations to the extent permitted by Section 9.04(v);
(xx) Liens securing Non-Recourse Indebtedness of Specified
Subsidiaries permitted under Section 9.04(x) so long as such Liens only
encumber the Gaming Properties owned by Specified Subsidiaries being
developed or financed with such Non-Recourse Indebtedness, including any
Real Property and furniture, fixtures and equipment related thereto, it
being understood and agreed that such assets of Specified Subsidiaries
also may secure Non-Recourse Indebtedness incurred by other Specified
Subsidiaries pursuant to Section 9.04(x);
(xxi) Liens on the Company's or any of its Subsidiaries' respective
equity interest in any Joint Venture so long as such Liens only secure
Indebtedness of such Joint Venture; and
(xxii) Liens placed upon the Hotel Collateral securing the
Indebtedness and other obligations of the Company and the Hotel
Subsidiaries under the Hotel Facility, it being understood that such
Liens shall not be permitted with respect to any assets or properties of
Parent or any Subsidiary of Parent after the Restatement Effective Date.
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9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. (a)
-------------------------------------------------------
Parent will not, and will not permit any of its Material Subsidiaries to,
wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or substantially all
of its assets, whether in a single transaction or a series of related
transactions, provided, however, (A) that in no event shall Parent or any of
-------- -------
its Subsidiaries sell, lease or otherwise dispose of the capital stock or
partnership interest in any Material Subsidiary or any Casino Property
unless, in the case of any sale of any Casino Property (including any
fixtures, furniture and equipment related thereto), or the sale of capital
stock or partnership interest of any Casino Owner that owns the related
Casino Property, (i) such sale is for cash and the Net Sale Proceeds
therefrom equals at least the Minimum Proceeds Amount for such Casino
Property or the Casino Owner thereof, provided that no more than two Casino
Properties or the two Casino Owners thereof in the aggregate may be the
subject of a Casino Release, whether pursuant to this Section 9.02 or Section
9.04(ix), and only one of either the Atlantic City Property or the Las Vegas
Property may be the subject of a Casino Release, (ii) the Casino Owner of
such Casino Property, if a Subsidiary Borrower, ceases to be a Subsidiary
Borrower and all Loans incurred by such Subsidiary Borrower are repaid in
full and the Company shall become the account party with respect to any
outstanding Letter of Credit issued for the account of such Subsidiary
Borrower pursuant to documentation satisfactory to the Administrative Agent
and the respective Letter of Credit Issuer, (iii) at the time of such sale no
Default or Event of Default then exists or would exist after giving effect
thereto and the Total Revolving Loan Commitment is reduced as required by
Section 3.03(e), (B) Harrah's New Jersey may merge with and into Harrah's
Atlantic City so long as at the time of such merger (i) no Default or Event
of Default shall exist, (ii) all of the assets of Marina are distributed to
the surviving corporation of such merger, (iii) the surviving corporation of
such merger is a Wholly-Owned Subsidiary of the Company all of the capital
stock of which is pledged by the Company pursuant to the terms of the
Company/Sub Pledge Agreement and (iv) all steps are taken that are necessary,
or in the opinion of the Collateral Agent desirable, to maintain the
perfection and priority of the Liens on the Collateral theretofore owned by
Marina pursuant to the terms of the respective Collateral Documents, (C) the
Hotel Transfer and the Hotel Stock Dividend shall be permitted, (D) the
Company may transfer its ownership interest in any of the Casino Properties
located in
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Nevada to Harrah's Club so long as at the time of any such transfer (i) no
Default or Event of Default shall exist and (ii) all steps are taken that are
necessary, or in the opinion of the Collateral Agent desirable, to maintain
the perfection and priority of the Liens on the Collateral theretofore owned
by the Company pursuant to the respective Collateral Documents and so
transferred to Harrah's Club and (E) Casino Holding Company may merge with
and into Harrah's Club so long as Harrah's Club is the surviving corporation
of such merger Harrah's may merge with and into the Company so long as the
Company is the surviving corporation of such merger, and Harrah's Club may
merge with and into the Company so long as the Company is the surviving
corporation of such merger and in each case so long as no Default or Event of
Default then exists and all steps are taken that are necessary, or in the
opinion of the Collateral Agent desirable, to maintain the perfection and
priority of the Lien's on the Collateral theretofore owned by Casino Holding
Company, Harrah's Club and Harrah's, as applicable, pursuant to the terms of
the respective Collateral Documents. Notwithstanding anything to the
contrary contained above, the Company may transfer any Casino Property (and
the fixtures, furniture and equipment related thereto) owned by it to a
special purpose Wholly-Owned Subsidiary of the Company for the purpose of
either (i) selling the capital stock of such special purpose Wholly-Owned
Subsidiary pursuant to clause (A) of this Section 9.02 or (ii) permitting
such special purpose Wholly-Owned Subsidiary to incur Existing Casino Non-
Recourse Financing pursuant to Section 9.04(ix) so long as in either case
such transfer occurs at the time of, or immediately prior to, such sale or
the incurrence of such Existing Casino Non-Recourse Financing.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent will not, and will not permit any of its Subsidiaries to,
sell, transfer or dispose of any Collateral (except for the Pledged
Securities of any Hotel Subsidiary as part of the Hotel Transfer), except
that (i) up to two Casino Properties (or the capital stock or partnership
interests in the respective Casino Owners) may be sold in accordance with
clause (A) of the proviso to the first sentence of Section 9.02(a), (ii)
sales of inventory, materials and equipment may be made in the ordinary
course of business, (iii) sales of obsolete, uneconomic or worn out equipment
or materials shall be permitted and (iv) so long as no Default or Event of
Default then exists or would exist after giving effect thereto, Collateral
(other than any Casino Property, the "Harrah's" name (although same may be
used or licensed on a non-exclusive basis in connection with
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the extension of the Gaming Business of the Company and its Subsidiaries and
Joint Ventures) and any capital stock or partnership interest in any Material
Subsidiary) may be sold at fair market value as determined in good faith by
the Company and so long as at least 75% of the gross proceeds therefrom
consist of cash, and so long as any reduction to the Total Revolving Loan
Commitment required by Section 3.03(e) and (f) is effected (and any resultant
required payments are made pursuant to Section 4.02) in accordance with the
terms thereof.
(c) To the extent the Required Banks waive in writing the provi-
sions of this Section 9.02 with respect to the sale of any Collateral, or any
Collateral is sold as permitted by this Section 9.02, such Collateral shall
be sold free and clear of the Liens created by the Collateral Documents, and
the Administrative Agent and Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.
9.03 Dividends. Parent will not, and will not permit any of its
---------
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Parent or any of its Subsidiaries, except that:
(i) any Subsidiary of the Company may pay Dividends to the Company
or any Wholly-Owned Subsidiary of the Company;
(ii) any non-Wholly-Owned Subsidiary of the Company may pay cash
Dividends to its shareholders generally on a pro rata basis;
--- ----
(iii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company may
pay cash Dividends to Parent which are used by Parent to pay cash
Dividends to its shareholders to the extent necessary, as determined in
the good faith judgment of the Board of Directors of Parent or the
Company, to prevent the filing of any disciplinary action by any Gaming
Authority or to prevent the loss or secure the reinstatement of any
license or franchise from any governmental agency, including Gaming
Authorities, held by Parent or any of its Subsidiaries which license or
franchise is conditioned upon some or all of the holders of Parent's
capital stock possessing prescribed qualifications, in each case only if
such loss or failure to reinstate would have a material adverse effect
on the business, operations,
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property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole, provided that
the aggregate amount of cash Dividends permitted to be paid pursuant to
this clause (iii) shall not exceed $5,000,000;
(iv) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company may
pay cash Dividends to Parent in the amounts permitted pursuant to
clauses (v) and (vi) of this Section 9.03, provided that Parent uses the
proceeds thereof to pay Dividends within three days after receipt
thereof for the purposes set forth in such clauses (v) and (vi);
(v) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may pay
cash Dividends in an aggregate amount for any fiscal year of Parent not
to exceed the lesser of (x) 10% of Consolidated Net Income for the prior
fiscal year and (y) $20,000,000;
(vi) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may
redeem the Rights outstanding pursuant to the terms of the Rights
Agreement, provided that (i) Parent shall not pay more than $.05 per
Right in connection therewith and (ii) the aggregate amount of Dividends
paid pursuant to this clause (vi) shall not exceed $2,500,000;
(vii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company may
pay cash Dividends to Parent so long as the proceeds thereof are
promptly used by Parent to pay (i) operating expenses in the ordinary
course of business and other similar corporate overhead costs and
expenses and (ii) amounts necessary to fund Aster Insurance Ltd. in the
ordinary course of its business;
(viii) the Company may pay cash Dividends to Parent in the amounts
and at the times of any payment by Parent in respect of federal, state,
franchise or other taxes (provided that any refund shall be promptly
returned by Parent to the Company); and
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(ix) Parent and the Company may declare and, on the Restatement
Effective Date pay, the Hotel Stock Dividend.
Nothing in this Section 9.03 shall prohibit the making of any Dividend within
45 days after the declaration thereof if such declaration was not prohibited
by this Section 9.03 at the time of such declaration.
9.04 Indebtedness. Parent will not, and will not permit any of
------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Indebtedness permitted under Section 9.04(ii) of the Original
Credit Agreement which remains outstanding on the Restatement Effective
Date and which is listed on Part A of Schedule V, provided that no re-
--------
financings or renewals thereof shall be permitted except as expressly
set forth on Part A of Schedule V and then, in any event, such
refinancings and renewals shall not be in excess of the respective
amounts set forth on Part A of Schedule V;
(iii) accrued expenses and current trade accounts payable incurred
in the ordinary course;
(iv) unsecured Indebtedness of Parent or the Company under
performance bonds and guarantees in respect of the completion of the
construction of any property in accordance with the plans or standards
as agreed with the obligee of such guarantee so long as such bonds or
guarantees are incurred by Parent or the Company in the ordinary course
of the Gaming Property development business of the Company and its
Subsidiaries;
(v) Indebtedness of the Company or any of its Subsidiaries subject
to Liens permitted under Section 9.01(viii) or evidenced by Capitalized
Lease Obligations provided that such Capitalized Lease Obligations only
relate to equipment or machinery (not constituting Collateral) of the
Company or any of its Subsidiaries;
(vi) Indebtedness of the Company or any of its Subsidiaries
consisting of (x) reimbursement obligations on letters of credit (other
than Letters of Credit),
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bankers acceptances or similar instruments, provided that (i) the
--------
aggregate amount thereof at any one time outstanding shall not exceed
$5,000,000 and (ii) any such Indebtedness in excess of $1,000,000 in the
aggregate at any one time outstanding shall be unsecured other than by
documents of title and (y) surety, performance or appeal bonds to the
extent permitted by Section 9.01(xi);
(vii) Indebtedness of the Company and the Hotel Subsidiaries under
the Hotel Facility, it being understood that neither Parent nor any
Subsidiary of Parent shall be liable in respect of such Indebtedness
after the Restatement Effective Date;
(viii) Indebtedness of Parent, the Company or any Wholly-Owned
Subsidiary of the Company to Parent, the Company or any Subsidiary of
the Company (other than a Subsidiary that has incurred Existing Casino
Non-Recourse Financing or other Non-Recourse Indebtedness) or
Indebtedness of any Subsidiary of Parent to the Parent, the Company or
any Wholly-Owned Subsidiary of the Company (other than a Subsidiary that
has incurred Existing Casino Non-Recourse Financing or other Non-
Recourse Indebtedness);
(ix) Existing Casino Non-Recourse Financing incurred by any Casino
Owner (including any special purpose Wholly-Owned Subsidiary of the
Company formed to become a Casino Owner in accordance with the last
sentence of Section 9.02(a)) so long as (i) the net cash proceeds
received by such Casino Owner therefrom equals at least the Minimum
Proceeds Amounts for such Casino Property, (ii) if such Casino Owner is
a Subsidiary Borrower, such Casino Owner ceases to be a Subsidiary
Borrower and all Loans incurred by such Casino Owner are repaid in full
and the Company shall become the account party with respect to any
outstanding Letters of Credit issued for the account of such Casino
Owner pursuant to documentation satisfactory to the Administrative Agent
and the respective Letter of Credit Issuer, (iii) at the time of
incurrence of such Existing Casino Non-Recourse Financing and after
giving effect thereto, no Default or Event of Default shall exist, (iv)
at the time of incurrence of such Existing Casino Non-Recourse
Financing, the respective Casino Owner's business and assets shall
consist substantially of only the Casino Property (including related
fixtures, furniture and equipment) subject to such financing, (v) no
more than
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two Casino Properties in the aggregate may be the subject of a Casino
Release, whether pursuant to this Section 9.04(ix) or Section 9.02, and
only one of either the Atlantic City Property or the Las Vegas Property
may be the subject of a Casino Release and (vi) at the time of the
incurrence of such Existing Casino Non-Recourse Financing, the Total
Revolving Loan Commitment shall be reduced as required by Section
3.03(d);
(x) Non-Recourse Indebtedness of Specified Subsidiaries to finance
the development of Gaming Properties so long as the aggregate principal
amount thereof at any time outstanding does not exceed $300,000,000, it
being understood and agreed, however, that (i) a Specified Subsidiary
which has incurred outstanding Non-Recourse Indebtedness pursuant to
this Section 9.04(x) may guaranty the Non-Recourse Indebtedness incurred
pursuant to this Section 9.04(x) by other Specified Subsidiaries, and
(ii) such Non-Recourse Indebtedness may be guaranteed by the Company and
its other Subsidiaries to the extent provided in Section 9.04(xii);
(xi) Subordinated Debt of the Company not otherwise outstanding on
the date hereof so long as (i) the terms and conditions thereof
(including, but not limited to, subordination provisions) are no more
favorable to the holders of such Subordinated Debt than those set forth
in the 8-3/4% Senior Subordinated Notes Indenture (provided that the
indebtedness covenant contained in any such other issue of Subordinated
Debt shall have sufficient availability (without relying on any
incurrence ratios) to justify the full amount of the Total Revolving
Loan Commitment and the Total 364-Day Revolving Loan Commitment) or the
10-7/8% Senior Subordinated Notes Indenture and (ii) if such
Subordinated Debt (or any portion thereof) constitutes Permitted
Designated Indebtedness, the Total Revolving Loan Commitment shall be
reduced as required by Section 3.03(d);
(xii) Parent and its Subsidiaries may guarantee on an unsecured
basis obligations of Specified Subsidiaries, Joint Ventures and parties
to management agreements with the Company or its Subsidiaries or with
such Joint Ventures, in each case with respect to the development of
Gaming Property in an amount not to exceed $100,000,000 at any one time
outstanding for any individual Gaming Property and $325,000,000 at any
one
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time outstanding for all such Gaming Properties, provided that (i) the
--------
aggregate limitation set forth above shall be (A) increased (or
decreased if Consolidated Net Income is negative) on the first day of
each fiscal year of the Company commencing on January 1, 1996 by an
amount equal to 50% (or 100% for each fiscal year for which Consolidated
Net Income is negative) of the Consolidated Net Income for the fiscal
year last ended, and (B) decreased from time to time by the amount of
Dividends paid by the Company to Parent pursuant to Section 9.03(iv) on
and after the Restatement Effective Date and prior to the date of deter-
mination, (ii) the aggregate amount of guarantees permitted to be out-
standing by Parent and its Subsidiaries pursuant to this Section
9.04(xii) shall be reduced by the amount of Investments outstanding
pursuant to clause (i) of the proviso to Section 9.05 and (iii) the
$100,000,000 individual limitation set forth above shall not apply to
the Cherokee Investments;
(xiii) Parent, the Company and Harrah's may guarantee on an unsecured
basis any obligations (except that it may not provide any guaranties,
direct or indirect, of Non-Recourse Indebtedness pursuant to this clause
(xiii)) of their respective Subsidiaries;
(xiv) Indebtedness of Parent and the other Guarantors under the 364-
Day Credit Agreement (but only to the extent that Parent or such other
Guarantors are Guarantors under, or in respect of, this Agreement) in an
aggregate principal amount not to exceed $150,000,000 (as reduced by any
mandatory reductions thereto as contemplated by Section 3.03(d) and (e))
at any one time outstanding; and
(xv) Indebtedness of Parent or any of its Subsidiaries not
otherwise permitted under this Section 9.04 in an aggregate principal
amount not to exceed $25,000,000 at any one time outstanding.
At the time any Casino Owner obtains Existing Casino Non-Recourse
Financing in accordance with clause (ix) of this Section 9.04, the Casino
Property (and fixtures, furniture and equipment related thereto) subject to
such financing shall be so financed free and clear of the Liens created by
the respective Mortgage and Collateral Documents, and the Administrative
Agent and Collateral Agent shall be authorized to take any actions deemed
appropriate in order to effect the foregoing.
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9.05 Advances, Investments and Loans. Parent will not, and will
-------------------------------
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person (collectively, "Investments") other than
Investments in the ordinary course of business, Subsidiary Investments and
other Investments existing on the Restatement Effective Date, provided that:
(i) Investments other than Subsidiary Investments shall not be
made with respect to the development or operation of Gaming Properties
or in connection with Gaming Businesses (and reasonable extensions
thereof), except that Investments in any Joint Venture relating to the
Gaming Business or Investments in parties to management agreements with
the Company or its Subsidiaries or such Joint Ventures for gaming
projects may be made so long as the aggregate amount thereof does not
exceed $100,000,000 at any one time outstanding (determined without
regard to any write-downs or write-offs of such Investments) for any
individual Gaming Business or gaming project or $325,000,000 at any one
time outstanding (determined without regard to any write-downs or write-
offs of such Investments) for all such Gaming Businesses and gaming
projects, provided that (w) the aggregate limitation set forth above
--------
shall be (A) increased (or decreased if Consolidated Net Income is
negative) on the first day of each fiscal year of the Company commencing
on January 1, 1996 by an amount equal to 50% (or 100% for each fiscal
year for which Consolidated Net Income is negative) of the Consolidated
Net Income for the fiscal year last ended and (B) decreased from time to
time by the amount of Dividends paid by the Company to Parent pursuant
to Section 9.03(iv) on and after the Restatement Effective Date, (x) the
aggregate amount of such Investments permitted to be made pursuant to
this Section 9.05(i) shall be reduced by the aggregate amount of
guarantees outstanding pursuant to Section 9.04(xii), (y) the
$100,000,000 individual limitation set forth above shall not apply to
the Cherokee Investments and (z) Investments in, to or for the benefit
of Harrah's Jazz and its Subsidiaries shall not be permitted to be made
pursuant to this Section 9.05(i); and
(ii) Investments constituting Harrah's Jazz Investments shall be
permitted, provided that the aggregate amount of all such Investments
(other than in
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respect of the Harrah's Jazz Completion Obligation Loans, the Harrah's
Jazz Title Indemnity Arrangements and the Harrah's Jazz Completion
Guaranties), whether made prior to, on or after the Restatement
Effective Date, shall not exceed $150,000,000.
Notwithstanding the foregoing provisions of this Section 9.05,
Investments in the ordinary course of business shall not include the
purchases of (i) Margin Stock and (ii) non-investment grade debt securities
of any Person.
9.06 Transactions with Affiliates. Parent will not, and will not
----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Parent or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to Parent or such Subsidiary as would reasonably be obtained by
Parent or such Subsidiary at that time in a comparable arm's-length transac-
tion with a Person other than an Affiliate, except that (i) Dividends may be
paid to the extent provided in Section 9.03, (ii) loans may be made and other
transactions may be entered into by Parent and its Subsidiaries to the extent
permitted by Sections 9.04 and 9.05 and (iii) transactions among Parent, the
Company and any Subsidiary of the Company shall be permitted so long as any
such transactions, individually or in the aggregate, would not have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole.
9.07 Maximum Leverage Ratio. Parent will not permit the ratio of
----------------------
Consolidated Debt to Consolidated Net Worth at any time during a period set
forth below to be greater than the ratio set forth opposite such period
below:
Period Ratio
------ -----
Restatement Effective Date to and
including December 31, 1996 2.75:1
January 1, 1997 to and
including December 31, 1997 2.50:1
January 1, 1998 to and
including December 31, 1998 2.25:1
January 1, 1999 and
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thereafter 2.00:1
9.08 Consolidated Interest Coverage Ratio. Parent will not permit
------------------------------------
the Consolidated Interest Coverage Ratio for any Test Period ended on the
last day of a fiscal quarter set forth below to be less than the ratio set
forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters ending
June 30, 1995,
September 30, 1995 and
December 31, 1995 2.5:1
Fiscal quarters ending
March 31, 1996
and thereafter 3.0:1
9.09 Minimum Consolidated Net Worth. Parent will not permit
------------------------------
Consolidated Net Worth at any time during a period or calendar year set forth
below to be less than the amount set forth opposite such period or calendar
year below:
Period Amount
------ ------
Restatement Effective Date to and
including December 31, 1995 $ 450,000,000
Year ending December 31, 1996 $ 550,000,000
Year ending December 31, 1997 $ 650,000,000
Year ending December 31, 1998 $ 800,000,000
Year ending December 31, 1999 $1,000,000,000
Year ending December 31, 2000 $1,000,000,000
9.10 Limitation on Payments and Modifications of Subordinated
--------------------------------------------------------
Debt; Modifications of Certificate of Incorporation, Partnership Agreements
---------------------------------------------------------------------------
and By-Laws. Parent will not, and will not permit any of its Subsidiaries
-----------
to, (i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying when
due) any Subordinated Debt (other than the Company's 8-3/8%
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Subordinated Debentures due 1996), (ii) make (or give any notice in respect
of) any mandatory payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the
trustee with respect thereto money or securities before due for the purpose
of when due) any Subordinated Debt as a result of any sale of assets by
Parent or any of its Subsidiaries, (iii) amend or modify, or permit the
amendment or modification of, any provision of any Subordinated Debt or of
any agreement (including, without limitation, any purchase agreement,
indenture or loan agreement) relating thereto (except modifications relating
to the 10-7/8% Senior Subordinated Notes Indenture and 8-3/4% Senior
Subordinated Notes Indenture in order to obtain the respective holders'
consent to the Hotel Transaction so long as the documentation with respect to
such consent is in form and substance satisfactory to the Administrative
Agent and the Required Banks), (iv) amend or modify, or permit the amendment
or modification of, any financial or business covenants and/or defaults of
the 364-Day Credit Agreement which would have the effect of making the same
more stringent or restrictive as applied to Parent or any of its Subsidiaries
in each case unless parallel changes are made to both this Agreement and the
364-Day Credit Agreement or (v) amend, modify or change its certificate of
incorporation (including, without limitation, by the filing or modification
of any certificate of designation), partnership agreement or by-laws except
such modifications which would not have a material adverse effect on Parent
and its Subsidiaries taken as a whole or an adverse effect on the rights and
remedies of the Administrative Agent or the Banks under any of the Credit
Documents. Notwithstanding anything to the contrary contained in clause (i)
of this Section 9.10, the Company may prepay, repurchase, redeem, defease or
otherwise retire Subordinated Debt if no Default or Event of Default then
exists or would result therefrom to the extent necessary in the good faith
judgment of the Board of Directors of Parent or the Company to prevent the
filing of a disciplinary action by any Gaming Authority or to prevent the
loss or secure the reinstatement of any license or franchise from any
governmental agency (including the Gaming Authorities) held by Parent, the
Company or any Subsidiary of Parent or the Company which license or franchise
is conditioned upon some or all of the holders of such Subordinated Debt
possessing prescribed qualifications, if such loss or failure to reinstate
would have a material adverse effect on the business, operations, property,
assets, liabilities, conditions (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
-87-
9.11 Limitation on Certain Restrictions on Subsidiaries. Parent
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary of Parent to
(a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by Parent or any
Subsidiary of Parent, or pay any Indebtedness owed to Parent or a Subsidiary
of Parent, (b) make loans or advances to Parent or any Subsidiary of Parent
or (c) transfer any of its properties or assets to Parent or any Subsidiary
of Parent, except for such encumbrances or restrictions existing under or by
reason of (i) regulatory actions or applicable law, (ii) this Agreement, the
other Credit Documents and the 364-Day Credit Agreement, (iii) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of Parent or a Subsidiary of Parent, (iv) customary provi-
sions restricting the assignment or transfer of any licensing agreement,
franchise agreement, management contract, joint venture agreement or any
similar types of agreement entered into by Parent or a Subsidiary of Parent
in the ordinary course of business, (v) customary restrictions imposed in
connection with any asset sale permitted by this Agreement for the benefit of
the purchaser or owner of such asset, (vi) restrictions existing in any
document executed in connection with Existing Casino Non-Recourse Financing
so long as such restrictions only apply to the Casino Property (and any
fixtures, furniture and equipment related thereto) serving as security for
such financing, (vii) restrictions existing in any document executed in con-
nection with Non-Recourse Indebtedness permitted under Section 9.04(x) so
long as such restrictions only apply to the property serving as security for
such debt, (viii) customary restrictions on the transfer of assets used to
secure Indebtedness permitted to be incurred (and so long as the Liens are
permitted to exist) by this Agreement, (ix) restrictions imposed in
connection with any new gaming Subsidiaries of the Company which are not
Material Subsidiaries and (x) restrictions imposed on the Company and the
Hotel Subsidiaries pursuant to the Hotel Facility, provided that the
restrictions imposed pursuant to the Hotel Facility shall not apply to Parent
or any Subsidiary of Parent after the Restatement Effective Date.
