SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO .
Commission File No. 1-10410
HARRAH'S ENTERTAINMENT, INC.
(formerly known as The Promus Companies Incorporated)
(Exact name of registrant as specified in its charter)
Delaware I.R.S. No. 62-1411755
(State of Incorporation) (I.R.S. Employer
Identification No.)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices)
(901) 762-8600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
At June 30, 1995, there were outstanding 102,531,830 shares
of the Company's Common Stock.
Page 1 of 708
Exhibit Index Page 43
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
----------------------------
The accompanying unaudited Consolidated Condensed Financial
Statements of Harrah's Entertainment, Inc. (Harrah's or the
Company), a Delaware corporation, have been prepared in
accordance with the instructions to Form 10-Q, and therefore do
not include all information and notes necessary for complete
financial statements in conformity with generally accepted
accounting principles. The results for the periods indicated are
unaudited, but reflect all adjustments (consisting only of normal
recurring adjustments) which management considers necessary for a
fair presentation of operating results. Results of operations
for interim periods are not necessarily indicative of a full year
of operations.
As discussed in Notes 1 and 2, on January 30, 1995,
Harrah's, formerly The Promus Companies Incorporated (Promus),
announced a planned spin-off (Spin-off), which was completed on
June 30, 1995, that split the Company into two independent public
corporations, one for conducting its casino entertainment
business and one for conducting its hotel business. Harrah's
retained ownership of the casino entertainment business. As a
result of the Spin-off, the accompanying Consolidated Condensed
Financial Statements reflect the hotel business as discontinued
operations. These Consolidated Condensed Financial Statements
should be read in conjunction with the Consolidated Financial
Statements and notes thereto included in the Company's 1994
Annual Report to Stockholders.
-2-
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
June 30, Dec. 31,
(In thousands, except share amounts) 1995 1994
ASSETS
Current assets
Cash and cash equivalents $ 73,057 $ 84,968
Receivables, including notes receivable of
$97 And $528, less allowance for doubtful
accounts of $10,763 and $9,460 35,360 33,051
Deferred income taxes 21,795 18,979
Supplies 11,636 11,463
Prepayments and other 21,855 23,374
---------- ----------
Total current assets 163,703 171,835
---------- ----------
Land, buildings, riverboats and equipment 1,638,572 1,602,620
Less: accumulated depreciation (502,934) (472,779)
---------- ----------
1,135,638 1,129,841
Net assets of discontinued hotel operations
(Notes 1 and 2) - 143,008
Investments in and advances to
nonconsolidated affiliates (Note 9) 97,322 116,932
Deferred costs and other 185,460 176,349
---------- ----------
$1,582,123 $1,737,965
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 39,423 $ 54,621
Accrued litigation settlement and related
costs (Note 8) 674 72,101
Construction payables 4,274 10,879
Accrued expenses 157,239 156,446
Current portion of long-term debt 1,736 1,036
---------- ----------
Total current liabilities 203,346 295,083
Long-term debt 730,068 727,493
Deferred credits and other 70,344 66,735
Deferred income taxes 1,359 7,138
---------- ----------
1,005,117 1,096,449
---------- ----------
Minority interests 19,682 18,079
---------- ----------
Commitments and contingencies (Notes 7, 8 and 9)
Stockholders' equity
Common stock, $0.10 par value,
authorized - 360,000,000 shares,
outstanding - 102,531,830 and 102,402,619
shares (net of 79,273 and 37,172 shares
held in treasury) 10,253 10,240
Capital surplus 361,496 350,196
Retained earnings 187,386 265,574
Deferred compensation related to
restricted stock (1,8ll) (2,573)
---------- ----------
557,324 623,437
---------- ----------
$1,582,123 $1,737,965
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
-3-
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Second Quarter Ended Six Months Ended
(In thousands, June 30, June 30, June 30, June 30,
except per share amounts) 1995 1994 1995 1994
Revenues
Casino $328,439 $283,474 $626,971 $526,484
Food and beverage 45,391 39,873 87,276 76,288
Rooms 27,852 26,381 52,506 50,160
Management fees 3,834 187 6,811 445
Other 22,821 19,760 46,211 35,528
Less: casino promotional allowances (39,000) (30,870) (73,957) (59,868)
-------- -------- -------- --------
Total revenues 389,337 338,805 745,818 629,037
-------- -------- -------- --------
Operating expenses
Direct
Casino 150,566 115,775 295,116 228,409
Food and beverage 23,804 23,483 42,746 41,807
Rooms 8,530 8,415 16,170 16,478
Depreciation of buildings,
riverboats and equipment 19,768 17,188 38,017 33,060
Development costs 4,409 3,436 8,657 7,060
Preopening costs - 5,141 - 5,141
Other 89,701 81,764 174,750 146,549
-------- -------- -------- --------
Total operating expenses 296,778 255,202 575,456 478,504
-------- -------- -------- --------
Operating profit before corporate expense 92,559 83,603 170,362 150,533
Corporate expense (8,799) (6,376) (14,181) (11,268)
-------- -------- -------- --------
Operating income 83,760 77,227 156,181 139,265
Interest expense, net of interest
capitalized (18,667) (19,514) (36,995) (37,551)
Interest expense, net, from nonconsolidated
affiliates (4,898) - (8,634) -
Provision for settlement of litigation and
related costs (Note 8) - (1,117) - (1,763)
Interest and other income 813 438 2,846 842
-------- -------- -------- --------
Income before income taxes and minority
interest 61,008 57,034 113,398 100,793
Provision for income taxes (23,239) (24,107) (43,596) (41,058)
Minority interests (2,418) (3,258) (5,755) (7,981)
-------- -------- -------- --------
Income from continuing operations 35,351 29,669 64,047 51,754
Discontinued operations (Note 2)
Earnings from hotel operations, net of tax
provisions of $8,451, $6,801, $15,434,
and $12,737 11,626 10,207 21,230 16,338
Spin-off transaction expenses, net of tax
benefits of $1,582 and $5,134 (5,996) - (21,194) -
-------- -------- -------- --------
Income before cumulative effect of change in
accounting policy 40,981 39,876 64,083 68,092
Cumulative effect of change in accounting
policy, net of tax benefit of $4,317 - - - (7,932)
-------- -------- -------- --------
Net income $ 40,981 $ 39,876 $ 64,083 $ 60,160
======== ======== ======== ========
Earnings per share
Continuing operations $ 0.35 $ 0.29 $ 0.62 $ 0.50
Discontinued operations
Earnings from hotel operations, net 0.11 0.10 0.21 0.16
Spin-off transaction expenses, net (0.06) - (0.21) -
Cumulative effect of change in accounting
policy, net - - - (0.08)
-------- -------- -------- --------
Earnings per share $ 0.40 $ 0.39 $ 0.62 $ 0.58
======== ======== ======== ========
Average common shares outstanding 103,211 102,826 103,088 102,858
======== ======== ======== ========
See accompanying Notes to Consolidated Condensed Financial Statements.
-4-
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30, June 30,
(In thousands) 1995 1994
Cash flows from operating activities
Net income $ 64,083 $ 60,160
Adjustments to reconcile net income
to cash flows from operating activities
Discontinued operations
Earnings from hotel operations (21,230) (16,338)
Spin-off transaction expenses, before income
taxes 26,328 -
Cumulative effect of change in accounting
policy, before income taxes - 12,249
Depreciation and amortization 44,897 41,094
Other noncash items 8,986 (1,372)
Minority interests share of net income 5,755 7,981
Equity in and distributions of (earnings)
losses of nonconsolidated affiliates 20,413 5,881
Net gains from asset sales (1,650) -
Net change in long-term accounts 172 (5,849)
Net change in working capital accounts (20,434) 24,862
Net change in accrued litigation settlement
and related costs (42,228) -
Tax indemnification payments to Bass (28,000) (25,469)
---------- ----------
Cash flows provided by operating activities 57,092 103,199
---------- ----------
Cash flows from investing activities
Land, buildings, riverboats and equipment
additions (60,159) (108,438)
Investments in and advances to
nonconsolidated affiliates (7,910) (18,649)
Decrease in construction payables (6,605) (9,950)
Proceeds from asset sales 9,331 1,405
Other (6,802) (14,989)
---------- ----------
Cash flows used in investing activities (72,145) (150,621)
---------- ----------
Cash flows from financing activities
Net borrowings under Revolving Credit Facility 51,450 75,350
Debt retirements (19,038) (39,986)
Minority interest distributions, net of contributions (3,774) (2,949)
Other (543) -
---------- ----------
Cash flows provided by financing activities 28,095 32,415
---------- ----------
Cash flows from discontinued hotel operations
Net transfers to (from) discontinued hotel operations (17,680) 12,068
Payment of spin-off transaction expenses (7,273) -
---------- ----------
Cash flows provided by (used in) discontinued
operations (24,953) 12,068
---------- ----------
Net change in cash and cash equivalents (11,911) (2,939)
Cash and cash equivalents, beginning of period 84,968 58,310
---------- ----------
Cash and cash equivalents, end of period $ 73,057 $ 55,371
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
-5-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
Note 1 - Basis of Presentation and Organization
-----------------------------------------------
Harrah's Entertainment, Inc., (Harrah's or the Company), a
Delaware corporation, is one of America's leading casino
companies and currently operates 16 casino entertainment
facilities. On January 30, 1995, the Company announced a spin-
off, completed on June 30, 1995, to split into two independent
public corporations, one for conducting its casino entertainment
business and one for conducting its hotel business. Harrah's,
formerly The Promus Companies Incorporated (Promus), retained
ownership of the casino entertainment business. The Company's
hotel operations, which included the Embassy Suites, Hampton Inn
and Homewood Suites hotel brands, were transferred to a new
entity, named Promus Hotel Corporation (PHC), the stock of which
was distributed to Promus' stockholders on a one-for-two basis
(the PHC Spin-off). As a result of the PHC Spin-off, Harrah's
historical financial statements reflect the hotel business as
discontinued operations (see Note 2). The final allocations
relating to the PHC Spin-off have not yet been completed.
Management does not believe any adjustments related thereto will
be material.
The Consolidated Condensed Financial Statements include the
accounts of Harrah's and its subsidiaries after elimination of
all significant intercompany accounts and transactions.
Investments in 50% or less owned companies and joint ventures
over which Harrah's has the ability to exercise significant
influence are accounted for using the equity method. Harrah's
reflects its share of income before interest expense of these
nonconsolidated affiliates in revenues. Harrah's proportionate
share of interest expense of such nonconsolidated affiliates is
included in interest expense, net, from nonconsolidated
affiliates. (See Note 9.)
Certain amounts for the prior year second quarter and six
months ended June 30, 1994, have been reclassified to conform
with the presentation for the second quarter and six months ended
June 30, 1995.
Note 2 - Discontinued Operations
--------------------------------
As discussed in Note 1, on June 30, 1995, Harrah's completed
a spin-off of its hotel operations. Accordingly, results of
operations and cash flows of Harrah's hotel business have been
reported as discontinued operations for all periods presented in
the Consolidated Condensed Financial Statements; the financial
position as of December 31, 1994, also reflects Harrah's hotel
business as discontinued operations. Summarized financial
information of the discontinued operations is presented in the
following tables:
-6-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 2 - Discontinued Operations (Continued)
-------------------------------------------
Net assets of discontinued hotel operations:
Dec. 31,
1994
Current assets $ 25,565
Current liabilities (34,461)
---------
Net current liabilities (8,896)
Land, buildings and equipment, net 322,140
Other assets 72,860
Long-term debt, including allocated debt
(Note 8) (189,943)
Other liabilities and deferred taxes (53,153)
---------
Net assets of discontinued hotel
operations $ 143,008
=========
As of the date of the PHC Spin-off, the net assets of
discontinued hotel operations were $142.3 million. This amount has
been charged against the Company's retained earnings in the
accompanying unaudited June 30, 1995 Consolidated Condensed Balance
Sheet to reflect the distribution of PHC's stock to Promus'
stockholders on that date.
Earnings from discontinued hotel operations:
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In thousands) 1995 1994 1995 1994
Revenues $ 69,567 $ 63,540 $132,785 $119,095
Costs and expenses (41,377) (39,235) (79,652) (75,050)
-------- -------- -------- --------
Operating income 28,190 24,305 53,133 44,045
Interest expense (8,335) (7,321) (16,742) (15,021)
Other expense 222 24 273 51
-------- -------- -------- --------
Income before income
taxes 20,077 17,008 36,664 29,075
Provision for income taxes (8,451) (6,801) (15,434) (12,737)
-------- -------- -------- --------
Earnings from discontinued
hotel operations $ 11,626 $ 10,207 $ 21,230 $ 16,338
======== ======== ======== ========
In addition to the earnings of its discontinued hotel
operations, Harrah's second quarter and six months ended June 30,
1995 operating results include charges of $6.0 million and
$21.2 million, respectively, net of tax, to accrue expenses of the
PHC Spin-off transaction.
-7-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 2 - Discontinued Operations (Continued)
-------------------------------------------
As part of the PHC Spin-off, Harrah's Operating Company, Inc.
(HOC), formerly Embassy Suites, Inc. (Embassy), a wholly-owned
subsidiary of the Company, obtained a new $350 million bank
facility (Hotel Facility), secured by the stock of PHC's material
subsidiaries. Immediately prior to the PHC Spin-off, HOC drew
approximately $218 million on the Hotel Facility, $215 million of
which was used to retire a portion of the Company's existing
corporate debt. Upon consummation of the PHC Spin-off, HOC was
released from liability under the Hotel Facility. In addition,
PHC assumed two of Harrah's existing interest rate swaps, with a
total notional amount of $100 million, converting that amount of
variable rate debt outstanding under the Hotel Facility to a
fixed rate.
Prior to the PHC Spin-off, the Company's corporate debt was
not specifically related to either its casino entertainment or
hotel segment. However, corporate debt service requirements had
been met using cash flows provided by both segments. Therefore,
in anticipation of the PHC Spin-off, a portion of the Company's
corporate debt balance, unamortized deferred finance charges and
interest expense were allocated to discontinued hotel operations
as of December 31, 1994, based on the percentage of the Company's
existing corporate debt expected to be retired using proceeds
from the Hotel Facility. Net assets of discontinued hotel
operations at December 31, 1994, include allocations to
discontinued hotel operations of corporate debt and unamortized
deferred finance charges of $187.8 million and $3.2 million,
respectively, together with debt specifically related to PHC of
$3.3 million. Interest expense of $5.5 million and $3.9 million
for the second quarters ended June 30, 1995 and 1994,
respectively, and $10.5 million and $8.5 million for the six
months ended June 30, 1995 and 1994, respectively have been
allocated to discontinued hotel operations.
-8-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 3 - Change in Accounting Policy
------------------------------------
Effective January 1, 1994, Harrah's changed its accounting
policy for its consolidated casinos relating to preopening costs
to capitalize such costs as incurred prior to opening and to
expense them upon opening of each project. Previously, the
Company had capitalized preopening costs and amortized them to
expense over 36 months from the date of opening. As a result of
this change, operating results for the six months ended June 30,
1994, reflect the cumulative charge against earnings, net of
income taxes, of $7.9 million, or $0.08 per share, to write off
the unamortized preopening costs balances related to projects
opened in prior years.
Note 4 - Long-Term Debt
-----------------------
During second quarter 1995, Harrah's redeemed the
approximately $18.1 million principal amount outstanding of the
11% Subordinated Debentures due 1999 of HOC. The cost of this
redemption was not material.
In connection with the PHC Spin-off, Harrah's negotiated
changes to its reducing revolving and letter of credit facility
(the Facility) which became effective June 30, 1995. Among the
modifications was an increase in total capacity from
$650 million to $750 million, an extension of the maturity,
reduced borrowing costs and modifications to certain financial
covenants.
Interest Rate Agreements
------------------------
To manage the relative mix of its debt between fixed and
variable rate instruments, Harrah's enters into interest rate
swap agreements to modify the interest characteristics of its
outstanding debt without an exchange of the underlying principal
amount. As of June 30, 1995 and 1994, Harrah's was a party to
the following interest rate swap agreements pursuant to which it
pays a variable interest rate in exchange for receiving a fixed
interest rate. The average variable rate paid by Harrah's was
6.4% and 4.4% at June 30, 1995 and 1994, respectively, and the
average fixed interest rate received was 5.9% at both dates. The
impact of these interest rate swap agreements on the effective
interest rates of the associated debt was as follows:
Effective Next Semi-
Swap Rate at Annual Rate
Associated Rate June 30, Adjustment
Debt (LIBOR+) 1995 1994 Date Swap Maturity
------------- -------- ----- ---- ----------- -------------
10 7/8% Notes
$200 million 4.73% 11.26% 9.16% October 15 October 1997
8 3/4% Notes
$50 million 3.42% 9.58% 8.85% November 15 May 1998
$50 million 3.22% 10.01% 6.67% July 15 July 1998
In accordance with the terms of the interest rate swap
agreements, the effective interest rate on the $50 million of the
8 3/4% Notes was adjusted on July 15, 1995, to 9.05%.
-9-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 4 - Long-Term Debt (Continued)
----------------------------------
Harrah's also maintains seven additional interest rate swap
agreements, three of which were entered into during second
quarter 1995, to effectively convert a total of $350 million in
variable rate debt to a fixed rate. Pursuant to the terms of
these swaps, Harrah's receives variable payments tied to LIBOR in
exchange for its payments at a fixed interest rate. The fixed
rates to be paid by Harrah's are summarized in the following
table:
Effective Rate
Swap Rate on Associated Debt Swap
Associated Debt Paid (Fixed) at June 30, 1995 Maturity
---------------------- ------------ ------------------ ------------
Revolving Credit
Facility (LIBOR
plus 3/4%)
$50 million 7.915% 8.665% January 1998
$50 million 7.914% 8.664% January 1998
$50 million 7.910% 8.660% January 1998
$50 million 6.985% 7.735% March 2000
$50 million 6.651% 7.401% May 2000
$50 million 5.788% 6.538% June 2000
$50 million 5.785% 6.535% June 2000
Harrah's interest rate collar on $140 million of its variable
rate bank debt expired in June 1995 and was not renewed.
The differences to be paid or received under the terms of the
interest rate swap agreements and, until its expiration, the rate
collar transaction described above are accrued as an adjustment
to interest expense for the related debt. Changes in the
effective interest rates to be paid by Harrah's pursuant to the
terms of its interest rate agreements will have a corresponding
effect on its future cash flows. These agreements contain a
credit risk that the counterparties may be unable to meet the
terms of the agreements. Harrah's minimizes that risk by
evaluating the creditworthiness of its counterparties, which are
limited to major banks and financial institutions, and does not
anticipate nonperformance by the counterparties.
As a component of a transaction whereby Harrah's effectively
secured an option to a site for a potential casino, Harrah's has
guaranteed a third party's $25 million variable rate bank loan.
Harrah's also has entered into an interest rate swap agreement in
which Harrah's receives a fixed interest rate of 7% from the
third party and pays the variable interest rate of the subject
debt, which is currently LIBOR plus 1.0%. The negative value of
the swap, which is marked to market by Harrah's, was
approximately $0.4 million at June 30, 1995. Adjustments to the
swap's market value are included in interest expense in the
Consolidated Condensed Statements of Income. Harrah's guarantee
and the interest rate swap agreement expire December 1, 1996, and
are also subject to earlier termination upon the occurrence of
certain
-10-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 4 - Long-Term Debt (Continued)
----------------------------------
events. As with the other interest rate swap agreements entered
into by Harrah's, this agreement contains an element of risk that
the counterparty may be unable to meet the terms of the
agreement. Harrah's has minimized such exposure by obtaining a
security interest in certain assets of the third party.
Note 5 - Stockholders' Equity
-----------------------------
In addition to its common stock, Harrah's has the following
classes of stock authorized but unissued:
Preferred stock, $100 par value, 150,000 shares authorized
Special stock, 5,000,000 shares authorized -
Series B, $1.125 par value
Note 6 - Supplemental Disclosure of Cash Paid for Interest and
Taxes
-----------------------------------------------------------------
The following table reconciles Harrah's interest expense, net
of interest capitalized, per the Consolidated Condensed
Statements of Income, to cash paid for interest:
Six Months Ended
June 30, June 30,
(In thousands) 1995 1994
Interest expense, net of amount capitalized $36,995 $37,551
Adjustments to reconcile to cash paid for
interest
Net change in accruals 14,262 3,805
Amortization of deferred finance charges (1,440) (1,405)
Net amortization of discounts and premiums (31) (86)
------- -------
Cash paid for interest, net of amount
capitalized $49,786 $39,865
======= =======
Cash payments for income taxes, net of refunds $51,636 $47,289
======= =======
Note 7 - Commitments and Contingent Liabilities
-----------------------------------------------
Contractual Commitments
-----------------------
Harrah's is pursuing many casino development opportunities
that may require, individually and in the aggregate, significant
commitments of capital, up-front payments to third parties,
guarantees by Harrah's of third party debt and development
completion guarantees. As of June 30, 1995, Harrah's has
guaranteed third party loans and leases of $86 million, which are
secured by certain assets, and has other contractual commitments
of $52 million, excluding amounts previously recorded.
-11-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 7 - Commitments and Contingent Liabilities (Continued)
----------------------------------------------------------
See Note 9 for discussion of the completion guarantee
provided by Harrah's related to development by Harrah's Jazz
Company of the New Orleans casino.
Guarantee of Insurance Contract
-------------------------------
Harrah's has guaranteed the value of a guaranteed investment
contract with an insurance company held by Harrah's defined
contribution savings plan. Harrah's has also agreed to provide
non-interest-bearing loans to the plan to fund, on an interim
basis, withdrawals from this contract by retired or terminated
employees. Harrah's maximum exposure on this guarantee as of
June 30, 1995, is approximately $7.2 million.
Self-Insurance
--------------
Harrah's is self-insured for various levels of general
liability, workers' compensation and employee medical coverage.
Insurance claims and reserves include accruals of estimated
settlements for known and anticipated claims, as well as accruals
of actuarial estimates of incurred but not reported claims.
Severance Agreements
--------------------
Harrah's has severance agreements with 17 of its senior
executives which provide for payments to the executives in the
event of their termination after a change in control, as defined,
of Harrah's. These agreements provide, among other things, for a
compensation payment equal to 2.99 times the average annual
compensation paid to the executive for the five preceding
calendar years, as well as for accelerated payment or accelerated
vesting of any compensation or awards payable to the executive
under any of Harrah's incentive plans. The estimated amount,
computed as of June 30, 1995, that would have been payable under
the agreements to these executives based on earnings and stock
options aggregated approximately $33.5 million.
Tax Sharing Agreements
----------------------
Under the terms of the Settlement between the Company and
Bass PLC (Bass) (see Note 8), the Tax Sharing Agreement entered
into in connection with the February 7, 1990, spin-off (the Spin-
off) of the Company and acquisition of the Holiday Inn hotel
business by Bass has been terminated. Under the Tax Sharing
Agreement, Promus was liable, with certain exceptions, for taxes
of Holiday and its subsidiaries for all pre-1990 Spin-off tax
periods. Bass was obligated under the same agreement to pay
Promus the amount of any tax benefits realized by Holiday as a
result of adjustments to pre-1990 Spin-off tax periods of Holiday
and its subsidiaries. Under the provisions of the Settlement,
Harrah's remains obligated for certain tax issues related to
Promus and its subsidiaries for the pre-1990 Spin-off tax periods
and certain other items related to the final resolution of
disputed issues from the Internal Revenue Service (IRS)
examination of income tax returns for 1987 through the 1990 Spin-
off date. A protest defending the taxpayers' position
-12-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
on all disputed issues for these periods was filed with the IRS
during third quarter 1993 and negotiations to resolve these
issues continue. Final resolution of the disputed issues is not
expected to have a material adverse effect on Harrah's
consolidated financial position or its results of operations.
Note 8 - Litigation
-------------------
In March 1995, the Company entered into a settlement
agreement (the Settlement) with Bass of all claims related to the
Merger Agreement and Tax Sharing Agreement arising from the 1990
Spin-off of Promus and acquisition of the Holiday Inn hotel
business by Bass. As a result of the Settlement, a charge of
$49.2 million was recorded in fourth quarter 1994's operating
results to accrue the estimated cost of the Settlement, the
related legal fees and other associated expenses. Operating
results for the second quarter and six months ended June 30, 1994
include approximately $1.1 million and $1.8 million,
respectively, of legal fees and other expenses incurred related
to Harrah's defense of this litigation. The provision for
settlement of litigation and related costs is not expected to be
deductible for federal income tax purposes.
Harrah's is involved in various inquiries, administrative
proceedings and litigation relating to contracts, sales of
property and other matters arising in the normal course of
business. While any proceeding or litigation has an element of
uncertainty, management believes that the final outcome of these
matters will not have a material adverse effect upon Harrah's
consolidated financial position or its results of operations.
-13-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 9 - Nonconsolidated Affiliates
-----------------------------------
Harrah's Jazz Company
---------------------
A Harrah's subsidiary owns an approximate 53% equity interest
in Harrah's Jazz Company (Harrah's Jazz), the partnership which
operates the sole land-based casino permitted by law to operate
in Orleans Parish, Louisiana. One of Harrah's partners in
Harrah's Jazz has an option to purchase an additional equity
interest of approximately 14.6% from Harrah's for $33.3 million
at any time until 120 days after opening of the temporary
casino. Discussions between Harrah's and the partner are underway
concerning a possible extension of this option. Due to the
existence of this option, Harrah's ownership of a majority interest
in Harrah's Jazz is expected to be temporary and voting control of
the partnership in any event continues to be shared equally by
each partner during the option period. As a result, Harrah's
Jazz is not consolidated into Harrah's financial statements.