9.12 Limitation on Issuance of Capital Stock. Parent will not
---------------------------------------
permit any of its Material Subsidiaries to issue any capital stock (including
by way of sales of treasury stock) or any options or warrants to purchase, or
securities convertible into, capital stock, except (i) for trans-
-88-
fers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and similar issuances which do not decrease the
percentage ownership of Parent or any of its Subsidiaries in any class of the
capital stock of such Subsidiary and (iii) to qualify directors to the extent
required by applicable law.
9.13 Business. Parent will not, and will not permit any of its
--------
Subsidiaries to, engage (directly or indirectly) in any business other than
the business in which Parent or such Subsidiary is engaged on the Restatement
Effective Date (after giving effect to the Hotel Transaction) and any other
reasonably related businesses.
9.14 Ownership of Subsidiaries. Parent will maintain its direct
-------------------------
100% ownership interest in the Company, and, except as expressly provided in
Section 9.02(a), the Company will maintain the same direct or indirect 100%
ownership interest in each of the Material Subsidiaries, provided that if the
Company owns (directly or indirectly) less than 100% of the capital stock or
other equity interest of any Material Subsidiary at the time same becomes a
Material Subsidiary, then the Company shall maintain at least such direct or
indirect ownership interest in such Material Subsidiary so long as it remains
a Material Subsidiary, it being understood that the Company may divest its
ownership interest in the Hotel Company and the Hotel Subsidiaries as a
result of the Hotel Stock Dividend.
9.15 Special Purpose Corporation. Parent will engage in no
---------------------------
material business activities other than the ownership of the capital stock of
the Company.
SECTION 10. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
10.01 Payments. Any Borrower shall (i) default in the payment
--------
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more days, in the payment when
due of any Unpaid Drawings or interest on any Loan or Note or any regularly
accruing Fees, or (iii) default, and such default shall continue unremedied
for five or more days after written notice to the Company by the Administra-
tive Agent or any Bank, in the payment when due of any other Fees or amounts
owing hereunder or under any other Credit Document, provided, however, that
-------- -------
such notice shall not be required to be given
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if a Bankruptcy Event shall have occurred and be continuing; or
10.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document or
in any certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made;
or
10.03 Covenants. Parent or any Borrower shall (i) default in the
---------
due performance or observance by it of any term, covenant or agreement con-
tained in Section 8.01(e)(i), 8.08 or 9 or (ii) default in the due perfor-
mance or observance by it of any other term, covenant or agreement contained
in this Agreement and such default shall continue unremedied for a period of
30 days after written notice to the Company by the Administrative Agent or
any Bank; or
10.04 Default Under Other Agreements. Parent or any Subsidiary of
------------------------------
Parent shall (i) default in any payment of any Indebtedness (other than the
Loans and the Notes) beyond the period of cure or grace, if any, provided in
the instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relat-
ing to any Indebtedness (other than the Loans and the Notes) or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause (determined without regard to whether any notice is required), any
such Indebtedness to become due prior to its stated maturity, or (iii) any
Indebtedness (other than the Loans and the Notes) of Parent or any Subsidiary
of Parent shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof, provided that it shall not be a Default or an Event of
--------
Default under this Section 10.04 unless the aggregate principal amount of all
Indebtedness as described in preceding clauses (i) through (iii), inclusive,
is at least $25,000,000; or
10.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor
-90-
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Parent or any Subsidiary of Parent, and the petition is not controverted
within 10 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of Parent or any
Subsidiary of Parent, or Parent or any Subsidiary of Parent commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to Parent or any
Subsidiary of Parent, or there is commenced against Parent or any Subsidiary
of Parent any such proceeding which remains undismissed for a period of 60
days, or Parent or any Subsidiary of Parent is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Parent or any Subsidiary of Parent suffers any
appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
Parent or any Subsidiary of Parent makes a general assignment for the benefit
of creditors; or any corporate action is taken by Parent or any Subsidiary of
Parent for the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had a trustee appointed by
the PBGC to administer such Plan, any Plan is, shall have been or is likely
to be terminated or to be the subject of termination proceedings under ERISA,
any Plan shall have an Unfunded Current Liability, Parent or any Subsidiary
of Parent or any ERISA Affiliate has incurred or is likely to incur a
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971 or 4975 of the Code, or Parent or any Subsidiary of Parent has incurred
or is likely to incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) which provide benefits to
retired employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA); (b)
there shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk of
incurring a liability; and (c) which lien, security interest or liability, in
the opinion of the Required Banks, could reasonably be expected
-91-
to have a material adverse effect upon the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole; or
10.07 Collateral Documents. At any time after the execution and
--------------------
delivery thereof, any of the Collateral Documents shall cease to be in full
force and effect, or shall cease to give the Collateral Agent for the benefit
of the Secured Parties the Liens, rights, powers and privileges purported to
be created thereby (including, without limitation, a perfected security
interest in, and Lien on, all of the Collateral), in favor of the Collateral
Agent, superior to and prior to the rights of all third Persons (except as
permitted by Section 9.01), and subject to no other Liens (except as
permitted by Section 9.01), or any Credit Party shall default in the due per-
formance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any of the Collateral Documents and such
default shall continue beyond any cure or grace period specifically applic-
able thereto pursuant to the terms of such Collateral Document; or
10.08 Guarantees. Any Guaranty or any provision thereof shall
----------
cease to be a legal, valid and binding obligation enforceable against the
obligor thereof, or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm such Guarantor's obligations under its
Guaranty, or any Guarantor shall default in its due performance of any term,
covenant or agreement on its part to be performed or observed pursuant to its
Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
---------
entered against Parent or any Subsidiary of Parent involving in the aggregate
for Parent and its Subsidiaries a liability (not paid or fully covered by a
reputable insurance company) and such judgments and decrees either shall be
final and non-appealable or shall not be vacated, discharged or stayed or
bonded pending appeal for any period of 30 consecutive days, and the aggre-
gate amount of all such judgments exceeds $10,000,000; or
10.10 Gaming Authority. Any Gaming Authority having jurisdiction
----------------
over any Casino Property shall determine that Parent or any of its
Subsidiaries that is required to be qualified under the Gaming Regulations
does not qualify, or that the qualification or license of any of them with
respect to any Casino Property should be revoked, not renewed or suspended
for more than 30 days, or any such Gaming Authority
-92-
shall have appointed a conservator, supervisor or trustee to oversee any of
the operations of any of them;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the written
request of the Required Banks, shall by written notice to the Borrowers, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent, any Bank or the holder of any Note to enforce its
claims against any Credit Party (provided that, if an Event of Default
--------
specified in Section 10.05 shall occur with respect to Parent or any
Borrower, the result which would occur upon the giving of written notice by
the Administrative Agent to the Borrowers as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Revolving Loan Commitment terminated, whereupon the
Revolving Loan Commitment of each Bank shall forthwith terminate immediately
and any Commitment Commission shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued
interest in respect of all Loans and the Notes and all Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Credit Party; (iii) terminate
any Letter of Credit, which may be terminated, in accordance with its terms;
(iv) direct the Borrowers to pay (and the Borrowers jointly and severally
agree that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 with respect to any Borrower, they will
pay) to the Collateral Agent at the Payment Office such additional amount of
cash, to be held as security by the Collateral Agent, as is equal to the
aggregate Stated Amount of all Letters of Credit issued for the account of
the Borrowers and then outstanding; and (v) enforce, as Collateral Agent, all
of the Liens and security interests created pursuant to the Collateral Docu-
ments.
SECTION 11. Definitions and Accounting Terms.
--------------------------------
11.01 Defined Terms. As used in this Agreement, the following
-------------
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Collateral Documents" shall have the meaning provided
in Section 8.12(b).
-93-
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the
sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing
(x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market
as published in the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the date hereof,
or if such publication or a substitute containing the foregoing rate
information shall not be published by the Federal Reserve System for any
week, the weekly average offering rate determined by the Administrative Agent
on the basis of quotations for such certificates received by it from three
certificate of deposit dealers in New York of recognized standing or, if such
quotations are unavailable, then on the basis of other sources reasonably
selected by the Administrative Agent, by (y) a percentage equal to 100% minus
the stated maximum rate of all reserve requirements as specified in
Regulation D applicable on such day to a three-month certificate of deposit
of a member bank of the Federal Reserve System in excess of $100,000 (in-
cluding, without limitation, any marginal, emergency, supplemental, special
or other reserves), plus (2) the then daily net annual assessment rate as
estimated by the Administrative Agent for determining the current annual
assessment payable by the Administrative Agent to the Federal Deposit
Insurance Corporation for insuring three-month certificates of deposit.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the Adjusted Total
Revolving Loan Commitment at a time when the Total Revolving Loan Commitment
or Adjusted Total Revolving Loan Commitment, as the case may be, has been
terminated shall be references to the Revolving Loan Commitments or Adjusted
Total Revolving Loan Commitment, as the case may be, in effect immediately
prior to such termination, provided that (A) no Bank's Adjusted Percentage
--------
shall change upon the occurrence of a Bank Default from that in effect
immediately prior to such Bank Default if after giving effect to such Bank
Default, and any repayment of Revolving Loans and Swingline Loans at such
time pursuant to Section 4.02(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-
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Defaulting Banks plus (ii) the aggregate outstanding principal amount of
Swingline Loans plus (iii) the Letter of Credit Outstandings, exceed the
Adjusted Total Revolving Loan Commitment; (B) the changes to the Adjusted
Percentage that would have become effective upon the occurrence of a Bank
Default but that did not become effective as a result of the preceding clause
(A) shall become effective on the first date after the occurrence of the
relevant Bank Default on which the sum of (i) the aggregate outstanding
principal amount of the Revolving Loans of all Non-Defaulting Banks plus (ii)
the aggregate outstanding principal amount of the Swingline Loans plus (iii)
the Letter of Credit Outstandings is equal to or less than the Adjusted Total
Revolving Loan Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted
Percentage is changed pursuant to the preceding clause (B) and (ii) any re-
payment of such Bank's Revolving Loans, or of Unpaid Drawings with respect to
Letters of Credit or of Swingline Loans, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date
of such change to its Adjusted Percentage must be returned to any Borrower as
a preferential or similar payment in any bankruptcy or similar proceeding of
such Borrower, then the change to such Non-Defaulting Bank's Adjusted Percen-
tage effected pursuant to said clause (B) shall be reduced to that positive
change, if any, as would have been made to its Adjusted Percentage if (x)
such repayments had not been made and (y) the maximum change to its Adjusted
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equalling such Bank's Revolving Loan Commitment at such time.
"Adjusted Revolving Loan Commitment" for each Non-Defaulting Bank
shall mean at any time the product of such Bank's Adjusted Percentage and the
Adjusted Total Revolving Loan Commitment.
"Adjusted Total Revolving Loan Commitment" shall mean at any time
the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of all Defaulting Banks.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include
any successor to the Administrative Agent appointed pursuant to Section
12.09.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling (in-
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cluding, but not limited to, all directors and officers of such Person),
controlled by, or under direct or indirect common control with, such Person
or (ii) that directly or indirectly owns more than 5% of the voting
securities or capital stock of such Person. A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract
or otherwise.
"Agent" shall mean each of Bankers Trust Company, The Bank of New
York, CIBC Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale, and The Sumitomo Bank
Limited, New York Branch.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
"Applicable Commitment Commission Percentage" shall mean 1/4 of 1%
less the then applicable Reduction Discount.
"Applicable Margin" shall mean 7/8 of 1% less the then applicable
Reduction Discount.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit Q (appropriately
completed).
"Assignment of Leases" shall mean the Assignment of Leases, dated
as of July 22, 1993, between Marina and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Assignment of Partnership Interests Agreement" shall mean the
Assignment of Partnership Interests Agreement, dated as of July 22, 1993,
among Harrah's New Jersey, Harrah's Atlantic City and the Collateral Agent,
as modified, supplemented or amended from time to time.
"Atlantic City Property" shall mean the Harrah's Atlantic City
Hotel Casino.
"Bank" shall mean each financial institution listed on Schedule I,
as well as any institution which becomes a "Bank" hereunder pursuant to
Section 1.13 or 13.04(b) or (c), provided that in any event each such
institution shall be a Qualified Person.
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"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing
(including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified in
writing the Borrowers and/or the Administrative Agent that it does not intend
to comply with its obligations under Section 1.01(a), 1.01(b) or 1.01(c) or
Section 2, in the case of either clause (i) or (ii) above as a result of any
takeover of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Bankruptcy Event" shall mean any Default or Event of Default of
the type described in Section 10.05.
"Base Rate" at any time shall mean the highest of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate, (ii) the Prime Lending
Rate and (iii) 1/2 of 1% in excess of the overnight Federal Funds Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) any
Revolving Loan designated or deemed designated as such by a Borrower at the
time of the incurrence thereof or conversion thereto.
"Book Entry System" shall have the meaning provided in Section
8.11.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean and include (i) the borrowing of Swingline
Loans from BTCo on a given date and (ii) the borrowing of one Type of
Revolving Loan from all the Banks on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, provided that Base Rate Loans incurred pursu-
--------
ant to Section 1.10(b) shall be considered part of the related Borrowing of
Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are
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authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) above and which is also a day for
trading by and between banks in the New York interbank Eurodollar market.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or
will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"Casino Holding Company" shall mean Casino Holding Company, a
Delaware corporation.
"Casino Owner" shall mean any Subsidiary of the Company that owns a
Casino Property.
"Casino Property" shall mean and include each of the Harrah's Reno
Hotel Casino, Harrah's Lake Tahoe Hotel Casino (including Bill's Casino),
Harrah's Las Vegas Hotel Casino, Harrah's Atlantic City Hotel Casino and
Harrah's Laughlin Hotel Casino.
"Casino Release" shall mean the release of a specific Casino
Property from the Liens created by the respective Collateral Documents as a
result of the sale thereof pursuant to Section 9.02 or the incurrence of
Existing Casino Non-Recourse Financing with respect thereto pursuant to
Section 9.04(ix).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time
to time, 42 U.S.C. Sec. 9601 et seq.
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"Change of Control" shall mean (i) Parent shall cease to own 100%
of the capital stock of the Company, (ii) the direct or indirect acquisition
by any Person or group (as such term is defined in Section 13(d)(3) of the
Securities Exchange Act) of beneficial ownership (as such term is defined in
Rule 13D-3 promulgated under the Securities Exchange Act) of 25% or more of
the outstanding shares of common stock of Parent, (iii) the Board of
Directors of Parent shall not consist of a majority of Continuing Directors
or (iv) any "change of control" or similar event
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shall occur under any issue of Indebtedness of Parent or any of its
Subsidiaries in an aggregate principal amount which exceeds (or upon
utilization of any unused commitments may exceed) $25,000,000.
"Cherokee Casino" shall mean the casino to be constructed,
developed and operated by the Eastern Band of Cherokee Indians in Cherokee,
North Carolina, and the manager of which shall be Parent or a Wholly-Owned
Subsidiary of Parent.
"Cherokee Investments" shall mean (i) one or more guaranties given
by Parent and/or the Company for the benefit of the lenders providing
construction financing for the Cherokee Casino and (ii) additional
Investments in the Cherokee Casino.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect on
the date of this Agreement, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or purport to
be granted) pursuant to any Collateral Document, including, without limi-
tation, all Pledge Agreement Collateral, all Security Agreement Collateral,
all Mortgaged Properties and all cash and cash equivalents delivered as
collateral pursuant to Section 4.02(a) or 10.
"Collateral Agent" shall mean and include the Administrative Agent
acting as collateral agent for the Secured Parties pursuant to the Collateral
Documents and any sub-agents or sub-trustees appointed by the Administrative
Agent pursuant to the Master Collateral Agreement and permitted under
applicable Gaming Regulations.
"Collateral Document" shall mean and include each Pledge Agreement,
the Security Agreement, each Mortgage, the Assignment of Partnership
Interests Agreement, the Assignment of Leases, each Net Lease Agreement, the
Master Collateral Agreement and, after the execution and delivery thereof,
each Additional Collateral Document.
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"Collateral Grantor" shall mean and include Parent, the Company and
each Subsidiary of the Company which is party to any Collateral Document,
provided that, from and after the date of the release of all Collateral of
any Subsidiary of the Company from the provisions of the Collateral
Documents, and so long as the respective Subsidiary at such time owns no
Required Collateral, such Subsidiary shall cease to constitute a Collateral
Grantor and the Collateral Agent shall be authorized to execute such
documentation as is necessary or desirable to effect such release.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Company" shall have the meaning provided in the first paragraph of
this Agreement.
"Company/Sub Guaranty" shall mean the Company/Sub Guaranty, dated
as of July 22, 1993, made by the Company and the other Guarantors party
thereto, as modified, supplemented or amended from time to time.
"Company/Sub Pledge Agreement" shall mean the Company/Sub Pledge
Agreement, dated as of July 22, 1993, among the Company, the other Collateral
Grantors party thereto and the Collateral Agent, as modified, supplemented or
amended from time to time.
"Consent" shall mean each written consent from a holder of the 8-
3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes
permitting the Company and the respective indenture trustee to enter into
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture.
"Consolidated Debt" shall mean, at any time, the sum of the
aggregate outstanding principal amount of all Indebtedness (including,
without limitation, guarantees, Non-Recourse Debt and the principal component
of Capitalized Lease Obligations) of Parent and its Consolidated
Subsidiaries.
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income plus Consolidated Interest Expense (to the extent same was
deducted in determining Consolidated Net Income) and provision for taxes, and
without giving effect to any extraordinary gains or losses or gains or losses
from sales of assets other than inventory sold in the ordinary course of
business.
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"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBIT to Consolidated Interest Expense.
"Consolidated Interest Expense" shall mean, for any period, the
total consolidated interest expense of Parent and its Consolidated
Subsidiaries (without deduction for minority interests in Subsidiaries) for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, (i) that portion of Capitalized Lease
Obligations of Parent and its Consolidated Subsidiaries representing the
interest factor for such period and (ii) the Company's or such Consolidated
Subsidiary's share of interest expense of any Joint Venture.
"Consolidated Net Income" shall mean, for any period, net income of
Parent and its Consolidated Subsidiaries (without deduction for minority
interests in Subsidiaries) for such period.
"Consolidated Net Worth" shall mean, at any time, the net worth of
Parent and its Consolidated Subsidiaries determined on a consolidated basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with generally accepted accounting
principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person being
a general partner of the other Person, unless the underlying obligation is
expressly made non-recourse as to such general partner) any Indebtedness or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
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-101-
Indebtedness shall not include endorsements for collection or deposit in the
ordinary course of business.
"Continuing Directors" shall mean the directors of Parent on the
Restatement Effective Date and each other director, if such other director's
nomination for election to the Board of Directors of Parent is recommended by
a majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each Note, each
Letter of Credit, each Guaranty and each Collateral Document.
"Credit Event" shall mean the making of any Loan, the conversion of
any Original Revolving Loan or Original Swingline Loan on the Restatement
Effective Date or the issuance of any Letter of Credit.
"Credit Party" shall mean Parent, the Company and each other
Subsidiary of Parent that is a Subsidiary Borrower, a Guarantor or a
Collateral Grantor.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Defaulting Participant" shall have the meaning provided in Section
2.04(g).
"Disqualified Stock" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder thereof, in whole or in part on, or
prior to, or is exchangeable for debt securities of Parent or its
Subsidiaries prior to, the first anniversary of the Final Maturity Date.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to its
stockholders as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any
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shares of any class of its capital stock outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such Person
with respect to its capital stock), or set aside any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to
purchase or otherwise acquire for a consideration any shares of any class of
the capital stock of such Person outstanding on or after the Restatement
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans,
equity incentive or achievement plans or any similar plans or setting aside
of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Hotel
Transaction Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(b).
"8-3/4% Senior Subordinated Notes" shall mean the Company's 8-3/4%
Senior Subordinated Notes due 2000.
"8-3/4% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 8-3/4% Senior Subordinated Notes.
"Election to Become a Subsidiary Borrower" shall mean an Election
to Become a Subsidiary Borrower substantially in the form of Exhibit P, which
shall be executed by each Subsidiary of the Company which becomes a
Subsidiary Borrower after the date hereof.
"End Date" shall have the meaning provided in the definition of
Reduction Discount.
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
liens, notices of noncompliance or violation, investigations of which Parent
or any Borrower has received notice or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a)
any and all
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Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief in connection with alleged injury or threat of injury to
health, safety or the environment due to the presence of Hazardous Materials.
"Environmental Law" means any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as
amended, including any judicial or administrative order, consent decree or
judgment, relating to the environment, employee health and safety or Hazard-
ous Materials, including, without limitation, CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Toxic Substances
-- ----
Control Act, 15 U.S.C. Sec. 2601 et seq.; the Clean Air Act, 42 U.S.C. Sec.
-------
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et seq.; the
------- -------
Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the Emergency
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Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Sec. 11001
et seq., the Hazardous Material Transportation Act, 49 U.S.C. Sec. 1801
-------
et seq. and the Occupational Safety and Health Act, 29 U.S.C. Sec. 651
-------
et seq.; and any state and local or foreign counterparts or equivalents,
-------
in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement, and to any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Parent or any Subsidiary of Parent would
be deemed to be a "single employer" within the meaning of Section 414(b),
(c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Revolving Loan designated as such
by a Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded to
the nearest 1/1000 of 1%) of the offered quotation to first-class banks in
the New York interbank
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Eurodollar market by each Reference Bank for Dollar deposits of amounts in
immediately available funds comparable to the outstanding principal amount of
the Eurodollar Loan of such Reference Bank with maturities comparable to the
Interest Period applicable to such Eurodollar Loan commencing two Business
Days thereafter as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period, divided by
(b) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency funding or liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D); provided that if one
or more of the Reference Banks fails to provide the Administrative Agent with
its aforesaid rate, then the Eurodollar Rate shall be determined based on the
rate or rates provided to the Administrative Agent by the other Reference
Bank or Banks.
"Event of Default" shall have the meaning provided in Section 10.
"Existing Casino Non-Recourse Financing" shall mean Non-Recourse
Indebtedness incurred by any Casino Owner pursuant to Section 9.04(ix) and
which is to be secured solely by the Casino Property (including any fixtures,
furniture and equipment related thereto) owned by such Casino Owner, except
that if two Casino Properties are subject to Existing Casino Non-Recourse
Financings, then each issue (or either issue) of such Existing Casino Non-
Recourse Financing may be cross-collateralized by the other Casino Property
subject to Existing Casino Non-Recourse Financing.
"Existing Letters of Credit" shall have the meaning provided in
Section 2.01(a).
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for
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any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean July 31, 2000.
"First-Tier Material Subsidiary" shall mean each Material
Subsidiary which is a direct Subsidiary of the Company.
"Former Bank" shall have the meaning provided in Section 13.04(c).
"Gaming Authority" shall mean the governmental authorities charged
with the administration and enforcement of the Gaming Regulations.
"Gaming Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, the Casino
Properties and any other casinos, hotel casinos or gaming businesses now or
in the future owned by the Company or any of its Subsidiaries or in which
Parent or any of its Subsidiaries has an interest either through a Joint
Venture or as a party to a management agreement.
"Gaming Property" of any Person shall mean those properties and
assets of such Person which relate to such Person's casino or hotel casino
businesses and operations.
"Gaming Regulations" shall mean the laws, rules, regulations and
orders applicable to the casino and gaming business or activities of Parent,
the Company or any of their Subsidiaries, as in effect from time to time,
including the policies, interpretations and administration thereof by the
Gaming Authorities.
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by Parent under the Parent Guaranty (i) to the
Administrative Agent and each Bank for the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the princi-
pal and interest on each Note issued by each Borrower to such Bank, and Loans
made, under this Agreement and all reimbursement
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obligations in respect of Drawings on Letters of Credit, together with all
the other obligations and liabilities (including, without limitation,
indemnities, fees and interest thereon) of each of the Borrowers to the
Administrative Bank and such Bank now existing or hereafter incurred under,
arising out of or in connection with this Agreement or any other Credit
Document and the due performance and compliance with the terms of the Credit
Documents by the Borrowers and (ii) to each Secured Interest Rate Protection
Creditor which has entered into, or in the future enters into, a Secured
Interest Rate Protection or Other Hedging Agreement with any Borrower, the
full and prompt payment when due (whether by acceleration or otherwise) of
all obligations of each Borrower owing under, or with respect to, any such
Secured Interest Rate Protection or Other Hedging Agreement, whether now in
existence or hereafter arising, and the due performance and compliance with
all terms, conditions and agreements contained therein.
"Guarantor", at any time, shall mean each of the Initial Guarantors
and each Required Additional Guarantor which has executed and delivered a
counterpart of the Company/Sub Guaranty in accordance with Section 8.12(a),
provided that, from and after the date of the release of any Subsidiary of
--------
the Company from the provisions of the Company/Sub Guaranty in accordance
with the terms thereof or hereof, such Subsidiary shall cease to constitute a
Guarantor.
"Guaranty" shall mean and include the Parent Guaranty and the
Company/Sub Guaranty.
"Harrah's" shall mean Harrah's, a Nevada corporation.
"Harrah's Atlantic City" shall mean Harrah's Atlantic City, Inc., a
New Jersey corporation.
"Harrah's Club" shall mean Harrah's Club, a Nevada corporation.
"Harrah's Jazz" shall mean Harrah's Jazz Company, a Louisiana
general partnership.
"Harrah's Jazz Completion Guaranties" shall mean one or more
completion guaranties heretofore given by Parent and/or the Company in favor
of certain lenders to Harrah's Jazz, the City of New Orleans and one or more
other governmental agencies of the State of Louisiana.
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"Harrah's Jazz Completion Obligation Loans" shall mean any payments
made by Parent and/or the Company under the Harrah's Jazz Completion
Guaranties or the Harrah's Jazz Title Indemnity Arrangements to the extent
that such payments are characterized as additional loans or advances made by
Parent and/or the Company to Harrah's Jazz.
"Harrah's Jazz Investments" shall mean Investments in or to
Harrah's Jazz and/or for the benefit of Harrah's Jazz, including the Harrah's
Jazz Completion Obligation Loans, the Harrah's Jazz Completion Guaranties and
the Harrah's Jazz Title Indemnity Arrangements.
"Harrah's Jazz Title Indemnity Arrangements" shall mean those
certain indemnity agreements heretofore given by Parent and the Company to
the title insurance companies providing title insurance for Harrah's Jazz's
casino the City of New Orleans.
"Harrah's Laughlin" shall mean Harrah's Laughlin, Inc., a Nevada
corporation.
"Harrah's New Jersey" shall mean Harrah's New Jersey, Inc., a New
Jersey corporation.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated biphenyls,
and radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous substances," "restricted
hazardous waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
"Hotel Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, its existing
(immediately prior to the Restatement Effective Date) hotel businesses and
operations and any other hotels owned by the Company or any of its
Subsidiaries immediately prior to the Restatement Effective Date that are not
included in the Gaming Business or in which Parent or any of its Subsidiaries
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has an interest either through a Joint Venture or as a party to a management
or franchise agreement.
"Hotel Collateral" shall mean the collateral securing the Hotel
Facility, which collateral shall only consist of the assets of the Hotel
Business of the Company and the Hotel Subsidiaries (including the capital
stock of the Hotel Subsidiaries).
"Hotel Company" shall mean Promus Hotel Corporation, a newly formed
Wholly-Owned Subsidiary of the Company.
"Hotel Facility" shall mean two new senior secured credit
facilities aggregating $350,000,000 which shall be (i) secured by the Hotel
Collateral and (ii) guaranteed by the Hotel Subsidiaries.
"Hotel Property" shall mean any hotel, any land or building under
development or any other property or asset which relates to the Hotel
Business of Parent and its Subsidiaries other than those properties or assets
which are included as Gaming Properties.
"Hotel Stock Dividend" shall mean, collectively, (i) the
distribution by the Company to Parent as a stock dividend of all of the
capital stock of the Hotel Company and (ii) the distribution by Parent to its
stockholders immediately thereafter as a stock dividend of all of the capital
stock of the Hotel Company.
"Hotel Subsidiaries" shall mean those existing Subsidiaries of the
Company which are engaged in the Hotel Business and which are set forth on
Schedule IX.
"Hotel Transaction" shall mean, collectively, the Hotel Stock
Dividend, the Hotel Transfer, the entering into of the Hotel Facility and the
incurrence by the Company of at least $210,000,000 of loans thereunder, the
assignment to, and the assumption by, the Hotel Company of the Hotel
Facility, the obtaining of the Consents and the entering into of the related
indenture supplements and the obtaining of the consent of Parent's
shareholders to the Hotel Transaction.
"Hotel Transaction Documents" shall mean (i) the Hotel Facility,
(ii) the Consents, the indenture supplements to the 8-3/4% Senior
Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and the Proxy Statement delivered to Parent's shareholders in
connection
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with the Hotel Transaction and (iii) the Distribution Agreement, the Tax
Sharing Agreement, the Trademark Assignment Agreement and an Employee
Benefits Allocation Agreement, which agreements are in the forms delivered to
the Administrative Agent pursuant to Section 5.04(b) and are to be entered
into by the Company and the Hotel Company in connection with the Hotel
Transfer and the Hotel Stock Dividend.
"Hotel Transfer" shall mean the transfer by the Company to the
Hotel Company of the Hotel Properties and Hotel Business of the Company and
the capital stock of the Hotel Subsidiaries, it being understood and agreed
that $210,000,000 of proceeds from the loans incurred by the Company under
the Hotel Facility on the Restatement Effective Date shall not be transferred
by the Company to the Hotel Company.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising
in the ordinary course of business, (iv) all obligations of such person as
lessee which are capitalized in accordance with generally accepted accounting
principles, (v) all obligations of such Person to reimburse or repay any bank
or other Person in respect of amounts paid or available to be drawn under a
letter of credit, banker's acceptance, surety, performance or appeal bond or
any similar instrument (each such obligation to be valued at the face amount
of such instrument), (vi) all Indebtedness of others secured by a Lien on any
asset of such Person, (vii) all Contingent Obligations of such Person with
respect to any Indebtedness of any other Person and (viii) the amount of any
Disqualified Stock.
"Initial Guarantors" shall mean each of Parent, the Company, Casino
Holding Company, Embassy Development Corporation, Embassy Equity Development
Corporation, ESI Equity Development Corporation, Hampton Inn Equity
Development Corporation, Hampton Inns, Inc., Harrah's, Harrah's Atlantic
City, Harrah's Club, Harrah's Las Vegas, Inc., Harrah's Laughlin, Harrah's
New Jersey, Harrah's Reno Holding Company, Inc., Homewood Suites Equity
Development Corporation and Marina; provided, that from and after the
Restatement Effective Date, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Cor-
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poration, Hampton Inn Equity Development Corporation, Hampton Inns, Inc. and
Homewood Suites Equity Development Corporation shall be (and hereby are)
released from the Company/Sub Guaranty and shall no longer constitute
Guarantors.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection or Other Hedging Agreements" shall mean
one or more (i) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or
other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time entered into by the Company or any of its
Subsidiaries.
"Investments" shall have the meaning provided in Section 9.05.
"Issuance System" shall have the meaning provided in Section 8.11.
"Issue" shall mean each of the two different types of Senior Debt,
there being two separate Issues for purposes of this Agreement, i.e., the
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Indebtedness under this Agreement and the Indebtedness under the 364-Day
Credit Agreement.
"Joint Venture" shall mean any entity or arrangement between the
Company or any of its Subsidiaries (so long as the Company and its
Subsidiaries own 50% or less of such entity) and one or more Persons other
than Parent or any of its Subsidiaries (whether now existing or created in
the future) for (i) the joint ownership, management, construction or
development of any Gaming Property or (ii) the joint ownership or operation
of any Gaming Business.
"Las Vegas Property" shall mean the Harrah's Las Vegas Hotel
Casino.
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Company or any of its Subsidiaries incurred
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in the ordinary course of business and (ii) all obligations supported by
Existing Letters of Credit.
"Leaseholds" of any Person means all the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean (x) BTCo and (y) with the
consent of the Administrative Agent, any other Bank to the extent such Bank
agrees, in its sole discretion, to become a Letter of Credit Issuer for the
purpose of issuing Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC
or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Swingline Loan.
"Lowest Outstanding Amount" shall have the meaning provided in
Section 13.18(b).
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial state-
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ments are delivered pursuant to Section 8.01(a) or (b) and which shall end on
the earlier of (i) the date of actual delivery of the next financial
statements pursuant to Section 8.01(a) or (b) and (ii) the latest date on
which the next financial statements are required to be delivered pursuant to
Section 8.01(a) or (b).
"Margin Stock" shall have the meaning provided in Regulation U.
"Marina" shall mean Marina Associates, a New Jersey general
partnership.
"Markers" shall have the meaning provided in the Master Collateral
Agreement.
"Master Collateral Agreement" shall mean the Master Collateral
Agreement, dated as of July 22, 1993, among Parent, the Company, the other
Collateral Grantors, the Administrative Agent and the Collateral Agent, as
modified, supplemented or amended from time to time.
"Material Subsidiary" shall mean each of (a) each Initial
Guarantor other than Parent and the Company, (b) each Subsidiary Borrower and
each Collateral Grantor and (c) as at the date of determination, (i) any
direct or indirect Subsidiary of Parent that holds any license or licenses
needed to conduct gaming operations with respect to any Casino Property
(which has not theretofore been released from the respective Mortgage
encumbering same in accordance with the terms thereof), (ii) any direct or
indirect Subsidiary of Parent that owns any Collateral or Required Collateral
or that directly or indirectly owns stock of a Subsidiary which owns
Collateral or Required Collateral or (iii) any Subsidiary of Parent that
(together with its Subsidiaries) accounts for, or holds, at least 10% of any
of (x) the consolidated assets of Parent and its Subsidiaries, (y) the
consolidated revenues of Parent and its Subsidiaries or (z) the Consolidated
EBIT of Parent and its Subsidiaries, in each case as determined at the end of
each fiscal quarter of Parent and, in the case of preceding clauses (y) and
(z), for the Test Period then last ended, it being understood and agreed that
Harrah's Jazz and Desplaines Development Limited Partnership shall not be
considered Material Subsidiaries under this sub-clause (iii) to the extent
that such Subsidiaries would otherwise constitute such a Material Subsidiary
so long as such Subsidiaries would not otherwise constitute a Material
Subsidiary under any of the other clauses of this definition.
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"Maximum Swingline Amount" shall mean $25,000,000.
"Minimum Proceeds Amount" with respect to any Casino Property (or
with respect to the Casino Owner that owns such Casino Property) shall mean
the amount set forth below opposite such Casino Property:
Harrah's Atlantic City
Hotel Casino $250,000,000
Harrah's Las Vegas
Hotel Casino $250,000,000
Harrah's Reno
Hotel Casino $150,000,000
Harrah's Lake Tahoe
Hotel Casino
(including Bill's Casino) $150,000,000
Harrah's Laughlin
Hotel Casino $150,000,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each of (i) the Deed of Trust, Leasehold Deed
of Trust, Assignment, Assignment of Leases and Rents, Security Agreement and
Financing Statement, dated as of July 22, 1993, from the Company, Harrah's
Laughlin, Inc. and Harrah's Reno Holding Company, Inc., as Grantors, to First
American Title Insurance Company of Nevada, as Trustee, and BTCo, as
Beneficiary, as modified, supplemented or amended from time to time and (ii)
the Mortgage, Leasehold Mortgage, Assignment, Assignment of Leases and Rents
and Security Agreement, dated as of July 22, 1993, from Marina and the
Company, as Mortgagors, to BTCo, as Collateral Agent and Mortgagee, as
modified, supplemented or amended from time to time.
"Mortgage Amendment" shall have the meaning provided in Section
5.09(i).
"Mortgage Policies" shall mean each of the mortgage title insurance
policies delivered pursuant to Section 5.10(ii) of the Original Credit
Agreement.
"Mortgaged Property" shall mean and include each of the Casino
Properties until same are released from the Liens created by the respective
Mortgage in accordance with the terms hereof and thereof.
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"Net Lease Agreement" shall mean each of (i) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's,
Harrah's Club and the Collateral Agent (Harrah's Hotel and Casino, Lake
Tahoe), (ii) the Net Lease Agreement, dated as of July 22, 1993, among
Parent, the Company, Harrah's Las Vegas, Inc. and the Collateral Agent
(Harrah's Hotel and Casino, Las Vegas), (iii) the Net Lease Agreement, dated
as of July 22, 1993, among Parent, the Company, Harrah's, Harrah's Club and
the Collateral Agent (Harrah's Hotel and Casino, Reno) and (iv) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's
Laughlin and the Collateral Agent (Harrah's Laughlin Hotel and Casino), in
each case as modified, supplemented or amended from time to time, it being
understood and agreed that in the event the Company transfers its ownership
interest in any of the Casino Properties located in Nevada to Harrah's Club
as permitted by Section 9.02(a), the Net Lease Agreement with respect to each
such Casino Property may be terminated.
"Net Sale Proceeds" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received) received from any sale of assets, net of reasonable transaction
costs and payments of unassumed liabilities relating to the assets sold at
the time of, or within 60 days after, the date of such sale and the amount of
such gross cash proceeds required to be used to repay any Indebtedness (other
than Indebtedness of the Banks pursuant to the Credit Documents) which is
secured by the respective assets which were sold.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Non-Recourse Indebtedness" shall mean (x) with respect to any
Casino Owner or Owners, Indebtedness incurred by such Casino Owner or Owners
meeting the requirements of Existing Casino Non-Recourse Financing and which
shall be (i) secured only by the Casino Property or Properties owned by such
Casino Owner or Owners, including any fixtures, furniture and equipment
related thereto (it being understood and agreed that, if two Casino
Properties are subject to Existing Casino Non-Recourse Financings, then such
properties may cross-collateralize the other issue of Existing Casino Non-
Recourse Financing) and (ii) expressly made non-recourse to Parent and its
Subsidiaries other than the respective Casino Owners, provided that recourse
may be had to the respective property serving as security therefor and (y)
with
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respect to any Specified Subsidiary, Indebtedness incurred by such Specified
Subsidiary which shall be (i) secured only by Gaming Properties being
developed with Non-Recourse Indebtedness incurred pursuant to Section
9.04(x), including any fixtures, furniture and equipment related thereto and
(ii) non-recourse to Parent and its Subsidiaries, provided that recourse may
be had to the extent permitted by Section 9.04(x) and to the respective
property or properties serving as security therefor.
"Note" shall mean each Swingline Note and each Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Patricia
Rapisarda, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in the
first Whereas clause of this Agreement.
"Original Revolving Loans" shall mean the "Revolving Loans" under,
and as defined in, the Original Credit Agreement.
"Original Swingline Loans" shall mean the "Swingline Loans" under,
and as defined in, the Original Credit Agreement.
"Parent" shall have the meaning provided in the first paragraph of
this Agreement.
"Parent Guaranty" shall mean the guaranty provided by Parent
pursuant to Section 14.
"Parent Pledge Agreement" shall mean the Parent Pledge Agreement,
dated as of July 22, 1993, between Parent
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and the Collateral Agent, as modified, supplemented or amended from time to
time.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006, or such other
office as the Administrative Agent may hereafter designate in writing as such
to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the
Total Revolving Loan Commitment at such time, provided that, if the
--------
Percentage of any Bank is to be determined after the Total Revolving Loan
Commitment has been terminated, then the Percentage of such Bank shall be
determined immediately prior (and without giving effect) to such termination.
"Permitted Designated Indebtedness" shall mean (i) any Existing
Casino Non-Recourse Financing and (ii) all Subordinated Debt (or portions
thereof) incurred pursuant to Section 9.04(xi) to the extent the aggregate
amount of Subordinated Debt incurred after the Restatement Effective Date
pursuant to said Section is in excess of $200,000,000.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
with respect thereto.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), Parent or a Subsidiary
of
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Parent or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Parent, or a Subsidiary of
Parent or an ERISA Affiliate maintained, contributed to or had an obligation
to contribute to such plan.
"Pledge Agreements" shall mean and include the Parent Pledge
Agreement and the Company/Sub Pledge Agreement.
"Pledged Securities" shall have the meaning assigned that term in
the respective Pledge Agreements.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a refer-
ence rate and does not necessarily represent the lowest or best rate actually
charged to any customer. BTCo may make commercial loans or other loans at
rates of interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 7.05(d).
"Proxy Statement" shall mean Parent's Proxy Statement dated April
25, 1995 which was delivered to Parent's shareholders in connection with the
Hotel Transaction.
"Qualified Person" shall mean, with respect to any Bank party to
this Agreement on the Restatement Effective Date or that becomes a Bank
pursuant to Section 1.13, 13.04(b) or 13.04(c), a banking or other licensed
lending institution within the meaning of the New Jersey Gaming Regulations
or a financial source or qualifier approved under the Gaming Regulations of
the State of New Jersey applicable to lenders (or waived or exempted from the
applicable requirements thereof) and which shall not have been found
unsuitable under the Gaming Regulations of the State of Nevada applicable to
lenders and which meets the requirements of all other jurisdictions
regulating the gaming business of Parent and its Subsidiaries to the extent
that the Company has so notified the Banks of such requirements of such other
jurisdiction pursuant to Section 13.04(e).
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. Sec. 6901 et seq.
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"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Reduction Discount" shall mean initially zero and from and after
the first day of any Margin Reduction Period (the "Start Date") to and
including the last day of such Margin Reduction Period (the "End Date"), the
Reduction Discount shall be the respective percentage per annum set forth in
clause (A), (B) or (C) below if, but only if, as of the last day of the most
recent fiscal quarter of Parent ended immediately prior to such Start Date
(the "Test Date") the conditions in clause (A), (B) or (C) below are met:
(A) (x) in the case of Eurodollar Loans, 1/8 of 1% and (y) in the
case of Commitment Commission, 5/100 of 1% in each case if, but only if,
as of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in none of clauses (B)
and (C) below are satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 3.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB- Senior Implied by S&P or Baa3 Senior Implied by
Moody's;
(B) (x) in the case of Eurodollar Loans, 3/8 of 1% and (y) in the
case of Commitment Commission, 10/100 of 1% in each case if, but only
if, as of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in clause (C) below are
not satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 3.50:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB Senior Implied by S&P or Baa2 Senior Implied by
Moody's; or
(C) (x) in the case of Eurodollar Loans, 1/2 of 1% and (y) in the
case of Commitment Commission, 1/8 of 1% in each case if, but only if,
as of the Test Date for such Start Date either of the following
conditions are met:
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(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 4.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB+ Senior Implied by S&P or Baa1 Senior Implied by
Moody's.
Notwithstanding anything to the contrary above in this definition, the
Reduction Discount shall be reduced to zero at all times when a Default under
Section 8.01(a) or (b) shall exist or an Event of Default shall exist.
"Reference Banks" shall mean BTCo, The Sumitomo Bank Limited, New
York Branch, Credit Lyonnais and The Bank of New York.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
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"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Required Additional Guarantor" shall have the meaning provided in
Section 8.12(a).
"Required Appraisal" shall have the meaning provided in Section
8.12(c).
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
Revolving Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Adjusted Percentage of outstanding Swingline Loans and
Letter of Credit Outstandings) represent an amount greater than fifty percent
of the sum of the Adjusted Total Revolving Loan Commitment (or after the
termination thereof, the sum of the then total outstanding Revolving Loans of
Non-Defaulting Banks and the aggregate Adjusted Percentages of all Non-
Defaulting Banks of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time).
"Required Collateral" shall mean and include all the following
assets and property:
(i) each Casino Property;
(ii) 100% of the capital stock of the Company;
(iii) 100% of the capital stock of each of Harrah's, Harrah's Club,
Casino Holding Company, Harrah's Atlantic City, Harrah's New Jersey,
Harrah's Reno Holding Company, Inc., Harrah's Laughlin and Harrah's Las
Vegas, Inc.;
(iv) 100% of the partnership interests in Marina;
(v) 100% of the capital stock or partnership interests, as the
case may be, of each Subsidiary Borrower;
(vi) 100% of the capital stock or partnership interests, as the
case may be, in any other Subsidiary of the Company which owns assets or
property, or is the direct or indirect parent of any Subsidiary which
owns assets or property, which constitutes Required Collateral pursuant
to any of the other clauses of this definition;
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(vii) 100% of the capital stock or partnership interests owned
directly by the Company in any Guarantor or Material Subsidiary;
(viii) all of the Company's and its Subsidiaries' interests in
building fixtures and personal property located in or owned or used in
connection with the Casino Properties, including (subject to applicable
Gaming Regulations) gaming equipment; all trademarks and trade names
(including the Harrah's name, subject to a non-exclusive license to be
granted to the Company in accordance with the terms of the Collateral
Documents) and other intangible property owned or used in connection
with the Casino Properties; and all licenses and permits held in
connection with the Casino Properties (excluding (x) gaming licenses and
(y) non-transferable liquor licenses and other non-transferable
licenses); and all revenues derived from the Casino Properties located
in Nevada, including (subject to applicable Gaming Regulations) gaming
revenues; and
(ix) the assignment of leases and net lease agreements effected
pursuant to the Assignment of Leases and Net Lease Agreements.