Summarized balance sheet and income statement information for
Harrah's Jazz, which Harrah's accounts for using the equity
method, as of June 30, 1995 and December 31, 1994, and for the
second quarter and six months ended June 30, 1995 and 1994 were
as follows:
June 30, Dec. 31,
1995 1994
Summarized Balance Sheet Information
Current assets $204,393 $454,295
Land, buildings and
equipment, net 165,986 69,608
Other assets 261,392 141,488
-------- --------
Total assets 631,771 665,391
-------- --------
Current liabilities 46,610 23,894
Long-term debt 510,000 510,000
-------- --------
Total liabilities 556,610 533,894
-------- --------
Net assets $ 75,161 $131,497
======== ========
Summarized Statements of Operations
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
Revenues $ 25,500 $ 100 $ 25,540 $ 100
======== ======= ======== ========
Operating loss $(25,774) $(5,981) $(33,967) $(12,500)
======== ======= ======== ========
Net loss $(38,395) $(6,310) $(56,336) $(13,044)
======== ======= ======== ========
-14-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 9 - Nonconsolidated Affiliates (Continued)
----------------------------------------------
The estimated cost for the project, which includes both the
temporary casino and permanent casino, is presently $819.5
million, including certain modifications currently under
consideration by Harrah's Jazz. Harrah's Jazz originally planned to
fund the project cost from a combination of partner equity
contributions, public debt securities, bank debt and projected
operating cash flow from the temporary casino. The temporary
casino's operating results for its initial three months of
operations have fallen significantly below original expectations
(see Results of Operations). In connection with its requirement
to periodically update the forecasted cash flow from the
temporary casino as a condition to continued use of the proceeds
from the issuance of public debt securities, and based upon such
initial operating results, Harrah's Jazz has changed its capital
budgeting plan for available project sources of funds to assume
no cash flow will be available from the temporary casino.
Based upon this assumption, and assuming the budget
modifications currently under consideration by Harrah's Jazz are
approved and Harrah's Jazz does not experience any further
project delays or project cost overruns, Harrah's Jazz presently
anticipates the remaining budgeted sources of funds discussed
above, together with unbudgeted sources of funds (e.g.
unbudgeted borrowings under the bank debt facility, interest
income, deferred management and consulting fees, proceeds from
equipment financing) will be sufficient to meet the costs of
completing the project.
If these sources of funds are insufficient to fund the project
costs, and Harrah's Jazz does not obtain such funds from its partners
(who are not obligated to contribute such funds in certain cases)
or another source, Harrah's is required, pursuant to its agreements
with project lenders, to fund the shortfall, subject to certain
conditions and exceptions. In exchange for its agreements, Harrah's
is entitled to receive a fee from Harrah's Jazz upon the opening of
the permanent casino.
Other
-----
Condensed financial information relating to a foreign casino
property currently under development and a restaurant subsidiary
has not been presented since their operating results and
financial position are not material to Harrah's either
individually or in the aggregate.
Harrah's share of nonconsolidated affiliates' combined pre-
interest operating results is reflected as Revenues-other in the
accompanying Consolidated Condensed Statements of Income as
follows:
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In thousands) 1995 1994 1995 1994
Pre-interest operating
loss (included in
Revenues-other) $ (9,267) $ (2,471) $ (12,070) $ (5,697)
======== ======== ========= ========
Harrah's share of nonconsolidated affiliates' combined
interest expense is reflected as Interest expense from
nonconsolidated affiliates in the Consolidated Condensed
Statements of Income.
-15-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 9 - Nonconsolidated Affiliates (Continued)
----------------------------------------------
June 30, Dec. 31,
(In thousands) 1995 1994
Harrah's investments in and advances to
nonconsolidated affiliates
At equity
Harrah's Jazz $45,594 $ 74,385
Other 26,987 18,320
At cost 24,741 24,227
------- --------
$97,322 $116,932
======= ========
Note 10 - Summarized Financial Information
------------------------------------------
HOC is a wholly-owned subsidiary and the principal asset of
Harrah's. Summarized financial information of HOC as of June 30,
1995 and December 31, 1994, and for the second quarter and six
months ended June 30, 1995 and 1994, prepared on the same basis
as Harrah's, was as follows:
June 30, Dec. 31,
(In thousands) 1995 1994
Current assets $ 161,047 $ 171,445
Land, buildings, riverboats and
equipment, net 1,135,638 1,129,841
Net assets of discontinued hotel operations - 143,008
Other assets 282,545 293,015
---------- ----------
1,579,230 1,737,309
---------- ----------
Current liabilities 185,974 280,295
Long-term debt 730,068 727,492
Other liabilities 72,967 74,043
Minority interest 19,682 18,267
---------- ----------
1,008,691 1,100,097
---------- ----------
Net assets $ 570,539 $ 637,212
========== ==========
-16-
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1995
(UNAUDITED)
Note 10 - Summarized Financial Information (Continued)
-----------------------------------------------------
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In thousands) 1995 1994 1995 1994
Revenues $388,910 $388,293 $745,107 $627,923
======== ======== ======== ========
Operating income $ 83,166 $ 77,629 $155,031 $137,961
======== ======== ======== ========
Income from continuing
operations $ 34,965 $ 29,930 $ 63,299 $ 50,905
======== ======== ======== ========
Net income $ 40,595 $ 40,137 $ 63,335 $ 59,311
======== ======== ======== ========
The agreements governing the terms of Harrah's debt contain
certain covenants which, among other things, place limitations on
HOC's ability to pay dividends and make other restricted
payments, as defined, to Harrah's. The amount of HOC'S
restricted net assets, as defined, computed in accordance with
the most restrictive of these covenants regarding restricted
payments, was approximately $561.3 million at June 30, 1995.
-17-
Item 2. Management's Discussion and Analysis
---------------------------------------------
of Financial Condition and Results of Operations
------------------------------------------------
On June 30, 1995, The Promus Companies Incorporated (Promus)
completed its previously announced spin-off that split Promus
into two independent public corporations, one for conducting its
casino entertainment business and one for conducting its hotel
business. Promus, which was renamed Harrah's Entertainment,
Inc.(Harrah's or the Company), retained ownership of the casino
entertainment business. Promus' hotel operations were
transferred to a new entity, Promus Hotel Corporation (PHC), the
stock of which was distributed to Promus' stockholders on a one-
for-two basis (the PHC Spin-off). As a result of the PHC Spin-
off, Harrah's historical financial statements reflect the hotel
business as discontinued operations.
RESULTS OF CONTINUING OPERATIONS
--------------------------------
Overall
-------
Second Quarter Percentage First Six Months Percentage
(in millions, except --------------- Increase/ ---------------- Increase/
earnings per share) 1995 1994 (Decrease) 1995 1994 (Decrease)
------ ------ ---------- ------ ------ ----------
Revenues $389.3 $338.8 14.9% $745.8 $629.0 18.6%
Operating income 83.8 77.2 8.5% 156.2 139.3 12.1%
Income from continuing
operations 35.4 29.7 19.2% 64.0 51.8 23.6%
Net income 41.0 39.9 2.8% 64.1 60.2 6.5%
Earnings per share
Continuing operations 0.35 0.29 20.7% 0.62 0.50 24.0%
Net income 0.40 0.39 2.6% 0.62 0.58 6.9%
Operating margin 21.5% 22.8% (1.3)pts 20.9% 22.1% (1.2)pts
Harrah's operating results for second quarter and the six
months ended June 30, 1995 include the combined results of its
ownership and/or management of 16 casino entertainment properties
located in Arizona, Colorado, Illinois, Louisiana, Mississippi,
Missouri, Nevada and New Jersey. Revenues and operating income
in second quarter 1995 reached record levels, due primarily to
growth within the Riverboat Casino Entertainment Division,
resulting from the addition of a riverboat casino entertainment
property in North Kansas City, Missouri, subsequent to second
quarter 1994 and continuing growth in gaming volume at Harrah's
Joliet. Second quarter 1995 also includes improved operations in
the Atlantic City and northern Nevada markets and management fees
from Harrah's Phoenix Ak-Chin, Harrah's first managed Indian
gaming operation, which opened on December 27, 1994. These
increases in second quarter operating income were partially
offset by lower operating income at Harrah's Mississippi
-18-
properties and Harrah's share of increased losses from the
Harrah's New Orleans partnership. The Mississippi properties
experienced lower gaming volume as competition increased over the
past twelve months. New Orleans losses increased primarily due
to continued preopening activities and costs incurred in
connection with the opening of a temporary casino entertainment
facility on May 1, 1995 (see additional discussion regarding the
New Orleans partnership in the Harrah's New Orleans section of
RESULTS OF OPERATIONS).
The record operating income noted above resulted in higher
income from continuing operations for second quarter and the six
months ended June 30, 1995. Income from discontinued hotel
operations increased in second quarter 1995 compared with second
quarter 1994 as a result of higher franchise and management fees
from system growth. Results for second quarter and year to date
1995 include charges of $6.0 million and $21.2 million
respectively, net of tax, for costs associated with the PHC Spin-
off. 1994's year to date results included a charge of
$7.9 million, net of tax, representing the cumulative effect of a
change in Harrah's accounting policy for preopening costs.
Despite the inclusion of these higher one-time charges, net
income for second quarter 1995 increased slightly over second
quarter 1994.
Harrah's overall operating margin declined 1.3 percentage
points for second quarter 1995 compared with the prior year
period primarily due to the combination of increased competition
in Mississippi markets and higher New Orleans losses.
The following table summarizes operating profit before
preopening costs and corporate expense for the twelve month
periods ended June 30, 1995, 1994 and 1993 in millions of dollars
and as a percent of the total for each of Harrah's casino
entertainment divisions:
Operating Profit Contribution
for the Twelve Months
Ended June 30,
--------------------------------------------
In Millions of Dollars Percent of Total
---------------------- --------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
Riverboat $142 $ 95 $ 3 43 % 33 % 1 %
Atlantic City 83 68 65 25 % 23 % 33 %
Southern Nevada 74 77 75 23 % 26 % 37 %
Northern Nevada 73 76 71 22 % 26 % 36 %
Indian Gaming 5 - - 2 % - -
New Orleans (16) (5) - (5)% (2)% -
Development costs (23) (13) (8) (7)% (4)% (4)%
Other (9) (5) (6) (3)% (2)% (3)%
---- ---- ---- --- --- ---
Total $329 $293 $200 100 % 100 % 100 %
==== ==== ==== === === ===
-19-
Riverboat Division
------------------
Second Quarter Percentage Six Months Ended Percentage
------------------ Increase/ ------------------ Increase/
(in millions) 1995 1994 (Decrease) 1995 1994 (Decrease)
-------- -------- ---------- -------- -------- ----------
Revenues $ 146.4 $ 109.8 33.3 % $ 284.2 $ 193.0 47.3 %
Operating income 44.2 38.8 13.9 % 85.1 70.3 21.1 %
Operating margin 30.2% 35.3% (5.1)% 29.9% 36.4% (6.5)%
Gaming volume $1,945.6 $1,147.7 69.5 % $3,682.2 $1,932.4 90.6 %
Revenues and operating income for second quarter 1995
increased over second quarter 1994 due primarily to the addition
of the North Kansas City riverboat casino, which opened in
September 1994. The Division also benefitted from continuing
growth in gaming volume at Harrah's Joliet. The increases in
revenues and operating income were partially offset by lower
revenue and operating income from the Division's Mississippi
properties, particularly Tunica. Through much of second quarter
1994, competition in Tunica County was minimal; the number of
competitors has increased significantly since second quarter
1994. Although revenues, operating income, and operating margins
for second quarter 1995 at the Mississippi properties decreased
as a result of the increased competition, management believes
that Harrah's properties have now stabilized at performance
levels appropriate under current competitive market conditions.
Operating margins at the Mississippi properties are not expected
to return to the levels achieved during the period of limited
competition.
Revenue and operating income for the six months ended
June 30, 1995, also include operating results for Harrah's
Shreveport for the full period. 1994's results include
operations from April 18, 1994, the property's opening date, and
reflect the impact of limited competition initially faced by the
property.
Second quarter 1995's overall operating margin for the
Riverboat Division declined from second quarter 1994, reflecting
primarily the decreased operating margins at Harrah's Mississippi
casinos from increased competition. Despite the decline, the
overall operating margin for the Riverboat Division remains
higher than margins for other divisions due to the operational
differences between a riverboat facility and conventional land-
based properties and lesser levels of competition in some of the
riverboat markets.
-20-
Southern Nevada Division
------------------------
Second Quarter Percentage Six Months Ended Percentage
---------------- Increase/ ------------------- Increase/
(in millions) 1995 1994 (Decrease) 1995 1994 (Decrease)
------ ------- ---------- -------- -------- ----------
Revenues $ 76.9 $ 74.7 2.9 % $ 149.2 $ 146.0 2.2 %
Operating income 19.4 20.0 (3.0)% 37.4 38.3 (2.3)%
Operating margin 25.2% 26.8% (1.6)pts 25.1% 26.2% (1.1)pts
Gaming volume $747.6 $754.7 (0.9)% $1,474.5 $1,509.6 (2.3)%
Revenues increased for the second quarter and six months
ended June 30, 1995, as compared to the prior year as a result of
improved gaming revenues in Laughlin and continued improvement in
Las Vegas nongaming revenue, particularly lodging. Higher
complimentary costs in both markets, however, resulted in lower
operating income and operating margins compared to the prior year
periods. Increased competition in both markets resulted in
slight declines in gaming volume for both periods.
Northern Nevada Division
------------------------
Second Quarter Percentage Six Months Ended Percentage
---------------- Increase/ ------------------- Increase/
(in millions) 1995 1994 (Decrease) 1995 1994 (Decrease)
------ ------ ---------- -------- -------- ----------
Revenues $ 81.5 $ 75.2 8.4% $ 146.5 $ 145.6 0.6 %
Operating income 20.5 18.0 13.9% 28.2 30.1 (6.3)%
Operating margin 25.2% 23.9% 1.3pts 19.2% 20.7% (1.5)pts
Gaming volume $964.2 $926.9 4.0% $1,738.5 $1,735.5 0.2 %
Second quarter 1995 results exceeded those of the prior year
as a result of strong performance at Harrah's Lake Tahoe, where
higher gaming volume and improved overall hold percentages
resulted in record operating income. As a result of second
quarter's strong performance, revenue and gaming volume for the
six month period exceeded those of the prior year; operating
income and margins remained below the prior year period, however,
as a result of the impact of severe weather conditions
experienced during first quarter 1995.
-21-
Atlantic City
-------------
Second Quarter Percentage Six Months Ended Percentage
--------------- Increase/ ------------------ Increase/
(in millions) 1995 1994 (Decrease) 1995 1994 (Decrease)
------ ------ ---------- -------- -------- ----------
Revenues $ 84.7 $ 78.1 8.5% $ 162.0 $ 143.9 12.6%
Operating income 22.0 18.2 20.9% 37.9 28.6 32.5%
Operating margin 26.0% 23.3% 2.7pts 23.4% 19.9% 3.5pts
Gaming volume $890.6 $800.8 11.2% $1,699.7 $1,485.4 14.4%
Led by strong slot volume growth and higher nongaming
revenues, Harrah's Atlantic City posted strong gains in both
revenue and gaming volume for both the second quarter and year to
date 1995 periods, compared with the prior year. Lower
incremental costs on the additional volume resulted in further
improvements to operating income and margins. These improvements
can be attributed both to growth within the overall Atlantic City
market and to a recently completed casino renovation at Harrah's
Atlantic City.
Harrah's New Orleans
--------------------
Revenues and operating income for second quarter 1995 and
1994 include losses of $9.9 million and $1.6 million,
respectively, representing Harrah's pro-rata share of
preoperating losses incurred by the partnership developing
Harrah's New Orleans. Harrah's share of partnership losses
included in revenues and operating income for the six months
ended June 30, 1995 and 1994 were $12.7 million and $4.8 million,
respectively. The higher losses in second quarter 1995 include
increased preopening costs during the month of April in
anticipation of the temporary casino's May 1 opening, as well as
accelerated write-offs subsequent to the May 1 opening of
temporary casino assets. The accelerated write-off of temporary
casino assets is necessary due to the limited useful life of the
facility. Harrah's expects losses from its New Orleans
investment will continue until the opening of the permanent
casino in late second quarter 1996. (See Capital Spending and
Development section for further discussion of the current status
of this development project.)
-22-
Other
-----
Harrah's continues to pursue additional casino development
opportunities. Development costs for the six months ended
June 30, 1995 and 1994 were approximately $8.6 million and
$7.1 million, respectively.
Other Factors Affecting Income Per Share
----------------------------------------
Second Quarter Percentage First Six Months Percentage
(Income)/Expense -------------- Increase/ ---------------- Increase/
(in millions) 1995 1994 (Decrease) 1995 1994 (Decrease)
----- ----- ---------- ------ ----- ----------
Preopening costs $ - $ 5.1 N/A $ - $ 5.1 N/A
Corporate expense 8.8 6.4 37.5 % 14.2 11.3 25.7 %
Interest expense 23.6 19.5 21.0 % 45.6 37.6 21.3 %
Provision for settlement of
litigation and related costs - 1.1 N/A - 1.8 N/A
Other income 0.8 0.4 100.0 % 2.8 0.8 250.0 %
Effective tax rate 39.7% 44.8% (5.1)pts 40.5% 44.2 (3.7)pts
Minority interests $(2.4) $(3.3) (27.3)% $ (5.8) $(8.0) (27.5)%
Discontinued Operations
Earnings from hotel operations,
net of income taxes 11.6 10.2 13.7 % 21.2 16.3 30.1 %
Spin-off transaction expenses,
net of income taxes (6.0) - N/A (21.2) - N/A
Cumulative effect of change
in accounting policy,
net of income taxes - - N/A - (7.9) N/A
1994 preopening costs represent those costs charged to
expense upon the opening of Harrah's Shreveport in April 1994.
Corporate expense increased for both second quarter and the six
months ended June 30, 1995, as compared to the respective prior
year periods due to the inclusion in the current year of higher
information technology costs. The increase for the six month
period was also partially attributable to the inclusion in the
1994 period of the reimbursement of certain expenses.
Interest expense increased in both the second quarter and six
months ended June 30, 1995, over comparable prior year periods
primarily as a result of the inclusion of Harrah's pro-rata share
of Harrah's New Orleans interest expense.
The provision for settlement of litigation and related costs
included legal fees and other expenses incurred during 1994
related to defense of litigation associated with the 1990 Spin-
off of Promus and the acquisition of the Holiday Inn business by
Bass PLC. A settlement agreement was reached in March 1995 and
reflected in fourth quarter 1994. Payment under the settlement
agreement was made using funds provided by Harrah's revolving
-23-
credit facility and by operations. Other income increased for
the six months ended June 30, 1995, versus the comparable prior
year period as a result of a gain on the sale of certain non-
operating property.
The effective tax rates for all periods are higher than the
federal statutory rate primarily due to state income taxes.
Minority interests reflect joint venture partners' shares of
income at joint venture riverboat casinos.
As previously discussed, on June 30, 1995, Harrah's
completed a spin-off of its hotel operations which split the
Company into two independent public corporations. Accordingly,
the operating results of Harrah's former hotel business are
reported as discontinued operations in the accompanying
Consolidated Condensed Financial Statements (see further
discussion below). The prior year statements have been restated
to conform to the 1995 presentation. Second quarter and the six
months ended June 30, 1995, also include after-tax charges of
$6.0 million and $21.2 million, respectively, to accrue the
expenses of the PHC Spin-off transaction.
Effective January 1, 1994, Harrah's changed its accounting
policy for its consolidated casinos related to preopening costs to
capitalize such costs as incurred prior to opening and to expense
them upon opening of each project. Previously, Harrah's had
capitalized such costs and amortized them to expense over 36
months from the date of opening. Operating results for six
months ended June 30, 1994, reflect the cumulative charge against
earnings, net of income taxes, of $7.9 million, or $0.08 per
share, to write off the unamortized preopening costs balances
related to projects opened in prior years (see Note 3 to the
accompanying consolidated financial statements).
Discontinued Hotel Operations
-----------------------------
Second Quarter First Six Months
-------------- Percentage ---------------- Percentage
(in millions) 1995 1994 Increase 1995 1994 Increase
----- ----- ---------- ------ ------ ----------
Revenues $69.6 $63.5 9.6% $132.8 $119.1 11.5%
Operating income 28.2 24.3 16.0% 53.1 44.0 20.7%
Interest expense 8.3 7.3 13.7% 16.7 15.0 11.3%
Provision for income taxes 8.5 6.8 25.0% 15.4 12.7 21.3%
Net earnings of discontinued
hotel operations 11.6 10.2 13.7% 21.2 16.3 30.1%
Operating margin 40.5% 38.3% 2.2pts 40.0% 36.9% 3.1pts
Revenues increased in both second quarter 1995 and the six
months ended June 30, 1995, over the comparable prior year
periods as a result of improvement in revenue per available
room/suite (RevPAR/S) at all three brands and increased franchise
-24-
fees due to system growth. Operating income was further
increased since franchise fees are high-margin and as a result of
lower operating expenses at company-owned hotels. Interest
expense for all periods includes an allocation of Harrah's
corporate interest expense and has increased due to higher
overall corporate interest rates and higher hotel debt levels,
primarily to purchase a new PHC office building, and higher
interest rates on variable rate debt.
As part of the recently completed PHC Spin-off, Promus Hotels
obtained a new $350 million bank facility (the PHC Facility),
which is secured by the stock of PHC and its material
subsidiaries. Concurrent with the PHC Spin-off, approximately
$218 million was drawn on the PHC Facility, $215 million of which
was used to retire a portion of Harrah's existing outstanding
debt. In addition, PHC assumed two of Harrah's existing interest
rate swaps, with a notional amount of $100 million, converting
variable rate debt to a fixed rate.
Prior to the PHC Spin-off, Harrah's corporate debt was not
specifically related to either its casino entertainment or hotel
segment; however, corporate debt service requirements were met
using cash flows provided by both segments. Therefore, for
periods prior to the PHC Spin-off, a portion of Harrah's
corporate debt balance, unamortized deferred finance charges and
interest expense were allocated to discontinued hotel operations
for the periods presented based on the percentage of Harrah's
existing corporate debt which were expected to be retired using
proceeds from the Hotel Facility. Net assets of discontinued
hotel operations at December 31, 1994, includes allocations to
discontinued hotel operations of corporate debt and unamortized
deferred finance charges of $187.8 million and $3.2 million,
respectively, together with debt specifically related to PHC of
$3.3 million. Interest expense of $5.5 million and $3.9 million
for the second quarters ended June 30, 1995 and 1994,
respectively, and $10.5 million and $8.5 million for the six
months then ended, respectively, has been allocated to
discontinued hotel operations.
CAPITAL SPENDING AND DEVELOPMENT
--------------------------------
Harrah's continues to pursue development opportunities
within the casino entertainment industry. These opportunities
include traditional land-based casinos, riverboat casinos, Indian
gaming projects and international casino projects.
Harrah's New Orleans
--------------------
Harrah's Jazz Company (Harrah's Jazz), in which a Harrah's
subsidiary is one of three partners, operates the sole land-based
casino permitted by law to operate in Orleans Parish, Louisiana.
-25-
Harrah's Jazz has leased and refurbished the New Orleans
Municipal Auditorium for use as a temporary casino, which opened
on May 1, 1995, and contains approximately 76,000 square feet of
casino space. This temporary casino will operate until the
construction of the permanent casino entertainment facility is
completed. Harrah's Jazz has also leased the site of the City's
former Rivergate Convention Center, the legally mandated site of
the permanent casino, and construction is currently underway on
the 400,000 square foot facility (approximately 200,000 square
feet of casino space). The permanent facility is expected to
open during late second quarter 1996, but the timing of
completion remains subject to certain pending legal issues,
including litigation affecting the project.
The estimated cost for the project, which includes both the
temporary casino and permanent casino, is presently $819.5
million, including certain modifications currently under
consideration by Harrah's Jazz. Harrah's Jazz originally planned to
fund the project cost from a combination of partner equity
contributions, public debt securities, bank debt and projected
operating cash flow from the temporary casino. The temporary
casino's operating results for its initial three months of
operations have fallen significantly below original expectations
(see Results of Operations). In connection with its requirement
to periodically update the forecasted cash flow from the
temporary casino as a condition to continued use of the proceeds
from the issuance of public debt securities, and based upon such
initial operating results, Harrah's Jazz has changed its capital
budgeting plan for available project sources of funds to assume
no cash flow will be available from the temporary casino.
Based upon this assumption, and assuming the budget
modifications currently under consideration by Harrah's Jazz are
approved and Harrah's Jazz does not experience any further
project delays or project cost overruns, Harrah's Jazz presently
anticipates the remaining budgeted sources of funds discussed
above, together with unbudgeted sources of funds (e.g.
unbudgeted borrowings under the bank debt facility, interest
income, deferred management and consulting fees, proceeds from
equipment financing) will be sufficient to meet the costs of
completing the project.
If these sources of funds are insufficient to fund the project
costs, and Harrah's Jazz does not obtain such funds from its partners
(who are not obligated to contribute such funds in certain cases)
or another source, Harrah's is required, pursuant to its agreements
with project lenders, to fund the shortfall, subject to certain
conditions and exceptions. In exchange for its agreements, Harrah's
is entitled to receive a fee from Harrah's Jazz upon the opening of
the permanent casino.
Harrah's contributed a total of $90 million to the
partnership and currently holds an approximate 53% equity
interest. A partner has an option to acquire 14.6% of Harrah's
ownership equity at an option price of $33.3 million pursuant to
the terms of an option expiring 120 days following the opening
of the temporary casino. Discussions between Harrah's and the
partner are underway concerning a possible extension of this
option. Because Harrah's ownership of a majority interest is
expected to be temporary and voting control continues to be shared
equally by each partner during the option
-26-
period, Harrah's Jazz is not consolidated into Harrah's financial
statements. Upon exercise of the option by Harrah's partner,
Harrah's subsidiary's equity interest in the Partnership will be
approximately 38.3%.