Notwithstanding anything to the contrary contained above, assets or property
shall cease to constitute Required Collateral at such time, if any, as same
are released pursuant to the terms of the respective Collateral Documents and
this Agreement.
"Required Secured Parties" shall have the meaning provided in the
Master Collateral Agreement.
"Restatement Effective Date" shall have the meaning provided in
Section 13.10.
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan" shall have the meaning provided in Section
1.01(a).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as same may (x) be reduced from time to
time pursuant to Sections 3.02, 3.03 and/or 10 or (y) be adjusted
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from time to time as a result of assignments to or from such Bank pursuant to
Section 1.13, 13.04(b) or 13.04(c).
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Rights" shall have the meaning provided in the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated as of
February 7, 1990, between Parent and The Bank of New York, as Rights Agent,
as in effect on the date hereof.
"S&P" shall mean Standard & Poor's Corporation.
"Scheduled Commitment Reduction" shall have the meaning provided in
Section 3.03(b).
"SEC" shall have the meaning provided in Section 8.01(f).
"Section 4.04(b)(iii) Certificate" shall have the meaning provided
in Section 4.04(b).
"Secured Interest Rate Protection Creditor" shall have the meaning
provided in the Master Collateral Agreement.
"Secured Interest Rate Protection or Other Hedging Agreement" shall
have the meaning provided in the Master Collateral Agreement.
"Secured Parties" shall have the meaning assigned that term in the
Collateral Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement, dated as of
July 22, 1993, among the Company, the other Collateral Grantors party thereto
and the Collateral Agent, as modified, supplemented or amended from time to
time.
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"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Senior Debt" shall mean the Indebtedness under this Agreement and
the Indebtedness under the 364-Day Credit Agreement.
"Share" shall mean, for each Issue, (A) if the event requiring a
mandatory commitment reduction to Senior Debt pursuant to Section 3.03(d) or
(e) would, in accordance with the terms of the 364-Day Credit Agreement, give
rise to a mandatory commitment reduction to the Total 364-Day Revolving Loan
Commitment, then the "Share" (x) applicable to the Total 364-Day Revolving
Loan Commitment shall equal the lesser of (1) the amount required to be
applied to reduce the commitments in respect of Senior Debt pursuant to
Section 3.03(d) or (e) multiplied by a fraction the numerator of which is the
amount of the Total 364-Day Revolving Loan Commitment then in effect and the
denominator of which is the sum of (i) the Total 364-Day Revolving Loan
Commitment then in effect plus (ii) the Total Revolving Loan Commitment then
in effect and (2) the maximum amount which would be required to be applied to
mandatorily reduce the Total 364-Day Revolving Loan Commitment in accordance
with the terms of the 364-Day Credit Agreement as a result of the respective
event requiring a reduction to the commitments in respect of Senior Debt
pursuant to Section 3.03(d) or (e) and (y) applicable to the Total Revolving
Loan Commitment shall equal the remainder of the amount required to be
applied to reduce the commitments in respect of Senior Debt pursuant to
Section 3.03(d) or (e), less the "Share" applicable to the Total 364-Day
Revolving Loan Commitment as determined pursuant to preceding clause (x), and
(B) if the event giving rise to a mandatory commitment reduction in respect
of Senior Debt would not require a mandatory reduction to the Total 364-Day
Revolving Loan Commitment of the 364-Day Credit Agreement in accordance with
the terms of the 364-Day Credit Agreement, the "Share" of each Issue shall
equal (x) in the case of the 364-Day Credit Agreement, $0 and (y) in the case
of this Agreement, the amount required to be applied to Senior Debt pursuant
to Section 3.03(d) or (e).
"Specified Subsidiary" shall mean any Subsidiary of the Company
(other than any Subsidiary Borrower, Collateral Grantor or Casino Owner) so
long as such Subsidiary has no material assets other than the Gaming
Properties to be developed and financed with Non-Recourse Indebtedness
incurred pursuant to Section 9.04(x).
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"Start Date" shall have the meaning provided in the definition of
Reduction Discount.
"Stated Amount" of each Letter of Credit shall, at any time, mean
the maximum amount available to be drawn thereunder (in each case determined
without regard to whether any conditions to drawing could then be met).
"Sub-Limit" shall mean (i) with respect to Marina, $400,000,000 and
(ii) with respect to each other Subsidiary of the Company that becomes a
Subsidiary Borrower after the date hereof, such aggregate amount as shall be
established by the Administrative Agent and the Required Banks at the time
such Subsidiary becomes a Subsidiary Borrower hereunder.
"Subordinated Debt" shall mean each issue of Subordinated Debt of
the Company as is set forth on Schedule V as well as any additional issuance
of Subordinated Debt by the Company that is permitted under Section 9.04(xi).
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corpora-
tion (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has more than a 50% equity interest at the
time.
"Subsidiary Borrower" shall mean Marina and any other Wholly-Owned
Subsidiary of the Company that is found acceptable to, and approved in
writing by, the Administrative Agent and the Required Banks, provided that at
the time any such Subsidiary incurs Existing Casino Non-Recourse Financing
pursuant to Section 9.04(ix) or the Casino Property owned by such Subsidiary
is sold pursuant to Section 9.02, such Subsidiary shall cease to be a
Subsidiary Borrower.
"Subsidiary Investments" shall mean any Investment by the Company
in one or more of its Subsidiaries provided that (x) any acquisition of a new
Subsidiary shall be through a transaction not involving the acquisition by
the Company or any of its Subsidiaries of Margin Stock and (y) any new
Subsidiary so acquired shall be engaged primarily in the Gaming Business.
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"Substitute Bank" shall have the meaning in Section 13.04(c).
"Swingline Expiry Date" shall mean, at any time, the date which is
two Business Days prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(b).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Taxes" shall have the meaning provided in Section 4.04(a).
"10-7/8% Senior Subordinated Notes" shall mean the Company's 10-
7/8% Senior Subordinated Notes due 2002.
"10-7/8% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 10-7/8% Senior Subordinated Notes.
"Test Date" shall have a meaning provided in the definition of
Reduction Discount.
"Test Period" shall mean the four consecutive fiscal quarters of
Parent then last ended (in each case taken as one accounting period).
"364-Day Banks" shall mean the lenders from time to time party to
the 364-Day Credit Agreement.
"364-Day Credit Agreement" shall mean the Credit Agreement, in the
form of Exhibit O, among Parent, the Company, certain Subsidiaries of the
Company, the 364-Day Banks, the Agents and BTCo, as Administrative Agent, as
amended, modified, supplemented or extended from time to time in accordance
with the terms thereof and hereof.
"364-Day Revolving Loan Commitment Reduction Amount" shall have the
meaning provided in Section 13.18(b).
"Total Outstandings" at any time shall mean the then outstanding
principal amount of Revolving Loans and Swingline Loans and the then
aggregate amount of Letter of Credit Outstandings.
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"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total 364-Day Revolving Loan Commitment" shall mean the "Total
Revolving Loan Commitment" under, and as defined in, the 364-Day Credit
Agreement.
"Total 364-Day Outstandings" shall mean, at any time, the aggregate
principal amount of loans outstanding pursuant to the 364-Day Credit
Agreement.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans and Swingline Loans then outstanding plus the then aggregate amount of
Letter of Credit Outstandings.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any,
by which the actuarial present value of the accumulated benefits under the
Plan as of the close of its most recent plan year, determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets allocable
thereto, determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less
the sum of (i) the then aggregate outstanding principal amount of Revolving
Loans made by such Bank and (ii) such Bank's Adjusted Percentage of the
Letter of Credit Outstandings at such time.
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"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
"Withdrawal Period" shall have the meaning provided in Section
13.04(d).
SECTION 12. The Administrative Agent and Agents.
-----------------------------------
12.01 Appointment. The Banks hereby designate Bankers Trust
-----------
Company as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" shall include Bankers Trust Company in its capacity as
Collateral Agent pursuant to the Collateral Documents) to act as specified
herein and in the other Credit Documents. The Banks hereby designate Bankers
Trust Company, The Bank of New York, CIBC Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term Credit Bank of
Japan, Limited, New York Branch, NationsBank of Georgia, N.A., Societe
Generale, and The Sumitomo Bank, Limited, New York Branch, as Agents to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Administrative Agent or
any Agent to take such action on its behalf under the provisions of this
Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent or any Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The
Administrative Agent and any Agent may perform any of their duties hereunder
by or through their respective officers, directors, agents (including any
sub-agents or sub-trustees to act as a Collateral Agent pursuant to the
Master Collateral Agreement or any other Collateral Document) or employees.
Each Bank further agrees to be bound by all of the terms and conditions set
forth in the Collateral Documents.
12.02 Nature of Duties. Neither the Administrative Agent nor any
----------------
Agent shall have any duties or responsibilities except those expressly set
forth in this Agreement and the Collateral Documents, it being understood
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and agreed, however, that none of the Agents in their capacities as such
shall have any duties or responsibilities under the Credit Documents.
Neither the Administrative Agent, any Agent nor any of their officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent and
Agents shall be mechanical and administrative in nature; neither the
Administrative Agent nor any Agent shall have by reason of this Agreement or
any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent or any Agent any obligations in respect
of this Agreement or any other Credit Document except as expressly set forth
herein or therein.
12.03 Lack of Reliance on the Administrative Agent and Agents.
-------------------------------------------------------
Independently and without reliance upon the Administrative Agent or any
Agent, each Bank and the holder of each Note, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent in-
vestigation of the financial condition and affairs of Parent and its
Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Parent and its Subsidiaries and,
except as expressly provided in this Agreement, neither the Administrative
Agent nor any Agent shall have any duty or responsibility, either initially
or on a continuing basis, to provide any Bank or the holder of any Note with
any credit or other information with respect thereto, whether coming into its
possession before themaking of the Loans or at any time or times thereafter.
Neither the Administrative Agent nor any Agent shall be responsible to any
Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of this Agreement or any other Credit Document or the
financial condition of Parent or any of its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Parent or any of its Subsidiaries
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or the existence or possible existence of any Default or Event of Default.
12.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with
this Agreement or any other Credit Document, the Administrative Agent shall
be entitled to refrain from such act or taking such action unless and until
the Administrative Agent shall have received instructions from the Required
Banks; and the Administrative Agent shall not incur liability to any Person
by reason of so refraining. Without limiting the foregoing, no Bank or the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or re-
fraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent and each Agent shall be
--------
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or
telephone message signed, sent or made by any Person that the Administrative
Agent or such Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document
and its duties hereunder and thereunder, upon advice of counsel selected by
the Administrative Agent or such Agent.
12.06 Indemnification. To the extent the Administrative Agent or
---------------
any Agent is not reimbursed and indemnified by the Credit Parties, the Banks
will reimburse and indemnify the Administrative Agent or such Agent, in
proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or dis-
bursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Administrative Agent or such Agent in performing
its duties hereunder or under any other Credit Document, in any way relating
to or arising out of this Agreement or any other Credit Document; provided
--------
that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's or such
Agent's gross negligence or willful misconduct.
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12.07 The Administrative Agent and the Agents in their Individual
-----------------------------------------------------------
Capacities. With respect to its obligation to make Loans under this Agree-
----------
ment, the Administrative Agent and each Agent shall have the rights and
powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include each of the
Administrative Agent and Agent in its individual capacity. The
Administrative Agent and each Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if it were not
performing the duties specified herein, and may accept fees and other con-
sideration from the Borrowers or any other Credit Party for services in con-
nection with this Agreement and otherwise without having to account for the
same to the Banks.
12.08 Holders. The Administrative Agent may deem and treat the
-------
payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall
be conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
12.09 Resignation by the Administrative Agent and Agents.
--------------------------------------------------
(a) The Administrative Agent and any Agent may resign from the performance
of all its functions and duties hereunder and/or under the other Credit
Documents at any time by giving 15 Business Days' prior written notice to the
Company and the Banks. In the case of the resignation by the Administrative
Agent, such resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below. In the case of a resignation by an Agent, such resignation
shall become effective immediately.
(b) Upon any such notice of resignation, the Company shall appoint
a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Required Banks
(it being understood and agreed that any Bank is deemed to be acceptable to
the Required Banks), provided that, if a
--------
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Default or an Event of Default exists at the time of such resignation, the
Required Banks shall appoint such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with
the consent of the Company, shall then appoint a successor Administrative
Agent who shall serve as Administrative Agent hereunder or thereunder until
such time, if any, as the Company or Required Banks, as the case may be,
appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursu-
ant to clause (b) or (c) above by the 30th Business Day after the date such
notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks shall
thereafter perform all the duties of the Administrative Agent hereunder
and/or under any other Credit Document until such time, if any, as the
Required Banks appoint a successor Administrative Agent.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. (a) The Borrowers jointly and
-------------------------
severally shall: (i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
disbursements of White & Case and local counsel and all appraisal fees,
trustee's fees, documentary and recording taxes, title insurance and
recording, filing and other expenses) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and
the documents and instruments referred to herein and therein and any
amendment, waiver or consent relating hereto or thereto, of the
Administrative Agent in connection with its syndication efforts with respect
to this Agreement and of the Administrative Agent and each of the Banks in
connection with the enforcement of this Agreement and the other Credit Docu-
ments and the documents and instruments referred to herein and therein
(including, without limitation, the reasonable fees and disbursements of
counsel (including allocated costs of in-house counsel) for the
Administrative Agent and for each of the Banks); (ii) pay and hold each of
the Banks harmless from and against any and all present and future stamp,
excise and other similar taxes with respect to the foregoing matters and save
each of the Banks
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harmless from and against any and all liabilities with respect to or result-
ing from any delay or omission (other than to the extent attributable to such
Bank) to pay such taxes; and (iii) indemnify the Administrative Agent, each
Agent, each Letter of Credit Issuer and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' (including allocated costs of in-house counsel) and
consultants' fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related
to, or by reason of, (a) any investigation, litigation or other proceeding
(whether or not the Administrative Agent, any Agent, any Letter of Credit
Issuer or any Bank is a party thereto) related to the entering into and/or
performance of this Agreement or any other Credit Document or the use of any
Letter of Credit or the proceeds of any Loans hereunder or the consummation
of any transactions contemplated herein (including, without limitation, the
Hotel Transaction) or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Real Property
owned or at any time operated by Parent or any of its Subsidiaries, the
generation, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned or operated by Parent or any
of its Subsidiaries, the non-compliance of any Real Property with foreign,
federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Claim relating in any way to Parent, any of its Subsidiaries,
their operations or any Real Property owned or at any time operated by Parent
or any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding
(but excluding any losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless the Administrative Agent, any Agent, any
Letter of Credit Issuer or any Bank set forth in the preceding sentence may
be unenforceable because it is violative of any law or public policy, the
Borrowers shall make the maximum contribution to
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the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
(b) The Borrowers further jointly and severally agree to pay the
reasonable legal fees of gaming counsel for the Administrative Agent in
Nevada and New Jersey and any other relevant state and all reasonable costs
(including costs of investigation) associated with any qualification (or
exemption or waiver therefrom) of any Bank under, or compliance in connection
with the Gaming Regulations in connection with the syndication under this
Agreement, provided that in the event that any assignee Bank or potential as-
signee Bank is not already a Qualified Person (before giving effect to any
actions taken to become such in connection with this Agreement), then all
costs associated with such Person becoming a Qualified Person shall be borne
by the respective assignee Bank or potential assignee Bank. Notwithstanding
the foregoing, after a Bank has been replaced pursuant to Section 1.13, the
Borrowers shall not be required to reimburse such Bank for any such costs
incurred by it after the date of such replacement.
13.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of
any such rights, upon the occurrence of an Event of Default, each Bank is
hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to any Credit Party or to any
other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of the Credit Parties against and on account of the
Obligations and liabilities of the Credit Parties to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 13.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall
be contingent or unmatured, provided that such right of set-off may only be
--------
exercised by any such Bank if Nevada Revised Statutes 40.430(4)(g) (1989)
remains in force and effect without modification, and such Bank has received
advice of New Jersey and Nevada counsel acceptable to the Administrative
Agent that there is no other
-134-
provision of Nevada or New Jersey law, as appropriate, under which such
action of set off might jeopardize any right of the Collateral Agent or any
Bank in or with respect to any Collateral. The provisions of the foregoing
proviso to this Section 13.02 are for the benefit of the Banks only, and may
be amended, modified or waived in any respect by the Required Banks without
the requirements of prior notice to or consent by any Credit Party and does
not constitute a waiver of any rights against any Credit Party or against any
Collateral.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to Parent or any
Borrower, at such Credit Party's address specified opposite its signature
below or in the respective Election to Become a Subsidiary Borrower; if to
any Bank, at its address specified opposite its name below; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit Party or the
Administrative Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Bank,
at such other address as shall be designated by such Bank in a written notice
to the Company and the Administrative Agent. All such notices and communi-
cations shall, when mailed, telegraphed, telexed, telecopied, or cabled or
sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as
the case may be, or sent by telex or telecopier, except that notices to the
Administrative Agent, the Company and any Letter of Credit Issuer shall not
be effective until received by such Person.
13.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, except as
-------- -------
provided in Sections 9.02, 9.04(ix) and 13.17(a), no Borrower may assign or
transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of the Administrative
Agent and the Banks (although any Subsidiary Borrower may, at its request and
with the consent of the Required Banks, otherwise cease to be a Subsidiary
Borrower hereunder so long as no Default or Event of Default then exists and
all Loans incurred by such Subsidiary are repaid in full and the Company
shall become the account party with respect to any outstanding Letters of
Credit issued for the account of such Subsidiary Borrower
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pursuant to documentation satisfactory to the Administrative Agent and the
respective Letter of Credit Issuer) and, provided further, that, although any
----------------
Bank may transfer, assign or grant participations in its rights hereunder,
such Bank shall remain a "Bank" for all purposes hereunder (and may not
transfer or assign all or any portion of its Revolving Loan Commitments
hereunder except as provided in Section 13.04(b)) and the transferee,
assignee or participant, as the case may be, shall not constitute a "Bank"
hereunder and, provided further, that no Bank shall transfer or grant any
----------------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except
to the extent such amendment or waiver would extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit
is not extended beyond the Final Maturity Date) in which such participant is
participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total
Revolving Loan Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Revolving Loan Commitment or Loan
shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof). In the
case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Bank in respect of such participation to be those set
forth in the agreement executed by such Bank in favor of the participant
relating thereto) and the Borrowers shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Credit Documents and all amounts payable
by the Borrowers hereunder shall be determined as if such Bank had not sold
such participation. Any agreement pursuant to which any Bank may grant such
a participation shall be in a form approved by the Administrative Agent and
Parent and shall be satisfactory under the Gaming Regulations of the State of
New Jersey so as not to require participants to be approved financial sources
or qualified under such Gaming Regulations applicable to lenders.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x)
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assign all or a portion of its Revolving Loan Commitments and related out-
standing Obligations hereunder to its parent company and/or any affiliate of
such Bank which is at least 50% owned by such Bank or its parent company or
to one or more Banks or (y) assign all, or if less than all, a portion equal
to at least $5,000,000 in the aggregate for the assigning Bank or assigning
Banks, of such Revolving Loan Commitments and related outstanding Obligations
hereunder, in either case to one or more Qualified Persons, each of which
assignees shall become a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, provided that, (i) at such time Schedule
--------
I shall be deemed modified to reflect the Revolving Loan Commitments of such
new Bank and of the existing Banks, (ii) new Notes will be issued to such new
Bank and to the assigning Bank upon the request of such new Bank or assigning
Bank, such new Notes to be in conformity with the requirements of Section
1.05 to the extent needed to reflect the revised Revolving Loan Commitments,
(iii) the consent of BTCo and each Letter of Credit Issuer shall be required
in connection with any assignment (which consent shall not be unreasonably
withheld) and (iv) the Administrative Agent shall receive at the time of each
such assignment, from either the assigning or assignee Bank or Banks, the
payment of a non-refundable assignment fee of $3,500 in the case of any
assignment to a Qualified Person which is not a Bank immediately prior to
such assignment or $1,000 in the case of any assignment to a then existing
Bank. To the extent of any assignment pursuant to this Section 13.04(b), the
assigning Bank shall be relieved of its obligations hereunder with respect to
its assigned Revolving Loan Commitments. At the time of each assignment
pursuant to this Section 13.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrowers in the case of a Bank described in clause (ii) or
(iv) of Section 4.04(b), the forms described in such clause (ii) or (iv), as
the case may be. To the extent that an assignment of all or any portion of a
Bank's Revolving Loan Commitments and related outstanding Obligations
pursuant to Section 1.13 or this Section 13.04(b) would, at the time of such
assignment, result in increased costs under Section 1.10, 1.11 or 4.04 from
those being charged by the respective assigning Bank prior to such
assignment, then the Borrowers shall not be obligated to pay such increased
costs (although the Borrowers shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of
the respective assignment).
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(c) If the New Jersey Gaming Authorities shall determine that any
Bank is not qualified as an approved financial source or otherwise does not
meet the standards pursuant to the Gaming Regulations in New Jersey, or the
Nevada Gaming Authorities shall determine that any Bank does not meet the
Suitability Standards under the Nevada Gaming Regulations or any other Gaming
Authority with jurisdiction over the gaming business of Parent and its
Subsidiaries shall determine that any Bank does not meet its suitability
standards (in any such case, a "Former Bank"), the Administrative Agent and
each Letter of Credit Issuer or the Company shall have the right (but not the
duty) to designate a bank or banks (in each case, a "Substitute Bank," which
may be any Bank or Banks that agree to become a Substitute Bank) that has
agreed to assume the rights and obligations of the Former Bank, subject to
receipt by the Administrative Agent of evidence that such Substitute Bank is
a Qualified Person. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an Assignment
and Assumption Agreement, which assumption shall be required to comply with,
and shall become effective in accordance with, the provisions of Section
13.04(b), provided that the purchase price to be paid by the Substitute Bank
--------
to the Administrative Agent for the account of the Former Bank for such
assumption shall equal the sum of (i) the unpaid principal amount of any
Notes held or Loans made by the Former Bank plus accrued interest thereon
plus (ii) the Former Bank's pro rata share of the aggregate amount of Draw-
--- ----
ings under all Letters of Credit that have not been reimbursed by the
Borrowers, plus accrued interest thereon, plus (iii) such Former Bank's pro
---
rata share of accrued Fees to the date of the assumption, and, provided
---- --------
further, the Borrowers shall pay all obligations owing to the Former Bank
-------
under the Credit Documents (including all obligations, if any, owing pursuant
to Section 1.11, but excluding those amounts in respect of which the purchase
price is being paid as provided above). Each Bank agrees that if it becomes
a Former Bank, upon payment to it by the Borrowers of all such amounts, if
any, owing to it under the Credit Documents, it will execute and deliver an
Assignment and Assumption Agreement, upon payment of such purchase price.
(d) Notwithstanding the provisions of subsection (c) of this
Section 13.04, if any Bank becomes a Former Bank, and if the Administrative
Agent or the Company fails to find a Substitute Bank pursuant to subsection
(c) of this Section within any time period specified by the appropriate
Gaming Authority for the withdrawal of a Former Bank (the "Withdrawal
Period"), the Borrowers shall, immediately (i)
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prepay in full the outstanding principal amount of each Note held or Loan
made by such Former Bank, together with accrued interest thereon to the
earlier of (x) the date of payment or (y) the last day of any Withdrawal
Period, and (ii) at the option of the Company either (A) place an amount
equal to such Former Bank's Adjusted Percentage in each Letter of Credit in a
separate cash collateral account with the Administrative Agent for each
outstanding Letter of Credit which amount will be applied by the
Administrative Agent to satisfy the Borrower's reimbursement obligations to
the respective Letter of Credit Issuer in respect of Drawings under the
applicable Letter of Credit or (B) if no Default or Event of Default then
exists, terminate the Revolving Loan Commitment of such Former Bank at which
time the other Banks' Percentages and Adjusted Percentages will be
automatically adjusted as a result thereof, provided that the option
specified in this clause (B) may only be exercised if, immediately after
giving effect thereto, no Bank's outstanding Revolving Loans, when added to
the product of (a) such Bank's Adjusted Percentage and (b) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings at such time and (II)
the aggregate amount of all Swingline Loans then outstanding, would exceed
such Bank's Revolving Loan Commitment at such time.
(e) Subject to the last sentence of this Section 13.04(e), each
Bank agrees that all participations and assignments made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable to
lenders. Each Bank agrees further that it will not grant participations or
assignments prior to receiving notice from the Administrative Agent that it
has completed the primary syndication of this facility. The Administrative
Agent shall provide such notice to the Banks promptly after completing such
primary syndication. Each Bank agrees to notify the New Jersey Gaming
Authorities of any dispute arising between such Bank and any participant
concerning Collateral located in New Jersey. Each Borrower hereby
acknowledges that unless the Company has provided the Banks with a written
opinion of counsel as to the suitability standards applicable to lenders of
any relevant Gaming Authority (excluding New Jersey and Nevada except to the
extent that the suitability standards set forth in the Gaming Regulations of
such States change from those in effect on the Restatement Effective Date as
described in the gaming memoranda delivered to the Banks prior to the
Restatement Effective Date) with jurisdiction over the Gaming Business of
Parent and its Subsidiaries, no Bank shall have the responsibility of
determining whether or
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not a potential assignee of such Bank would be a Qualified Person under the
Gaming Regulations of any such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrowers or any other Credit
Party and the Administrative Agent or any Bank or the holder of any Note
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent or any Bank or the holder of any Note would otherwise
have. No notice to or demand on any Credit Party in any case shall entitle
any Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative
Agent or any Bank or the holder of any Note to any other or further action in
any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in
-----------------
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of a Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
--- ----
any such payment) pro rata based upon their respective shares, if any, of the
--- ----
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or
interest on, the Loans, Unpaid Drawings, Commitment Commission or Letter of
Credit Fees, of a sum which with respect to the related sum or sums received
by other Banks is
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in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all
of the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Party to such
Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
--------
amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing pay-
ments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in
the notes thereto or as otherwise disclosed in writing by Parent to the
Banks); provided that, (i) except as otherwise specifically provided herein,
--------
all computations determining compliance with Sections 9.03 through 9.05,
inclusive, and Sections 9.07 through 9.09, inclusive, shall utilize ac-
counting principles and policies in conformity with those used to prepare the
historical financial statements delivered to the Banks pursuant to Section
7.05(a), provided that for all Test Periods which include periods prior to
the Restatement Effective Date, all calculations used in determining the
Consolidated Interest Coverage Radio for such Test Periods (both for purposes
of Section 9.08 and the definition of Reduction Discount) shall be made on a
pro forma basis as if the Hotel Transaction had been consummated on the first
--- -----
day of each such Test Period and all historical financial information shall
be restated (on a basis consistent with the methodology used in the Proxy
Statement) to retroactively reflect the Hotel Business as discontinued
operations and to exclude from such calculations the results of operations of
the Hotel Business, and (ii) at no time shall Harrah's Jazz and its
Subsidiaries be treated as Subsidiaries of Parent for purposes of this
Agreement even though (x) Harrah's Jazz and its Subsidiaries may at any time
fall within the definition of "Subsidiary" or (y) generally
-141-
accepted accounting principles would require otherwise but shall instead be
treated as an equity investment by Parent.
(b) All computations of interest, Commitment Commission and other
Fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, Commitment Commission or
other Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
----------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT
AS OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF PARENT AND EACH BORROWER HERE-
BY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON
ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH SUCH CREDIT PARTY AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE
AGENT. EACH OF PARENT AND EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT,
ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY SUCH CREDIT PARTY IN ANY OTHER JURISDICTION.
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(b) EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO
IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrowers and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Restatement Effective Date") and at the time on which (i) Parent,
the Company, each existing Subsidiary Borrower and the Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered the same to the Administrative Agent at its Notice
Office or, in the case of the Banks, shall have given to the Administrative
Agent telephonic (confirmed in writing), written or telex notice (actually
received) at such office that the same has been signed and mailed to it and
(ii) the conditions contained in Sections 5 and 6 are met to the satisfaction
of the Administrative Agent and the Required Banks. Unless the
Administrative Agent has received actual notice from any Bank that the
conditions contained in Sections 5 and 6 have not been met to its
satisfaction, upon the satisfaction of the condition described in clause (i)
of the immediately preceding sentence and upon the Administrative Agent's
good faith determination that the conditions described in clause (ii) of the
immediately preceding sentence have been met, then the Restatement Effective
Date shall have been deemed to have occurred, regardless of any subsequent
determination that one or more of the conditions thereto had not been met
(although the occurrence of the Restatement Effective Date
-143-
shall not release Parent or any Borrower from any liability for failure to
satisfy one or more of the applicable conditions contained in Section 5 or
6). The Administrative Agent will give Parent, the Company, each existing
Subsidiary Borrower and each Bank prompt written notice of the occurrence of
the Restatement Effective Date.
13.11 Headings Descriptive. The headings of the several sections
--------------------
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
13.12 Amendment or Waiver. (a) Neither this Agreement nor any
-------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the respective Credit Parties party thereto (except
as otherwise provided in Section 13.02) and the Required Banks (or the
Required Secured Parties in the case of a change, waiver, discharge or
termination with respect to a Collateral Document to the extent provided
therein), provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby), (i) extend the final scheduled
maturity of any Loan or Note or extend the stated maturity of any Letter of
Credit beyond the Final Maturity Date, or reduce the rate or extend the time
of payment of interest or Fees thereon, or reduce the principal amount there-
of, (ii) release all or substantially all of the Collateral (except as
expressly provided in the Collateral Documents) under all the Collateral
Documents, provided that such release of Collateral may be effected by only
--------
the Required Banks if at the time of such release the Company's Indebtedness
shall be rated at least BBB- Senior Implied by S&P or Baa3 Senior Implied by
Moody's, (iii) amend, modify or waive any provision of this Section 13.12,
(iv) reduce the percentage specified in the definition of Required Banks (it
being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Banks on substantially the same basis as the
extensions of Revolving Loan Commitments are included on the Restatement
Effective Date) or (v) except as set forth in Section 9.02, 9.04(ix) or
13.17(a), consent to the assignment or transfer by any Borrower of any of its
rights and obligations under this Agreement (although any Subsidiary Borrower
may, at its request and with the consent of the Required Banks, otherwise
cease to be a Subsidiary Borrower
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hereunder so long as no Default or Event of Default exists and all Loans
incurred by such Subsidiary Borrower are repaid in full and the Company shall
become the account party with respect to any outstanding Letters of Credit
issued for the account of such Subsidiary Borrower pursuant to documentation
satisfactory to the Administrative Agent and the respective Letter of Credit
Issuer); provided further, that no such change, waiver, discharge or termina-
----------------
tion shall (v) increase the Revolving Loan Commitment of any Bank over the
amount thereof then in effect without the consent of such Bank (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in the Total
Revolving Loan Commitment shall not constitute an increase of the Revolving
Loan Commitment of any Bank, and that an increase in the available portion of
any Revolving Loan Commitment of any Bank shall not constitute an increase in
the Revolving Loan Commitment of such Bank), (w) without the consent of each
Letter of Credit Issuer, amend, modify or waive any provision of Section 2 or
3.01(c) or alter its rights or obligations with respect to Letters of Credit,
(x) without the consent of BTCo, alter its rights and obligations with
respect to Swingline Loans, (y) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 12 or any other
provision as same relates to the rights or obligations of the Administrative
Agent and (z) without the consent of the Collateral Agent, amend, modify or
waive any provision relating to the rights or obligations of the Collateral
Agent. Notwithstanding anything to the contrary contained above, any Letter
of Credit may be modified by the respective Letter of Credit Issuer so long
as the terms thereof would be permitted in a newly issued Letter of Credit in
accordance with Section 2.
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more
of such other Banks whose consent is required is not obtained, then the
Company shall have the right, so long as all non-consenting Banks whose
individual consent is required are treated as described in either clauses (A)
or (B) below, to either (A) replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 1.13 so long as at the
time of such replacement, each such Replacement Bankconsents to the proposed
change, waiver, discharge or termination or (B) terminate such non-consenting
Bank's Revolving Loan Commitment and repay all outstanding
-145-
Revolving Loans of such Bank in accordance with Sections 3.02(b) and/or
4.01(iv), provided that, unless the Revolving Loan Commitments are
--------
terminated, and Revolving Loans repaid, pursuant to preceding clause (B) are
immediately replaced in full at such time through the addition of new Banks
or the increase of the Revolving Loan Commitments and/or outstanding
Revolving Loans of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to preceding clause (B) the
Required Banks (determined before giving effect to the proposed action) shall
specifically consent thereto, provided further, that in any event the Company
----------------
shall not have the right to replace a Bank, terminate its Revolving Loan
Commitment or repay its Revolving Loans solely as a result of the exercise of
such Bank's rights (and the withholding of any required consent by such Bank)
pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein (including,
--------
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01)
shall survive the execution, delivery and termination of this Agreement and
the Notes and the making and repayment of the Loans. Notwithstanding the
occurrence of the Restatement Effective Date, all indemnities set forth in
the Original Credit Agreement for the benefit of the Existing Banks and the
Existing Agents shall survive in accordance with the terms thereof.
13.14 Domicile of Loans. Each Bank may transfer and carry its
-----------------
Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11 or
4.04 from those being charged by the respective Bank prior to such transfer,
then the Borrowers shall not be obligated to pay such increased costs
(although the Borrowers shall be obligated to pay any other increased costs
of the type described above resulting from changes after the date of the
respective transfer).
13.15 Application of Gaming Regulations. Parent, the Company,
---------------------------------
each Subsidiary Borrower and the Banks acknowledge that (i) the consummation
of the transactions contemplated by the Credit Documents is subject to the
Gaming Regulations (and Parent, the Company and each Subsidiary Borrower
represent and warrant that all requisite approvals thereunder have been duly
obtained) and (ii) the exercise of remedies
-146-
under the Collateral Documents with respect to the Collateral will be subject
to the Gaming Regulations.
13.16 Confidentiality. (a) Subject to the provisions of clause
---------------
(b) of this Section 13.16, each Bank agrees that it will use its best effort
not to disclose without the prior consent of the Company (other than to its
employees, auditors or counsel or to another Bank if the Bank or such Bank's
holding or parent company in its sole discretion determines that any such
party should have access to such information) any information with respect to
Parent or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is
designated by the Company to the Banks in writing as confidential, provided
--------
that any Bank may disclose any such information (a) as has become generally
available to the public, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Bank or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons
or subpoena or in connection with any litigation, (d) in order to comply with
any law, order, regulation or ruling applicable to such Bank, and (e) to any
prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes or Revolving Loan
Commitments or any interest therein by such Bank, provided, that such
--------
prospective transferee executes an agreement with such Bank containing
provisions substantially identical to those contained in this Section.
(b) Each Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to Parent or any of
its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of Parent and its Subsidiaries).
13.17 Miscellaneous. (a) Notwithstanding anything to the
-------------
contrary contained in this Agreement, the Required Banks may consent to a
corporate reorganization of Parent and its Subsidiaries, which corporate
reorganization may include the transfer of one or more Subsidiaries of the
Company as direct Subsidiaries of Parent. In connection with any such
corporate reorganization, the Required Banks may, at their option, require
that Parent or one or more of its
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Subsidiaries become direct borrowers with respect to the Obligations. In
addition, any necessary amendments or supplements to this Agreement or the
other Credit Documents to effect such corporate reorganization, including to
preserve the perfection and priority of the Liens created under the
Collateral Documents and retaining the benefits of the Guarantees, may be
made with consent of the Required Banks.
(b) Each of the Banks hereby acknowledges that the law firms of
Vargas & Bartlett, Norris, McLaughlin & Marcus and Saiber Schlesinger Satz &
Goldstein have jointly represented the Banks and the Credit Parties in
connection with certain of the local real estate and/or gaming matters
related to the transactions contemplated by this Agreement. Each of the
Banks further acknowledges that such dual representation may give rise to a
conflict of interest under the Rules of Professional Conduct under the laws
of the States of New Jersey and Nevada. In that such connection, the
Administrative Agent, on behalf (and with the authority) of the Banks and at
the request of such law firms, signed certain waivers in the forms of
Exhibits R-1, R-2 and R-3, respectively to the Original Credit Agreement.
Each of the Banks understands the contents of such waivers and acknowledges
that such waivers remain in effect.
13.18. Certain Agreements with Respect to Existing Indentures.
------------------------------------------------------
(a) The Borrowers agree that they shall not incur or suffer to exist at any
time any Debt (as defined in the 10-7/8% Senior Subordinated Notes Indenture)
pursuant to clause (a) of the first paragraph of Section 1008 of the 10-7/8%
Senior Subordinated Notes Indenture, except that (x) Debt pursuant to this
Agreement and the 364-Day Credit Agreement shall be justified as outstanding
pursuant to said clause (a) and (y) other Debt in an aggregate outstanding
principal amount not to exceed $768,000,000 less the sum of (a) the then
Total Revolving Loan Commitment (or if greater, the Total Outstandings at
such time) and (b) the Total 364-Day Revolving Loan Commitment (or, if
greater, the Total 364-Day Outstandings at such time) may be outstanding at
any time pursuant to said clause (a). For purposes of determining compliance
with the 10-7/8% Senior Subordinated Notes Indenture, all incurrences of
Loans and issuances of Letters of Credit will be deemed incurred pursuant to
clause (a) of the first paragraph of Section 1008 of the 10-7/8% Senior
Subordinated Notes Indenture. The Borrowers represent and warrant that all
Indebtedness incurred under this Agreement shall be permitted to be incurred
and remain outstanding pursuant to the 10-7/8% Senior Subordinated Notes
Indenture,
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and the Borrowers hereby also covenant and agree that they shall not take any
action with respect to the incurrence of any Indebtedness (including under
this Agreement) which is inconsistent with this Section 13.18(a). This
clause (a) shall cease to be of further force or effect at such time as all
10-7/8% Senior Subordinated Notes have been repaid in full and the provisions
of Section 1008 of the 10-7/8% Senior Subordinated Notes Indenture are no
longer effective.
(b) Each Borrower represents and warrants to the Banks that, on
the Restatement Effective Date, loans in aggregate principal amount equal to
the sum of the Total Revolving Loan Commitment and the Total 364-Day
Revolving Loan Commitment would be permitted to be incurred pursuant to the
second paragraph of Section 1008 of the 8-3/4% Senior Subordinated Notes
Indenture (and that the Consolidated Fixed Charge Ratio referred to therein
would be at least equal to 2.0 to 1 after giving effect thereto).
Furthermore, the Borrowers agree that they (x) shall not incur or suffer to
exist at any time any Debt (as defined in the 8-3/4% Senior Subordinated
Notes Indenture) pursuant to clause (a) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, except that up to
$125,000,000 of outstanding Debt incurred from time to time pursuant to the
364-Day Credit Agreement may be justified as outstanding pursuant to said
clause (a) and up to $450,000,000 (plus the amount of all reductions to the
Total 364-Day Revolving Loan Commitment after the Restatement Effective Date
so long as the Debt outstanding under the 364-Day Credit Agreement does not
exceed the Total 364-Day Revolving Loan Commitment as so reduced (with such
amount being herein called the "364-Day Revolving Loan Commitment Reduction
Amount")) of Debt outstanding from time to time pursuant to this Agreement
may be justified as having been incurred pursuant to said clause (a) and (y)
shall not incur or suffer to exist at any time more than $25,000,000 of
outstanding Debt (other than pursuant to the 364-Day Credit Agreement)
pursuant to clause (f) of the first paragraph of Section 1008 of the 8-3/4%
Senior Subordinated Notes Indenture, thereby leaving at least $25,000,000
under said clause (f) to justify outstanding Debt pursuant to the 364-Day
Credit Agreement. For purposes of determining compliance with the 8-3/4%
Senior Subordinated Notes Indenture for Credit Events occurring after the
Restatement Effective Date, all incurrences of Loans and issuances of Letters
of Credit after the Restatement Effective Date will be deemed incurred
pursuant to clause (a) of the first paragraph of Section 1008 of the 8-3/4%
Senior Subordinated Notes Indenture; provided that if at any time after the
Restatement Effective Date the Total Outstandings
-149-
are reduced below an amount equal to the remainder of $150,000,000 less the
364-Day Revolving Loan Commitment Reduction Amount, if any, at such time
(with the lowest amount below said remainder to which the Total Outstandings
hereunder have at any time been reduced (as such amount may be adjusted as
herein provided), being herein called the "Lowest Outstanding Amount", it
being understood that if the Total Outstandings hereunder ever exceed the
then previous Lowest Outstanding Amount by more than $450,000,000, the then
previous Lowest Outstanding Amount shall be increased by an amount equal to
such excess, provided that in no event shall the Lowest Outstanding Amount
ever exceed $150,000,000), then at any time thereafter the Borrowers shall
not be permitted to incur Loans or have Letters of Credit issued which would
cause the Total Outstandings to exceed the theretofore Lowest Outstanding
Amount by more than $450,000,000 plus the 364-Day Revolving Loan Commitment
Reduction Amount, if any, at such time unless, in connection with any such
Credit Event, the Borrowers establish to the satisfaction of the Agent
(including by the delivery of a satisfactory legal opinion and a certificate
of the Company's Chief Financial Officer, Treasurer or Controller) that the
incurrence of such Loans or issuance of such Letter of Credit would be
permitted pursuant to the terms of the 8-3/4% Senior Subordinated Notes
Indenture. The Borrowers represent and warrant that all Indebtedness
incurred under this Agreement shall be permitted to be incurred and remain
outstanding pursuant to the 8-3/4% Senior Subordinated Notes Indenture, and
the Borrowers hereby also covenant and agree that they shall not take any
action with respect to the incurrence of any Indebtedness (including under
this Agreement) which is inconsistent with this Section 13.18(b). This
clause (b) shall cease to be of further force or effect at such time as all
8-3/4% Senior Subordinated Notes have been repaid in full and the provisions
of Section 1008 of the 8-3/4% Senior Subordinated Notes Indenture are no
longer effective.
SECTION 14. Parent Guaranty.
---------------
14.01 The Guaranty. In order to induce the Administrative Agent
------------
and Banks to enter into this Agreement and to extend credit hereunder and in
recognition of the direct benefits to be received by Parent from the proceeds
of the Loans and the issuance of the Letters of Credit, Parent hereby agrees
with the Administrative Agent, the Banks and the Secured Interest Rate
Protection Creditors as follows: Parent hereby unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full
and prompt
-150-
payment when due, whether upon maturity, by acceleration or otherwise, of any
and all of the Guaranteed Obligations of the Borrowers to the Administrative
Agent, the Banks and the Secured Interest Rate Protection Creditors. If any
or all of the Guaranteed Obligations of the Borrowers to the Administrative
Agent, the Banks or the Secured Interest Rate Protection Creditors becomes
due and payable, Parent unconditionally promises to pay such indebtedness to
the Administrative Agent, the Banks and the Secured Interest Rate Protection
Creditors, or order, on demand, together with any and all reasonable expenses
which may be incurred by the Administrative Agent, the Banks or the Secured
Interest Rate Protection Creditors in collecting any of the Guaranteed
Obligations.
14.02 Bankruptcy. Additionally, Parent unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrowers to the Administrative Agent, the Banks and the
Secured Interest Rate Protection Creditors whether or not due or payable by
the Borrowers upon the occurrence in respect of any Borrowers of any of the
events specified in Section 10.05, and unconditionally and irrevocably
promises to pay such Guaranteed Obligations to the Administrative Agent, the
Banks or the Secured Interest Rate Protection Creditors, as the case may be,
or order, on demand, in Dollars.
14.03 Nature of Liability. The liability of Parent hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrowers whether executed by Parent, any other
Guarantor, any other guarantor or by any other party, and the liability of
Parent hereunder shall not be affected or impaired by (a) any direction as to
application of payment by any Borrower or by any other party (other than for
misappropriation of funds by the respective Bank), or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor
or of any other party as to the Guaranteed Obligations of any Borrower, or
(c) any payment on or in reduction of any such other guaranty or undertaking,
or (d) any dissolution, termination or increase, decrease or change in per-
sonnel by any Borrower, or (e) any payment made to the Administrative Agent,
the Banks or the Secured Interest Rate Protection Creditors on the indebt-
edness which the Administrative Agent, such Banks or such Secured Interest
Rate Protection Creditors repay to such Borrower pursuant to court order in
any bankruptcy, reorganization, arrangement, moratorium or other debtor re-
lief proceeding, and Parent waives any right to the
-151-
deferral or modification of its obligations hereunder by reason of any such
proceeding.
14.04 Independent Obligation. The obligations of Parent hereunder
----------------------
are independent of the obligations of any other Guarantor, any other
guarantor or any Borrower, and a separate action or actions may be brought
and prosecuted against Parent whether or not action is brought against any
other Guarantor, any other guarantor or any Borrower and whether or not any
other Guarantor, any other guarantor or any Borrower be joined in any such
action or actions. Parent waives, to the fullest extent permitted by law,
the benefit of any statute of limitations affecting its liability hereunder
or the enforcement thereof. Any payment by any Borrower or other
circumstance which operates to toll any statute of limitations as to such
Borrower shall operate to toll the statute of limitations as to Parent.
14.05 Authorization. Parent authorizes the Administrative Agent,
-------------
the Banks and the Secured Interest Rate Protection Creditors without notice
or demand (except (i) as shall be required by applicable statute and cannot
be waived and (ii) for any consents of the respective Credit Parties required
by the terms of the respective Credit Documents), and without affecting or
impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the Parent
Guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) in
or hereof, and/or any offset thereagainst;
-152-
(c) exercise or refrain from exercising any rights against any
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
any Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Borrower to its creditors other
than the Administrative Agent, the Banks and the Secured Interest Rate
Protection Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrowers to the Administrative Agent,
the Banks and the Secured Interest Rate Protection Creditors regardless
of what liability or liabilities of Parent or the Borrowers remain
unpaid; and/or
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements.