Riverboat Casino Development
----------------------------
Harrah's has announced or completed several enhancements to
its existing Riverboat casino entertainment properties during the
first six months of 1995. In February 1995, Harrah's Shreveport
placed in service a newly constructed riverboat which resulted in
approximately 27% more gaming positions at Harrah's Shreveport.
The former Shreveport riverboat is being refurbished at a cost of
approximately $5 million, and, upon completion of the
refurbishment in third quarter 1995, will be transferred to
Joliet as a replacement for the Southern Star subject to
regulatory approval. The costs associated with exchanging the
riverboats and with maintaining riverboats until they are
returned to service are not material. In addition to the
exchange of riverboats at Joliet, significant additions and
improvements to the existing shoreside pavilion are currently
underway. The shoreside improvements are expected to be
completed by the end of the year at a cost of approximately
$7 million.
In July 1995, a Harrah's affiliate purchased at a bankruptcy
auction the former Southern Belle casino entertainment property,
located near the existing Harrah's casino in Tunica County,
Mississippi, for $34.2 million. In addition to the purchase
price, Harrah's plans to spend up to $49 million to renovate the
facility, including the addition of a hotel with approximately
200 rooms, and expects to open the renovated facility by first
quarter 1996. The renovated facility will feature 55,000 square
feet of casino space. Harrah's currently operates 27,000 square
feet of casino space in its present Harrah's Tunica property
which is expected to remain open.
Harrah's recently announced a $78 million expansion of
Harrah's North Kansas City, to include a second riverboat casino,
hotel, parking garage and additional shoreside amenities, pending
approval of licensing from the Missouri Gaming Commission. When
completed, the expansion is expected to result in 77% more gaming
positions.
In addition to the six riverboat casinos now operating,
Harrah's previously announced a second riverboat casino project
in the state of Missouri to be located in Maryland Heights, a
suburb of St. Louis. Approximately $39 million had been incurred
on the project as of the end of second quarter 1995, of which
$11 million is expected to be paid during the remainder of 1995.
In March 1995, Harrah's announced plans to form a joint venture
with Players International, Inc., to jointly develop a riverboat
-27-
casino entertainment complex in Maryland Heights. Each company
will operate separately branded riverboat casinos and Harrah's,
in partnership with Players, will develop the facility which will
include a 300-room Harrah's hotel. Subject to the receipt of the
necessary approvals and conclusion of necessary documentation,
construction is expected to begin in third quarter 1995 and be
completed in third quarter 1996. Harrah's investment in the
project, including the amount invested to date, is expected to be
approximately $150 million.
In July 1995, Harrah's announced a proposal for additional
development and enhancements at its existing Shreveport property.
Under the proposal, a second riverboat casino, to be owned and
operated by a joint venture between two other companies, will be
added to the Harrah's site and both Harrah's and the joint
venture will invest in major shoreside enhancements, including a
hotel. The proposal is subject to the acquisition by the joint
venture of the second riverboat casino, completion of definitive
agreements and regulatory approval. As a result of the
investment to be made by the joint venture partners, any required
additional investment by Harrah's is expected to be minimal.
Indian Lands
------------
Harrah's opened its first managed Indian gaming facility on
Native American land on December 27, 1994. Harrah's Ak-Chin
Phoenix, located on the Maricopa Indian Reservation approximately
25 miles south of Phoenix and 90 miles north of Tucson, is owned
by the Ak-Chin Indian Community and is managed by Harrah's for a
fee under terms of a management contract with a five year term.
Though Harrah's did not fund the development, it guaranteed the
community's borrowing for development costs of the casino
entertainment facility. Additionally, Sodak Gaming, Inc., has
provided a guarantee to Harrah's for one-half of this financing.
In April 1995, Harrah's received approval from the National
Indian Gaming Commission for gaming management and development
agreements between Harrah's and the Upper Skagit Indian Tribe.
In May 1995, construction began on a planned $22.8 million casino
entertainment facility approximately 70 miles north of Seattle,
Washington, which is expected to open in December 1995. Though
Harrah's is not funding the development, it has guaranteed the
related bank financing.
Harrah's has also previously announced agreements with
certain other Indian tribes, which are in various stages of
negotiation and are subject to various conditions, including
approval from appropriate government agencies, prior to
substantive financial involvement by Harrah's. Upon the receipt
of necessary approvals, Harrah's will most likely guarantee the
related bank financing for the projects, which could be
significant.
-28-
For all existing guarantees of Indian debt, Harrah's has
obtained a first lien on the personal property (tangible and
intangible) of the casino enterprise. Additionally, Harrah's
also receives a limited waiver from the Indian tribe of its
sovereign immunity to allow Harrah's to pursue its rights under
the contracts between the parties and to enforce collection
efforts as to any assets in which a security interest is taken.
International
-------------
Harrah's and its local partner continue construction of a
US$335 million casino entertainment facility in Auckland, New
Zealand. The facility, which will be managed by Harrah's, will
contain approximately 55,000 square feet of casino space and the
casino is expected to open during first quarter 1996. At June
30, 1995, Harrah's investment in the project was approximately
US$27.0 million, representing a 20% interest in the partnership.
Subsequent to June 30, 1995, the partners completed a
private placement offering that lowered Harrah's ownership
interest to 12.5%, resulting in a pre-tax gain to Harrah's of
approximately $11 million.
Existing Casino Facilities
--------------------------
Harrah's continues construction of a $28.6 million company-
owned hotel on the site of Harrah's Reno under a license
agreement with Hampton Inn. The 408-room, 26-story hotel is
expected to begin operations in fourth quarter 1995.
Harrah's recently announced plans for a major expansion at
its Las Vegas casino property. The Company plans to spend up to
$150 million for the addition of a 35-story, 694-room hotel tower,
the expansion of existing casino and restaurant space, and an
upgrade of the property's facade. This project is expected to be
completed by mid-1997. Harrah's Board of Directors has also approved
a plan to spend approximately $81 million at Harrah's Atlantic City
for the construction of a 16-story, 412-room hotel tower and the
expansion of casino and restaurant space, expected to be completed
during early 1998.
In addition to these additions, Harrah's continues the on-
going refurbishment and maintenance of its existing casino
entertainment facilities to maintain the quality standards set
for these properties.
-29-
Overall
-------
In addition to the projects discussed above, Harrah's
continues to pursue additional casino entertainment development
opportunities in various possible jurisdictions across the United
States and abroad. Until necessary approvals to proceed with
development of a project are obtained from the relevant
regulatory bodies, the costs of pursuing casino entertainment
projects are expensed as incurred. Construction-related costs
incurred after the receipt of necessary approvals are capitalized
and depreciated over the estimated useful life of the resulting
asset. Other preopening costs are deferred as incurred and
expensed at the respective property's opening.
A number of these projects, if they go forward, may require,
individually and in the aggregate, a significant capital
commitment and, if completed, may result in significant
additional revenues. The commitment of capital, the timing of
completion and the commencement of operations of casino
entertainment development projects are contingent upon, among
other things, negotiation of final agreements and receipt of
approvals from the appropriate political and regulatory bodies.
Cash needed to finance projects currently under development as
well as additional projects being pursued by Harrah's will be
made available from operating cash flows, the Bank Facility (see
Debt and Liquidity section), joint venture partners, specific
project financing, guarantees by Harrah's of third party debt
and, if necessary, Harrah's debt and/or equity offerings.
Harrah's capital spending during the six months ended June 30,
1995 totalled approximately $68 million. Total anticipated
1995 capital expenditures are estimated at $250 million to
$300 million, including the projects discussed in this Capital
Spending and Development section as well as other projects and
refurbishment of existing facilities . Including the projects
discussed above, capital spending of $300 million to $400 million
is expected during 1996.
DEBT AND LIQUIDITY
------------------
Bank Facility
-------------
In connection with the PHC Spin-off, Harrah's negotiated
changes to its reducing revolving and letter of credit facility
(the Facility) which became effective June 30, 1995. Among the
modifications were an increase in total capacity from
$650 million to $750 million, an extension of the maturity,
reduced borrowing costs and modifications to certain financial
convenants. As of June 30, 1995, $322.0 million in
-30-
borrowings were outstanding under the Facility, with an
additional $25.1 million committed to back letters of credit.
These facility commitments resulted in $402.9 million of the
Facility being available to Harrah's as of June 30, 1995.
Interest Rate Agreements
------------------------
To manage the relative mix of its debt between fixed and
variable rate instruments, Harrah's enters into interest rate
swap agreements to modify the interest characteristics of its
outstanding debt without an exchange of the underlying principal
amount. As of June 30, 1995, Harrah's was a party to the
following interest rate swap agreements which effectively convert
certain fixed rate debt to variable rates:
Effective Next Semi-
Swap Rate at Annual Rate
Associated Rate June 30, Adjustment
Debt (LIBOR+) 1995 Date Swap Maturity
-------------- ------ --------- ----------- -------------
10 7/8% Notes
$200 million 4.73% 11.26% October 15 October 1997
8 3/4% Notes
$50 million 3.42% 9.58% November 15 May 1998
$50 million 3.22% 10.01% July 15 July 1998
In accordance with the terms of the interest rate swap
agreements, the effective interest rate on $50 million of the
8 3/4% Notes was adjusted on July 15, 1995, to 9.05%.
During the first six months of 1995, Harrah's entered into
nine additional interest rate swap agreements to effectively
convert a total of $450 million in variable rate debt to a fixed
rate. Two of these swaps were assumed by PHC as part of the PHC
Spin-off. The remaining seven swaps, which are summarized in the
following table, reset on a quarterly basis.
Effective Rate
Swap Rate on Associated Debt Swap
Associated Debt Paid (Fixed) at June 30, 1995 Maturity
---------------- ----------- ------------------ -------------
Revolving Credit
Facility
(LIBOR plus 3/4%)
$50 million 7.915% 8.665% January 1998
$50 million 7.914% 8.664% January 1998
$50 million 7.910% 8.660% January 1998
$50 million 6.985% 7.735% March 2000
$50 million 6.651% 7.401% May 2000
$50 million 5.788% 6.538% June 2000
$50 million 5.785% 6.535% June 2000
-31-
The interest rate collar on $140 million of variable rate
bank debt expired in June 1995 and was not renewed.
The differences to be paid or received under the terms of
the interest rate swap agreements and, until its expiration, the
rate collar transaction described above are accrued as interest
rates change and recognized as an adjustment to interest expense
for the related debt. Changes in the effective interest rates to
be paid by Harrah's pursuant to the terms of its interest rate
agreements will have a corresponding effect on its future cash
flows. These agreements contain a credit risk that the
counterparties may be unable to meet the terms of the agreements.
Harrah's minimizes that risk by evaluating the creditworthiness
of its counterparties, which are limited to major banks and
financial institutions, and does not anticipate nonperformance by
the counterparties.
As a component of a transaction whereby Harrah's effectively
secured an option to a site for a potential casino, Harrah's has
guaranteed a third party's $25 million variable rate bank loan.
Harrah's also entered into an interest rate swap agreement in
which Harrah's receives a fixed interest rate of 7% from the
third party and pays the variable interest rate of the subject
debt (LIBOR plus 1% at June 30, 1995) to the bank. The negative
value of the swap, which is marked to market by Harrah's, was
approximately $0.4 million at June 30, 1995. Adjustments to the
swap's market value are included in interest expense in the
consolidated statements of income. Harrah's guarantee and the
swap agreement expire December 1, 1996, and are also subject to
earlier termination upon the occurrence of certain events.
Shelf Registration
------------------
Harrah's shelf registration of up to $200 million of new debt
securities to be issued through its wholly-owned subsidiary
Harrah's Operating Company, Inc.(HOC), formerly Embassy Suites,
Inc., expired on August 8, 1995. Harrah's is currently preparing
a shelf registration for $200 million in debt or equity
securities to replace the expired shelf registration.
Other
-----
During second quarter 1995, Harrah's redeemed the
$18.1 million principal amount outstanding of the 11%
Subordinated Debentures due 1999 of Embassy. The cost of this
redemption was not material.
-32-
INCOME TAX MATTERS
------------------
Under the terms of the March 1995 Settlement between the
Company and Bass PLC (Bass), the Tax Sharing Agreement entered
into in connection with the February 7, 1990, spin-off (the 1990
Spin-off) of the stock of Promus to stockholders of Holiday
Corporation has been terminated. Under the Tax Sharing
Agreement, Promus was liable, with certain exceptions, for taxes
of Holiday and its subsidiaries for all pre-1990 Spin-off tax
periods. Bass was obligated under the same agreement to pay
Promus the amount of any tax benefits realized from pre-1990
Spin-off tax periods of Holiday and its subsidiaries. Under the
provisions of the Settlement, Harrah's remains obligated for
certain tax issues related to Promus and its subsidiaries for the
pre-Spin-off tax periods and certain other items related to the
final resolution of disputed issues from the Internal Revenue
Service (IRS) examination of income tax returns for 1987 through
the 1990 Spin-off date. A protest defending the taxpayers'
position on all disputed issues for these periods was filed with
the IRS during third quarter 1993 and negotiations to resolve
these issues continue. Final resolution of the disputed issues
is not expected to have a material adverse effect on Harrah's
consolidated financial position or its results of operations.
EFFECTS OF CURRENT ECONOMIC AND POLITICAL CONDITIONS
----------------------------------------------------
In recent years, the casino entertainment industry in the
United States has experienced significant expansion in both
existing markets and new jurisdictions. Though expansion is
continuing within the industry, the pace of casino gaming
approval within new jurisdictions in the United States has
subsided and, as a result, future increases or decreases in
gaming demand and legalization are difficult to predict. Three
large properties opened in late 1993 in the Las Vegas market, and
development has begun on several new projects and major
expansions of existing properties in and around Las Vegas.
Revenues in the Laughlin market continue to be impacted by the
recently completed additions to competitive supply in and around
Las Vegas and from Indian casinos in the region. In Reno, a
major new project which adds substantial additional casino space
and hotel rooms to that market opened July 28, 1995. New casino
projects have been announced recently in Atlantic City.
In addition, certain new jurisdictions have restrictions on
entry into the market, either through limitations on number of
licenses granted or required minimum initial capital investment,
which serve to limit capacity as well as to limit competition
within those jurisdictions. In other jurisdictions, such as
Mississippi, there are no constraints on market entry, which has
created overcapacity in the market. In such markets, operating
performance may suffer due to oversupply and as competing casinos
engage in high cost marketing and promotional activities that
-33-
increase costs for all market participants. The proliferation of
casino gaming has also been furthered by the Indian Gaming
Regulatory Act of 1988 which, as of July 26, 1995, had resulted
in the approval of 139 compacts for the development of casinos on
Native American lands in 24 states.
Harrah's is not able to determine the long-term impact,
whether favorable or unfavorable, that these developments will
have on the markets in which it currently operates. However,
management believes that the current balance of its operations
among the existing casino entertainment divisions as discussed
above, combined with the further geographic diversification and
the continuing pursuit of the Harrah's national brand strategy,
including the enhanced corporate identity resulting from the PHC
Spin-off, have well-positioned Harrah's to face the challenges
presented by these market forces.
INTERCOMPANY DIVIDEND RESTRICTION
---------------------------------
Agreements governing the terms of its debt require Harrah's
to abide by covenants which, among other things, limit HOC's
ability to pay dividends and make other restricted payments, as
defined, to Harrah's. The amount of HOC's restricted net assets,
as defined, computed in accordance with the most restrictive of
these covenants regarding restricted payments, was approximately
$561.3 million at June 30, 1995. Harrah's principal asset is the
stock of HOC, a wholly-owned subsidiary. HOC holds, directly and
through subsidiaries, the principal assets of Harrah's
businesses. Given this ownership structure, these restrictions
should not impair Harrah's ability to conduct its business
through its subsidiaries or to pursue its development plans.
-34-
PART II - OTHER INFORMATION
---------------------------
Item 4. Submission of Matters To a Vote of Security Holders
---------------------------------------------------
The Company held its annual stockholders meeting on May 26,
1995. The following Proposals were voted upon at the meeting:
1. Ratification of a distribution Against or
in the form of a special dividend For Withheld Abstentions
to all holders of the Company's --- -------- -----------
outstanding shares of Common 79,653,369 212,166 651,277
Stock, on a one-for-two basis, of
all outstanding shares of common
stock and the associated stock-
holders' rights of Promus Hotel
Corporation and the related
arrangements and policies in
connection therewith, as described
in the Company's Proxy Statement
dated April 25, 1995.
---------------------------------
2. Amendment to the Company's Against or
Certificate of Incorporation to For Withheld Abstentions
change the name of the Company to --- -------- -----------
Harrah's Entertainment, Inc., as 79,625,782 233,529 657,501
described in the Company's Proxy
Statement dated April 25, 1995.
---------------------------------
3. Amendment of the Company's 1990 Against or
Stock Option Plan as described in For Withheld Abstentions
the Company's Proxy Statement --- -------- -----------
dated April 25, 1995. 67,992,685 11,709,777 814,350
---------------------------------
4. Amendment of the Company's 1990 Against or
Restricted Stock Plan as described For Withheld Abstentions
in the Company's Proxy Statement --- -------- -----------
dated April 25, 1995. 69,077,371 10,614,737 824,704
---------------------------------
5. Approval of the Promus Hotel Against or
Corporation 1995 Stock Option Plan For Withheld Abstentions
as described in the Company's --- -------- -----------
Proxy Statement dated April 25, 67,719,721 11,042,188 1,754,903
1995.
---------------------------------
-35-
6. Approval of the Promus Hotel Against or
Corporation 1995 Restricted Stock For Withheld Abstentions
Plan as described in the Company's --- -------- -----------
Proxy Statement dated April 25, 68,768,905 9,959,775 1,768,132
1995.
---------------------------------
7. Approval of the Promus Hotel Against or
Corporation Key Executive Officer For Withheld Abstentions
Annual Incentive Plan as described --- -------- -----------
in the Company's Proxy Statement 76,959,580 1,840,677 1,716,555
dated April 25, 1995.
---------------------------------
8. Approval of the Promus Hotel Against or
Corporation Nonmanagement Directors For Withheld Abstentions
Stock Incentive Plan as described --- -------- -----------
in the Company's Proxy Statement 74,371,224 4,432,703 1,712,885
dated April 25, 1995.
---------------------------------
9. Ratification of the election of Against or
the eleven directors of Promus For Withheld Abstentions
Hotel Corporation, who will be --- -------- -----------
divided into three classes, the 76,731,830 3,019,284 765,678
initial terms of which will expire
in 1996, 1997 and 1998, as described
in the Company's Proxy Statement
dated April 25, 1995.
---------------------------------
10. Election of Class II Directors
-------------------------------
Votes Cast
-------------------------------
Against or
Name of Director Elected For Withheld
------------------------ --- --------
Philip G. Satre 91,892,581 272,508
Boake A. Sells 91,917,857 247,232
Shirley Young 91,918,074 247,015
Name of Each Other Director Whose Term of
Office as Director Continued After the Meeting
----------------------------------------------
James L. Barksdale
Susan Clark-Jackson
James B. Farley
Joe M. Henson
Michael D. Rose
Walter J. Salmon
Eddie N. Williams
-36-
11. Amendment to the Company's Against or
Certificate of Incorporation as For Withheld Abstentions
described in the Company's --- -------- -----------
Proxy Statement dated April 25, 78,681,475 1,058,482 776,855
1995.
---------------------------------
12. Approval of the Company's Key Against or
Executive Officer Annual Incentive For Withheld Abstentions
Plan as described in the Company's --- -------- -----------
Proxy Statement dated April 25, 88,111,277 2,344,222 1,709,590
1995.
---------------------------------
13. Approval of the Company's Non- Against or
Management Directors Stock Incentive For Withheld Abstentions
Plan as described in the Company's --- -------- -----------
Proxy Statement dated April 25, 85,986,962 4,471,588 1,706,539
1995.
---------------------------------
14. Ratification of Arthur Andersen Against or
LLP as the Company's independent For Withheld Abstentions
public accountants for the 1995 --- -------- -----------
calendar year. 91,752,400 158,548 254,141
---------------------------------
For Proposals 1 through 9 and Proposal 11, there were 11,648,277
broker nonvotes.
-37-
Item 6. Exhibits and Reports on Form 8-K
----------------------------------------------------------
(a) Exhibits
EX-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.(1)
EX-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.(1)
*EX-4(3) Interest Swap Agreement between The Sumitomo Bank, Limited
and Embassy Suites, Inc. dated June 5, 1995.
*EX-4(4) Interest Swap Agreement between Bankers Trust Company and
Embassy Suites, Inc. dated May 16, 1995.
*EX-4(5) Interest Swap Agreement between Bankers Trust Company and
Embassy Suites, Inc. dated June 6, 1995.
*EX-10(1) Plan of Reorganization and Distribution Agreement, dated
June 30, 1995, between The Promus Companies Incorporated
and Promus Hotel Corporation.
*EX-10(2) 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 Bakers Trust Company, as Administrative
Agent.(1)
*EX-10(3) 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.(1)
-38-
*EX-10(4) First Amendment to Master Collateral Agreement, dated as
of June 30, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., the other Collateral Grantors
parties thereto, Bankers Trust Company, as Administrative
Agent, and Bankers Trust Company as Collateral Agent
amending the Master Collateral Agreement, dated as of July
22, 1993, among The Promus Companies Incorporated, Embassy
Suites, Inc., the other Collateral Grantors parties
thereto, Bankers Trust Company, as Administrative Agent,
and Bankers Trust Company as Collateral Agent.
*EX-10(5) First Amendment to Parent Pledge Agreement, dated as of
June 30, 1995, among The Promus Companies Incorporated and
Bankers Trust Company, as Collateral Agent, amending the
Pledge Agreement, dated as of July 22, 1993, between The
Promus Companies Incorporated and Bankers Trust Company,
as Collateral Agent.
*EX-10(6) First Amendment to Company/Sub Pledge Agreement, dated as
of June 30, 1995, among Embassy Suites, Inc., Harrah's,
Harrah's Club, and Bankers Trust Company, as the General
Collateral Agent, and Bank of America Nevada as the Nevada
Collateral Agent, amending the Pledge Agreement, dated as
of July 22, 1993, among Embassy Suites, Inc., ESI Equity
Development Corporation, Harrah's, Harrah's Club, Casino
Holding Company, and Bankers Trust Company, as the General
Collateral Agent, and Bank of America Nevada as the Nevada
Collateral Agent.
*EX-10(7) First Amendment to Security Agreement, dated as of June
30, 1995, among Embassy Suites, Inc., the Collateral
Grantors parties thereto and Bankers Trust Company, as
Collateral Agent, amending the Security Agreement dated as
of July 22, 1993, among Embassy Suites, Inc., the
Collateral Grantors parties thereto and Bankers Trust
Company, as Collateral Agent.
*EX-10(8) First Amendment to Mortgage, Leasehold Mortgage,
Assignment, Assignment of Leases and Rents and Security
Agreement, dated as of June 30, 1995, among Embassy
Suites, Inc., Marina Associates, the Mortgagors, to
Bankers Trust Company, as Collateral Agent and the
Mortgagee, amending the Mortgage, Leasehold Mortgage,
Assignment, Assignment of Leases and Rents and Security
Agreement, dated as of July 22, 1993, from Marina
Associates and Embassy Suites, Inc., the Mortgagors, to
Bankers Trust Company, as Collateral Agent and the
Mortgagee.
-39-
*EX-10(9) First Amendment to Deed of Trust, Leasehold Deed of Trust,
Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of June 30,
1995, among Embassy Suites, Inc., Harrah's Laughlin, Inc.,
Harrah's Reno Holding Company, Inc., Harrah's, Harrah's
Club and Harrah's Las Vegas, Inc., the Collateral
Grantors, and Bankers Trust Company as Collateral Agent
and Beneficiary, amending 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 Embassy Suites, Inc., Harrah's
Laughlin, Inc., and Harrah's Reno Holding Company, Inc.,
the Grantors, to First American Title Company of Nevada,
as Trustee, for the benefit of Bankers Trust Company, as
Beneficiary.
*EX-10(10) Employee Benefits and Other Employment Matters Allocation
Agreement, dated June 30, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation.
*EX-10(11) Risk Management Allocation Agreement, dated June 30, 1995,
between The Promus Companies Incorporated and Promus Hotel
Corporation.
*EX-10(12) Tax Sharing Agreement, dated June 30, 1995, between The
Promus Companies Incorporated and Promus Hotel
Corporation.
EX-10(13) Amendment, dated May 26, 1995, to The Promus Companies
Incorporated Executive Deferred Compensation Plan.(1)
EX-10(14) Amendment, dated May 26, 1995, to The Promus Companies
Incorporated Deferred Compensation Plan.(1)
EX-10(15) Amendment, dated as of June 7, 1995, to Escrow Agreement
among The Promus Companies Incorporated, certain
subsidiaries thereof and NationsBank.(1)
*EX-10(16) Severance Agreement, dated June 30, 1995, with Bradford W.
Morgan.
*EX-10(17) Amended and Restated Employment Agreement, dated June 30,
1995, between Michael D. Rose and Harrah's Entertainment,
Inc.
EX-10(18) Amendment, dated April 5, 1995, to The Promus Companies
Incorporated 1990 Restricted Stock Plan.(2)
EX-10(19) Amendment, dated April 5, 1995, to The Promus Companies
Incorporated 1990 Stock Option Plan.(2)
EX-10(20) The Promus Companies Incorporated 1996 Non-Management
Director's Stock Incentive Plan dated April 5, 1995.(2)
*EX-10(21) The Promus Companies Incorporated Key Executive Officer
Annual Incentive Plan dated February 24, 1995.