14.06 Reliance. It is not necessary for the Administrative Agent,
--------
the Banks or the Secured Interest Rate Protection Creditors to inquire into
the capacity or powers of Parent or its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and
any Guaranteed Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
14.07 Subordination. Any of the indebtedness of the Borrowers
-------------
relating to the Guaranteed Obligations now or hereafter owing to Parent is
hereby subordinated to the Guaranteed Obligations of the Borrowers owing to
the Administrative Agent, the Banks and the Secured Interest Rate Protection
Creditors, provided that payment may be made by any Borrower on any such
indebtedness relating to the Guaranteed Obligations owing to Parent so long
as the same is not prohibited by this Agreement and provided further, that if
----------------
the Administrative Agent so requests at a time when an
-153-
Event of Default exists, all such indebtedness relating to the Guaranteed
Obligations of the Borrowers to Parent shall be collected, enforced and re-
ceived by Parent for the benefit of the Banks and the Secured Interest Rate
Protection Creditors and be paid over to the Administrative Agent on behalf
of the Administrative Agent, the Banks and the Secured Interest Rate
Protection Creditors on account of the Guaranteed Obligations of the Bor-
rowers to the Administrative Agent, the Banks, but without affecting or im-
pairing in any manner the liability of Parent under the other provisions of
this Parent Guaranty. Prior to the transfer by Parent of any note or nego-
tiable instrument evidencing any of the indebtedness relating to the
Guaranteed Obligations of the Borrowers to Parent, Parent shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination.
14.08 Waiver. (a) Parent waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require the
Administrative Agent, the Banks or the Secured Interest Rate Protection
Creditors to (i) proceed against any Borrower, any other Guarantor, any other
guarantor or any other party, (ii) proceed against or exhaust any security
held from any Borrower, any other Guarantor, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's, the
Banks' or the Secured Interest Rate Protection Creditors' power whatsoever.
Parent waives any defense based on or arising out of any defense of any
Borrower, any other Guarantor, any other guarantor or any other party other
than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of any
Borrower, any other Guarantor, any other guarantor or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Borrower other
than payment in full of the Guaranteed Obligations. The Administrative
Agent, the Banks and the Secured Interest Rate Protection Creditors may, at
their election, foreclose on any security held by the Administrative Agent,
the Collateral Agent, the Banks or the Secured Interest Rate Protection
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale
is permitted by applicable law), or exercise any other right or remedy the
Administrative Agent, the Banks and the Secured Interest Rate Protection
Creditors may have against any Borrower or any other party, or any security,
without affecting or impairing in any way the liability of Parent hereunder
except to the
-154-
extent the Guaranteed Obligations have been paid. Parent waives any defense
arising out of any such election by the Administrative Agent, the Banks and
the Secured Interest Rate Protection Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Parent against any Borrower or any other party or
any security.
(b) Parent waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Parent
Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Parent assumes all responsibility for
being and keeping itself informed of the Borrowers' financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks
which Parent assumes and incurs hereunder, and agrees that the Administrative
Agent, the Banks and the Secured Interest Rate Protection Creditors shall
have no duty to advise Parent of information known to them regarding such
circumstances or risks.
-155-
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
Address:
-------
1023 Cherry Road THE PROMUS COMPANIES
Memphis, Tennessee 38117 INCORPORATED
Tel: (901) 762-8600
Fax: (901) 762-8777
Attention: Treasurer By
------------------------------
Title:
with a copy to the same
address to the attention
of the Corporate Secretary
1023 Cherry Road EMBASSY SUITES, INC.
Memphis, Tennessee 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attention: Treasurer By
-------------------------------
Title:
with a copy to the same
address to the attention
of the Corporate Secretary
1023 Cherry Road MARINA ASSOCIATES
Memphis, Tennessee 38117
Tel: (901) 762-8600 By: HARRAH'S ATLANTIC CITY, INC.,
Fax: (901) 762-8777 a general partner
Attention: Treasurer
with a copy to the same
address to the attention By
------------------------------
of the Corporate Secretary Title:
By: HARRAH'S NEW JERSEY, INC.,
a general partner
By
------------------------------
Title:
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 Individually and as
Tel: (212) 250-9094 Administrative Agent
Fax: (212) 250-7218 and as an Agent
Attention: Mary Kay Coyle
By
------------------------------
Title:
One Wall Street THE BANK OF NEW YORK,
New York, New York 10286 Individually and as an
Tel: (212) 635-6898 Agent
Fax: (212) 635-6434
Attention: Greg Batson
By
-------------------------------
Title:
300 South Grand Avenue CIBC INC., Individually and as
Los Angeles, California 90071 an Agent
Tel: (213) 617-6226
Fax: (213) 346-0157
Attention: Paul Chakmak By
-------------------------------
Title:
303 Peachtree Street CREDIT LYONNAIS, ATLANTA AGENCY,
Suite 4400 Individually and as an Agent
Atlanta, Georgia 30308
Tel: (404) 524-3700
Fax: (404) 584-5249
Attention: David Cawrse By
------------------------------
Title:
c/o Credit Lyonnais, CREDIT LYONNAIS CAYMAN ISLAND
Atlanta Agency BRANCH
303 Peachtree Street
Suite 4400
Atlanta, Georgia 30308 By
------------------------------
Tel: (404) 524-3700 Title:
Fax: (404) 584-5249
Attention: David Cawrse
707 Wilshire Boulevard FIRST INTERSTATE BANK OF
Los Angeles, California 90017 CALIFORNIA, Individually and
Tel: (213) 614-3903 as an Agent
Fax: (213) 614-2569
Attention: Edith Lim
By
-------------------------------
Title:
4894 Poplar Avenue FIRST AMERICAN NATIONAL BANK
Memphis, Tennessee 38117
Tel: (901) 762-5688
Fax: (901) 762-5665 By
-------------------------------
Attention: David May Title:
165 Madison Avenue FIRST TENNESSEE BANK NATIONAL
Memphis, Tennessee 38101 ASSOCIATION
Tel: (901) 523-4444
Fax: (901) 523-4267
Attention: Steve Wade By
-------------------------------
Title:
One Ninety One Peachtree THE INDUSTRIAL BANK OF JAPAN,
Tower LIMITED
191 Peachtree Street
Suite 3600
Atlanta, Georgia 30303-1757 By
-------------------------------
Tel: (404) 524-8770 Title:
Fax: (404) 524-8509 (for Credit Matters)
Attention: Jackie Brunetto
Fax: (404) 577-6818 (for Administrative Matters)
Attention: Business Operations Department
6000 Midlantic Drive MIDLANTIC BANK, N.A.
Mount Laurel, New Jersey 08054 (formerly known as Midlantic
Tel: (609) 778-2683 National Bank)
Fax: (609) 778-2673
Attention: Denise Killen
By
-------------------------------
Title:
Georgia-Pacific Center THE SANWA BANK, LIMITED,
Suite 4750 ATLANTA AGENCY
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Tel: (404) 586-8809 By
-------------------------------
Fax: (404) 589-1629 Title:
Attention: Virginia Mahoney
555 S.W. Oak Street UNITED STATES NATIONAL BANK
Suite 400 OF OREGON
Portland, Oregon 97204
Tel: (503) 275-3192
Fax: (503) 275-4267 By
-------------------------------
Attention: Claire Jones Title:
210 East Capitol Street DEPOSIT GUARANTY NATIONAL BANK
P.O. Box 1200
Jackson, Mississippi 39215
Tel: (601) 968-4749
Fax: (601) 354-8315
Attention: Larry C. Ratzlaff By
-------------------------------
Title:
520 Madison Avenue THE MITSUBISHI TRUST & BANKING
New York, New York 10022 CORP.
Tel: (212) 838-7700
Fax: (212) 755-2349
Attention: Jay Kato By
-------------------------------
Title:
1211 Avenue of the Americas WESTDEUTSCHE LANDESBANK
New York, New York 10036 GIROZENTRALE, NEW YORK BRANCH
Tel: (212) 852-6023
Fax: (212) 852-6163
Attention: Alan Bookspan
By
-------------------------------
Title:
By
-------------------------------
Title:
101 California Street ABN AMRO BANK N.V.
Suite 4550
San Francisco, California 94111
Tel: (415) 984-3703
Fax: (415) 362-3524
Attention: Jeffrey French By
-------------------------------
Title:
By
-------------------------------
Title:
6000 Poplar Avenue THIRD NATIONAL BANK
Suite 145
Memphis, Tennessee 38119
Tel: (901) 766-7561
Fax: (901) 766-7565 By
-------------------------------
Attention: Carol Yochem Title:
210 Baronne Street FIRST NATIONAL BANK
4th Floor OF COMMERCE
New Orleans, Louisiana 70160
Tel: (504) 561-1989
Fax: (504) 561-1316
Attention: Louis Ballero
By
-------------------------------
Title:
165 Broadway THE LONG-TERM CREDIT BANK OF
JAPAN,
New York, New York 10006 LIMITED, NEW YORK BRANCH,
Tel: (212) 335-4529 Individually and as an Agent
Fax: (212) 608-2371
Attention: Philip Marsden
By
-------------------------------
Title:
with a copy to
245 Peachtree Center Avenue
Suite 2801
Atlanta, Georgia 30303
Tel: (404) 659-7210
Fax: (404) 658-9751
Attention: Rebecca Sedlar
One NationsBank Plaza-M-5 NATIONSBANK OF GEORGIA, N.A.,
Nashville, Tennessee 37239-1697 Individually and as an Agent
Tel: (615) 749-3524
Fax: (615) 749-4640 By
-------------------------------
Attention: Ashley Crabtree Title:
2029 Century Park East SOCIETE GENERALE, Individually
Suite 2900 and as an Agent
Los Angeles, California 90067
Tel: (310) 788-7104
Fax: (310) 551-1537 By
-------------------------------
Attention: Donald L. Schubert Title:
277 Park Avenue THE SUMITOMO BANK, LIMITED,
6th Floor NEW YORK BRANCH, Individually
New York, New York 10172 and as an Agent
Tel: (212) 224-4129
Fax: (212) 224-5188
Attention: Suresh Tata By
-------------------------------
Title:
555 South Flower Street BANK OF AMERICA NATIONAL TRUST
Entertainment Media, 10th Floor AND SAVING ASSOCIATION
Los Angeles, California 90071
Tel: (213) 228-2768
Fax: (213) 228-2641 By
-------------------------------
Attention: Scott Faber Title:
550 South Hope Street THE NIPPON CREDIT BANK, LTD.,
Suite 2500 LOS ANGELES AGENCY
Los Angeles, California 90071
Tel: (213) 243-5555
Fax: (213) 892-0111 By
-------------------------------
Attention: Jay Schwartz Title:
Atlanta Agency THE BANK OF NOVA SCOTIA
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308 By
-------------------------------
Tel: (404) 877-1500 Title:
Fax: (404) 888-8998
Attention: F.C.H. Ashby (Operations Contact)
with a copy to
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Tel: (713) 752-0900
Fax: (713) 752-2425
Park Avenue Tower GIROCREDIT BANK A.G. DER
65 East 55th Street SPARKASSEN, GRAND CAYMAN
New York, New York 10022 ISLAND BRANCH
Tel: (212) 644-0660
Fax: (212) 644-0644
Attention: Lalit Malhotra By
-------------------------------
Title:
Park Avenue Plaza THE TOKAI BANK, LIMITED,
55 East 52nd Street NEW YORK BRANCH
New York, New York 10055
Tel: (212) 339-1117
Fax: (212) 754-2170 By
-------------------------------
Attention: Stuart Schulman Title:
One Boatmen's Plaza THE BOATMEN'S NATIONAL BANK
800 Market Street OF ST. LOUIS
12th Floor
St. Louis, Missouri 63101
Tel: (314) 466-7651 By
-------------------------------
Fax: (314) 466-6499 Title:
Attention: Doug Thornsberry
One Peachtree Center THE DAIWA BANK, LIMITED
Suite 4420
303 Peachtree Street
Atlanta, Georgia 30303 By
-------------------------------
Tel: (404) 524-6544 Title:
Fax: (404) 523-7983
Attention: Terry Herron
By
-------------------------------
Title:
SCHEDULE I
----------
REVOLVING LOAN COMMITMENTS
--------------------------
Revolving Loan
Commitment
--------------
Bankers Trust Company $ 46,000,000
The Bank of New York $ 34,000,000
CIBC Inc. $ 34,000,000
Credit Lyonnais, Atlanta Agency $ 34,000,000
First Interstate Bank of
California $ 34,000,000
The Long-Term Credit Bank of
Japan, Limited, New York Branch $ 34,000,000
NationsBank of Georgia, N.A. $ 34,000,000
Societe Generale $ 34,000,000
The Sumitomo Bank, Limited,
New York Branch $ 30,000,000
Bank of America National Trust
and Savings Association $ 26,000,000
The Bank of Nova Scotia $ 26,000,000
The Industrial Bank of
Japan Limited $ 24,000,000
The Mitsubishi Trust & Banking
Corp. $ 24,000,000
The Tokai Bank, Limited,
New York Branch $ 24,000,000
The Sanwa Bank, Limited,
Atlanta Agency $ 20,000,000
SCHEDULE I
Page 2
Midlantic Bank, N.A. $ 16,000,000
United States National Bank
of Oregon $ 16,000,000
Westdeutsche Landesbank Girozentrale, $ 14,000,000
New York Branch
ABN Amro Bank N.V. $ 12,000,000
The Boatmen's National Bank
of St. Louis $ 12,000,000
First American National Bank $ 12,000,000
First Tennessee Bank National
Association $ 12,000,000
The Nippon Credit Bank, Ltd.,
Los Angeles Agency $ 12,000,000
The Daiwa Bank, Limited $ 8,000,000
Deposit Guaranty National Bank $ 8,000,000
Third National Bank $ 8,000,000
GiroCredit Bank A.G. Der
Sparkassen, Grand Cayman Island Branch $ 8,000,000
First National Bank
of Commerce $ 4,000,000
------------
TOTAL: $600,000.000
SCHEDULE II
-----------
EXISTING LETTERS OF CREDIT
--------------------------
SCHEDULE III
------------
TAX MATTERS
-----------
SCHEDULE IV
-----------
SUBSIDIARIES
------------
SCHEDULE V
----------
EXISTING INDEBTEDNESS
---------------------
SCHEDULE VI
-----------
JOINT VENTURES
--------------
SCHEDULE VII
------------
INSURANCE
---------
SCHEDULE VIII
-------------
EXISTING LIENS
--------------
SCHEDULE IX
-----------
HOTEL SUBSIDIARIES
------------------
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
Bankers Trust Company, as
Administrative Agent for
the Banks party to
the Credit Agreement
referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention:
----------------------
Gentlemen:
The undersigned, (the
---------------------
"Borrower"), refers to the Credit Agreement, dated as of
July 22, 1993 and amended and restated as of June 9, 1995
(as amended from time to time, the "Credit Agreement", the
terms defined therein being used herein as therein
defined), among Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated), Harrah's
Operating Company, Inc. (formerly known as Embassy Suites,
Inc.), each Subsidiary Borrower, the financial institutions
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and you, as
Administrative Agent, and hereby gives you notice,
irrevocably, pursuant to Section 1.03(a) of the Credit
Agreement, that the undersigned hereby requests a Borrowing
of Revolving Loans under the Credit Agreement, and in that
connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by
Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing
is _________, 19__.1/
--------------------
1/ Shall be a Business Day at least one Business Day in
the case of Base Rate Loans and three Business Days in the
case of Eurodollar Rate Loans, in each case after the date
hereof.
EXHIBIT A
Page 2
(ii) The aggregate principal amount of the
Proposed Borrowing is $___________.
(iii) The Revolving Loans to be made pursuant to
the Proposed Borrowing shall be initially maintained
as [Base Rate Loans] [Eurodollar Loans].
(iv) The initial Interest Period for the Proposed
Borrowing is ___ month(s).2/
The undersigned hereby certifies that the
following statements are true on the date hereof, and will
be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained
in the Credit Agreement and in the other Credit
Documents are and will be true and correct in all
material respects, both before and after giving effect
to the Proposed Borrowing and to the application of
the proceeds thereof, as though made on such date (it
being understood and agreed that any representation or
warranty which by its terms is made as of a specified
date shall be required to be true and correct in all
material respects only as of such specified date); and
(B) no Default or Event of Default has occurred
and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds
thereof.
Very truly yours,
[NAME OF BORROWER]
By____________________________
Name:
Title:
--------------------
2/ To be included for a Proposed Borrowing of Eurodollar
Loans.
EXHIBIT B-1
-----------
REVOLVING NOTE
$ New York, New York
-----------------
______ __, 199_
FOR VALUE RECEIVED, , a
------------------ --------
[corporation][general partnership] (the "Borrower"), hereby
promises to pay to the order of
-----------------------
(the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of
Bankers Trust Company located at One Bankers Trust Plaza,
New York, New York 10006 on the Final Maturity Date (as
defined in the Agreement referred to below) the principal
sum of _______________ DOLLARS ($______________) or, if
less, the then unpaid principal amount of all Revolving
Loans (as defined in the Agreement) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the
unpaid principal amount hereof in like money at said office
from the date hereof until paid at the rates and at the
times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred
to in the Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated), Harrah's Operating Company, Inc. (formerly
known as Embassy Suites, Inc.), each Subsidiary Borrower
(as defined in the Agreement), the financial institutions
from time to time party thereto (including the Bank),
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (as from time to time in effect, the "Agreement"),
and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Agreement). This Note
is secured by the Collateral Documents (as defined in the
Agreement) and is entitled to the benefits of the
Guarantees (as defined in the Agreement). As provided in
the Agreement, this Note is
EXHIBIT B-1
Page 2
subject to voluntary prepayment and mandatory repayment
prior to the Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the
Agreement) shall occur and be continuing, the principal of
and accrued interest on this Note may be declared to be due
and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF BORROWER]
By_____________________________
Title:
EXHIBIT B-2
-----------
SWINGLINE NOTE
$25,000,000 New York, New York
______ __, 199_
FOR VALUE RECEIVED, , a
------------------ --------
[corporation][general partnership] (the "Borrower"), hereby
promises to pay to the order of BANKERS TRUST COMPANY (the
"Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust
Company located at One Bankers Trust Plaza, New York,
New York 10006 on the Swingline Expiry Date (as defined in
the Agreement referred to below) the principal sum of
TWENTY-FIVE MILLION DOLLARS ($25,000,000) or, if less, the
then unpaid principal amount of all Swingline Loans (as
defined in the Agreement) made by the Bank pursuant to the
Agreement.
The Borrower promises also to pay interest on the
unpaid principal amount hereof in like money at said office
from the date hereof until paid at the rates and at the
times provided in Section 1.08 of the Agreement.
This Note is one of the Swingline Notes referred
to in the Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated), Harrah's Operating Company, Inc. (formerly
known as Embassy Suites, Inc.), each Subsidiary Borrower
(as defined in the Agreement), the financial institutions
from time to time party thereto (including the Bank),
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (as from time to time in effect, the "Agreement"),
and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Agreement). This Note
is secured by the Collateral Documents (as defined in the
Agreement) and is entitled to the benefits of the
Guarantees (as defined in the Agreement). As provided in
the Agreement, this Note is subject to voluntary prepayment
and mandatory repayment prior to the Swingline Expiry Date,
in whole or in part.
In case an Event of Default (as defined in the
Agreement) shall occur and be continuing, the principal of
and accrued interest on this Note may be declared to be due
and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF BORROWER]
By____________________________
Title:
EXHIBIT C
---------
LETTER OF CREDIT REQUEST
No. (1) Dated (2)
------- ---------------
Bankers Trust Company, as Administrative
Agent under the Credit Agreement (as
amended, modified or supplemented from
time to time, the "Credit Agreement"),
dated as of July 22, 1993 and amended
and restated as of June 9, 1995, among
Harrah's Entertainment, Inc. (formerly
known as The Promus Companies
Incorporated), Harrah's Operating
Company, Inc. (formerly known as Embassy
Suites, Inc.), each Subsidiary Borrower,
the financial institutions from time to
time party thereto, Bankers Trust
Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo
Bank, New York Branch, as Agents, and
Bankers Trust Company, as Administrative
Agent
One Bankers Trust Plaza
New York, New York 10006
[Name and Address of Proposed
Letter of Credit Issuer]
Dear Sirs:
We hereby request that [name of proposed Letter
of Credit Issuer] issue a Letter of Credit for the account
--------------------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request.
EXHIBIT C
Page 2
of the undersigned on (3) (the "Date of
--------
Issuance") in the aggregate stated amount of
(4) .
---------------
For purposes of this Letter of Credit Request,
unless otherwise defined herein, all capitalized terms used
herein which are defined in the Credit Agreement shall have
the respective meaning provided therein.
The beneficiary of the requested Letter of Credit
will be (5) , and such Letter of Credit will
---------------
be in support of (6) and will have a stated
---------------
expiration date of (7) .
---------------
We hereby certify that:
(1) The representations and warranties contained
in the Credit Agreement and in the other Credit
Documents will be true and correct in all material
respects, both before and after giving effect to the
issuance of the Letter of Credit requested hereby, on
the Date of Issuance (it being understood and agreed
that any representation or warranty which by its terms
is made as of a specified date shall be required to be
true and correct in all material respects only as of
such date).
(2) No Default or Event of Default has occurred
and is continuing or, after giving effect to the
--------------------
(3) Date of Issuance which shall be at least 5 Business Days
(or such shorter period as is acceptable to such Letter
of Credit Issuer) from the date hereof.
(4) Aggregate initial stated amount of Letter of Credit.
(5) Insert name and address of beneficiary.
(6) Insert description of L/C Supportable Indebtedness.
(7) Insert last date upon which drafts may be presented
which may not be later than (i) 12 months after the Date
of Issuance or, (ii) if earlier, the Final Maturity
Date.
EXHIBIT C
Page 3
issuance of the Letter of Credit requested hereby,
would such a Default or an Event of Default occur.
(3) The Letter of Credit requested hereby will
be issued in accordance with, and will not violate the
requirements of, Section 2.01(c) of the Credit
Agreement.
Copies of all documentation with respect to the
supported transaction are attached hereto.
[NAME OF BORROWER]
By_____________________________
Title:
EXHIBIT D
---------
Section 4.04(b)(iii) Certificate
--------------------------------
Reference is hereby made to the Credit Agreement,
dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated), Harrah's
Operating Company, Inc. (formerly known as Embassy Suites,
Inc.), each Subsidiary Borrower, the financial institutions
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent, as amended to the date
hereof (the "Credit Agreement"). Pursuant to the
provisions of Section 4.04(b)(iii) of the Credit Agreement,
the undersigned hereby certifies that it is not a "bank" as
such term is used in Section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended.
[NAME OF BANK]
By:______________________
Title:
Date:
EXHIBIT E
---------
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, [President/Senior Vice
President/Vice President] of [Name of Credit Party], a
[corporation/partnership] organized and existing under the
laws of the State of (the "Company"), do hereby
-----------
certify that:
1. This Certificate is furnished pursuant to
(i) the Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated, "Parent"), Harrah's Operating Company, Inc.
(formerly known as Embassy Suites, Inc., ("Harrah's
Operating"), each Subsidiary Borrower, the financial
institutions from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (such Credit
Agreement, as in effect on the date of this Certificate,
being herein called the "5-Year Credit Agreement") and (ii)
the Credit Agreement, dated as of June 9, 1995, among
Parent, Harrah's Operating, each Subsidiary Borrower, the
financial institutions from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (such Credit Agreement, as in effect on the date of
this Certificate, being herein called the "364-Day Credit
Agreement"). Unless otherwise defined herein, capitalized
terms used in this Certificate shall have the meanings set
forth in the 5-Year Credit Agreement.
2. The individuals named on Exhibit A hereto
are elected officers of the Company or authorized
signatories, and each either holds the office of the Com-
pany set forth opposite such officer's name and has held
such office at least since ____________, or has been
designated an authorized signatory pursuant to the
resolutions described in
EXHIBIT E
Page 2
paragraph 5 hereof. The signature written opposite the
name and title of each such officer or authorized signatory
is such officer's or authorized signatory's correct signa-
ture.
3. Attached hereto as Exhibit B is a certified
copy of the [Certificate of Incorporation of the Company as
filed in the Office of the Secretary of State of the State
of on _________ __, 19__,][Partnership
------------
Agreement of the Company], together with all amendments
thereto adopted through the date hereof.
4. Attached hereto as Exhibit C is a true and
correct copy of the By-Laws of the Company which were duly
adopted, are in full force and effect on the date hereof,
and have been in effect since __________ __, 19__.
5. Attached hereto as Exhibit D is a true and
correct copy of resolutions which were duly adopted on
__________, 19__ [by unanimous written consent of the Board
of Directors of the Company] [by a meeting of the Board of
Directors of the Company at which a quorum was present and
acting throughout] [as required by the Partnership
Agreement], and said resolutions have not been rescinded,
amended or modified. Except as attached hereto as Exhibit
D, no resolutions have been adopted by [the Board of
Directors of] the Company which deal with the execution,
delivery or performance of any of the Documents or any
other documents relating to the Transaction to which the
Company is party.
6. There is no proceeding for the dissolution
or liquidation of the Company or threatening its existence.
[7. On the date hereof, all of the conditions in
Sections 5.14, 5.15, 5.16, 5.17(a), (b) and (d), 5.19, 5.20
and 6.01 of the 5-Year Credit Agreement and Sections 4.14,
4.15, 4.16, 4.17(a), (b) and (d), 4.19, 4.20 and 5.01 of
the 364-Day Credit Agreement, in each case have been
satisfied.
8. Attached hereto as Exhibit E are true and
correct copies of all Hotel Transaction Documents.
EXHIBIT E
Page 3
9. Attached hereto as Exhibit F is a true and
correct copy of the 364-Day Credit Agreement.]1
--------------------
1 To be included in the Certificate delivered by Harrah's
Operating Company.
EXHIBIT E
Page 4
IN WITNESS WHEREOF, I have hereunto set my hand
this ___ day of __________, 1995.
______________________________
Name:
Title:
EXHIBIT E
Page 5
[NAME OF CREDIT PARTY]
I, the undersigned, [Secretary/Assistant Secretary] of the
Company, do hereby certify that:
1. [Name of Person making above certifications]
is the duly elected and qualified [President/Senior Vice
President/Vice President] of the Company and the signature
above is his genuine signature.
2. The certifications made by [name of Person
making above certifications] in Items 2, 3, 4, 5 and 6
above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand
this _____ day of _________, 1995.
____________________________
Name:
Title:
Exhibit A
to Officers' Certificate
------------------------
Office/
Authorized
Name2 Signatory Signature
---- --------- ---------
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
--------------------
2 Include name, office and signature of each officer who
will sign any Credit Document, including the officer who
will sign the certification at the end of this Certificate.
EXHIBIT F
---------
FIRST AMENDMENT TO MASTER COLLATERAL AGREEMENT
----------------------------------------------
FIRST AMENDMENT TO MASTER COLLATERAL AGREEMENT
(this "Amendment"), dated as of _______________, 1995,
among HARRAH'S ENTERTAINMENT, INC. (formerly known as The
Promus Companies Incorporated) ("Parent"), HARRAH'S
OPERATING COMPANY, INC. (formerly known as Embassy Suites,
Inc.) (the "Company"), the other parties listed on the
signature pages hereof under the caption "Collateral
Grantors," BANKERS TRUST COMPANY, as Administrative Agent
for the Banks party to the Credit Agreements referred to
below, and BANKERS TRUST COMPANY, as Collateral Agent (the
"Collateral Agent") for the benefit of the Secured Parties
under the Master Collateral Agreement referred to below.
Except as otherwise defined herein, capitalized terms used
herein and defined in the Master Collateral Agreement shall
be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "5-
Year Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "5-Year
Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank
EXHIBIT F
Page 2
of New York, Credit Lyonnais, Atlanta Agency, and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, Parent, the Company, the
other Collateral Grantors, the 5-Year Administrative Agent
and the Collateral Agent entered into the Master Collateral
Agreement, dated as of July 22, 1993 (as amended, modified
or supplemented from time to time, the "Master Collateral
Agreement");
WHEREAS, the parties hereto wish to amend the
Master Collateral Agreement to provide that the 364-Day
Banks and the 364-Day Administrative Agent are secured on a
pari passu basis with the 5-Year Banks, the 5-Year
---- -----
Administrative Agent and the Secured Interest Rate
Protection Creditors;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Collateral Grantors shall have executed and delivered this
Amendment to the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Master Collateral Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The introductory paragraph of the Master
Collateral Agreement is hereby amended by deleting the
words "(the "Administrative Agent") for the Banks party to
the Credit Agreement" appearing therein and inserting the
words "for the Banks party to the Credit Agreements" in
lieu thereof.
EXHIBIT F
Page 3
2. The first recital of the Master Collateral
Agreement is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
"WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"5-Year Banks") from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo
Bank, Limited, New York Branch, as Agents, and Bankers
Trust Company, as Administrative Agent (together with
any successor administrative agent, the "5-Year
Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making
of loans and the issuance of, and participation in,
letters of credit as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced
or replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
3. The fourth and sixth recitals (in each case,
before giving effect to this Amendment) of the Master
EXHIBIT F
Page 4
Collateral Agreement are hereby amended by deleting the
words "Credit Agreement" appearing therein and inserting
the words "Credit Agreements" in lieu thereof.
4. Section 1.01(a) of the Master Collateral
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words "5-
Year Credit Agreement or 364-Day Credit Agreement, as the
case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. The definition of "Banks" appearing in
Section 1.01(b) of the Master Collateral Agreement is
hereby amended by deleting the word "first" appearing
therein and inserting the word "second" in lieu thereof.
7. The definition of "Credit Agreement
Obligations" appearing in Section 1.01(b) of the Master
Collateral Agreement is hereby amended by deleting the word
"the" appearing immediately before the words
"Administrative Agent" appearing therein and inserting the
word "any" in lieu thereof.
8. The definition of "Estimated
Collateralization Amount" appearing in Section 1.01(b) of
the Master Collateral Agreement is hereby amended by
inserting the word "respective" immediately before the
words "Administrative Agent" appearing therein.
9. The definition of "Event of Default"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby amended by deleting the words "the
Credit Agreement" appearing therein and inserting the words
"the 5-Year Credit Agreement or the 364-Day Credit
Agreement, as the case may be," in lieu thereof.
10. The definition of "Notice Event of Default"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following
EXHIBIT F
Page 5
new definition of "Notice Event of Default" is inserted in
lieu thereof:
"Notice Event of Default" shall mean a written
notice to the Collateral Agent from or on behalf of
the Required Secured Parties, provided, that, in the
case of an Event of Default under Section 10.01 of the
5-Year Credit Agreement or Section 9.01 of the 364-Day
Credit Agreement, such notice may be given by the
respective Administrative Agent, stating that an Event
of Default (or an Event of Default under Section 10.01
of the 5-Year Credit Agreement or Section 9.01 of the
364-Day Credit Agreement, as the case may be) has
occurred and is continuing, which notice may be oral
if immediately confirmed in writing, including
facsimile or telex, provided that the lack of such an
immediate confirmation shall not affect the
conclusiveness and binding effect of such notice."
11. The definition of "Required Secured Parties"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new definition of "Required Secured Parties" is
inserted in lieu thereof:
"Required Secured Parties" shall mean (i) so
long as any Credit Agreement Obligations remain
outstanding, Banks the sum of whose Revolving Loan
Commitments under the Credit Agreements (or after the
termination of such Revolving Loan Commitments,
outstanding Revolving Loans and Competitive Bid Loans
and Percentage of outstanding Swingline Loans and
Letter of Credit Outstandings) represent an amount
greater than fifty percent of the sum of the Total
Revolving Loan Commitments under the Credit Agreements
(or after the termination of the Total Revolving Loan
Commitments, the sum of the then total outstanding
Revolving Loans and Competitive Bid Loans and the
aggregate Percentages of the total outstanding
Swingline Loans and Letter of Credit Outstandings at
such time) or (ii) if no Credit Agreement Obligations
remain outstanding, the holders of a majority of the
outstanding principal amount of the Secured Interest
Rate Protection Obligations."
EXHIBIT F
Page 6
12. The definition of "Secured Documents"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby amended by (i) deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "each" in lieu
thereof and (ii) deleting the words "the 9% Notes
Reimbursement Agreement, the 9% Reimbursement Agreement
Note," appearing therein.
13. The definition of "Secured Interest Rate
Protection Creditors" appearing in Section 1.01(b) of the
Master Collateral Agreement is hereby amended by inserting
the word "respective" immediately before the words "Credit
Agreement" appearing in clause (iii) thereof.
14. The definition of "Secured Parties"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
15. Section 1.01(b) of the Master Collateral
Agreement is hereby further amended by inserting in the
appropriate alphabetical order the following new
definitions:
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Required 5-Year Banks" shall mean the "Required
Banks" under, and as defined in, the 5-Year Credit
Agreement.
"Required 364-Day Banks" shall mean the "Required
Banks" under, and as defined in, the 364-Day Credit
Agreement.
EXHIBIT F
Page 7
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
16. Section 3.01 of the Master Collateral
Agreement is hereby amended by (i) deleting the comma
appearing immediately after the words "Required Secured
Parties" appearing in the first sentence thereof, (ii)
deleting the proviso appearing in the first sentence
thereof in its entirety and inserting the following new
proviso in lieu thereof:
"(provided that, in the case of an Event of Default
--------
under Section 10.01 of the 5-Year Credit Agreement or
Section 9.01 of the 364-Day Credit Agreement, such
notice may be given by the respective Administrative
Agent)."
and (iii) deleting the second parenthetical appearing in
the second sentence thereof in its entirety and inserting
the following new parenthetical in lieu thereof:
"(provided that, in the case of an Event of Default
--------
under Section 10.01 of the 5-Year Credit Agreement or
Section 9.01 of the 364-Day Credit Agreement, the
respective Administrative Agent may instruct the
Collateral Agent to instruct the Beneficiary or
Mortgagee under the respective Mortgages to record,
file and mail a notice of breach and election to
sell)".
17. Section 3.08 of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new Section 3.08 is inserted in lieu thereof:
"SECTION 3.08. Absolute Rights of the
----------------------
Administrative Agents and the Collateral Agent.
----------------------------------------------
Notwithstanding any other provision of this Agreement
or any other Collateral Document, but subject to
mandatory provisions of applicable law (including,
without limitation,
EXHIBIT F
Page 8
applicable Gaming Regulations and Bankruptcy Laws),
the following rights of the Administrative Agents and
the Collateral Agent, as the case may be, each of
which is absolute and unconditional, shall not be
impaired or adversely affected without the written
consent of the Administrative Agents or the Collateral
Agent, as the case may be: (i) the right of each
Administrative Agent on behalf of the respective Banks
to receive payments under the respective Credit Agree-
ment, (ii) the right of the Administrative Agents or
the Collateral Agent, as the case may be (acting at
the direction of the Required Secured Parties) on
behalf of the Secured Parties to seek, in any
Proceeding in which Parent, the Company or any of the
other Collateral Grantors is a debtor, adequate pro-
tection of its interest and the interests of the
Secured Parties under the Secured Documents and in the
Collateral, (iii) the right of the respective
Administrative Agent (acting at the direction of the
Required 5-year Banks or Required 364-Day Banks, as
the case may be) on behalf of the Secured Parties to
institute suit for the enforcement of its rights and
the rights of the respective Banks under the Secured
Documents, or (iv) the right of the respective
Administrative Agent or the Collateral Agent, as the
case may be (acting at the direction of the Required
Secured Parties) on behalf of the respective Banks
otherwise to assert its position and views or those of
the Secured Parties or to act (including making and
voting claims) as a secured creditor in any Proceeding
in which Parent, the Company or any of the other
Collateral Grantors is a debtor."
18. Section 4.01 of the Master Collateral
Agreement is hereby amended by deleting the second sentence
thereof in its entirety and inserting the following second
sentence in lieu thereof:
"Each such Collateral Account and Restoration Account
shall be established and maintained by the Collateral
Agent at an office of the Collateral Agent or an
Administrative Agent, or at an office of such other
bank or trust company as the Required Secured Parties
shall designate in writing to the Collateral Agent and
each such Collateral Account and Restoration Account
shall have noted thereon the lien and security
interest
EXHIBIT F
Page 9
therein in favor of the Collateral Agent for the
benefit of the Secured Parties."
19. Section 4.03 of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" each place such words appear therein
and inserting the words "Administrative Agents" in lieu
thereof in each such place.
20. Section 4.04(a) of the Master Collateral
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
21. Section 4.04(b) of the Master Collateral
Agreement is hereby amended by inserting the word
"respective" immediately before the words "Administrative
Agent" appearing therein.
22. Section 4.05 of the Master Collateral
Agreement is hereby amended by (i) deleting clause (i)
thereof in its entirety and inserting the following new
clause (i) in lieu thereof:
"(i) the respective Administrative Agent as to
the amounts payable under the respective Credit
Agreement, and";
and (ii) deleting the word "the" appearing immediately
before the words "Administrative Agent" appearing in the
second sentence thereof and inserting the word "any" in
lieu thereof.
23. Section 5.02 of the Master Collateral
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
24. Section 5.07 of the Master Collateral
Agreement is hereby amended by deleting the words "and
Section 8.03(b) of the Credit Agreement" appearing therein
inserting the following words in lieu thereof:
", Section 8.03(b) of the 5-Year Credit Agreement and
Section 7.03(b) of the 364-Day Credit Agreement."
EXHIBIT F
Page 10
25. Section 6.01(a) of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
26. Section 6.01(b) of the Master Collateral
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "any" in lieu
thereof.
27. Section 6.01(f) of the Master Collateral
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Administrative
Agent" each place such words appear therein and inserting
the word "any" in lieu thereof in each such place.
28. Section 6.03(c) of the Master Collateral
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Administrative
Agent" appearing therein and inserting the word "any" in
lieu thereof.
29. Sections 6.04(a) and (b) of the Master
Collateral Agreement are hereby amended by deleting the
word "the" appearing before the words "Administrative
Agent" appearing therein and inserting the word "each" in
lieu thereof.
30. Sections 6.06(a) and (b) of the Master
Collateral Agreement are hereby amended by deleting the
words "Administrative Agent" appearing therein and
inserting the words "Administrative Agents" in lieu
thereof.
31. Sections 6.08(a), (b) and (c) of the Master
Collateral Agreement are hereby amended by deleting the
words "Administrative Agent" each place such words appear
therein and inserting the words "Administrative Agents" in
lieu thereof in each such place.
32. Section 6.09 of the Master Collateral
Agreement is hereby amended by inserting the word
"respective" immediately before the words "Credit
Agreement" appearing therein.
EXHIBIT F
Page 11
33. Section 7.01 of the Master Collateral
Agreement is hereby amended by deleting the last sentence
thereof in its entirety and inserting the following new
sentence in lieu thereof:
"Notwithstanding anything to the contrary contained herein,
all or substantially all of the Collateral may be otherwise
released from the Liens created by the Collateral Documents
at the direction of (acting collectively) (i) all of the 5-
Year Banks (or the Required 5-Year Banks to the extent
permitted under Section 13.12(a) of the 5-Year Credit
Agreement) and (ii) all of the 364-Day Banks (or the
Required 364-Day Banks to the extent permitted under
Section 12.12(a) of the 364-Day Credit Agreement)."
34. Section 7.02(a) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new Section 7.02(a) is inserted in lieu thereof:
"SECTION 7.02. Conditions to Partial Release.
-----------------------------
(a) Subject to the conditions in Sections 7.03 and
7.04 hereof, the respective Collateral shall be
released from the Lien created by the applicable
Collateral Documents in connection with a sale or
other disposition permitted by Section 9.02 of the 5-
Year Credit Agreement and Section 8.02 of the 364-Day
Credit Agreement or in connection with an Existing
Casino Non-Recourse Financing permitted by Section
9.04(ix) of the 5-Year Credit Agreement and Section
8.04(ix) of the 364-Day Credit Agreement so long as in
each such case the proceeds of such sale or Existing
Casino Non-Recourse Financing are applied in
accordance with, and to the extent required by, the
provisions of Section 4.02 of the 5-Year Credit
Agreement and Section 3.02 of the 364-Day Credit
Agreement as a result of any corresponding reduction
to the Total 5-Year Revolving Loan Commitment pursuant
to Section 3.03(d) or (e) of the 5-Year Credit
Agreement or the Total 364-Day Revolving Loan
Commitment pursuant to Section 3.03(b) or (c) of the
364-Day Credit Agreement, as the case may be, in
connection with any such sale or financing. Pledged
Securities shall also be released from the Lien
created under the Company/Sub Pledge Agreement to the
extent such Pledged Securities no longer constitute
Required Collateral and the Partnership Interests
shall be released from the Lien
EXHIBIT F
Page 12
created under the Assignment of Partnership Interests
Agreement upon the merger of Harrah's New Jersey with
and into Harrah's Atlantic City pursuant to Section
9.02(a)(B) of the 5-Year Credit Agreement and Section
8.02(a)(B) of the 364-Day Credit Agreement."
35. Section 7.02(c) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new Section 7.02(c) is inserted in lieu thereof:
"(c) Any cash or cash equivalents required to be
delivered to the respective Administrative Agent
pursuant to Section 4.02(a) of the 5-Year Credit
Agreement or Section 3.02(a) of the 364-Day Credit
Agreement may be released by such Administrative Agent
in accordance with the terms of such Section 4.02(a)
or Section 3.02(a)."
36. Section 7.03(d) of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" each place such words appear therein
and inserting the words "Administrative Agents" in lieu
thereof in each such place.
37. Sections 7.04(a) and (b) of the Master
Collateral Agreement are hereby amended by deleting the
words "Administrative Agent" appearing therein and
inserting the words "Administrative Agents" in lieu
thereof.
38. Section 7.06 of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
39. Section 8.01 of the Master Collateral
Agreement is hereby amended by deleting the second sentence
thereof in its entirety and inserting the following new
second sentence in lieu thereof:
"For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Parties, i.e.,
----
whether (x) the 5-Year Banks as holders of the Credit
Agreement Obligations under, or in respect of, the 5-
Year Credit Agreement, (y) the 364-Day Banks as
holders of the Credit Agreement Obligations under, or
in respect of,
EXHIBIT F
Page 13
the 364-Day Credit Agreement or (z) the Secured
Interest Rate Protection Creditors as the holders of
the Secured Interest Rate Protection Obligations; and
the term "Requisite Secured Parties" of any Class
shall mean each of (x) the Required 5-year Banks with
respect to the Credit Agreement Obligations under, or
in respect of, the 5-Year Credit Agreement, (y) the
Required 364-Day Banks with respect to the Credit
Agreement Obligations under, or in respect of, the
364-Day Agreement and (z) the holders of a majority of
all obligations outstanding from time to time under
the Secured Interest Rate Protection Agreements or
Other Hedging Agreements with respect to the Secured
Interest Rate Protection Obligations."
40. Section 8.02(i) of the Credit Agreement is
hereby amended by (i) deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing therein and inserting the word "either" in lieu
thereof and (ii) deleting the name "Christopher Stadler"
appearing therein and inserting the name "Mary Kay Coyle"
in lieu thereof.
41. Each of the Collateral Grantors hereby
reaffirms its respective obligations under the Master
Collateral Agreement.
42. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Master Collateral Agreement.
43. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Credit Parties, the Administrative Agents and the
Collateral Agent.
44. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
45. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each
EXHIBIT F
Page 14
Collateral Grantor, the Administrative Agents and the
Collateral Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the
Collateral Agent, (ii) the Restatement Effective Date
under, and as defined in, the 5-year Credit Agreement
occurs and (iii) the Effective Date under, and as defined
in, the 364-Day Credit Agreement occurs.
46. From and after the First Amendment Effective
Date, all references in the Master Collateral Agreement and
each of the Credit Documents to the Master Collateral
Agreement shall be deemed to be references to the Master
Collateral Agreement as amended hereby.
EXHIBIT F
Page 15
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Collateral Grantors:
HARRAH'S ENTERTAINMENT, INC.
By
-------------------------------
Name:
Title:
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S
By
-------------------------------
Name:
Title:
HARRAH'S CLUB
By
-------------------------------
Name:
Title:
EXHIBIT F
Page 16
HARRAH'S RENO HOLDING
COMPANY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S LAS VEGAS, INC.
By
-------------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.
By
-------------------------------
Name:
Title:
MARINA ASSOCIATES,
a New Jersey partnership
By HARRAH'S NEW JERSEY, INC.,
a New Jersey corporation, a
General Partner
By
----------------------------
Name:
Title:
EXHIBIT F
Page 17
By HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation, a
General Partner
By
----------------------------
Name:
Title:
CASINO HOLDING COMPANY
By
-------------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S NEW JERSEY, INC.
By
-------------------------------
Name:
Title:
Administrative Agent:
--------------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
EXHIBIT F
Page 18
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
EXHIBIT G-1
-----------
FIRST AMENDMENT TO PARENT PLEDGE AGREEMENT
------------------------------------------
FIRST AMENDMENT TO PARENT PLEDGE AGREEMENT (this
"Amendment"), dated as of ____________, 1995, among
HARRAH'S ENTERTAINMENT, INC. (formerly known as The Promus
Companies Incorporated) (the "Pledgor") and BANKERS TRUST
COMPANY, not in its individual capacity but solely as
Collateral Agent (the "Collateral Agent"). Except as
otherwise defined herein, capitalized terms used herein and
defined in the Parent Pledge Agreement referred to below
shall be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Pledgor, Harrah's Operating Company,
Inc. (formerly known as Embassy Suites, Inc.) (the
"Company"), each Subsidiary Borrower thereunder, the
financial institutions (the "5-Year Banks") from time to
time party thereto, Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit Bank of
Japan, Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated as of June 9, 1995, providing
for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, the Pledgor, the Company, each
Subsidiary Borrower thereunder, the financial institutions
(the "364-Day Banks," and together with the 5-Year Banks,
the "Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank,
EXHIBIT G-1
Page 2
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Pledgor and the
Collateral Agent entered into the Parent Pledge Agreement,
dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Parent Pledge
Agreement");
WHEREAS, the parties hereto wish to amend the
Parent Pledge Agreement to provide that the 364-Day Banks
and the 364-Day Administrative Agent are secured on a pari
----
passu basis with the 5-Year Banks, the 5-Year
-----
Administrative Agent and the Secured Interest Rate
Protection Creditors with respect to the Pledge Collateral;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Pledgor shall have executed and delivered this Amendment to
the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Parent Pledge Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Parent Pledge
Agreement is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
"WHEREAS, the Pledgor, Harrah's Operating Company
(formerly known as Embassy Suites, Inc.) (the
"Company"), each Subsidiary Borrower thereunder, the
financial institutions (the "5-Year Banks") from time
to time party thereto, Bankers Trust Company, The Bank
of
EXHIBIT G-1
Page 3
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, providing for
the making of loans and the issuance of, and
participation in, letters of credit as contemplated
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"5-Year Credit Agreement");
WHEREAS, the Pledgor, the Company, each
Subsidiary Borrower thereunder, the financial
institutions (the "364-Day Banks," and together with
the 5-Year Banks, the "Banks"), Bankers Trust Company,
The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, Limited, New York
Branch, NationsBank of Georgia, N.A., Societe Generale
and The Sumitomo Bank, Limited, New York Branch, as
Agents, and Bankers Trust Company, as Administrative
Agent (together with any successor administrative
agent, the "364-Day Administrative Agent," and
together with the 5-Year Administrative Agent, the
"Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced
or replaced from time to time, the "364-Day
Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Parent Pledge Agreement is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "Credit Agreements" in lieu
thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Parent Pledge Agreement is hereby
amended by (i) deleting the words "Administrative Agent"
EXHIBIT G-1
Page 4
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (ii) deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
4. The introductory paragraph of Section 1 of
the Parent Pledge Agreement is hereby amended by deleting
the words "Credit Agreement" appearing therein and
inserting the words "5-Year Credit Agreement or 364-Day
Credit Agreement, as the case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1 of the Parent Pledge Agreement is
hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. The definition of "Parent" appearing in
Section 1 of the Parent Pledge Agreement is hereby deleted
in its entirety.