-40-
EX-10(22) Amendment, dated April 5, 1995, to The Promus Companies
Incorporated Amended and Restated Savings and Retirement
Plan.(3)
EX-10(23) Amendment, dated May 26, 1995, to The Promus Companies
Incorporated Amended and Restated Savings and Retirement
Plan.(3)
*EX-10(24) Agreement, dated April 28, 1995, between Michael D. Rose
and and The Promus Companies Incorporated concerning
treatment of stock options in spin-off.
*EX-10(25) Agreement, dated May 1, 1995, between Michael D. Rose and
The Promus Companies Incorporated concerning treatment of
Executive Deferred Compensation Plan account in spin-off.
*EX-11 Computation of per share earnings.
*EX-27 Financial Data Schedule.
------------
*Filed herewith.
FOOTNOTES
---------
(1) Incorporated by reference from the Company's Current Report on
Form 8-K filed June 15, 1995, File No. 1-10410.
(2) Incorporated by reference from the Company's Proxy Statement
filed April 25, 1995.
(3) Incorporated by reference from the Company's Registration
Statement on Form S-8 filed June 6, 1995, File No. 33-59975.
(b) The following reports on Form 8-K were filed during the quarter ended
June 30, 1995.
(1) Form 8-K filed May 19, 1995, that announced, under Item 5 of Form
8-K "Other Events," the modification to the consent solicitation
for 8 3/4% Senior Subordinated Notes due 2000 and 10 7/8% Senior
Subordinated Notes due 2002.
(2) Form 8-K filed May 31, 1995, that announced, under Item 5 of Form
8-K "Other Events," the modification to the consent solicitation
for 8 3/4% Senior Subordinated Notes due 2000 and 10 7/8% Senior
Subordinated Notes due 2002.
(3) Form 8-K filed June 15, 1995, that announced, under Item 5 of
Form 8-K "Other Events," the intended distribution to all holders
of the Company's outstanding shares of common stock of a special
dividend of shares of Promus Hotel Corporation common stock on a
one-for-two basis and associated rights (the "Distribution"), the
Board of Director's approval of the Distribution, the removal of
conditions to the Distribution, the Distribution Date of June 30,
1995, and the treatment of fractional shares in connection with
the Distribution.
-41-
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
HARRAH'S ENTERTAINMENT, INC.
August 14, 1995 BY: MICHAEL N. REGAN
------------------------------
Michael N. Regan
Vice President and Controller
(Chief Accounting Officer)
-42-
Exhibit Index
-------------
Exhibit No. Description Sequential Page No.
----------- ------------ -------------------
EX-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.(1)
EX-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.(1)
*EX-4(3) Interst Swap Agreement between 49
The Sumitomo Bank, Limited and
Embassy Suites, Inc. dated June 5,
1995.
*EX-4(4) Interest Swap Agreement between 53
Bankers Trust Company and Embassy
Suites, Inc. dated May 16, 1995.
*EX-4(5) Interest Swap Agreement between 57
Bankers Trust Company and Embassy
Suites, Inc. dated June 6, 1995.
*EX-10(1) Plan of Reorganization and 61
Distribution Agreement, dated
June 30, 1995, between The Promus
Companies Incorporated and Promus
Hotel Corporation.
-43-
*EX-10(2) Credit Agreement, dated as of July 131
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 Bakers
Trust Company, as Administrative
Agent.(1)
*EX-10(3) Credit Agreement, dated as of June 318
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.(1)
*EX-10(4) First Amendment to Master Collateral 482
Agreement, dated as of June 30, 1995,
among The Promus Companies
Incorporated, Embassy Suites, Inc.,
the other Collateral Grantors
parties thereto, Bankers Trust
Company, as Administrative Agent,
and Bankers Trust Company as
Collateral Agent amending the Master
Collateral Agreement, dated as of
July 22, 1993, among The Promus
Companies Incorporated, Embassy
Suites, Inc., the other Collateral
Grantors parties thereto, Bankers
Trust Company, as Administrative
Agent, and Bankers Trust Company
as Collateral Agent.
-44-
*EX-10(5) First Amendment to Parent Pledge 499
Agreement, dated as of June 30,
1995, among The Promus Companies
Incorporated and Bankers Trust
Company, as Collateral Agent,
amending the Pledge Agreement,
dated as of July 22, 1993, between
The Promus Companies Incorporated
and Bankers Trust Company, as
Collateral Agent.
*EX-10(6) First Amendment to Company/Sub 507
Pledge Agreement, dated as of June
30, 1995, among Embassy Suites,
Inc., Harrah's, Harrah's Club,
and Bankers Trust Company, as the
General Collateral Agent, and
Bank of America Nevada as the
Nevada Collateral Agent, amending
the Pledge Agreement, dated as
of July 22, 1993, among Embassy
Suites, Inc., ESI Equity
Development Corporation, Harrah's,
Harrah's Club, Casino Holding
Company, and Bankers Trust Company,
as the General Collateral Agent,
and Bank of America Nevada as the
Nevada Collateral Agent.
*EX-10(7) First Amendment to Security 514
Agreement, dated as of June 30,
1995, among Embassy Suites, Inc.,
the Collateral Grantors parties
thereto and Bankers Trust Company,
as Collateral Agent, amending the
Security Agreement dated as of
July 22, 1993, among Embassy Suites,
Inc., the Collateral Grantors
parties thereto and Bankers Trust
Company, as Collateral Agent.
*EX-10(8) First Amendment to Mortgage, 524
Leasehold Mortgage, Assignment,
Assignment of Leases and Rents and
Security Agreement, dated as of June
30, 1995, among Embassy Suites, Inc.,
Marina Associates, the Mortgagors,
to Bankers Trust Company, as
Collateral Agent and the Mortgagee,
amending the Mortgage, Leasehold
Mortgage, Assignment, Assignment of
Leases and Rents and Security
Agreement, dated as of July 22,
1993, from Marina Associates and
Embassy Suites, Inc., the Mortgagors,
to Bankers Trust Company, as
Collateral Agent and the Mortgagee.
-45-
*EX-10(9) First Amendment to Deed of Trust, 537
Leasehold Deed of Trust, Assignment,
Assignment of Leases and Rents,
Security Agreement and Financing
Statement, dated as of June 30,
1995, among Embassy Suites, Inc.,
Harrah's Laughlin, Inc., Harrah's
Reno Holding Company, Inc.,
Harrah's, Harrah's Club and
Harrah's Las Vegas, Inc., the
Collateral Grantors, and Bankers
Trust Company as Collateral Agent
and Beneficiary, amending 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 Embassy Suites,
Inc., Harrah's Laughlin, Inc., and
Harrah's Reno Holding Company, Inc.,
the Grantors, to First American
Title Company of Nevada, as Trustee,
for the benefit of Bankers Trust
Company, as Beneficiary.
*EX-10(10) Employee Benefits and Other 590
Employment Matters Allocation
Agreement, dated June 30, 1995,
between The Promus Companies
Incorporated and Promus Hotel
Corporation.
*EX-10(11) Risk Management Allocation 618
Agreement, dated June 30, 1995,
between The Promus Companies
Incorporated and Promus Hotel
Corporation.
*EX-10(12) Tax Sharing Agreement, dated 632
June 30, 1995, between The Promus
Companies Incorporated and Promus
Hotel Corporation.
EX-10(13) Amendment, dated May 26, 1995, to
The Promus Companies Incorporated
Executive Deferred Compensation
Plan.(1)
EX-10(14) Amendment, dated May 26, 1995, to
The Promus Companies Incorporated
Deferred Compensation Plan.(1)
-46-
EX-10(15) Amendment, dated as of June 7,
1995, to Escrow Agreement among
The Promus Companies Incorporated,
certain subsidiaries thereof and
NationsBank.(1)
*EX-10(16) Severance Agreement, dated June 30, 650
1995, with Bradford W. Morgan.
*EX-10(17) Amended and Restated Employment 664
Agreement, dated June 30, 1995,
between Michael D. Rose and
Harrah's Entertainment, Inc.
EX-10(18) Amendment, dated April 5, 1995,
to The Promus Companies
Incorporated 1990 Restricted
Stock Plan.(2)
EX-10(19) Amendment, dated April 5, 1995,
to The Promus Companies
Incorporated 1990 Stock
Option Plan.(2)
EX-10(20) The Promus Companies
Incorporated 1996 Non-Management
Director's Stock Incentive
Plan dated April 5, 1995.(2)
*EX-10(21) The Promus Companies 697
Incorporated Key Executive Officer
Annual Incentive Plan dated
February 24, 1995.
EX-10(22) Amendment, dated April 5, 1995,
to The Promus Companies Incorporated
Amended and Restated Savings and
Retirement Plan.(3)
EX-10(23) Amendment, dated May 26, 1995,
to The Promus Companies Incorporated
Amended and Restated Savings and
Retirement Plan.(3)
*EX-10(24) Agreement, dated April 28, 1995, 701
between Michael D. Rose and and
The Promus Companies Incorporated
concerning treatment of stock options
in spin-off.
*EX-10(25) Agreement, dated May 1, 1995, between 705
Michael D. Rose and The Promus
Companies Incorporated concerning
treatment of Executive Deferred
Compensation Plan account in
spin-off.
-47-
*EX-11 Computation of per share earnings. 707
*EX-27 Financial Data Schedule. 708
------------
*Filed herewith.
FOOTNOTES
---------
(1) Incorporated by reference from the Company's Current Report on Form 8-
K filed June 15, 1995, File No. 1-10410.
(2) Incorporated by reference from the Company's Proxy Statement filed
April 25, 1995.
(3) Incorporated by reference from the Company's Registration Statement on
Form S-8 filed June 6, 1995, File No. 33-59975.
-48-
EX-4(3)
CONFIRMATION
Date: June 5, 1995
To: Ms. Katherine Weien
Embassy Suites, Inc.
1023 Cherry Road
Memphis, TN 38117
Telephone: 901 537-3338
Telefax: 901 762-8998
From: Mr. Suresh Tata, Vice President
US Corporate II
The Sumitomo Bank, Limited,
New York Branch
277 Park Avenue
New York, NY 10172
Telephone: 212 224-4129
Telefax: 212 224-5188
cc: Documentation Contact: Mr. Rudy Cabuya
Telephone: 212 224-4252
Telefax: 212 593-9522
Re: USD 50,000,000.00 Swap Transaction, dated as of June 2, 1995 between
The Sumitomo Bank, Limited, acting through its New York Branch
("Party A") and Embassy Suites, Inc. ("Party B").
Our Reference Number: 9511308
The purpose of this letter agreement is to set forth the terms and
conditions of the Swap Transaction entered into between The Sumitomo Bank,
Limited, acting through its New York Branch and Embassy Suites, Inc. on the
Trade Date specified below (the "Swap Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the Interest Rate and
Currency Exchange Agreement specified below. This document supersedes all
previous confirmations and amendments with respect to the above referenced
transaction.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swap Dealers Association, Inc.), without
regard to any revision or subsequent edition thereof, are incorporated into
this Confirmation. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will
govern.
1. ISDA AGREEMENT:
This Confirmation supplements, forms a part of, and is subject to, the ISDA
Master Agreement dated as of October 22, 1992, as amended and supplemented
from time to time (the "Agreement"), between The Sumitomo Bank, Limited and
Embassy Suites, Inc. All provisions contained in the Agreement shall
govern this Confirmation except as expressly modified below.
2. TERMS OF SWAP TRANSACTION:
The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:
Notional Amount: USD 50,000,000.00
Trade Date: June 2, 1995
Effective Date: June 6, 1995
Termination Date: June 6, 2000
FLOATING AMOUNTS: (PARTY A)
Floating Rate Payer: The Sumitomo Bank, Limited, acting through
its New York Branch
Floating Rate Payer Payment September 6, December 6, March 6, June 6,
Dates: in each year from and including September 6,
1995 to and including June 6, 2000; subject
to adjustment in accordance with the
Modified
Following Business Day Convention
Floating Rate For Initial 5.875% (percent) per annum
Calculation Period:
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 3 Months
Spread: Inapplicable
Floating Rate Day Count Actual/360
Fraction:
Reset Dates: First day of each Calculation Period
Compounding: Inapplicable
FIXED AMOUNTS: (PARTY B)
Fixed Rate Payer: Embassy Suites, Inc.
Fixed Rate Payer Payment September 6, December 6, March 6, June 6,
Dates: in each year from and including September 6,
1995 to and including June 6, 2000; subject
to adjustment in accordance with the
Modified
Following Business Day Convention with No
Adjustment for Period End Dates
Fixed Rate: 5.785% (percent) per annum
Fixed Rate Day Count Actual/360
Fraction:
Business Days For Payments New York and London
By Both Parties:
Calculation Agent: The Sumitomo Bank, Limited
Governing Law: New York
3. CREDIT SUPPORT DOCUMENTS:
(A) The Collateral Documents (as defined in the Credit Agreement, dated as
of July 22, 1993, among Embassy Suites, Inc., The Promus Companies
Incorporated, certain Subsidiaries of Embassy Suites, Inc., the banks from
time to time party thereto, 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 (the "Credit Agreement")).
(B) Endorsement to title insurance policies relating to properties
underlying the Mortgages and the Assignment of Lease (both as defined in
the Credit Agreement).
4. PAYMENT INSTRUCTIONS:
Payments to The Sumitomo Bank, Limited, acting through its New York Branch
of USD amounts:
Depository: Morgan Guaranty Trust Company of New York,
New York
Branch
Address: New York, NY
In Favor Of: The Sumitomo Bank, Limited
New York Branch
Account No.: 631-28-256
CHIPS: 013571
Attention: Interest Rate Swap Settlement
Payments to Embassy Suites, Inc. of USD amounts:
Depository: First Tennessee Bank
Address: Memphis, Tennessee
In Favor Of: Embassy Suites, Inc.
Account No.: 841900
ABA No.: 084-000-026
Please confirm that the foregoing correctly sets forth the terms of the
agreement between you and us by executing this Confirmation and returning
it to the documentation contact above.
Yours Sincerely,
The Sumitomo Bank, Limited, acting through its New York Branch
By: YOSHINORI KAWAMURA
---------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
Confirmed as of the date first written above:
Embassy Suites, Inc.
By: WILLIAM S. McCALMONT
---------------------------
Name: William S. McCalmont
Title: Vice President & Treasurer
EX-4(4)
Page 1 of 4
To: EMBASSY SUITES, INC.
1023 CHERRY ROAD
MEMPHIS, Tennessee 38117
Attn: JOSH HIRSBERG
Fax: 901 762 8998
From: BANKERS TRUST COMPANY
1 BANKERS TRUST PLAZA
130 LIBERTY STREET
NEW YORK, New York 10006
Date: May 16, 1995
CONFIRMATION
BT Transaction Ref. No. N000061136
The purpose of this communication is to set forth the terms and conditions
of the transaction entered into between us on the Trade Date specified
below (the "Transaction"). This communication constitutes a "Confirmation"
as referred to in the master agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms parts of, and is subject to, the
following master agreement:
Dated As Of : May 5, 1995
Between : EMBASSY SUITES, INC.
and : BANKERS TRUST COMPANY
BT Master Agreement Number : 14784
All provisions contained in the master agreement govern this Confirmation
except as expressly modified below.
Page 2 of 4
The terms of the particular Transaction to which this Confirmation relates
are as follows:
Calculation Amount : USD 50,000,000.00
Trade Date : May 5, 1995
Effective Date : May 10, 1995
Termination Date : May 10, 2000
The Floating Rate Payer pays on each Payment Date an amount determined in
accordance with the following:
Floating Rate Payer : BANKERS TRUST COMPANY
Payment Dates : Commencing on August 10, 1995 and
quarterly thereafter on the 10th calendar
day of each November, February, May and
August, up to and including May 10, 2000
Floating Rate Option : USD-LIBOR-BBA
Designated Maturity : 3 Months
Spread : Inapplicable
Floating Rate for initial :
Calculation Period : 6.125000 percent
Rounding Factor : One hundred-thousandth of one percent
Floating Rate Day
Count Fraction : Actual/360
Compounding : Inapplicable
Reset Dates : The first day of each Calculation Period
Business Day : The following cities are specified for
use in the definition of "Business Day"
as it applies to the Floating Rate Payer:
London
New York City
Business Day Convention : Modified Following
Page 3 of 4
The Fixed Rate Payer pays on each Payment Date an amount determined in
accordance with the following:
Fixed Rate Payer : EMBASSY SUITES, INC.
Payment Dates : Commencing on August 10, 1995 and
quarterly thereafter on the 10th calendar day
of each November, February, May and August,
up to and including May 10, 2000
Fixed Rate : 6.651000 percent
Fixed Rate Day Count
Fraction : Actual/360
Business Day : The following cities are specified for use
in the definition of "Business Day" as it
applies to the Fixed Rate Payer:
London
New York City
Business Day Convention : Modified Following
Additional Provisions : None
For all USD payments,
We will pay you at : FIRST TENNESSEE BANK
MEMPHIS
ABA # 084000026
For the Account of : EMBASSY SUITES, INC.
Account Number : 841900
Attention : WES OATES
For all USD payments,
Please pay us at : BANKERS TRUST COMPANY
NEW YORK
ABA # 021001033
For the Account of : BANKERS TRUST INTERNATIONAL
MAIN SWAP ACCOUNT
Account Number : 04-822-378
Each Party has agreed to make payments to the other in accordance with this
Confirmation. Please confirm that the foregoing correctly sets forth the
terms of our agreement by signing this Confirmation and returning it via
fax to the attention of the BT Confirmation Unit in New York, fax no.
(212)250-7263.
Please check this Confirmation carefully and immediately upon receipt, so
that errors or discrepancies can be promptly identified and rectified.
Page 4 of 4
We are very pleased to have concluded this Transaction with you.
Regards,
BANKERS TRUST COMPANY
By: TARANA BARKAT
---------------------------
Tarana Barkat
Assistant Vice President
Confirmed as of the date
first above written:
EMBASSY SUITES, INC.
By: WILLIAM S. McCALMONT
---------------------------
Name and William S. McCalmont
Title: V.P. & Treasurer
Counterparty's
Deal Number : ---------------
EX-4(5)
Page 1 of 4
To: EMBASSY SUITES, INC.
1023 CHERRY ROAD
MEMPHIS, Tennessee 38117
Attn: JOSH HIRSBERG
Fax: 901 762 8998
From: BANKERS TRUST COMPANY
1 BANKERS TRUST PLAZA
130 LIBERTY STREET
NEW YORK, New York 10006
Date: June 6, 1995
CONFIRMATION
BT Transaction Ref. No. N000062831
The purpose of this communication is to set forth the terms and conditions
of the transaction entered into between us on the Trade Date specified
below (the "Transaction"). This communication constitutes a "Confirmation"
as referred to in the master agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms parts of, and is subject to, the
following master agreement, as amended and supplemented from time to time:
Dated As Of : May 5, 1995
Between : EMBASSY SUITES, INC.
and : BANKERS TRUST COMPANY
BT Master Agreement Number : 14784
All provisions contained in the master agreement govern this Confirmation
except as expressly modified below.
Page 2 of 4
The terms of the particular Transaction to which this Confirmation relates
are as follows:
Calculation Amount : USD 50,000,000.00
Trade Date : June 2, 1995
Effective Date : June 6, 1995
Termination Date : June 6, 2000
The Floating Rate Payer pays on each Payment Date an amount determined in
accordance with the following:
Floating Rate Payer : BANKERS TRUST COMPANY
Payment Dates : Commencing on September 6, 1995 and quarterly
thereafter on the 6th calendar day of each
December, March, June and September, up to
and including June 6, 2000
Floating Rate Option : USD-LIBOR-BBA
Designated Maturity : 3 Months
Spread : Inapplicable
Floating Rate for initial :
Calculation Period : 5.875000 percent
Rounding Factor : One hundred-thousandth of one percent
Floating Rate Day
Count Fraction : Actual/360
Compounding : Inapplicable
Reset Dates : The first day of each Calculation Period
Business Day : The following cities are specified for
use in the definition of "Business Day"
as it applies to the Floating Rate Payer:
London
New York City
Business Day Convention : Modified Following
Page 3 of 4
`The Fixed Rate Payer pays on each Payment Date an amount determined in
accordance with the following:
Fixed Rate Payer : EMBASSY SUITES, INC.
Payment Dates : Commencing on September 6, 1995 and quarterly
thereafter on the 6th calendar day of each
December, March, June and September, up to
and including June 6, 2000
Fixed Rate : 5.787500 percent
Fixed Rate Day Count
Fraction : Actual/360
Business Day : The following cities are specified for use
in the definition of "Business Day" as it
applies to the Fixed Rate Payer:
London
New York City
Business Day Convention : Modified Following
Additional Provisions : None
For all USD payments,
We will pay you at : FIRST TENNESSEE BANK
MEMPHIS
ABA # 084000026
For the Account of : EMBASSY SUITES, INC.
Account Number : 841900
Attention : WES OATES
For all USD payments,
Please pay us at : BANKERS TRUST COMPANY
NEW YORK
ABA # 021001033
For the Account of : BANKERS TRUST INTERNATIONAL
MAIN SWAP ACCOUNT
Account Number : 04-822-378
Each Party has agreed to make payments to the other in accordance with this
Confirmation. Please confirm that the foregoing correctly sets forth the
terms of our agreement by signing this Confirmation and returning it via
fax to the attention of the BT Confirmation Unit in New York, fax no.
(212)250-7263.
Please check this Confirmation carefully and immediately upon receipt, so
that errors or discrepancies can be promptly identified and rectified.
Page 4 of 4
We are very pleased to have concluded this Transaction with you.
Regards,
BANKERS TRUST COMPANY
By: TARANA BARKAT
---------------------------
Tarana Barkat
Assistant Vice President
Confirmed as of the date
first above written:
EMBASSY SUITES, INC.
By: WILLIAM S. McCALMONT
---------------------------
Name and William S. McCalmont
Title: V.P. & Treasurer
Counterparty's
Deal Number : ---------------
EX-10(1)
PLAN OF REORGANIZATION AND DISTRIBUTION AGREEMENT
This PLAN OF REORGANIZATION AND DISTRIBUTION AGREEMENT (this
"Agreement") is made as of this 30th 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 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.
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 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 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.
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 "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 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 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 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.
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
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:
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;
(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 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 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 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 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.
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 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
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.
(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.
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;
(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.
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 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 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.
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 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, 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 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 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
manner 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, 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 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 PHC will continue to own an equity
interest and with respect to which hotel real estate PHC 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 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.
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 (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.
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 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 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 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 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 (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.
Section 8.02. Hiring of Employees. Neither PRH nor Promus nor
their respective Affiliates shall, for a period of two years after the
Distribution Date, hire any employee of the other company or its subsidiaries
(it being understood that PRH or its Affiliates may employ any PRH Employee and
Promus or its Affiliates may employ any Retained Employee), except that, 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 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 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
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.
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 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.
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: CHARLES A. LEDSINGER, JR.
------------------------------
Name: Charles A. Ledsinger, Jr.
Title: Senior Vice President
PROMUS HOTEL CORPORATION,
a Delaware corporation
By: DONALD H. DEMPSEY
------------------------------
Name: Donald H. Dempsey
Title: SVP-CFO
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
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
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
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 . . . . . . . . . . . . . . . . . . . . . 47
Section 9.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.06. Amendments . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.07. Successors and Assigns . . . . . . . . . . . . . . . . 48
Section 9.08. Termination . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.09. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 48
Section 9.10. No Third-Party Beneficiaries . . . . . . . . . . . . . 48
Section 9.11. Titles and Headings . . . . . . . . . . . . . . . . . . 49
Section 9.12. Exhibits and Schedules . . . . . . . . . . . . . . . . 49
Section 9.13. Legal Enforceability . . . . . . . . . . . . . . . . . 49
Section 9.14. Arbitration of Disputes . . . . . . . . . . . . . . . . 49
EXHIBITS
SCHEDULES
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 Deferred Compensation Plans and Deferred Compensation Plan
5. Commitment to purchase $25,000,000 of shares in Felcor Suites Hotels, Inc.
or units in Felcor Suites Hotels Limited Partnership
6. 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) [Art?]
- 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 Bloomington 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 Raleigh 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 genera; 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. King 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 and, after the Distribution has been consummated, those
certain hotel-related assets of Promus and its Subsidiaries that will be
retained by Promus and its Subsidiaries but which shall be managed by Promus
Hotels, Inc. pursuant to that certain Asset Management Agreement by and between
Embassy Suites, Inc. and Promus Hotels, Inc. to be executed as of June 30, 1995.
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 (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
(i)
Page
----
SECTION 5. Conditions Precedent to the Restatement
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
(ii)
Page
----
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 54
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
(iii)
Page
----
9.11 Limitation on Certain Restrictions on Subsidiaries . . . . . 88
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
(iv)
Page
----
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 142
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 143
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
(v)
Pledge Agreement
EXHIBIT H First Amendment to the Security Agreement
EXHIBIT I First Amendment to the Company/Sub Guaranty
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 simultaneously with the incurrence of, the respective incur-
rence 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
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 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 Swingline Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the provi-
sions 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 satisfied, (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 Percentages (determined
before giving effect to any termination of the Revolving Loan Commitments
pursuant to the last paragraph of Section 10), provided that (x) all inter-
--------
est 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 Borrowing (which shall be a Business Day), whether the
Revolving Loans being made pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans,
the initial Interest Period to be applicable thereto. The Administrative
Agent shall promptly give each Bank written notice of such proposed Bor-
rowing, of such Bank's proportionate share thereof and of the other matters
required by the immediately
-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 im-
mediately available funds at the Payment Office of the Administrative
Agent, and the Administrative Agent will make available to the respective
Borrower at the Payment Office the aggregate of the amounts so made
available
-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 respective Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If
such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the respective Borrower and such Borrower shall immediately
pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover on demand from such
Bank or such Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to such Borrower until the date
such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Bank, the overnight
Federal Funds Rate and (ii) if recovered from such Borrower, the rate of
interest applicable to the respective Borrowing, as determined pursuant to
Section 1.08. 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 substantially in the form of Exhibit B-2, with blanks appro-
priately 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 prin-
cipal amount of the Revolving Loans made pursuant to one or more Borrowings
of one or more Types of Revolving Loans into a Borrowing of another Type of
Revolving Loan, provided that (i) except as otherwise provided in Section
--------
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 out-
standing 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 Eurodollar 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 Con-
version") specifying the Revolving Loans to be so converted, the Bor-
rowing(s) pursuant to which such Revolving Loans were made and, if to be
converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt
written notice of any such proposed conversion affecting any of its
Revolving Loans. Upon any such conversion the proceeds thereof will be
deemed to be applied directly on the day of such conversion to prepay the
outstanding principal amount of the Revolving Loans being converted.
1.07 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 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) 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 repaid), 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
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 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
Borrowing of Eurodollar Loans, the respective Borrower has failed to elect,
or is not permitted to elect, a new Interest Period to be applicable to
such Eurodollar Loans as provided above, such Borrower shall be deemed to
have elected to convert such Eurodollar Loans into Base Rate Loans effec-
tive as of the expiration date of such current Interest Period.
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, 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 the Notes or any other amounts
payable hereunder (except for changes in the rate of tax on, or deter-
mined 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 Euro-
dollar 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
obligations hereunder, then the Borrowers shall pay (and shall be jointly
and severally obligated to pay) to such Bank, upon its written demand
therefor, such additional amounts as shall be required to compensate such
Bank or such other corporation for the increased cost to such Bank or such
other corporation or the reduction in the rate of return to such Bank or
such other corporation as a result of such increase of capital. In de-
termining 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 deter-
mining 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 re-
payment made pursuant to Section 4.01 or 4.02 or a result of an accel-
eration 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 prepay-
ment given by such Borrower; or (iv) as a consequence of (x) any other
default by such Borrower to repay its Loans when required by the terms of
this Agreement or any 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 (collec-
tively, 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 remains 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 Support-
able 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 is-
suance:
(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 accept-
able 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
Borrower 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 Adjusted 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 not be 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 Administra-
tive 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 speci-
fied 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 dis-
bursement, interest shall thereafter accrue on the amounts so paid or dis-
bursed by such Letter of Credit Issuer (and until reimbursed by such Bor-
rower) 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
Drawings (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 condi-
tions 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 under-
writing 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 in-
ventory, 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
Outstandings 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 such Revolving 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 jurisdic-
tion 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
jurisdiction 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 necessary 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,
certifying 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 respec-
tive 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, to provide to the Company and the Adminis-
trative 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 to the 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 satis-
factory 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 desirable, in the judgment of the Collateral Agent,
effectively to create or maintain a valid and enforceable first
priority mortgage lien on each such Mortgaged Property in favor of the
Collateral Agent for the benefit of the Secured Parties;
(ii) endorsements to the Mortgage Policies issued by First
American Title Insurance Company or such other title insurers
reasonably satisfactory to the Administrative Agent in amounts satis-
factory to the Administrative Agent assuring the Administrative Agent
that the Mortgages on the Mortgaged Properties are valid and enforce-
able first priority mortgage liens on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Per-
mitted Encumbrances and such endorsements shall otherwise be in form
and substance satisfactory to the Administrative Agent, and shall
include, as appropriate, an endorsement for future advances under this
Agreement and the 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 satis-
factory to the Administrative Agent, certified by a licensed profes-
sional 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 trans-
actions 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 con-
ditions upon the consummation of the transactions contemplated by this
Agreement, the Hotel Transaction Documents or otherwise referred to herein
or therein. Additionally, there shall not exist any judgment, order,
injunction or other restraint issued or filed or a hearing seeking
injunctive relief or other restraint pending or notified prohibiting or
imposing materially adverse conditions upon the consummation of the
transactions contemplated by this Agreement, the Hotel Transaction
Documents or otherwise referred to herein or therein.
(b) On or prior to the 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 Subsidi-
aries, 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 Effective Date, the following additional conditions shall be
satisfied:
-47-
(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 such Credit Event may be incurred without violating
the terms of the 8-3/4% Senior Subordinated Notes Indenture.
-48-
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 spec-
ified 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 documents 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 this Section 7 after the Restatement
Effective Date the term Documents shall not include the Hotel Transaction
Documents).
-49-
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 pros-
pects 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 accord-
ance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and
by equitable principles (regardless of whether enforcement is sought in
equity or at law).
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 provision of any law, statute, rule or regulation or any
order, writ, injunction or decree of any court or governmental instrumen-
tality, (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 pursuant to the Collateral Documents
and, in the case of the Hotel Company and the Hotel Subsidiaries, pursuant
to the Hotel Facility) upon any of the property or assets of Parent or any
of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement, or any other material
agreement, contract or
-50-
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 respec-
tive 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 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
-51-
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 assumptions and estimates on which the
Projections were based are not reasonable; provided that no assurance can
be given that the projected results will be realized or with respect to the
-52-
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 circum-
stances 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 re-
lated 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 Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
-53-
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 Sub-
sidiaries 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 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
-54-
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 first perfected security
interests in the Partnership Interests described in the Assignment of
Partnership Interests Agreement, subject to no security interests of any
-55-
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.
7.13 Capitalization. (a) On the Restatement Effective Date,
--------------
the authorized capital stock of Parent shall
-56-
consist of 360,000,000 shares of common stock, $.10 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 environmental standards and controls),
except such noncompliances as could not, individually or in the aggregate,
reasonably be
-57-
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.
7.16 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 Sub-
sidiaries or any Real Property owned or operated by Parent or any of its
Subsidiaries that individually or in the aggregate could reasonably be
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole. There are no
facts, circumstances, conditions or occurrences on any Real Property owned
or operated by Parent or any of its Subsidiaries or, to the best knowledge
of Parent or any Borrower after due inquiry, on any property adjoining or
in the vicinity of any such Real Property that, to the best knowledge of
Parent or any 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 (financ-
ial 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.
-58-
(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 knowl-
edge of Parent or any Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or any Borrower,
threatened against Parent or any of its Subsidiaries and (iii) to the best
knowledge of Parent or any Borrower, no union representation question
existing with respect to the employees of Parent or 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.
-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
subordination 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 judg-
ment, order or injunction prohibiting or imposing material adverse condi-
tions 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
Drawings, together with interest, Fees and all other obligations incurred
hereunder 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 accom-
panied by a statement of the chief financial officer, controller or
treasurer of Parent that the budget has been approved by the Board of
Directors of Parent or the Company.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 8.01(a) and (b), a
certificate of the chief financial officer, controller or treasurer of
Parent to the effect that, to the best of such officer's knowledge, no
Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate shall set forth (i)
the calculations required to establish whether Parent and the
Borrowers were in compliance with the provisions of Sections 3.03(d)
and (e), 9.03(v), 9.04(vi), (ix) through and including (xii), (xiv)
and (xv), 9.05 and 9.07 through 9.09, inclusive, at the end of such
fiscal quarter or year, as the case may be and (ii) the Senior Implied
Indebtedness ratings, if any, assigned by Moody's and S&P to the
Company's Indebtedness at the end of such fiscal quarter or year, as
the case may be.
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(e) Notice of Default or Litigation. Promptly upon, and in any
-------------------------------
event within three Business Days after, an officer of Parent or any
Borrower obtains knowledge thereof, notice of (i) the occurrence of
any event which constitutes a Default or an Event of Default and (ii)
any litigation or governmental investigation or proceeding (including
any investigation by any Gaming Authority) pending (x) against Parent
or any of its Subsidiaries which could reasonably be expected to mate-
rially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects
of Parent and its Subsidiaries taken as a whole, (y) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (z)
with respect to any Credit Document.
(f) Other Reports and Filings. Promptly, (i) copies of all
-------------------------
financial statements, reports and proxy materials which Parent has
mailed to its shareholders generally, (ii) copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalent) which Parent or any of its
Subsidiaries shall file with the Securities and Exchange Commission or
any successor thereof (the "SEC") and (iii) to the extent not
otherwise provided to the Banks, copies of all notices, reports and
financial statements which Parent or any of its Subsidiaries shall
deliver to holders of any issue of Indebtedness if the aggregate
principal amount thereof exceeds (or upon the utilization of any used
commitments may exceed) $25,000,000 pursuant to the terms of the
documentation governing any such issue of Indebtedness (or any
trustee, agent or other representative therefor).
(g) Environmental Matters. Promptly upon, and in any event
---------------------
within ten Business Days after, an officer of Parent or any Borrower
obtains knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters could not,
individually or when aggregated with all other such environmental
matters, be reasonably expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (finan-
cial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole: (i) any pending or threatened Environmental Claim against
Parent or any of its Subsidiaries or any Real Property owned or oper-
ated by Parent or any of its
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Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by Parent or any of its Subsidiaries
that (a) results in noncompliance by Parent or any of its Subsidiaries
with any applicable Environmental Law or (b) could reasonably be
expected to form the basis of an Environmental Claim against Parent or
any of its Subsidiaries or any such Real Property; (iii) any condition
or occurrence on any Real Property owned or operated by Parent or any
of its Subsidiaries that could reasonably be expected to cause such
Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by Parent or any of its Subsidiaries
of such Real Property under any Environmental Law; and (iv) the taking
of any removal or remedial action in response to the actual or alleged
presence of any Hazardous Material on any Real Property owned or oper-
ated by Parent or any of its Subsidiaries as required by any
Environmental Law or any governmental or other administrative agency;
provided that in any event Parent shall deliver to each Bank all
--------
notices received by Parent or any of its Subsidiaries from any
government or governmental agency under, or pursuant to, CERCLA. All
such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial
action and Parent's or such Subsidiary's response thereto. In
addition, Parent will provide the Banks with copies of all material
written communications by Parent or any of its Subsidiaries with any
government or governmental agency relating to Environmental Laws, all
material written communications with any person relating to
Environmental Claims, and such detailed reports of any Environmental
Claim as may reasonably be requested by the Banks.
(h) Other Information. From time to time, such other
-----------------
information or documents (financial or otherwise) with respect to
Parent or its Subsidiaries as the Administrative Agent or any Bank may
reasonably request.
8.02 Books, Records and Inspections. Parent will, and will
------------------------------
cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with generally
accepted accounting principles and all requirements of law shall be made of
all dealings and transactions in relation to its business and activities.
Parent will, and will cause each of its Subsidiaries to, permit officers
and designated representatives of the Administrative Agent or any Bank to
visit and inspect, at the Admin-
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istrative Agent's or such Bank's expense and under guidance of officers of
Parent or such Subsidiary, any of the properties of Parent or such Sub-
sidiary, and to examine the books of account of Parent or such Subsidiary
and discuss the affairs, finances and accounts of Parent or such Subsidiary
with, and be advised as to the same by, its and their officers and in-
dependent 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 condition.
(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 policy-
holders service rating of not less than "B+VI" or such other insurers as
the Administrative Agent may approve in writing. In addition, all insur-
ance with respect to the Collateral shall name the Collateral Agent as loss
payee, for the benefit of the Secured Parties, and shall provide that (a)
the proceeds thereof shall be paid directly to the Collateral Agent,
subject to Section 3.01(c) of each Mortgage and Section 11 of the Security
Agreement and (b) no cancellation,
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material change or reduction thereof shall be effective until at least 30
days after receipt by the Collateral Agent of written notice thereof.
Parent will deliver to the Banks (i) upon request of any Bank through the
Administrative Agent from time to time full information as to the insurance
carried, (ii) for insurance with respect to the Collateral and all other
material insurance, within five days of receipt of notice from any insurer,
a copy of any notice of cancellation or material change in coverage from
that existing on the date of this Agreement and (iii) forthwith, notice of
any cancellation or nonrenewal of any insurance coverage of Parent or any
of its Material Subsidiaries with respect to the Collateral or any other
material insurance coverage of Parent or any of its Subsidiaries. Nothing
in this Section 8.03(b) shall be construed to restrict the right of Parent
or any Material Subsidiaries from obtaining blanket insurance as permitted
under the Mortgages, or self insurance of certain risks to the extent such
insurance is consistent with the past practices of Parent or such Material
Subsidiary and consistent with reasonable and prudent insurance
underwriting practices. The provisions of this Section 8.03(b) shall be
deemed supplemental to, but not duplicative of, the provisions of the
Security Agreement and the Mortgages. If Parent or any of its Material
Subsidiaries shall fail to insure its property in accordance with this
Section 8.03(b), the Collateral Agent shall have the right (but shall be
under no obligation) upon notice to Parent or the respective Material
Subsidiary to procure such insurance and Parent and each Borrower agrees to
reimburse the Collateral Agent for all costs and expenses of procuring such
insurance.
8.04 Corporate Franchises. Parent will, and will cause each of
--------------------
its Material Subsidiaries to, do or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its
material rights, franchises, licenses and patents; provided, however, that
-------- -------
nothing in this Section 8.04 shall prevent (i) sales of stock or assets by
Parent or any of its Subsidiaries in accordance with Section 9.02, (ii) the
withdrawal by Parent or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or other-
wise) or prospects of Parent and its Subsidiaries taken as a whole or (iii)
the taking of any action respecting any right, franchise, license or patent
determined by the management of Parent or such Subsidiary to be in the best
interest of Parent or such Subsidiary.
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8.05 Compliance with Statutes, etc. Parent will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes,
regulations (including Gaming Regulations) and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, 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 Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in such compliance, and will keep or cause to be kept all
such Required Collateral free and clear of any Liens imposed pursuant to
such Environmental Laws other than Liens which could not materially detract
from the value of any such Required Collateral. Neither Parent nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of,
or permit (to the extent within Parent's or such Subsidiary's reasonable
control) the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
managed by Parent or any of its Subsidiaries, or transport or permit (to
the extent within Parent's or such Subsidiary's reasonable control) the
transportation of Hazardous Materials to or from any such Real Property
except as in material compliance with all applicable Environmental Laws and
reasonably required in connection with the operation, use and maintenance
of any such Real Property in the conduct of Parent's or such Subsidiary's
business.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after either (i) an Event of
Default shall have 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
concerning 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 Sub-
sidiary of Parent or any ERISA Affiliate will or may incur any liability
(including any contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA 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 Com-
pany's failure to comply with this Section 8.11. With respect to any Bank
described in Section 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 transferee 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 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
Drawings, together with interest, Fees and all other Obligations incurred
hereunder 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
intangible) of Parent or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
Parent or any of its Subsidiaries), or assign any right to receive income
or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute; pro-
----
vided that the provisions of this Section 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 proceedings for which adequate reserves have been estab-
lished in accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of Parent or any of
its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money,
such as carriers', warehousemen's, materialmen's and mechanics' liens
and other similar Liens arising in the ordinary
-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, perform-
ance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations
for the payment of borrowed money);
(xiv) Liens securing reimbursement obligations with respect to
commercial and standby letters of credit incurred by the Company or
any of its Subsidiaries in the ordinary course of business provided
that (x) each such letter of credit is in a face amount of less than
$1,000,000 and (y) the aggregate face amount of all such letters of
credit does not exceed $5,000,000;
(xv) restrictions pursuant to legends on stock required by (x)
Gaming Regulations and (y) the 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 Docu-
ments, 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 refinancings 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),
-80-
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 Consoli-
dated 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 determination, (ii) the aggregate amount of guarantees
permitted to be outstanding 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
transaction 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%
-86-
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 provisions restricting the assignment
or transfer of any licensing agreement, franchise agreement, management
contract, joint venture agreement or any similar types of agreement entered
into by Parent or a Subsidiary of Parent in the ordinary course of
business, (v) customary restrictions imposed in connection with any asset
sale permitted by this Agreement for the benefit of the purchaser or owner
of such asset, (vi) restrictions existing in any document executed in
connection with Existing Casino Non-Recourse Financing so long as such
restrictions only apply to the Casino Property (and any fixtures, furniture
and equipment related thereto) serving as security for such financing,
(vii) restrictions existing in any document executed in connection with
Non-Recourse Indebtedness permitted under Section 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
Administrative Agent or any Bank, in the payment when due of any other Fees
or amounts owing hereunder or under any other Credit Document, provided,
--------
however, that such notice shall not be required to be given
-------
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if a Bankruptcy Event shall have occurred and be continuing; or
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
contained in Section 8.01(e)(i), 8.08 or 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for
a period of 30 days after written notice to the Company by the
Administrative Agent or any Bank; or
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 relating to any Indebtedness (other than the Loans and the
Notes) or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause (determined without regard to
whether any notice is required), any such Indebtedness to become due prior
to its stated maturity, or (iii) any Indebtedness (other than the Loans and
the Notes) of Parent or any Subsidiary of Parent shall be declared to be
due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not be a Default or an Event of Default under this
--------
Section 10.04 unless the aggregate principal amount of all Indebtedness as
described in preceding clauses (i) through (iii), inclusive, is at least
$25,000,000; or
10.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor
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thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against Parent or any Subsidiary of Parent, and the petition is not contro-
verted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Parent or any Subsidiary of Parent, or Parent or any Subsidiary
of Parent commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now or hereafter
in effect relating to Parent or any Subsidiary of Parent, or there is
commenced against Parent or any Subsidiary of Parent any such proceeding
which remains undismissed for a period of 60 days, or Parent or any Subsid-
iary of Parent is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or Parent
or any Subsidiary of Parent suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue undis-
charged or unstayed for a period of 60 days; or Parent or any Subsidiary of
Parent makes a general assignment for the benefit of creditors; or any cor-
porate action is taken by Parent or any Subsidiary of Parent for the
purpose of effecting any of the foregoing; or
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 em-
ployee welfare benefit plans (as defined in Section 3(1) of ERISA) which
provide benefits to retired employees (other than as required by Section
601 of ERISA) or employee pension benefit plans (as defined in Section 3(2)
of ERISA); (b) there shall result from any such event or events the imposi-
tion of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) which lien, security
interest or liability, in the opinion of the Required Banks, could
reasonably be expected
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to have a material adverse effect upon the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole; or
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 (ex-
cept as permitted by Section 9.01), or any Credit Party shall default in
the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any of the Collateral Docu-
ments and such default shall continue beyond any cure or grace period
specifically applicable thereto pursuant to the terms of such Collateral
Document; or
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 consecu-
tive days, and the aggregate amount of all such judgments exceeds
$10,000,000; or
10.10 Gaming Authority. Any Gaming Authority having
----------------
jurisdiction over any Casino Property shall determine that Parent or any of
its Subsidiaries that is required to be qualified under the Gaming
Regulations does not qualify, or that the qualification or license of any
of them with respect to any Casino Property should be revoked, not renewed
or suspended for more than 30 days, or any such Gaming Authority
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shall have appointed a conservator, supervisor or trustee to oversee any of
the operations of any of them;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the
written request of the Required Banks, shall by written notice to the
Borrowers, take any or all of the following actions, without prejudice to
the rights of the Administrative Agent, any Bank or the holder of any Note
to enforce its claims against any Credit Party (provided that, if an Event
--------
of Default specified in Section 10.05 shall occur with respect to Parent or
any Borrower, the result which would occur upon the giving of written
notice by the Administrative Agent to the Borrowers as specified in clauses
(i) and (ii) below shall occur automatically without the giving of any such
notice): (i) declare the Total Revolving Loan Commitment terminated,
whereupon the Revolving Loan Commitment of each Bank shall forthwith term-
inate immediately and any Commitment Commission shall forthwith become due
and payable without any other notice of any kind; (ii) declare the prin-
cipal 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, pro-
test 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 termin-
ated, 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 Documents.
SECTION 11. Definitions and Accounting Terms.
--------------------------------
11.01 Defined Terms. As used in this Agreement, the following
-------------
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Collateral Documents" shall have the meaning provided
in Section 8.12(b).
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"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for
negotiable certificates of deposit with a three-month maturity in the
secondary market as published in the most recent Federal Reserve System
publication entitled "Select Interest Rates," published weekly on Form H.15
as of the date hereof, or if such publication or a substitute containing
the foregoing rate information shall not be published by the Federal
Reserve System for any week, the weekly average offering rate determined by
the Administrative Agent on the basis of quotations for such certificates
received by it from three certificate of deposit dealers in New York of
recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by the Administrative Agent, by
(y) a percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a
three-month certificate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, 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 repayment of such Bank's Revolving Loans, or of Unpaid Draw-
ings 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 Percentage 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
--------
pursuant to Section 1.10(b) shall be considered part of the related
Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are
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authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) above and which is also a day for
trading by and between banks in the New York interbank Eurodollar market.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles,
are or will be required to be capitalized on the books of such Person, in
each case taken at the amount thereof accounted for as indebtedness in
accordance with such principles.
"Casino Holding Company" shall mean Casino Holding Company, a
Delaware corporation.
"Casino Owner" shall mean any Subsidiary of the Company that owns
a Casino Property.
"Casino Property" shall mean and include each of the Harrah's
Reno Hotel Casino, Harrah's Lake Tahoe Hotel Casino (including Bill's
Casino), Harrah's Las Vegas Hotel Casino, Harrah's Atlantic City Hotel
Casino and Harrah's Laughlin Hotel Casino.
"Casino Release" shall mean the release of a specific Casino
Property from the Liens created by the respective Collateral Documents as a
result of the sale thereof pursuant to Section 9.02 or the incurrence of
Existing Casino Non-Recourse Financing with respect thereto pursuant to
Section 9.04(ix).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from
time to time, 42 U.S.C. Sec. 9601 et seq.
-- ----
"Change of Control" shall mean (i) Parent shall cease to own 100%
of the capital stock of the Company, (ii) the direct or indirect
acquisition by any Person or group (as such term is defined in Section
13(d)(3) of the Securities Exchange Act) of beneficial ownership (as such
term is defined in Rule 13D-3 promulgated under the Securities Exchange
Act) of 25% or more of the outstanding shares of common stock of Parent,
(iii) the Board of Directors of Parent shall not consist of a majority of
Continuing Directors or (iv) any "change of control" or similar event
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shall occur under any issue of Indebtedness of Parent or any of its
Subsidiaries in an aggregate principal amount which exceeds (or upon
utilization of any unused commitments may exceed) $25,000,000.
"Cherokee Casino" shall mean the casino to be constructed,
developed and operated by the Eastern Band of Cherokee Indians in Cherokee,
North Carolina, and the manager of which shall be Parent or a Wholly-Owned
Subsidiary of Parent.
"Cherokee Investments" shall mean (i) one or more guaranties
given by Parent and/or the Company for the benefit of the lenders providing
construction financing for the Cherokee Casino and (ii) additional
Investments in the Cherokee Casino.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect
on the date of this Agreement, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or purport
to be granted) pursuant to any Collateral Document, including, without
limitation, all Pledge Agreement Collateral, all Security Agreement Collat-
eral, all Mortgaged Properties and all cash and cash equivalents delivered
as collateral pursuant to Section 4.02(a) or 10.
"Collateral Agent" shall mean and include the Administrative
Agent acting as collateral agent for the Secured Parties pursuant to the
Collateral Documents and any sub-agents or sub-trustees appointed by the
Administrative Agent pursuant to the Master Collateral Agreement and
permitted under applicable Gaming Regulations.
"Collateral Document" shall mean and include each Pledge
Agreement, the Security Agreement, each Mortgage, the Assignment of
Partnership Interests Agreement, the Assignment of Leases, each Net Lease
Agreement, the Master Collateral Agreement and, after the execution and
delivery thereof, each Additional Collateral Document.
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"Collateral Grantor" shall mean and include Parent, the Company
and each Subsidiary of the Company which is party to any Collateral
Document, provided that, from and after the date of the release of all
Collateral of any Subsidiary of the Company from the provisions of the
Collateral Documents, and so long as the respective Subsidiary at such time
owns no Required Collateral, such Subsidiary shall cease to constitute a
Collateral Grantor and the Collateral Agent shall be authorized to execute
such documentation as is necessary or desirable to effect such release.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Company" shall have the meaning provided in the first paragraph
of this Agreement.
"Company/Sub Guaranty" shall mean the Company/Sub Guaranty, dated
as of July 22, 1993, made by the Company and the other Guarantors party
thereto, as modified, supplemented or amended from time to time.
"Company/Sub Pledge Agreement" shall mean the Company/Sub Pledge
Agreement, dated as of July 22, 1993, among the Company, the other
Collateral Grantors party thereto and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Consent" shall mean each written consent from a holder of the 8-
3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes
permitting the Company and the respective indenture trustee to enter into
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture.
"Consolidated Debt" shall mean, at any time, the sum of the
aggregate outstanding principal amount of all Indebtedness (including,
without limitation, guarantees, Non-Recourse Debt and the principal
component of Capitalized Lease Obligations) of Parent and its Consolidated
Subsidiaries.
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income plus Consolidated Interest Expense (to the extent same was
deducted in determining Consolidated Net Income) and provision for taxes,
and without giving effect to any extraordinary gains or losses or gains or
losses from sales of assets other than inventory sold in the ordinary
course of business.
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"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBIT to Consolidated Interest Expense.
"Consolidated Interest Expense" shall mean, for any period, the
total consolidated interest expense of Parent and its Consolidated
Subsidiaries (without deduction for minority interests in Subsidiaries) for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, (i) that portion of Capitalized Lease
Obligations of Parent and its Consolidated Subsidiaries representing the
interest factor for such period and (ii) the Company's or such Consolidated
Subsidiary's share of interest expense of any Joint Venture.