7. Section 1 of the Parent Pledge Agreement is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Pledgor" shall have the meaning provided in the
introductory paragraph of this Agreement.
EXHIBIT G-1
Page 5
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
8. Section 7 of the Parent Pledge Agreement is
hereby amended by (i) deleting the words "Credit Agreement"
appearing in clause (x) of the first sentence thereof and
inserting the following words in lieu thereof:
"5-Year Credit Agreement and Section 8.03(viii)
of the 364-Day Credit Agreement";
(ii) deleting the words "Credit Agreement" appearing in
clause (y) of the first sentence thereof and inserting the
following words in lieu thereof:
"5-Year Credit Agreement and Section 8.03 of the
364-Day Credit Agreement";
and (iii) deleting the word "the" appearing immediately
before the words "Credit Agreement" appearing in the third
sentence thereof and inserting the word "each" in lieu
thereof.
9. Section 8 of the Parent Pledge Agreement is
hereby amended by deleting the second parenthetical
appearing in the second paragraph thereof and inserting the
following parenthetical in lieu thereof:
"(which notice (i) shall be deemed to have been
given if the respective Administrative Agent
gives notice pursuant to Section 10.03 of the 5-
Year Credit Agreement or Section 9.03 of the 364-
Day Credit Agreement and (ii) shall not be
required if an Event of Default specified in
Section 10.05 of the 5-Year Credit Agreement or
Section 9.05 of the 364-Day Credit Agreement has
occurred)".
EXHIBIT G-1
Page 6
10. Section 13 of the Parent Pledge Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "each" in lieu thereof.
11. Section 18 of the Parent Pledge Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "either" in lieu thereof.
12. The Pledgor hereby reaffirms its obligations
under the Parent Pledge Agreement and the grant of the
Security Interests contemplated thereby.
13. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Parent Pledge Agreement.
14. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Pledgor Parties and the Collateral Agent.
15. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
16. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
the Pledgor and the Collateral Agent shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the
5-Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
17. From and after the First Amendment Effective
Date, all references in the Parent Pledge Agreement and
each of the Credit Documents to the Parent Pledge Agreement
shall
EXHIBIT G-1
Page 7
be deemed to be references to the Parent Pledge Agreement
as amended hereby.
EXHIBIT G-1
Page 8
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
PLEDGOR
-------
HARRAH'S ENTERTAINMENT, INC.
By
-------------------------------
Name:
Title:
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
EXHIBIT G-2
-----------
FIRST AMENDMENT TO COMPANY/SUB PLEDGE AGREEMENT
-----------------------------------------------
FIRST AMENDMENT TO COMPANY/SUB PLEDGE AGREEMENT
(this "Amendment"), dated as of __________, 1995, among
HARRAH'S OPERATING COMPANY, INC. (formerly known as Embassy
Suites, Inc.) (the "Company"), each of the other persons
listed on the signature pages hereto under the caption
"Pledgors" (the Company and such other Pledgors are
collectively referred to herein as the "Pledgors"), BANKERS
TRUST COMPANY, not in its individual capacity but solely as
a collateral agent hereunder (the "General Collateral
Agent"), and BANK OF AMERICA NEVADA, not in its individual
capacity but solely as a collateral agent hereunder (the
"Nevada Collateral Sub-Agent"). Except as otherwise
defined herein, capitalized terms used herein and defined
in the Company/Sub Pledge Agreement referred to below shall
be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated as of June 9, 1995, providing
for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from
EXHIBIT G-2
Page 2
time to time party thereto, Bankers Trust Company, The Bank
of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Pledgors, the General
Collateral Agent and the Nevada Collateral Sub-Agent
entered into the Company/Sub Pledge Agreement, dated as of
July 22, 1993 (as amended, modified or supplemented from
time to time, the "Company/Sub Pledge Agreement");
WHEREAS, the parties hereto wish to amend the
Company/Sub Pledge Agreement to provide that the 364-Day
Banks and the 364-Day Administrative Agent are secured on a
pari passu basis with the 5-Year Banks, the 5-Year
---- -----
Administrative Agent and the Secured Interest Rate
Protection Creditors with respect to the Pledged
Collateral;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Pledgors shall have executed and delivered this Amendment
to the Collateral Agents; and
WHEREAS, the parties hereto wish to amend the
Company/Sub Pledge Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Company/Sub Pledge
Agreement is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
EXHIBIT G-2
Page 3
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as the Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified, supple-
mented, extended, renewed, refinanced or replaced from
time to time, the "364-Day Agreement," and together
with the 5-Year Credit Agreement, the "Credit
Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Company/Sub Pledge Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing
EXHIBIT G-2
Page 4
therein and inserting the words "Credit Agreements" in lieu
thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Company/Sub Pledge Agreement is
hereby amended by (i) deleting the words "Administrative
Agent" appearing therein and inserting the words
"Administrative Agents" in lieu thereof and (ii) deleting
the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
4. The introductory paragraph of Section 1 of
the Company/Sub Pledge Agreement is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "5-Year Credit Agreement or 364-Day
Credit Agreement, as the case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1 of the Company/Sub Pledge Agreement
is hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. Section 1 of the Company/Sub Pledge
Agreement is hereby further amended by inserting in the
appropriate alphabetical order the following new
definitions:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
EXHIBIT G-2
Page 5
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
7. Section 7 of the Company/Sub Pledge
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "each" in lieu
thereof.
8. Section 8 of the Company/Sub Pledge
Agreement is hereby amended by deleting the second
parenthetical appearing in the second paragraph thereof and
inserting the following parenthetical in lieu thereof:
"(which notice (i) shall be deemed to have been
given if the respective Administrative Agent
gives notice pursuant to Section 10.03 of the
5-Year Credit Agreement or Section 9.03 of the
364-Day Credit Agreement and (ii) shall not be
required if an Event of Default specified in
Section 10.05 of the 5-Year Credit Agreement or
Section 9.05 of the 364-Day Credit Agreement has
occurred)".
9. Section 13 of the Company/Sub Pledge
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "each" in lieu
thereof.
10. Section 16 of the Company/Sub Pledge
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words "5-
Year Credit Agreement or Section 7.12(b) of the 364-Day
Credit Agreement" in lieu thereof.
11. Section 19 of the Company/Sub Pledge
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "either" in lieu
thereof.
EXHIBIT G-2
Page 6
12. Each Pledgor hereby reaffirms its
obligations under the Company/Sub Agreement and the grant
by such Pledgor of the Security Interests contemplated
thereby.
13. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Company/Sub Pledge Agreement.
14. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Pledgors, the General Collateral Agent and the
Nevada Collateral Sub-Agent.
15. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
16. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Pledgor, the General Collateral Agent and the Nevada
Collateral Sub-Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the
General Collateral Agent, (ii) the Restatement Effective
Date under, and as defined in, the 5-Year Credit Agreement
occurs and (iii) the Effective Date under, and as defined
in, the 364-Day Credit Agreement occurs.
17. From and after the First Amendment Effective
Date, all references in the Company/Sub Pledge Agreement
and each of the Credit Documents to the Company/Sub Pledge
Agreement shall be deemed to be references to the
Company/Sub Pledge Agreement as amended hereby.
EXHIBIT G-2
Page 7
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Pledgors:
--------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S
By
-------------------------------
Name:
Title:
HARRAH'S CLUB
By
-------------------------------
Name:
Title:
CASINO HOLDING COMPANY
By
-------------------------------
Name:
Title:
EXHIBIT G-2
Page 8
General Collateral Agent:
------------------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
Nevada Collateral Sub-Agent:
---------------------------
BANK OF AMERICA NEVADA
By
-------------------------------
Name:
Title:
EXHIBIT H
---------
FIRST AMENDMENT TO SECURITY AGREEMENT
-------------------------------------
FIRST AMENDMENT TO SECURITY AGREEMENT (this
"Amendment"), dated as of _____________, 1995, among
HARRAH'S OPERATING COMPANY, INC. (formerly known as Embassy
Suites, Inc.) (the "Company"), the other parties listed on
the signature pages hereof under the caption "Collateral
Grantors" (the Company and such other Collateral Grantors
are collectively referred to herein as the "Collateral
Grantors"), and BANKERS TRUST COMPANY, not in its
individual capacity but solely as Collateral Agent (the
"Collateral Agent"). Except as otherwise defined herein,
capitalized terms used herein and defined in the Security
Agreement referred to below shall be used herein as so
defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated as of June 9, 1995, providing
for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit
EXHIBIT H
Page 2
Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Collateral Grantors and
the Collateral Agent entered into the Security Agreement,
dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Security Agreement");
WHEREAS, the parties hereto wish to amend the
Security Agreement to provide that the 364-Day Banks and
the 364-Day Administrative Agent are secured on a pari
----
passu basis with the 5-Year Banks, the 5-Year
-----
Administrative Agent and the Secured Interest Rate
Protection Creditors with respect to the Collateral;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Collateral Grantors shall have executed and delivered this
Amendment to the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Security Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Security Agreement
is hereby deleted in its entirety and the following two new
recitals are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to
EXHIBIT H
Page 3
time party thereto, Bankers Trust Company, The Bank of
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, providing for
the making of loans and the issuance of, and
participation in, letters of credit as contemplated
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Security Agreement is hereby amended
by deleting the words "Credit Agreement" appearing therein
and inserting the words "Credit Agreements" in lieu
thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Security Agreement is hereby amended
by (i) deleting the words "Administrative Agent" appearing
EXHIBIT H
Page 4
therein and inserting the words "Administrative Agents" in
lieu thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
4. Section 1(a) of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or 364-Day Credit Agreement, as the case may be,"
in lieu thereof.
5. The definition of "Bank" appearing in
Section 1(b) of the Security Agreement is hereby deleted in
its entirety and the following new definition is inserted
in lieu thereof:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
6. The definition of Credit Agreement appearing
in Section 1(b) of the Security Agreement is hereby deleted
in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
7. The definition of "Permitted Personalty
Liens" appearing in Section 1(b) of the Security Agreement
is hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing in clause (2) thereof and inserting the word
"any" in lieu thereof.
8. Section 1(b) of the Security Agreement is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
"Collateral Grantors" shall have the meaning
provided in the introductory paragraph of this
Agreement.
EXHIBIT H
Page 5
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Parent" shall have the meaning provided in the
first recital of this Agreement.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
9. Section 2 of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
in clause (g) thereof and inserting the word "each" in lieu
thereof.
10. Section 6(a) of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent" each
place such word appear therein and inserting the word "any"
in lieu thereof in each such place.
11. Section 17(b) of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "either" in lieu thereof.
12. Section 17(c) of the Security Agreement is
hereby deleted in its entirety and the following new
Section 17(c) is inserted in lieu thereof:
"(c) In addition to the foregoing clauses (a) and
(b) of this Section 17, upon the sale of a Casino
Property pursuant to Section 9.02 of the 5-Year Credit
EXHIBIT H
Page 6
Agreement and Section 8.02 of the 364-Day Credit
Agreement or the incurrence of Existing Casino Non-
Recourse Financing with respect thereto pursuant to
Section 9.04(ix) of the 5-Year Credit Agreement and
Section 8.04(ix) of the 364-Day Credit Agreement, the
personal property and fixtures relating solely to such
Casino Property shall automatically be released from
the Lien and security interest created by this
Agreement in accordance with Article VII of the Master
Collateral Agreement."
13. Section 22(b) of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Section 12.16 of the 364-Day Credit
Agreement" in lieu thereof.
14. Section 25 of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" each place
such words appear therein and inserting the word "each" in
lieu thereof in each such place.
15. Section 27 of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or Section 7.12(b) of the 364-Day Credit
Agreement" in lieu thereof.
16. Each Collateral Grantor hereby reaffirms its
obligations under the Security Agreement and the grant by
such Collateral Grantor of the Security Interests
contemplated thereby.
17. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Security Agreement.
18. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Collateral Grantors and the Collateral Agent.
EXHIBIT H
Page 7
19. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
20. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Collateral Grantor and the Collateral Agent shall have
signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
21. From and after the First Amendment Effective
Date, all references in the Security Agreement and each of
the Credit Documents to the Security Agreement shall be
deemed to be references to the Security Agreement as
amended hereby.
EXHIBIT H
Page 8
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Collateral Grantors:
-------------------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------
Name:
Title:
HARRAH'S
By
-------------------------
Name:
Title:
HARRAH'S CLUB
By
-------------------------
Name:
Title:
HARRAH'S RENO HOLDING
COMPANY, INC.
By
-------------------------
Name:
Title:
EXHIBIT H
Page 9
HARRAH'S LAS VEGAS, INC.
By
-------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.
By
-------------------------
Name:
Title:
MARINA ASSOCIATES,
a New Jersey partnership
By HARRAH'S NEW JERSEY, INC.,
a New Jersey corporation, a
General Partner
By
-----------------------
Name:
Title:
By HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation, a
General Partner
By
-----------------------
Name:
Title:
CASINO HOLDING COMPANY
EXHIBIT H
Page 10
By
--------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.
By
--------------------------
Name:
Title:
HARRAH'S NEW JERSEY, INC.
By
--------------------------
Name:
Title:
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By
-------------------------
Name:
Title:
EXHIBIT I
---------
FIRST AMENDMENT TO COMPANY/SUB GUARANTY
---------------------------------------
FIRST AMENDMENT TO COMPANY/SUB GUARANTY (this
"Amendment"), dated as of _____ __, 1995, among each party
listed on the signature pages hereto under the caption
"Guarantors" (the "Guarantors") and BANKERS TRUST COMPANY,
not in its individual capacity but solely as Collateral
Agent (the "Collateral Agent"). Except as otherwise
defined herein, capitalized terms used herein and defined
in the Company/Sub Guaranty referred to below shall be used
herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as the Promus Companies Incorporated) ("Parent"),
Harrah's Operating Company, Inc. (the "Company"), each
Subsidiary Borrower thereunder, the financial institutions
(the "5-Year Banks") from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (together with any successor administrative agent,
the "5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank,
EXHIBIT I
Page 2
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Guarantors and the
Collateral Agent entered into the Company/Sub Guaranty,
dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Company/Sub
Guaranty");
WHEREAS, the parties hereto wish to amend the
Company/Sub Guaranty to provide that the obligations of the
Borrowers to the 364-Day Banks and the 364-Day
Administrative Agent are guaranteed by the Guarantors on
the same basis as the obligations of the Borrowers to the
5-Year Banks, the 5-Year Administrative Agent and the
Secured Interest Rate Protection Creditors are guaranteed;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Guarantors shall have executed and delivered this Amendment
to the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Company/Sub Guaranty as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Company/Sub
Guaranty is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), Harrah's Operating Company (formerly known
as Embassy Suites, Inc.) (the "Company"), each
Subsidiary Borrower thereunder, the financial
institutions (the "5-Year
EXHIBIT I
Page 3
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Company/Sub Guaranty is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Company/Sub Guaranty is hereby
amended
EXHIBIT I
Page 4
by deleting the words "Credit Agreement" each place such
words appear therein and inserting the words "Credit
Agreements" in lieu thereof in each such place.
4. The sixth recital (before giving effect to
this Amendment) of the Company/Sub Guaranty is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "Credit Agreements" in lieu
thereof.
5. Section 1 of the Company/Sub Guaranty is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or 364-Day Credit Agreement, as the case may be,"
in lieu thereof.
6. Section 2 of the Company/Sub Guaranty is
hereby amended by deleting the words "Administrative Agent"
each place such words appear therein and inserting the
words "Administrative Agents" in lieu thereof in each such
place.
7. Section 3 of the Company/Sub Guaranty is
hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing in clauses (e) and (g) thereof and inserting the
word "any" in lieu thereof in each such place.
8. Section 10 of the Company/Sub Guaranty is
hereby amended by deleting the words "Administrative Agent"
appearing in clause (d) thereof and inserting the words
"Administrative Agents" in lieu thereof.
9. Section 11 of the Company/Sub Guaranty is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Sections 7 and 8 of the 364-Day Credit
Agreement" in lieu thereof.
10. Section 13 of the Company/Sub Guaranty is
hereby amended by (i) deleting the words "Credit Agreement"
appearing in clause (x) thereof and inserting the words
"Credit Agreements" in lieu thereof and (ii) deleting the
words "on the signature pages of the Administrative Agent
in the Credit Agreement" appearing in clause (y) thereof
and inserting the words "in the Master Collateral
Agreement" in lieu thereof.
EXHIBIT I
Page 5
11. Section 14 of the Company/Sub Guaranty is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
12. Section 21 of the Company/Sub Guaranty is
hereby deleted in its entirety and the following new
Section 21 is inserted in lieu thereof:
"21. In the event that (i) all of the capital
stock of one or more Guarantors is sold in connection
with a sale permitted by Section 9.02 of the 5-Year
Credit Agreement and Section 8.02 of the 364-Day
Credit Agreement and the proceeds of such sale or
sales are applied in accordance with, and to the
extent required by, the terms of each such Credit
Agreement or (ii) one or more Guarantors no longer is
required to guaranty obligations of the Secured
Parties as provided in either of the Credit
Agreements, each such Guarantor shall be released from
this Guaranty with respect to each such Credit
Agreement and this Guaranty shall, as to each such
Guarantor, terminate and have no further force or
effect with respect to each such Credit Agreement."
13. Each Guarantor hereby reaffirms its
obligations under the Company/Sub Guaranty and the guaranty
by such Guarantor of the obligations of the Borrowers under
the Secured Documents.
14. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Company/Sub Guaranty.
15. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Guarantors and the Collateral Agent.
16. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
EXHIBIT I
Page 6
17. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Guarantor and the Collateral Agent shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the
5-Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
18. From and after the First Amendment Effective
Date, all references in the Company/Sub Guaranty and each
of the Credit Documents to the Company/Sub Guaranty shall
be deemed to be references to the Company/Sub Guaranty as
amended hereby.
EXHIBIT I
Page 7
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
The Guarantors:
--------------
HARRAH'S OPERATING COMPANY, INC.
By:
------------------------------
Name:
Title:
CASINO HOLDING COMPANY
By:
------------------------------
Name:
Title:
HARRAH'S
By:
------------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.
By:
------------------------------
Name:
Title:
EXHIBIT I
Page 8
HARRAH'S CLUB
By:
------------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.,
By:
------------------------------
Name:
Title:
HARRAH'S NEW JERSEY, INC.
By:
------------------------------
Name:
Title:
HARRAH'S RENO HOLDING COMPANY,
INC.,
By:
------------------------------
Name:
Title:
HARRAH'S LAS VEGAS, INC.
By:
------------------------------
Name:
Title:
EXHIBIT I
Page 9
MARINA ASSOCIATES,
a New Jersey partnership
By: HARRAH'S NEW JERSEY, INC., a
New Jersey corporation, a
general partner
By:
------------------------------
Name:
Title:
By: HARRAH'S ATLANTIC CITY,
INC., a New Jersey
corporation, a general
partner
By:
------------------------------
Name:
Title:
Collateral Agent:
BANKERS TRUST COMPANY
By:
------------------------------
Name:
Title:
This instrument was prepared by the [Atlantic County, New Jersey]
attorney described below:
___________________________________
Jeffrey J. Temple
Recording Requested By EXHIBIT J-1
-----------
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO MORTGAGE, LEASEHOLD MORTGAGE,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
----------------------------------------------------------
FIRST AMENDMENT TO MORTGAGE, LEASEHOLD MORTGAGE,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT (this "Amendment"), dated
as of _____________, 1995, among HARRAH'S OPERATING
COMPANY, INC. (formerly known as Embassy Suites, Inc.) (the
"Company"), MARINA ASSOCIATES ("Marina", each of Marina and
Embassy being a "Mortgagor" and, collectively, the
"Mortgagors") and BANKERS TRUST COMPANY, not in its
individual capacity but solely as Collateral Agent (the
"Mortgagee"). Except as otherwise defined herein,
capitalized terms used herein and defined in the Mortgage
referred to below shall be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as
EXHIBIT J-1
Page 2
Agents, and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the "5-
Year Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Mortgagors executed and
delivered to the Mortgagee a Mortgage, Leasehold Mortgage,
Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22,
1993 (as amended, modified or supplemented from time to
time, the "Mortgage");
WHEREAS, the parties hereto wish to amend the
Mortgage to provide that the 364-Day Banks and the 364-Day
Administrative Agent are secured on a pari passu basis with
---- -----
the 5-Year Banks, the 5-Year Administrative Agent and the
Secured Interest Rate Protection Creditors with respect to
the Collateral and to renew and extend the liens granted
therein;
EXHIBIT J-1
Page 3
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Mortgagors shall have executed and delivered this Amendment
to the Mortgage; and
WHEREAS, the parties hereto wish to amend the
Mortgage as herein provided.
NOW, THEREFORE, it is agreed:
1. The first recital of the Mortgage is hereby
deleted in its entirety and the following two new recitals
are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,and
Bankers Trust Company, as Administrative Agent
(together with any
EXHIBIT J-1
Page 4
successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"),
have entered into a Credit Agreement, dated as of June
9, 1995, providing for the making of loans as
contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. Each reference to the word "Embassy"
contained in the Mortgage shall be deemed deleted and the
words "the Company" shall be inserted in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Mortgage is hereby amended by
deleting (i) the words "Credit Agreement" appearing therein
and inserting the words "respective Credit Agreements" in
lieu thereof, (ii) the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (iii) the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
4. The sixth recital (before giving effect to
this Amendment) of the Mortgage is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
5. The seventh recital (before giving effect to
this Amendment) of the Mortgage is hereby amended by (i)
deleting the words "Administrative Agent" appearing therein
and inserting the words "Administrative Agents" in lieu
thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
6. The first paragraph of the granting clauses
of the Mortgage is hereby amended by deleting the words
"Credit Agreement" appearing therein and inserting the
words "Credit Agreements" in lieu thereof.
7. Section 1.01(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
in the second sentence of the introductory paragraph
thereof and