"Consolidated Net Income" shall mean, for any period, net income
of Parent and its Consolidated Subsidiaries (without deduction for minority
interests in Subsidiaries) for such period.
"Consolidated Net Worth" shall mean, at any time, the net worth
of Parent and its Consolidated Subsidiaries determined on a consolidated
basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with generally accepted
accounting principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person
being a general partner of the other Person, unless the underlying
obligation is expressly made non-recourse as to such general partner) any
Indebtedness or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation (whether arising by virtue of partnership arrangements, by
agreement to keepwell, to purchase assets, goods, securities or services,
to take-or-pay or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect the obligee against loss in respect thereof (in whole or in
part), provided that the term
--------
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Indebtedness shall not include endorsements for collection or deposit in
the ordinary course of business.
"Continuing Directors" shall mean the directors of Parent on the
Restatement Effective Date and each other director, if such other
director's nomination for election to the Board of Directors of Parent is
recommended by a majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each Note, each
Letter of Credit, each Guaranty and each Collateral Document.
"Credit Event" shall mean the making of any Loan, the conversion
of any Original Revolving Loan or Original Swingline Loan on the
Restatement Effective Date or the issuance of any Letter of Credit.
"Credit Party" shall mean Parent, the Company and each other
Subsidiary of Parent that is a Subsidiary Borrower, a Guarantor or a
Collateral Grantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Defaulting Participant" shall have the meaning provided in
Section 2.04(g).
"Disqualified Stock" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or
in part on, or prior to, or is exchangeable for debt securities of Parent
or its Subsidiaries prior to, the first anniversary of the Final Maturity
Date.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to
its stockholders as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any
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shares of any class of its capital stock outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such
Person with respect to its capital stock), or set aside any funds for any
of the foregoing purposes, or shall have permitted any of its Subsidiaries
to purchase or otherwise acquire for a consideration any shares of any
class of the capital stock of such Person outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such
Person with respect to its capital stock). Without limiting the foregoing,
"Dividends" with respect to any Person shall also include all payments made
or required to be made by such Person with respect to any stock apprecia-
tion 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
Hazardous Materials, including, without limitation, CERCLA; RCRA; the
Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Toxic
-- ----
Substances Control Act, 15 U.S.C. Sec. 2601 et seq.; the Clean Air Act, 42
-- ----
U.S.C. Sec. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et
-- ---- --
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the
---- -- ----
Emergency Planning and the Community Right-to-Know Act of 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
principal and interest on each Note issued by each Borrower to such Bank,
and Loans made, under this Agreement and all reimbursement
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obligations in respect of Drawings on Letters of Credit, together with all
the other obligations and liabilities (including, without limitation,
indemnities, fees and interest thereon) of each of the Borrowers to the
Administrative Bank and such Bank now existing or hereafter incurred under,
arising out of or in connection with this Agreement or any other Credit
Document and the due performance and compliance with the terms of the
Credit Documents by the Borrowers and (ii) to each Secured Interest Rate
Protection Creditor which has entered into, or in the future enters into, a
Secured Interest Rate Protection or Other Hedging Agreement with any
Borrower, the full and prompt payment when due (whether by acceleration or
otherwise) of all obligations of each Borrower owing under, or with respect
to, any such Secured Interest Rate Protection or Other Hedging Agreement,
whether now in existence or hereafter arising, and the due performance and
compliance with all terms, conditions and agreements contained therein.
"Guarantor", at any time, shall mean each of the Initial
Guarantors and each Required Additional Guarantor which has executed and
delivered a counterpart of the Company/Sub Guaranty in accordance with
Section 8.12(a), provided that, from and after the date of the release of
--------
any Subsidiary of the Company from the provisions of the Company/Sub
Guaranty in accordance with the terms thereof or hereof, such Subsidiary
shall cease to constitute a Guarantor.
"Guaranty" shall mean and include the Parent Guaranty and the
Company/Sub Guaranty.
"Harrah's" shall mean Harrah's, a Nevada corporation.
"Harrah's Atlantic City" shall mean Harrah's Atlantic City, Inc.,
a New Jersey corporation.
"Harrah's Club" shall mean Harrah's Club, a Nevada corporation.
"Harrah's Jazz" shall mean Harrah's Jazz Company, a Louisiana
general partnership.
"Harrah's Jazz Completion Guaranties" shall mean one or more
completion guaranties heretofore given by Parent and/or the Company in
favor of certain lenders to Harrah's Jazz, the City of New Orleans and one
or more other governmental agencies of the State of Louisiana.
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"Harrah's Jazz Completion Obligation Loans" shall mean any
payments made by Parent and/or the Company under the Harrah's Jazz
Completion Guaranties or the Harrah's Jazz Title Indemnity Arrangements to
the extent that such payments are characterized as additional loans or
advances made by Parent and/or the Company to Harrah's Jazz.
"Harrah's Jazz Investments" shall mean Investments in or to
Harrah's Jazz and/or for the benefit of Harrah's Jazz, including the
Harrah's Jazz Completion Obligation Loans, the Harrah's Jazz Completion
Guaranties and the Harrah's Jazz Title Indemnity Arrangements.
"Harrah's Jazz Title Indemnity Arrangements" shall mean those
certain indemnity agreements heretofore given by Parent and the Company to
the title insurance companies providing title insurance for Harrah's Jazz's
casino the City of New Orleans.
"Harrah's Laughlin" shall mean Harrah's Laughlin, Inc., a Nevada
corporation.
"Harrah's New Jersey" shall mean Harrah's New Jersey, Inc., a New
Jersey corporation.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (c) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"Hotel Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, its existing
(immediately prior to the Restatement Effective Date) hotel businesses and
operations and any other hotels owned by the Company or any of its
Subsidiaries immediately prior to the Restatement Effective Date that are
not included in the Gaming Business or in which Parent or any of its
Subsidiaries
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has an interest either through a Joint Venture or as a party to a
management or franchise agreement.
"Hotel Collateral" shall mean the collateral securing the Hotel
Facility, which collateral shall only consist of the assets of the Hotel
Business of the Company and the Hotel Subsidiaries (including the capital
stock of the Hotel Subsidiaries).
"Hotel Company" shall mean Promus Hotel Corporation, a newly
formed Wholly-Owned Subsidiary of the Company.
"Hotel Facility" shall mean two new senior secured credit
facilities aggregating $350,000,000 which shall be (i) secured by the Hotel
Collateral and (ii) guaranteed by the Hotel Subsidiaries.
"Hotel Property" shall mean any hotel, any land or building under
development or any other property or asset which relates to the Hotel
Business of Parent and its Subsidiaries other than those properties or
assets which are included as Gaming Properties.
"Hotel Stock Dividend" shall mean, collectively, (i) the
distribution by the Company to Parent as a stock dividend of all of the
capital stock of the Hotel Company and (ii) the distribution by Parent to
its stockholders immediately thereafter as a stock dividend of all of the
capital stock of the Hotel Company.
"Hotel Subsidiaries" shall mean those existing Subsidiaries of
the Company which are engaged in the Hotel Business and which are set forth
on Schedule IX.
"Hotel Transaction" shall mean, collectively, the Hotel Stock
Dividend, the Hotel Transfer, the entering into of the Hotel Facility and
the incurrence by the Company of at least $210,000,000 of loans thereunder,
the assignment to, and the assumption by, the Hotel Company of the Hotel
Facility, the obtaining of the Consents and the entering into of the
related indenture supplements and the obtaining of the consent of Parent's
shareholders to the Hotel Transaction.
"Hotel Transaction Documents" shall mean (i) the Hotel Facility,
(ii) the Consents, the indenture supplements to the 8-3/4% Senior
Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and the Proxy Statement delivered to Parent's shareholders in
connection
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with the Hotel Transaction and (iii) the Distribution Agreement, the Tax
Sharing Agreement, the Trademark Assignment Agreement and an Employee
Benefits Allocation Agreement, which agreements are in the forms delivered
to the Administrative Agent pursuant to Section 5.04(b) and are to be
entered into by the Company and the Hotel Company in connection with the
Hotel Transfer and the Hotel Stock Dividend.
"Hotel Transfer" shall mean the transfer by the Company to the
Hotel Company of the Hotel Properties and Hotel Business of the Company and
the capital stock of the Hotel Subsidiaries, it being understood and agreed
that $210,000,000 of proceeds from the loans incurred by the Company under
the Hotel Facility on the Restatement Effective Date shall not be
transferred by the Company to the Hotel Company.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such
person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all obligations of such Person to
reimburse or repay any bank or other Person in respect of amounts paid or
available to be drawn under a letter of credit, banker's acceptance,
surety, performance or appeal bond or any similar instrument (each such
obligation to be valued at the face amount of such instrument), (vi) all
Indebtedness of others secured by a Lien on any asset of such Person, (vii)
all Contingent Obligations of such Person with respect to any Indebtedness
of any other Person and (viii) the amount of any Disqualified Stock.
"Initial Guarantors" shall mean each of Parent, the Company,
Casino Holding Company, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Corporation, Hampton Inn
Equity Development Corporation, Hampton Inns, Inc., Harrah's, Harrah's
Atlantic City, Harrah's Club, Harrah's Las Vegas, Inc., Harrah's Laughlin,
Harrah's New Jersey, Harrah's Reno Holding Company, Inc., Homewood Suites
Equity Development Corporation and Marina; provided, that from and after
the Restatement Effective Date, Embassy Development Corporation, Embassy
Equity Development Corporation, ESI Equity Development Cor-
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poration, Hampton Inn Equity Development Corporation, Hampton Inns, Inc.
and Homewood Suites Equity Development Corporation shall be (and hereby
are) released from the Company/Sub Guaranty and shall no longer constitute
Guarantors.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection or Other Hedging Agreements" shall mean
one or more (i) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or
other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time entered into by the Company or any of its
Subsidiaries.
"Investments" shall have the meaning provided in Section 9.05.
"Issuance System" shall have the meaning provided in Section 8.11.
"Issue" shall mean each of the two different types of Senior
Debt, there being two separate Issues for purposes of this Agreement, i.e.,
----
the Indebtedness under this Agreement and the Indebtedness under the 364-
Day Credit Agreement.
"Joint Venture" shall mean any entity or arrangement between the
Company or any of its Subsidiaries (so long as the Company and its
Subsidiaries own 50% or less of such entity) and one or more Persons other
than Parent or any of its Subsidiaries (whether now existing or created in
the future) for (i) the joint ownership, management, construction or
development of any Gaming Property or (ii) the joint ownership or operation
of any Gaming Business.
"Las Vegas Property" shall mean the Harrah's Las Vegas Hotel
Casino.
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Company or any of its Subsidiaries incurred in
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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 Sub-
sidiary of Parent that (together with its Subsidiaries) accounts for, or
holds, at least 10% of any of (x) the consolidated assets of Parent and its
Subsidiaries, (y) the consolidated revenues of Parent and its Subsidiaries
or (z) the Consolidated EBIT of Parent and its Subsidiaries, in each case
as determined at the end of each fiscal quarter of Parent and, in the case
of preceding clauses (y) and (z), for the Test Period then last ended, it
being understood and agreed that Harrah's Jazz and Desplaines Development
Limited Partnership shall not be considered Material Subsidiaries under
this sub-clause (iii) to the extent that such Subsidiaries would otherwise
constitute such a Material Subsidiary so long as such Subsidiaries would
not otherwise constitute a Material Subsidiary under any of the other
clauses of this definition.
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"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 trans-
action costs and payments of unassumed liabilities relating to the assets
sold at the time of, or within 60 days after, the date of such sale and the
amount of such gross cash proceeds required to be used to repay any
Indebtedness (other than Indebtedness of the Banks pursuant to the Credit
Documents) which is secured by the respective assets which were sold.
"Non-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 reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. BTCo may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 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 re-
quired 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
corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any partner-
ship, association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a 50% equity
interest at the time.
"Subsidiary Borrower" shall mean Marina and any other Wholly-
Owned Subsidiary of the Company that is found acceptable to, and approved
in writing by, the Administrative Agent and the Required Banks, provided
that at the time any such Subsidiary incurs Existing Casino Non-Recourse
Financing pursuant to Section 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 spec-
ified herein and in the other Credit Documents. The Banks hereby designate
Bankers Trust Company, The Bank of New York, CIBC Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale, and The Sumitomo Bank, Limited, New York Branch, as
Agents to act as specified herein and in the other Credit Documents. Each
Bank hereby irrevocably authorizes, and each holder of any 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 offi-
cers, 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
investigation of the financial condition and affairs of Parent and its
Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Parent and its Subsidiaries
and, except as expressly provided in this Agreement, neither the
Administrative Agent nor any Agent shall have any duty or 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 the making 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 refraining 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
disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Administrative Agent or such Agent in
performing its duties hereunder or under any other Credit Document, in any
way relating to or arising out of this Agreement or any other Credit
Document; provided that no Bank shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's or such Agent's gross negligence or willful misconduct.
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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 Agreement, 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, in-
clude each of the Administrative Agent and Agent in its individual capac-
ity. The Administrative Agent and each Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Credit Party or any Affiliate of any Credit Party as if
it were not performing the duties specified herein, and may accept fees and
other consideration from the Borrowers or any other Credit Party for ser-
vices in connection with this Agreement and otherwise without having to
account for the same to the Banks.
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 accept-
able 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 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 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 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
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harmless from and against any and all liabilities with respect to or re-
sulting 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, pen-
alties, claims, actions, judgments, suits, costs, expenses and dis-
bursements (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) re-
lated 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 Subsidi-
aries, the non-compliance of any Real Property with foreign, federal, state
and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
relating in any way to Parent, any of its Subsidiaries, their operations or
any Real Property owned or at any time operated by Parent or any of 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 assignee Bank is not already a Qualified Person (before giving
effect to any actions taken to become such in connection with this
Agreement), then all costs associated with such Person becoming a Qualified
Person shall be borne by the respective assignee Bank or potential assignee
Bank. Notwithstanding the foregoing, after a Bank has been replaced
pursuant to Section 1.13, 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 communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective when
deposited in the mails, delivered to the telegraph company, cable company
or overnight courier, as the case may be, or sent by telex or telecopier,
except that notices to the Administrative Agent, 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 Commit-
ments 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 Adminis-
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 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 Admin-
istrative 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 Drawings 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 Com-
mission 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 payments 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
accounting principles and policies in conformity with those used to prepare
the historical financial statements delivered to the Banks pursuant to
Section 7.05(a), provided that for all Test Periods which include periods
prior to the Restatement Effective Date, all calculations used in
determining the Consolidated Interest Coverage Radio for such Test Periods
(both for purposes of Section 9.08 and the definition of Reduction
Discount) shall be made on a pro forma basis as if the Hotel Transaction
--- -----
had been consummated on the first day of each such Test Period and all
historical financial information shall be restated (on a basis consistent
with the methodology used in the Proxy Statement) to retroactively reflect
the Hotel Business as discontinued operations and to exclude from such
calculations the results of operations of the Hotel Business, and (ii) at
no time shall Harrah's Jazz and its Subsidiaries be treated as Subsidiaries
of Parent for purposes of this Agreement even though (x) Harrah's Jazz and
its Subsidiaries may at any time fall within the definition of "Subsidiary"
or (y) generally
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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 HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF
ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO
ACT AS SUCH, EACH SUCH CREDIT PARTY AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF
THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT. EACH OF PARENT
AND EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY SUCH CREDIT PARTY IN ANY OTHER JURISDICTION.
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(b) EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrowers and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on
-------------
the date (the "Restatement Effective Date") and at the time on which (i)
Parent, the Company, each existing Subsidiary Borrower and the Banks shall
have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Administrative Agent
at its Notice Office or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written or telex
notice (actually received) at such office that the same has been signed and
mailed to it and (ii) the conditions contained in Sections 5 and 6 are met
to the satisfaction of the Administrative Agent and the Required Banks.
Unless the Administrative Agent has received actual notice from any Bank
that the conditions contained in Sections 5 and 6 have not been met to its
satisfaction, upon the satisfaction of the condition described in clause
(i) of the immediately preceding sentence and upon the Administrative
Agent's good faith determination that the conditions described in clause
(ii) of the immediately preceding sentence have been met, then the
Restatement Effective Date shall have been deemed to have occurred,
regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the
Restatement Effective Date
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shall not release Parent or any Borrower from any liability for failure to
satisfy one or more of the applicable conditions contained in Section 5 or
6). The Administrative Agent will give Parent, the Company, each existing
Subsidiary Borrower and each Bank prompt written notice of the occurrence
of the Restatement Effective Date.
13.11 Headings Descriptive. The headings of the several
--------------------
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
13.12 Amendment or Waiver. (a) Neither this Agreement nor any
-------------------
other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party
thereto (except as otherwise provided in Section 13.02) and the Required
Banks (or the Required Secured Parties in the case of a change, waiver,
discharge or termination with respect to a Collateral Document to the
extent provided therein), provided that no such change, waiver, discharge
--------
or termination shall, without the consent of each Bank (other than a
Defaulting Bank) (with Obligations being directly affected thereby), (i)
extend the final scheduled maturity of any Loan or Note or extend the
stated maturity of any Letter of Credit beyond the Final Maturity Date, or
reduce the rate or extend the time of payment of interest or Fees thereon,
or reduce the principal amount thereof, (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 spec-
ified 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 termination 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 con-
sent 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 pursu-
ant to Section 1.13 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's Revolving Loan
Commitment and repay all outstanding
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Revolving Loans of such Bank in accordance with Sections 3.02(b) and/or
4.01(iv), provided that, unless the Revolving Loan Commitments are
--------
terminated, and Revolving Loans repaid, pursuant to preceding clause (B)
are immediately replaced in full at such time through the addition of new
Banks or the increase of the Revolving Loan Commitments and/or outstanding
Revolving Loans of existing Banks (who in each case must specifically
consent thereto), then in the case of any action pursuant to preceding
clause (B) the Required Banks (determined before giving effect to the pro-
posed 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 Sec-
tion 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 in-
terest 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
-147-
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,
-148-
and the Borrowers hereby also covenant and agree that they shall not take
any action with respect to the incurrence of any Indebtedness (including
under this Agreement) which is inconsistent with this Section 13.18(a).
This clause (a) shall cease to be of further force or effect at such time
as all 10-7/8% Senior Subordinated Notes have been repaid in full and the
provisions of Section 1008 of the 10-7/8% Senior Subordinated Notes
Indenture are no longer effective.
(b) Each Borrower represents and warrants to the Banks that, on
the Restatement Effective Date, loans in aggregate principal amount equal
to the sum of the Total Revolving Loan Commitment and the Total 364-Day
Revolving Loan Commitment would be permitted to be incurred pursuant to the
second paragraph of Section 1008 of the 8-3/4% Senior Subordinated Notes
Indenture (and that the Consolidated Fixed Charge Ratio referred to therein
would be at least equal to 2.0 to 1 after giving effect thereto).
Furthermore, the Borrowers agree that they (x) shall not incur or suffer to
exist at any time any Debt (as defined in the 8-3/4% Senior Subordinated
Notes Indenture) pursuant to clause (a) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, except that up to
$125,000,000 of outstanding Debt incurred from time to time pursuant to the
364-Day Credit Agreement may be justified as outstanding pursuant to said
clause (a) and up to $450,000,000 (plus the amount of all reductions to the
Total 364-Day Revolving Loan Commitment after the Restatement Effective
Date so long as the Debt outstanding under the 364-Day Credit Agreement
does not exceed the Total 364-Day Revolving Loan Commitment as so reduced
(with such amount being herein called the "364-Day Revolving Loan
Commitment Reduction Amount")) of Debt outstanding from time to time
pursuant to this Agreement may be justified as having been incurred
pursuant to said clause (a) and (y) shall not incur or suffer to exist at
any time more than $25,000,000 of outstanding Debt (other than pursuant to
the 364-Day Credit Agreement) pursuant to clause (f) of the first paragraph
of Section 1008 of the 8-3/4% Senior Subordinated Notes Indenture, thereby
leaving at least $25,000,000 under said clause (f) to justify outstanding
Debt pursuant to the 364-Day Credit Agreement. For purposes of
determining compliance with the 8-3/4% Senior Subordinated Notes Indenture
for Credit Events occurring after the Restatement Effective Date, all
incurrences of Loans and issuances of Letters of Credit after the
Restatement Effective Date will be deemed incurred pursuant to clause (a)
of the first paragraph of Section 1008 of the 8-3/4% Senior Subordinated
Notes Indenture; provided that if at any time after the Restatement
Effective Date the Total Outstandings
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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 uncondition-
ally 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 liabil-
ity of a guarantor or of any other party as to the Guaranteed Obligations
of any Borrower, or (c) any payment on or in reduction of any such other
guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by any Borrower, or (e) any payment made to
the Administrative Agent, the Banks or the Secured Interest Rate Protection
Creditors on the indebtedness which the Administrative Agent, such Banks or
such Secured Interest Rate Protection Creditors repay to such Borrower pur-
suant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief 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) incurred directly or indirectly in respect thereof
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 lia-
bility 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 im-
pairing 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 infor-
mation 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/s/ William McCalmont
-------------------------
Title: Vice President &
with a copy to the same Treasurer
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 /s/ William McCalmont
--------------------------
Title: Vice President &
with a copy to the same Treasurer
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/s/ William McCalmont
-----------------------
of the Corporate Secretary Title: Assistant Secretary
By: HARRAH'S NEW JERSEY, INC.,
a general partner
By /s/ William McCalmont
------------------------
Title: Assistant Secretary
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 /s/ Mary Kay Coyle
-------------------------
Title: Vice President
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 /s/ Gregory L. Batson
---------------------------
Title: Vice President
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 /s/ Paul Chakmak
-----------------------
Title: Vice President
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 /s/David Cawrse
----------------------
Title: Vice President
c/o Credit Lyonnais, CREDIT LYONNAIS CAYMAN ISLAND
Atlanta Agency BRANCH
303 Peachtree Street
Suite 4400
Atlanta, Georgia 30308 By /s/ David Cawrse
-----------------------
Tel: (404) 524-3700 Title: Vice President
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/s/ Edith Lim
------------------------------
Title: Vice President
By/s/ Charles W. Reed
------------------------------
Title: Senior Vice President
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 /s/ John Sullivan
---------------------------
Title: Joint General Mngr.
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 /s/ John E. Ball
------------------------------
Attention: Ashley Crabtree Title: Senior Vice President
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 /s/ Donald J. Schubert
------------------------------
Attention: Donald L. Schubert Title: Vice President
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/s/ Y. Kawamura
---------------------------
Title: Joint General Mngr.
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/s/ Scott L. Faber
----------------------------
Attention: Scott Faber Title: Vice President
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 /s/ Bernardo E. Correa-Henschke
---------------------------------
Attention: Jay Schwartz Title: Vice President & Mngr.
Atlanta Agency THE BANK OF NOVA SCOTIA
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308 By /s/ F.C.H. Ashby
-------------------------------
Tel: (404) 877-1500 Title: Senior Manager Loan
Fax: (404) 888-8998 Operations
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: Dhuane Stephens By /s/ Dhuane Stephens
---------------------------
Title: Vice President
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 /s/ Stuart M. Schulman
---------------------------
Attention: Stuart Schulman Title: Senior Vice President
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 /s/ Douglas W. Thornsberry
-------------------------------
Fax: (314) 466-6499 Title: Assistant Vice President
Attention: Doug Thornsberry
One Peachtree Center THE DAIWA BANK, LIMITED
Suite 4420
303 Peachtree Street
Atlanta, Georgia 30303 By /s/ Lauren P. Carrigan
--------------------------
Tel: (404) 524-6544 Title: Asst. Vice President
Fax: (404) 523-7983
Attention: Terry Herron
By /s/ Diane M. Rhoades
-------------------------
Title: Executive Officer
4894 Poplar Avenue FIRST AMERICAN NATIONAL BANK
Memphis, Tennessee 38117
Tel: (901) 762-5688
Fax: (901) 762-5665 By /s/ Elizabeth Vaughn
------------------------
Attention: David May Title: Vice President
165 Madison Avenue FIRST TENNESSEE BANK NATIONAL
Memphis, Tennessee 38101 ASSOCIATION
Tel: (901) 523-4444
Fax: (901) 523-4267
Attention: Steve Wade By /s/ James H. Moore, Jr.
-------------------------------
Title: Vice President
One Ninety One Peachtree THE INDUSTRIAL BANK OF JAPAN,
Tower LIMITED
191 Peachtree Street
Suite 3600
Atlanta, Georgia 30303-1757 By /s/ Shusai Nagai
-----------------------
Tel: (404) 524-8770 Title: General Manager
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 /s/ Denise Killen
--------------------------------
Title: Vice President
Georgia-Pacific Center THE SANWA BANK, LIMITED,
Suite 4750 ATLANTA AGENCY
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Tel: (404) 586-8809 By /s/ Virginia C. Mahoney
---------------------------
Fax: (404) 589-1629 Title: Vice President
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 /s/ Clare C. Jones
--------------------------
Attention: Claire Jones Title: Asst. Vice President
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 /s/ Frank E. Meigs, III
----------------------------
Title: Senior Vice President
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 /s/ Patricia Loret de Mola
----------------------------
Title: Senior Vice President
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 /s/ Alan Bookspan
---------------------------
Title: Vice President
By /s/ Sol Battinelli
---------------------------
Title: Vice President
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/s/ Jeff French
------------------------
Title: Vice President
By/s/ L.T. Osborne
-------------------------
Title: Group Vice President
6000 Poplar Avenue THIRD NATIONAL BANK
Suite 145
Memphis, Tennessee 38119
Tel: (901) 766-7561
Fax: (901) 766-7565 By/s/ Carol Yochem
---------------------------
Attention: Carol Yochem Title: Group Vice President
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/s/ Louis Ballero
------------------------------
Title:Senior Vice President
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
-----------
PROMUS COMPANIES/EMBASSY SUITES
LETTERS OF CREDIT
FOLLOWING LC'S - ISSUED UNDER REVOLVER PART OF CREDIT FACILITY DATED 07-23-93 (MAX ALLOWED = $255 MIL)
23 Jul 93 Credit Lyonnais $ 896,879 Sec Pac-TTEE for Syphus (Embassy Suites) 28 Apr 95
23 Jul 93 Credit Lyonnais 1,044,787 Sec Pac-TTEE for Dougal (Embassy Suties) 28 Apr 95
13 Aug 93 First Tennessee 148,971 Embassy-Phil Airpt 20 Aug 94
05 Oct 93 First Tennessee 300,000 Risk Mgt-TN self ins (Embassy Suites) 07 Oct 94
07 Oct 93 First Tennessee 50,000 Amnd #32821-Incrs amount 07 Oct 94
08 Nov 93 Bankers Trust 3,000,000 Risk Mgt-Nevada Ins (Promus Companies) 08 Nov 94
Confirm fee-1st Interstate Nevada
04 Feb 94 Bank of America 1,404,288 Replacement-CA Ins (ESI & Hampton Inns, Inc.) 03 Feb 95
25 Feb 94 First Tennessee 250,000 Risk Mgt-Miss (Promus) 25 Feb 95
07 Mar 94 Bankers Trust 500,000 Replacement-Georgia Ins (Promus Companies) 07 Mar 95
29 Apr 94 Bank of America 238,783 LC increase 03 Feb 95
27 Jun 94 Bnkers Trust 3,050,000 LC Replacement-Risk Mgt(ESI)-Gen'l & auto Liab 27 Jun 95
06 Jul 94 Bankers Trust 5,220,619 LC Replacement-Risk Mgt-Aster 06 Jul 95
02 Aug 94 Bankers Trust 2,600,000 Maryland Hts-4 pmts $650,000 each 02 Aug 95
01 Nov 94 Bankers Trust 200,000 Embassy-MO self ins 01 Nov 95
01 Nov 94 Bankers Trust 425,000 Maryland Hts-MO self ins 01 Nov 95
01 Nov 94 Bankers Trust 425,000 Harrah's NKC-MO self ins 01 Nov 95
08 Dec 94 Bankers Trust 1,382,000 Increase in Nov-Risk Mgt 08 Nov 94
Risk Mgt-Nev Ins increase
01 Mar 94 Bankers Trust 608,475 Aster Ins-property ins program 01 Mar 95
01 Feb 95 Bankers Trust 165,822 Aster Ins-property ins program 01 Feb 96
21 Feb 95 Bankers Trust 2,022,941 Incrs LC-Old Rep auto-gen'l liab 27 Jun 95
09 Mar 95 NationsBank of GA 500,000 GA self insurance 09 Jun 96
31 Mar 95 Bank of America (115,086) LC Decrease 03 Feb 95
18 May 95 Bankers Trust 750,000 Promus-Aster losses 18 May 96
Subtotal (misc) 25,068,459
23 Jul 93 Sumitomo 0 $200mm Notes (9%) + int (Marina Assoc) 15 Feb 95
Total Under Credit Facility 25,068,459
** Unless otherwise noted, LC's have 1 year term with automatic renewal
SCHEDULE III
------------
TAX MATTERS
-----------
BANKER'S TRUST CREDIT FACILITY
SCHEDULE III
AUDITS AND EXTENSION OF STATUTES AS OF 6/30/95:
1). IRS Examination of 1987-2/7/90 for Holiday Corporation and
Subsidiaries contains five issues that were retained by
Harrah's Entertainment, Inc. (HEI), formerly The Promus
Companies Incorporated, in their settlement agreement with
Bass, PLC and Holiday Corporation that was entered into
March 21, 1995. Final resolution of these issues are
expected to result in either a refund or no material taxes
being paid by HEI. The statute on these years has been
extended until December 31, 1996.
2). IRS Examination of 1987-89 for Marina Associates, a wholly
owned partnership of HEI subsidiaries, has been concluded
and all issues resolved with no material taxes assessed.
The statute on these years has been extended until December
31, 1995.
3). IRS Examination of 1990-91 for The Promus Companies
Incorporated is completed and a protest of all unagreed
issues is currently being prepared by the company. HEI will
retain, in connection with the Spinoff of the Promus Hotel
Corporation, only those issues related to its remaining
business and it is expected that resolution of all unagreed
issues will result in no material adverse effect to the
company. The statute on these years has been extended until
March 31, 1996.
4). IRS Examination of 1990-91 for Marina Associates has been
concluded and a protest of all unagreed issues is currently
being prepared by the company. It is expected that the
resolution of the unagreed issues will result in no
material adverse effect to the company. The statute on
these years has been extended until March 31, 1996.
The IRS Examination of 1992-93 for The Promus Companies and
Marina Associates has just begun. Additionally, various state
audits for years 1990-94 are in process. HEI will retain, in
connection with the Spinoff of the Promus Hotel Corporation, only
those issues related to its remaining business and there are no
known adjustments at this time which would result in material
taxes being paid by the company.
SCHEDULE IV
GAMING SUBSIDIARIES
Jurisdiction Percentage Date of
of of Incorpo- FEIN
Name Incorporation Ownership ration Number
---- ------------- --------- ------ ------
Harrah's Operating Company, Inc.1 2 Delaware 100% 08/08/83 75-1941623
Harrah's1 2 Nevada 100% 01/21/80 62-1076292
Harrah's-Holiday Inns of New Jersey, Inc. New Jersey 100% 09/19/79 62-1071040
Harrah's Laughlin, Inc.1 2 Nevada 100% 07/10/87 88-0230282
Harrah's Management Company Nevada 100% 04/07/83 88-0187173
Harrah's Pty. Limited Australia 100% 04/21/75 00-0000000
Harrah's Reno Holding Company, Inc.1 2 Nevada 100% 02/23/88 62-1440237
Harrah's Club1 2 Nevada 100% 06/07/71 88-0111242
Harrah's Atlantic City, Inc.1 2 New Jersey 100% 02/13/79 93-0737757
Harrah's New Jersey, Inc.1 2 New Jersey 100% 09/13/78 22-2219370
Harrah South Shore Corporation California 100% 10/02/59 88-0074793
Harrah's of Jamaica, Ltd. Jamaica 100% 07/12/85 00-0000000
Harrah's Alabama Corporation Nevada 100% 09/09/93 88-0308027
Harrah's Alberta Investment Corporation Alberta 100% 04/05/95 N/A
Harrah's Arizona Corporation Nevada 100% 01/26/93 62-1523519
Harrah's Arkansas Casino Corporation Nevada 100% 08/02/94 88-0323397
Harrah's Arkansas Casino Management Company Nevada 100% 08/02/94 88-0323395
Harrah's Biloxi Bay, Inc. Nevada 100% 01/07/93 62-1523549
Harrah's California Corporation Nevada 100% 02/02/94 88-0313169
Harrah's California SSR Corporation Nevada 100% 10/12/94 88-0329526
Harrah's Casino Saskatchewan Corporation Saskatchewan 100% 03/12/93
Harrah's Colorado Investment Corporation Nevada 100% 06/23/93 88-0307572
Harrah's Colorado Management Company Nevada 100% 06/23/93 88-0307574
Harrah's Colorado Standby Corporation Nevada 100% 11/10/93 88-0315104
Harrah's Connecticut Corporation Nevada 100% 01/25/94 88-0314254
Harrah's Huntington Corporation W. Virginia 100% 03/03/95 62-1597986
Harrah's Illinois Corporation Nevada 100% 12/18/91 88-0284653
Harrah's Indiana Investment Corporation Nevada 100% 09/09/93 88-0284653
Harrah's Indiana Management Corporation Nevada 100% 09/09/93 88-0308082
Harrah's Interactive Entertainment Company Nevada 100% 09/21/94 88-0326037
Harrah's Interactive Investment Company Nevada 100% 09/21/94 88-0326036
Harrah's Kenner Corporation Louisiana 100% 01/27/93 72-1230858
Harrah's Las Vegas, Inc.1 2 Nevada 100% 03/21/68 88-0116377
Harrah's Maine Corporation Nevada 100% 11/12/93 88-0313173
Harrah's Maryland Heights Corporation Nevada 100% 07/30/93 88-0306276
Harrah's Mexico Holding Company Nevada 100% 4/11/95 88-0337475
Harrah's Michigan Corporation Nevada 100% 06/15/93 88-0307990
Harrah's Minnesota Corporation Nevada 100% 10/20/92 88-0292681
Harrah's Mississippi Corporation Nevada 100% 07/13/92 88-0292679
GAMING SUBSIDIARIES
Jurisdiction Percentage Date of
of of Incorpo- FEIN
Name Incorporation Ownership ration Number
---- ------------- --------- ------ ------
Harrah's New Orleans Investment Company Nevada 100% 05/21/93 62-1534757
Harrah's New Orleans Management Company Nevada 100% 05/21/93 62-1534758
Harrah's New Zealand, Inc. Nevada 100% 02/28/92 88-0292682
Harrah's North Carolina Casino Corporation North Carolina 100% 12/22/94 56-1926496
Harrah's Nova Scotia Casino Limited Nova Scotia 100% 07/25/94 N\A
Harrah's-North Kansas City Corporation Nevada 100% 02/23/93 88-0297483
Harrah's Ohio Corporation Nevada 100% 11/02/94 88-0328475
Harrah's Ohio Management Company Nevada 100% 11/02/94 88-0328474
Harrah's Pennsylvania Development Co. Nevada 100% 05/18/94 88-0320301
Harrah's Pittsburgh Investment Company Nevada 100% 05/26/94 88-0319078
Harrah's Pittsburgh Management Company Nevada 100% 06/08/94 88-0320269
Harrah's Regina Casino Corporation Nevada 100% 09/09/94
Harrah's Shreveport Investment Company, Inc. Nevada 100% 04/23/92 88-0292677
Harrah's Shreveport Management Company, Inc. Nevada 100% 04/23/92 88-0292678
Harrah's Southwest Michigan Casino Corporation Nevada 100% 04/06/95 88-0337476
Harrah's Tunica Corporation Nevada 100% 08/10/92 88-0292680
Harrah's Vicksburg Corporation Nevada 100% 07/13/92 88-0292320
Harrah's Virginia Corporation Nevada 100% 12/01/94 88-0330522
Harrah's Washington Corporation Nevada 100% 02/03/94 88-0313171
Harrah's West Virginia Corporation W. Virginia 100% 03/03/95 62-1597966
Harrah's Wheeling Corporation Canada 100% 04/29/94 88-0317848
Harrah's Windsor, Inc. Nevada 100% 06/23/93 00-0000000
Ziwa Missouri Corporation Nevada 100% 10/11/93 88-0307991
1 Material Subsidiary
2 Guarantor
GAMING SUBSIDIARIES
DATE LOCATION SUBSIDIARY SERVING OWNERSHIP CONTROL
FORMED NAME AND ADDRESS OF PROPERTY AS PARTNER % % OTHER PARTNER
------ ---------------- ----------- ------------------- ------ ----- -------------
9/14/78 Marina Associates1 2 Atlantic City, Harrah's Atlantic City, Inc. 48.65% 48.65% N/A
Joint Venture New Jersey Harrah's New Jersey, Inc. 51.34% 51.34% N/A
1725 Brigantine Blvd.
Atlantic City, NJ 08401
2/28/92 Des Plaines Development North Joilet, IL Harrah's Illinois 80% 80% John Q. Hammons
Limited Partnership (Riverboats) Corporation 20%
150 N. Scott St.
Joilet, IL 60431
11/10/92 Red River Entertainment of Shreveport, LA Harrah's Shreveport 99% 99% ET River
Shreveport Partnership (Riverboat) Investment Company, Inc. Corp.
in Commendam
401 Market Street
Suite 800
Shreveport, LA 71101
11/29/93 Harrah's Jazz Company New Orleans, LA Harrah's New Orleans 52.93% 33.3% Grand Palais Casino,
365 Canal Street Investment Company Inc.- 33.3% (GP)
One Canal Plaza, Suite 2800 New Orleans
New Orleans, LA 70130 Louisiana
Development
Corporation - 13.77%
(GP)
12/17/93 Harrah's Jazz Finance New Orleans, LA Harrah's Jazz Company 100% 100%
Corp. (a Delaware corp.)
5/27/94 Harrah's Forest City Station Square Harrah's Pittsburgh 75% 75% Forest City
Associates Pittsburgh, PA Investment Company Square, Inc.
1023 Cherry Rd. 25%
Memphis, TN 38117
3/28/95 Tunica Partners L.P. Harrah's Casino Harrah's Tunica Corporation 83% 83% Belsino L.P. 17%
(a MS limited partnership) Tunica, MS
1 Material Subsidiary
2 Guarantor
Schedule V
----------
Existing Indebtedness
(a/o 6/30/95)
(AMOUNTS IN THOUSANDS)
Undiscounted Principal Debt Outstanding
Corporate
10 7/8% Senior Subordinated Notes, maturity 2002 $200,000
8 3/4% Senior Subordinated Notes, maturity 2000 200,000
10% Oveson Notes, Maturities to 1998 1,699
8 3/8% Notes, maturity 1996 227
Casino Entertainment
L & M Walter Note, 15% maturities to 2001 6,842
-----
Total Principal Debt Outstanding $408,768
--------
Guarantees
Turfway 25,000
Ak-Chin 26,150
Upper Skagit 22,800
Executive Life Insurance GIC 7,338*
NOLDC 16,000
------
Total Guarantees $97,288
-------
Letters of Credit
Date Expiration
Issued Bank Amount Purpose Date**
------ ---- ------ ------- ----------
13 Jun 90 NationsBank $ 225 Embassy Suites 16 Oct 93
10 Mar 93 1st Commercial Bank 8 ESI Rochester-Twn of Brighton 14 Mar 94
22 Oct 93 FNBC 100 Risk Mgt-LA workman's comp(Embassy) 22 Oct 94
------
Total mix (NOT under
Revolver of Credit Facility) 333
LC Guarantees:
11 Feb 94 Hibernia 5,000 Shreveport constr permit 11 Feb 95
-----
Total Misc including guar's $5,333
Total Letters of Credit $5,333
------
*Amount a/o 5-31-95. It is not expected to change significantly if at all in June.
Schedule VI
-------- --
GAMING JOINT VENTURES
DATE LOCATION SUBSIDIARY SERVING OWNERSHIP CONTROL
FORMED NAME AND ADDRESS OF PROPERTY AS PARTNER % % OTHER PARTNER
------ -- -------- -- ------- - - ----- -------
12/15/95 ECRP Partnership Holds $4,687,150 Harrah's Colorado 17.284% 17.284% (Other GP's): G.
1023 Cherry Rd. Promissory Note in Investment Corporation Schneider Holdings
Memphis, TN 38117 connection with (GP) Co. 37.284%
financing of Roger W. Mason
Colorado casinos 24.691%
Arthur A. Johnson,
Jr. 3.457%
Dean A. Gilbert
2.469%
James W. Neese
3.704%
Curtis Rochell
8.642%
Marian H. Rochelle
2.469%
12/17/93 Eagle Gaming, L.P. Central City Harrah's Colorado 15.316% 15.316% Wild West
1023 Cherry rd. Black Hawk Casinos Investment Corporation Development (GP)
Memphis, TN 38117 (LP) 47.523%
Harrah's Colorado 1% 1% Limited Partners as
Standby Corporation set forth in the
(LP) Partnership
Agreement comprising
ownership of
remaining 36.17%
11/7/94 Interactive N/A Harrah's Interactive 20% 20% SGI Holding
Entertainment Sky Games Investment Company Corporation Ltd.
Limited (In-flight gaming) (Shareholder) 80%
Note: This is a Bermuda
exempted company.
Sodak Gaming, Inc. N/A Harrah's Club 13.8% 13.8%
Sky City Limited Auckland, Harrah's Club 20% 20% Brierley Investments
New Zealand Limited
SCHEDULE VII
------------
INSURANCE
---------
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
N/R 06/01/94- ASTER AST-012 DEDUCTIBLE REIMBURSEMENT AL-$1,000,000
6/1/95 GL-$1,900,00 XS
$100,000
A IX 06/01/94 OLD REPUBLIC MWTB-17541 PRIMARY AUTO. LIAB. (FR.) $1MM
6/1/95
A IX 06/01/94 OLD REPUBLIC HW2Y-54644 PRIMARY GEN. LIAB. (FR.) $2MM
6/1/95
A IX 06/01/94 WESTCHESTER CUA1002950 UMBRELLA LIABILITY $10MM XS $2MM GL
6/1/95 $10MM XS $1MM AL
A 06/01/93- ROYAL RHA007844 UMBRELLA LIABILITY $10MM XS $10MM
6/1/94
06/01/94- UMBRELLA LIABILITY $29M XS $20MM
6/1/95 AGRICULTURAL EXC-7637120 ($17MM P/O $29MM)
A++XIV FEDERAL EXC76377120 ($7MM P/O $29MM)
A X PLANET NEA1486491 ($5MM P/0 $29MM)
06/01/94- UMBRELLA LIABILITY $50MM XS $50MM
A XI 6/1/95 TRANSAMERICA XSX9180443 ($20MM P/O $50M)
A++ XV1 FEDERAL 79412206 ($18MM P/O $50MM)
AETNA 11XN24221994SCA ($12MM P/O $50MM)
N/R 06/01/94- XL UMBO1565 UMBRELLA LIABILITY $50MM XS $100MM
6/1/97
N/R 06/01/94- ACE PRMU750/4 UMBRELLA LIABILITY $150MM XS $150MM
6/1/97
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
06/01/94- ASTER AST-011 EXCESS WORKERS' COMP-SIR $400K XS $100K
6/1/95 STATES AND DEDUCTIBLE STATES
A IX 06/01/94- OLD REPUBLIC OMWC1025220 WORKERS' COMPENSATION (A/O COVERAGE A-$500K
6/1/95 STATES) INSURED STATES STAT XS $2MM
DEDUCTIBLE STATES COVERAGE B-
FEES, RML'S SURCHARGES $2MM/$2MM/$2MM
A+ XV 06/01/94- GENERAL REINSU CCN-2540-C EXCESS WORKERS' COMP. -INS. $1.5MM XS 500K
6/1/95 STATES EXCESS EMPLOYERS LIAB. $1.5MM XS 500M
A+ XV 06/01/94- GENERAL REINSU X121558 EXCESS WORKERS' COMP. -SIR $9.5MM XS 500K
6/1/95 STATES EXCESS EMPLOYERS LIAB $1.5MM XS 500K
A XIII 06/01/94- FIREMAN'S FUND XLX1655725 EXCESS WORKERS' COM.P -SIR STATE XS $10MM
6/1/95 STATES
N/A 07/01/94- SELF-INSURANCE WORKERS' COMP STATUTORY
7/1/95 NEVADA SELF
INSURANCE STATE ASSESSMENT
A+ XV 07/01/94- NATIONAL UNION 440-2638 CRIME $5MM
7/1/95 CREDIT CARD FORGERY $100K
SAFE DEPOSIT BOX $25K BOX\$2.5MM AGG
A- KI 07/01/94- FEDERAL 81323859A CRIME $5MM XS $5MM
7/1/95
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
03/01/95 ALL RISK PROPERTY-HARRAH'S $20.0MM
3/1/96 THE HOME MPL9107106 CASINOS $12.5MM P/O $20MM
A- XIV U.S. FIRE CO. 2441814642 $2.5MM P/O $20MM
A++ XV LEXINGTON U861082 $2.5MM P/O $20MM
A- VIII COMMONWEALTH GIC2058A $2.5MM P/O $20MM
03/01/95- ALL RISK PROPERTY-HARRAH'S $30MM XS $20MM
A-VIII 3/1/95 WESTCHESTER FXL421605 CASINOS $3.3MM P/O $20MM
A-XI ROYAL INS. RHD401368 $5MM P/O $20.MM
A VIII ALL INS. CO. CHF313006 $5MM P/O $20.MM
A VI ESSEX INS. MSP0472 $5MM P/O $20.MM
A-XV TRAVELER'S RTXJCMB204TJ94895 $2MM P/O $20.MM
A XIV FIREMAN'S FUND XSP2387190 $2MM P/O $20.MM
A-XIV U.S. FIRE 2441814642 $2.5MM P/O $20MM
A XVI AGRICULTURAL CPP8815644 $1MM P/O $20MM
N/A CTR RE U861083 $2.25MM P/O $20MM
N/A ABIELLE RE U861083 $1.5MM P/O $20MM
N/A MCR RE U861083 $.45MM P/O $20MM
3/1/1995- ALL RISK PROPERTY-HARRAH'S $60MM X/S $50MM
A XVI 3/1/96 AGRICULTURAL CPP8815645 CASINOS $3MM P/O $50MM
A+ XIV FEDERAL INS. 6585170 $10MM P/O $50MM
A-XIV U.S. FIRE 244J81642 $5MM P/O $50MM
A XIV FIREMAN'S FUND XSP2387191 $5MM P/O $50MM
A-VIII WESTCHESTER FXL421605 $6.6MM P/O $50MM
A-XV TRAVELER'S KTXJCMB204T394895 $5MM P/O $50MM
N/A CTR RE U861084 $4.5MM P/O $50MM
N/A ABIELLE RE U861084 $3MM P/O $50MM
N/A MCR RE U861084 $.9MM P/O $50MM
A-VII COMMONWEALTH CIC2059 $7.5MM P/O $50MM
N/A LONDON U861084 $9.5MM P/O $50MM
N/A 03/01/95- IRI 31363249 ALL RISK PROPERTY-HARRAH'S $640MM X/S $110MM
3/1/96 CASINOS
03/01/95- EXCESS DIC $150MM X/S $110MM
3/1/96 YASUDA PEP10345J04 HARRAH'S CASINOS $5MM P/O $110MM
A+XV WAUSAU 206603056560 $75MM P/O $110MM
A KIV FIREMAN'S FUND XSP2387192 $40MM P/O $110MM
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
A+ XIV FEDERAL INS. 6585170 $15MM P/O $110MM
A- XV TRAVELER'S RTXJCMB204T394895 $15MM P/O $110MM
A-XI 03/01/95- RELIANCE NZCC107532 BOILER & MACHINERY-HARRAH'S $100MM
3/1/96 CASINOS (INCLUDING RIVERBOATS)
N/R 03/01/95- AIG AV4794793 EXCESS AIRCRAFT/NON-OWNED $100MM
3/1/96 LIAB HARRAH'S (CHARTER FLIGHTS)
A+ 03/01/95- CIGNA AMFS0027545 AIRCRAFT HULL & LIABILITY $100MM
3/1/96 N290PC
N293PC
N/R 03/01/95- PROVIDENT LIFE GTA1503 TRAVEL ACCIDENT $250K
3/1/96
SCHEDULE VIII
-------------
EXISTING LIENS
--------------
None
SCHEDULE IX
-------- --
Hotel Subsidiaries
Jurisdiction of Percentage
Incorporation or of
Name Organization Ownership
Promus Hotels, Inc. Delaware 100%
Buckleigh, Inc. Delaware 100%
Compass, Inc. Tennessee 100%
EJP Corporation Delaware 100%
Suite Life, Inc. Delaware 100%
Embassy Development Corporation Delaware 100%
ES/PA, L.P. [Pennsylvania] 98%
Embassy Equity Development Corporation Delaware 100%
Embassy Syracuse Development Corporation Delaware 100%
Southfield Hotel Management, Inc. Florida 100%
Embassy Memphis Corporation Tennessee 100%
Embassy Pacific Equity Corporation Delaware 100%
Embassy Suites Club No. 1, Inc. Kansas 100%
Embassy Suites Club No. Three, Inc. Louisiana 100%
Jurisdiction of Percentage
Incorporation or of
Name Organization Ownership
Embassy Suites De Mexico, S.A., De C.V. Mexico 97%
Embassy Suites (Isla Verde), Inc. Delaware 100%
Embassy Suites (Puerto Rico), Inc. Delaware 100%
Embassy Vacation Resorts, Inc. Delaware 100%
EPAM Corporation Delaware 100%
ESI Development, Inc. Tennessee 100%
ESI Mortgage Development Corporation Delaware 100%
ESI Mortgage Development Corporation II Delaware 100%
E.S. Philadelphia Airport Joint Venture Pennsylvania 90%
GOL (Heathrow), Inc. Tennessee 100%
Granada Royale Hometel-West, a limited partnership Arizona 50.003%
Granada Royale Hometel-Tucson, a limited partnership Arizona 65%
Hampton Inns, Inc. Delaware 100%
GOL Columbia Limited Partnership Maryland 99%
Old Town Hotel Corporation Delaware 100%
Pacific Hotels, Inc. Tennessee 100%
Promus Hotel Services, Inc. Delaware 100%
Jurisdiction of Percentage
Incorporation or of
Name Organization Ownership
Promus Hotels Florida, Inc. Delaware 100%
EXHIBIT 10(3)
============================================================================
CREDIT AGREEMENT
among
THE PROMUS COMPANIES INCORPORATED
(which will be renamed "HARRAH'S ENTERTAINMENT, INC."),
EMBASSY SUITES, INC.
(which will be renamed "HARRAH'S OPERATING COMPANY, INC."),
CERTAIN SUBSIDIARIES OF EMBASSY SUITES, INC.,
VARIOUS BANKS,
BANKERS TRUST COMPANY,
THE BANK OF NEW YORK,
CIBC INC.,
CREDIT LYONNAIS, ATLANTA AGENCY,
FIRST INTERSTATE BANK
OF CALIFORNIA,
THE LONG-TERM CREDIT
BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
NATIONSBANK OF GEORGIA, N.A.,
SOCIETE GENERALE
and
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH,
as AGENTS
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
__________________________________
Dated as of June 9, 1995
__________________________________
============================================================================
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing of Revolving Loans . . . . 2
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 3
1.04 Competitive Bid Borrowings . . . . . . . . . . . . . . . . 3
1.05 Disbursement of Funds . . . . . . . . . . . . . . . . . . . 5
1.06 Notes; Register . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Conversions . . . . . . . . . . . . . . . . . . . . . . . . 7
1.08 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . 8
1.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 Interest Periods . . . . . . . . . . . . . . . . . . . . . 9
1.11 Increased Costs, Illegality, etc. . . . . . . . . . . . . . 11
1.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . 13
1.13 Change of Lending Office . . . . . . . . . . . . . . . . . 14
1.14 Replacement of Banks . . . . . . . . . . . . . . . . . . . 14
SECTION 2. Fees; Reductions of Revolving Loan
Commitment; Final Maturity Date
Extensions . . . . . . . . . . . . . . . . . . . . . . . 16
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.02 Voluntary Termination of Unutilized
Revolving Loan Commitments . . . . . . . . . . . . . . . 16
2.03 Mandatory Reduction of Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . 17
2.04 Final Maturity Date Extensions . . . . . . . . . . . . . . 18
SECTION 3. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . 20
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 20
3.02 Mandatory Repayments. . . . . . . . . . . . . . . . . . . 21
3.03 Method and Place of Payment . . . . . . . . . . . . . . . . 22
3.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4. Conditions Precedent to the Effective
Date . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . 25
4.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . 25
4.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . 25
4.04 Corporate Documents; Proceedings . . . . . . . . . . . . . 26
4.05 Master Collateral Agreement . . . . . . . . . . . . . . . . 27
4.06 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . 27
(i)
Page
----
4.07 Security Agreement . . . . . . . . . . . . . . . . . . . . 27
4.08 Company/Sub Guaranty . . . . . . . . . . . . . . . . . . . 27
4.09 Mortgages; Title Insurance; Surveys; etc. . . . . . . . . . 28
4.10 Assignment of Partnership Interests Agreement . . . . . . . 29
4.11 Assignment of Leases . . . . . . . . . . . . . . . . . . . 29
4.12 Net Lease Agreements . . . . . . . . . . . . . . . . . . . 29
4.13 Consent Letter . . . . . . . . . . . . . . . . . . . . . . 29
4.14 Adverse Change . . . . . . . . . . . . . . . . . . . . . . 29
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 30
4.16 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . 30
4.17 Approvals, etc. . . . . . . . . . . . . . . . . . . . . . . 30
4.18 Solvency Certificate; Evidence of Insurance . . . . . . . . 32
4.19 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . 32
4.20 5-Year Credit Agreement. . . . . . . . . . . . . . . . . . 32
4.21 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5. Conditions Precedent to All Loans . . . . . . . . . . . . . 33
5.01 No Default; Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . 33
5.02 Notice of Borrowing; Competitive Bid
Loans . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.03 Election to Become a Subsidiary Borrower . . . . . . . . . 33
SECTION 6. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . 34
6.01 Corporate or Partnership Status . . . . . . . . . . . . . . 35
6.02 Corporate or Partnership Power and
Authority . . . . . . . . . . . . . . . . . . . . . . . 35
6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . 35
6.04 Governmental Approvals . . . . . . . . . . . . . . . . . . 36
6.05 Financial Statements; Financial
Condition; Undisclosed Liabilities;
Projections; etc. . . . . . . . . . . . . . . . . . . . . 36
6.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 38
6.07 True and Complete Disclosure . . . . . . . . . . . . . . . 38
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . 38
6.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . 39
6.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 39
6.11 The Collateral Documents . . . . . . . . . . . . . . . . . 40
6.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . 42
6.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . 42
6.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 42
6.15 Compliance with Statutes, etc. . . . . . . . . . . . . . . 43
(ii)
Page
----
6.16 Investment Company Act . . . . . . . . . . . . . . . . . . 43
6.17 Public Utility Holding Company Act . . . . . . . . . . . . 43
6.18 Environmental Matters . . . . . . . . . . . . . . . . . . . 43
6.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 44
6.20 Patents, Licenses, Franchises and
Formulas . . . . . . . . . . . . . . . . . . . . . . . . 45
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . 45
6.22 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . 45
6.23 No Other Ventures . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . 46
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . 46
7.02 Books, Records and Inspections . . . . . . . . . . . . . . 49
7.03 Maintenance of Property; Insurance . . . . . . . . . . . . 50
7.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . 51
7.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . 52
7.06 Compliance with Environmental Laws . . . . . . . . . . . . 52
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . 54
7.09 Performance of Obligations . . . . . . . . . . . . . . . . 54
7.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 54
7.11 Registry . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.12 Additional Guarantors; Additional
Collateral; etc . . . . . . . . . . . . . . . . . . . . 56
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . 57
8.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.02 Consolidation, Merger, Purchase or Sale
of Assets, etc. . . . . . . . . . . . . . . . . . . . . 61
8.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 65
8.05 Advances, Investments and Loans . . . . . . . . . . . . . . 68
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . 70
8.07 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . 70
8.08 Consolidated Interest Coverage Ratio . . . . . . . . . . . 70
8.09 Minimum Consolidated Net Worth . . . . . . . . . . . . . . 71
8.10 Limitation on Payments and Modifications of Subordinated
Debt; Modifications of Certificate of Incorporation,
Partnership Agreements and By-Laws . . . . . . . . . . . 71
8.11 Limitation on Certain Restrictions on
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 72
8.12 Limitation on Issuance of Capital Stock . . . . . . . . . . 73
8.13 Business . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . 74
8.15 Special Purpose Corporation . . . . . . . . . . . . . . . . 74
(iii)
Page
----
SECTION 9. Events of Default . . . . . . . . . . . . . . . . . . . . . 74
9.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . 74
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.04 Default Under Other Agreements . . . . . . . . . . . . . . 75
9.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . 75
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.07 Collateral Documents . . . . . . . . . . . . . . . . . . . 77
9.08 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . 77
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.10 Gaming Authority . . . . . . . . . . . . . . . . . . . . . 77
SECTION 10. Definitions and Accounting Terms . . . . . . . . . . . . . 78
10.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11. The Administrative Agent and Agents. . . . . . . . . . . . 110
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . 110
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . 111
11.03 Lack of Reliance on the Administrative
Agent and Agents . . . . . . . . . . . . . . . . . . . . 111
11.04 Certain Rights of the Administrative
Agent . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.06 Indemnification . . . . . . . . . . . . . . . . . . . . . 112
11.07 The Administrative Agent and the Agents
in their Individual Capacities . . . . . . . . . . . . . 113
11.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.09 Resignation by the Administrative Agent
and Agents . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 114
12.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . 114
12.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . 116
12.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 117
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . 117
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . 121
12.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . 122
12.07 Calculations; Computations . . . . . . . . . . . . . . . . 123
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 123
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 124
12.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 125
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . 125
12.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . 125
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 127
(iv)
Page
----
12.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . 127
12.15 Application of Gaming Regulations. . . . . . . . . . . . . 127
12.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 128
12.17 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 128
SECTION 13. Parent Guaranty . . . . . . . . . . . . . . . . . . . . . 131
13.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . 131
13.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . 131
13.03 Nature of Liability . . . . . . . . . . . . . . . . . . . 131
13.04 Independent Obligation . . . . . . . . . . . . . . . . . . 132
13.05 Authorization . . . . . . . . . . . . . . . . . . . . . . 132
13.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 133
13.07 Subordination . . . . . . . . . . . . . . . . . . . . . . 133
13.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 134
SCHEDULE I Revolving Loan Commitments
SCHEDULE II Tax Matters
SCHEDULE III Subsidiaries
SCHEDULE IV Existing Indebtedness
SCHEDULE V Joint Ventures
SCHEDULE VI Insurance
SCHEDULE VII Existing Liens
SCHEDULE VIII Hotel Subsidiaries
EXHIBIT A Notice of Borrowing
EXHIBIT B Notice of Competitive Bid Borrowing
EXHIBIT C Revolving Note
EXHIBIT D Section 3.04(b)(iii) Certificate
EXHIBIT E Election to Become a Subsidiary Borrower
EXHIBIT F Assignment and Assumption Agreement
(v)
CREDIT AGREEMENT, dated as of June 9, 1995, among THE PROMUS
COMPANIES INCORPORATED (which will be renamed "HARRAH'S ENTERTAINMENT,
INC."), a Delaware corporation ("Parent"), EMBASSY SUITES, INC. (which will
be renamed "HARRAH'S OPERATING COMPANY, INC."), a Delaware corporation (the
"Company"), each Subsidiary Borrower (together with the Company, each a
"Borrower" and, collectively, the "Borrowers"), the Banks party hereto from
time to time, BANKERS TRUST COMPANY, THE BANK OF NEW YORK, CIBC INC.,
CREDIT LYONNAIS, ATLANTA AGENCY, FIRST INTERSTATE BANK OF CALIFORNIA, THE
LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH, NATIONSBANK OF
GEORGIA, N.A., SOCIETE GENERALE, and THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Agents, and BANKERS TRUST COMPANY, as Administrative Agent (all
capitalized terms used herein and defined in Section 10 are used herein as
therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Original 5-Year Credit Agreement refinanced and
replaced the Existing Credit Facilities (as defined in the Original 5-Year
Credit Agreement);
WHEREAS, this Agreement refinances and replaces, in part, the
Original 5-Year Credit Agreement; and
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrowers the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
---------------
conditions set forth herein, each Bank severally agrees, at any time and
from time to time on and after the Effective Date and prior to the Maturity
Date for such Bank, to make a revolving loan or revolving loans (each a
"Revolving Loan" and, collectively, the "Revolving Loans") to one or more
Borrowers, which Revolving Loans:
(i) shall, at the option of the respective Borrower, be Base
Rate Loans or Eurodollar Loans, provided
--------
that, except as otherwise specifically provided in Section 1.11(b),
all Revolving Loans comprising the same Borrowing shall at all times
be of the same Type;
(ii) may be repaid and reborrowed in accordance with the
provisions hereof;
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which equals the Revolving Loan Commitment
of such Bank at such time;
(iv) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to the aggregate
principal amount of all Competitive Bid Loans (exclusive of
Competitive Bid Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding, equals the Total Revolving Loan
Commitment at such time; and
(v) shall not exceed for any Subsidiary Borrower at any time
outstanding that aggregate principal amount which equals such
Subsidiary Borrower's Sub-Limit.
(b) Subject to and upon the terms and conditions set forth
herein, each Bank severally agrees that the Company may incur a loan or
loans (each a "Competitive Bid Loan" and, collectively, the "Competitive
Bid Loans") pursuant to a Competitive Bid Borrowing from time to time on
and after the Effective Date and prior to the date which is the Business
Day preceding the date which is 30 days prior to the Final Maturity Date
then in effect, provided that after giving effect to any Competitive Bid
--------
Borrowing then being made the aggregate principal amount of all Competitive
Bid Loans then outstanding, when added to the aggregate principal amount of
all Revolving Loans then outstanding, shall not exceed the Total Revolving
Loan Commitment at such time. Within the foregoing limits and subject to
the terms and conditions set forth in Sections 1.04 and 5, Competitive Bid
Loans may be repaid and reborrowed in accordance with the provisions
hereof.
1.02 Minimum Amount of Each Borrowing of Revolving Loans. The
---------------------------------------------------
aggregate principal amount of each Borrowing of Revolving Loans shall not
be less than $5,000,000 and, if greater, shall be in an integral multiple
of $1,000,000. More than one Borrowing of Revolving Loans may occur on the
same date, but at no time shall there be outstanding more than six
Borrowings of Eurodollar Loans.
-2-
1.03 Notice of Borrowing. Whenever a 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 notice of each
Base Rate Loan and at least three Business Days' prior notice of each Euro-
dollar Loan to be made hereunder, provided that any such notice shall be
--------
deemed to have been given on a certain day only if given before 12:00 Noon
(New York time) on such day. Each such notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.11, shall
be irrevocable and shall be given by such Borrower in the form of Exhibit
A, appropriately completed to specify the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day), whether the Revolving Loans
being made pursuant to such Borrowing are to be initially maintained as
Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial
Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank written notice of such proposed Borrowing, of such
Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
1.04 Competitive Bid Borrowings. (a) Whenever the Company
--------------------------
desires to incur a Competitive Bid Borrowing, it shall deliver to the
Administrative Agent at its Notice Office not later than 11:00 A.M (New
York time) at least three Business Days prior to the date of such proposed
Competitive Bid Borrowing, a written notice substantially in the form of
Exhibit B (each a "Notice of Competitive Bid Borrowing"), such notice to
specify in each case (i) the date (which shall be a Business Day) and the
aggregate principal amount of the proposed Competitive Bid Borrowing (which
shall not be less than $5,000,000), (ii) the maturity date for repayment of
each Competitive Bid Loan to be made as part of such Competitive Bid
Borrowing (which maturity date may not be earlier than seven days after the
date of such Competitive Bid Borrowing or later than the fifth Business Day
preceding the Final Maturity Date then in effect), (iii) the interest
payment date or dates relating thereto (which shall be at least every three
months in the case of maturities in excess of three months), (iv) the
Senior Implied Indebtedness rating assigned by S&P and Moody's to the
Company's Indebtedness, which ratings shall be at least BBB- Senior Implied
in the case of S&P or Baa3 Senior Implied in the case of Moody's and (v)
any other terms to be applicable to such Competitive Bid Borrowing. The
Administrative Agent shall promptly notify each Bidder Bank of each such
request for a Competitive Bid
-3-
Borrowing received by it from the Company by telecopying to each such
Bidder Bank a copy of the related Notice of Competitive Bid Borrowing.
(b) Each Bidder Bank shall, if in its sole discretion it elects
to do so, irrevocably offer to make one or more Competitive Bid Loans to
the Company as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Bidder Bank in its sole discretion and
determined by such Bidder Bank independently of each other Bidder Bank, by
notifying the Administrative Agent in writing (which shall give prompt
written notice thereof to the Company), before 10:00 A.M. (New York time)
on the date (the "Reply Date") which is two Business Days before the date
of such proposed Competitive Bid Borrowing, of the minimum amount, if any,
and maximum amount of each Competitive Bid Loan which such Bidder Bank
would be willing to make as part of such proposed Competitive Bid Borrowing
(which amounts may, subject to the proviso to the first sentence of Section
1.01(b), exceed such Bank's Revolving Loan Commitment) and the rate or
rates of interest therefor; provided, that if the Administrative Agent in
--------
its capacity as a Bidder Bank shall, in its sole discretion, elect to make
any such offer, it shall notify the Company in writing of such offer before
9:30 A.M. (New York time) on the Reply Date. If any Bidder Bank shall
elect not to make such an offer, such Bidder Bank shall so notify the
Administrative Agent, before 10:00 A.M. (New York time) on the Reply Date,
and such Bidder Bank shall not be obligated to, and shall not, make any
Competitive Bid Loan as part of such Competitive Bid Borrowing; provided,
--------
that the failure by any Bidder Bank to give such notice shall not cause
such Bidder Bank to be obligated to, and such Bidder Bank shall not, make
any Competitive Bid Loan as part of such proposed Competitive Bid Bor-
rowing.
(c) The Company shall, in turn, before 12:00 Noon (New York
time) on the Reply Date, either
(1) cancel such Competitive Bid Borrowing by giving the
Administrative Agent notice (in writing or by telephone confirmed in
writing) to that effect, or
(2) accept one or more of the offers made by any Bidder Bank or
Bidder Banks pursuant to clause (b) above by giving notice (in writing
or by telephone confirmed in writing) to the Administrative Agent of
the amount of each Competitive Bid Loan (which amount shall be equal
to or greater than the minimum amount, if any, and equal to or less
than the maximum amount, notified to the
-4-
Company by the Administrative Agent on behalf of each such Bidder Bank
for such Competitive Bid Borrowing) and reject any remaining offers
made by Bidder Banks pursuant to clause (b) above by giving the
Administrative Agent notice to that effect; provided that acceptance
--------
of offers may only be made on the basis of ascending Absolute Rates
commencing with the lowest rate so offered; provided further, however,
----------------
if offers are made by two or more Bidder Banks at the same rate and
acceptance of all such equal offers would result in a greater princi-
pal amount of Competitive Bid Loans being accepted than the aggregate
principal amount requested by the Company, the Company shall have the
right to accept one or more such equal offers in their entirety and
reject the other equal offer or offers or to allocate acceptance among
all such equal offers (but giving effect to the minimum amounts, if
any, and maximum amounts specified for each such offer pursuant to
clause (b) above), as the Company may elect in its sole discretion.
(d) If the Company notifies the Administrative Agent that such
Competitive Bid Borrowing is cancelled pursuant to clause (c)(1) above, the
Administrative Agent shall give prompt written notice thereof to the Bidder
Banks and such Competitive Bid Borrowing shall not be made.
(e) If the Company accepts one or more of the offers made by any
Bidder Bank or Bidder Banks pursuant to clause (c)(2) above, the
Administrative Agent shall in turn promptly notify (in writing or by
telephone confirmed in writing) (x) each Bidder Bank that has made an offer
as described in clause (b) above, of the date and aggregate amount of such
Competitive Bid Borrowing and whether or not any offer or offers made by
such Bidder Bank pursuant to clause (b) above have been accepted by the
Company and (y) each Bidder Bank that is to make a Competitive Bid Loan as
part of such Competitive Bid Borrowing, of the amount of each Competitive
Bid Loan to be made by such Bidder Bank as part of such Competitive Bid
Borrowing.
(f) On the last Business Day of each calendar quarter, the
Administrative Agent shall notify the Company and the Banks of the
aggregate principal amount of Competitive Bid Loans outstanding at such
time.
1.05 Disbursement of Funds. Except as otherwise specifically
---------------------
provided in the immediately succeeding sentence, not later than 10:00 A.M.
(New York time) on the date speci-
-5-
fied in each Notice of Borrowing (or in the case of Competitive Bid
Borrowings, not later than 10:00 A.M. (New York time) on the date specified
pursuant to Section 1.04(b)), each Bank will make available its pro rata
--- ----
portion of each such Borrowing requested to be made on such date (or in the
case of Competitive Bid Loans, each Bidder Bank participating in the
respective Competitive Bid Borrowing will make available its share
thereof). All such amounts shall be made available in Dollars and in im-
mediately available funds at the Payment Office of the Administrative
Agent, and the Administrative Agent will make available to the respective
Borrower at the Payment Office the aggregate of the amounts so made
available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of
any Borrowing to be made on such date, the Administrative Agent may assume
that such Bank has made such amount available to the Administrative Agent
on such date of Borrowing and the Administrative Agent may, in reliance
upon such assumption, make available to the respective Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from
such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the respective Borrower and such Borrower shall
immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover on demand from such
Bank or such Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to such Borrower until the date
such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Bank, the overnight
Federal Funds Rate and (ii) if recovered from such Borrower, the rate of
interest applicable to the respective Borrowing, as determined pursuant to
Section 1.09. Nothing in this Section 1.05 shall be deemed to relieve any
Bank from its obligation to make Loans hereunder or to prejudice any rights
which the respective Borrower may have against any Bank as a result of any
failure by such Bank to make Loans hereunder.
1.06 Notes; Register. (a) Each Borrower's obligation to pay
---------------
the principal of, and interest on, the Revolving Loans made by each Bank to
such Borrower shall be evidenced by a promissory note duly executed and
delivered by
-6-
such Borrower substantially in the form of Exhibit C, with blanks
appropriately completed in conformity herewith (each a "Revolving Note"
and, collectively, the "Revolving Notes").
(b) The Revolving Note issued by each Borrower to each Bank
shall (i) be payable to the order of such Bank and be dated the Effective
Date, (ii) be in a stated principal amount equal to the Revolving Loan
Commitment of such Bank and be payable in the principal amount of the out-
standing Revolving Loans evidenced thereby, (iii) mature on such Bank's
Maturity Date, (iv) bear interest as provided in the appropriate clause of
Section 1.09 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (v) be subject to mandatory repayment as
provided in Section 3.02 and (vi) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Revolving Loan made by it and each payment in respect thereof and will
prior to any transfer of any of its Revolving Notes endorse on the reverse
side thereof the outstanding principal amount of Revolving Loans evidenced
thereby. Failure to make any such notation (or any error in such notation)
shall not affect any Borrower's obligations in respect of such Revolving
Loans.
(d) The Administrative Agent shall maintain at its Payment
Office a register for the recordation of the names and addresses of the
Banks, the Revolving Loan Commitments of the Banks from time to time, and
the principal amount of the Revolving Loans and Competitive Bid Loans owing
to each Bank from time to time, together with the maturity and interest
rates applicable to each Competitive Bid Loan and the other terms
applicable thereto (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error. The
Register shall be available for inspection by each Borrower or any Bank at
any reasonable time and from time to time upon reasonable prior notice to
the Administrative Agent.
1.07 Conversions. Each Borrower shall have the option to
-----------
convert, on any Business Day, at least $5,000,000 of the outstanding prin-
cipal amount of the Revolving Loans made pursuant to one or more Borrowings
of one or more Types of Revolving Loans into a Borrowing of another Type of
Revolving Loan, provided that (i) except as otherwise provided in Section
--------
1.11(b), Eurodollar Loans may be converted into Base Rate Loans only on the
last day of an
-7-
Interest Period applicable to the Revolving Loans being converted and no
such conversion of Eurodollar Loans shall reduce the outstanding principal
amount of such Eurodollar Loans made pursuant to a single Borrowing to less
than $5,000,000, (ii) unless the Required Banks otherwise agree, Base Rate
Loans may only be converted into Eurodollar Loans if no Event of Default is
in existence on the date of the conversion and (iii) no conversion pursuant
to this Section 1.07 shall result in a greater number of Borrowings of
Eurodollar Loans than is permitted under Section 1.02. Each such
conversion shall be effected by the respective Borrower by giving the
Administrative Agent at its Notice Office prior to 12:00 Noon (New York
time) at least three Business Days' prior notice (each a "Notice of Con-
version") specifying the Revolving Loans to be so converted, the Bor-
rowing(s) pursuant to which such Revolving Loans were made and, if to be
converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt
written notice of any such proposed conversion affecting any of its
Revolving Loans. Upon any such conversion the proceeds thereof will be
deemed to be applied directly on the day of such conversion to prepay the
outstanding principal amount of the Revolving Loans being converted.
1.08 Pro Rata Borrowings. All Borrowings of Revolving Loans
-------------------
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.
1.09 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
-8-
the Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) The Company agrees to pay interest in respect of the unpaid
principal amount of each Competitive Bid Loan from the date the proceeds
thereof are made available to the Company until the maturity thereof
(whether by acceleration or otherwise) at the rate or rates per annum
specified pursuant to Section 1.04(b) by the Bidder Bank or Bidder Banks,
as the case may be, making such Competitive Bid Loan and accepted by the
Company pursuant to Section 1.04(c)(2).
(d) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount
payable hereunder shall, in each case, bear interest at a rate per annum
equal to the greater of (x) 2% per annum in excess of the Base Rate in
effect from time to time and (y) the rate which is 2% in excess of the rate
then borne by such Loans, in each case with such interest to be payable on
demand.
(e) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months,
on each date occurring at three month intervals after the first day of such
Interest Period, (iii) in respect of each Competitive Bid Loan, at such
times as specified in the Notice of Competitive Bid Borrowing relating
thereto and (iv) in respect of each Loan, on any repayment (on the amount
repaid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(f) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period
applicable to Eurodollar Loans and shall promptly notify the respective
Borrower and the Banks thereof. Each such determination shall, absent
manifest error, be final and conclusive and binding on all parties hereto.
1.10 Interest Periods. At the time it gives any Notice of
----------------
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
-9-
right to elect, by giving the Administrative Agent notice thereof, the in-
terest period (each an "Interest Period") applicable to such Eurodollar
Loan, which Interest Period shall, at the option of such Borrower, be a
one, two, three or six month period, provided that:
--------
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Loan (including the date of
any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
-------- -------
Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) unless the Required Banks otherwise agree, no Interest
Period may be selected at any time when an Event of Default is then in
existence; and
(vi) no Interest Period shall be selected which extends beyond
the Final Maturity Date as then in effect.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the respective Borrower has failed to elect,
or is not permitted to elect, a new Interest Period to be applicable to
such Eurodollar Loans as provided above, such Borrower shall be deemed to
have elected to convert such Eurodollar Loans into Base Rate Loans effec-
tive as of the expiration date of such current Interest Period.
-10-
1.11 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):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Effective Date affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascer-
taining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan or Competitive Bid Loan, as the case
may be, because of (x) any change since the Effective Date in any
applicable law or governmental rule, regulation, order, guideline or
request (whether or not having the force of law) or in the inter-
pretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or re-
quest, such as, for example, but not limited to: (A) a change in the
basis of taxation of payment to any Bank of the principal of or
interest on the Revolving Notes, the Competitive Bid Loans or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is
located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the
Effective Date affecting such Bank or the interbank Eurodollar market
or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan or Competitive Bid Loan, as the case may be, has been
made (x) unlawful by any law or governmental rule, regulation or
order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring
-11-
after the Effective Date which materially and adversely affects the
interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give telephonic notice (confirmed
in writing) to the respective Borrower and, except in the case of clause
(i) above, to the Administrative Agent of such determination (which notice
the Administrative Agent shall promptly transmit to each of the other
Banks). Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Administrative Agent
notifies the respective Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and
any Notice of Borrowing or Notice of Conversion given by such Borrower with
respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by such Borrower, (y) in the
case of clause (ii) above, the respective Borrower shall pay to such Bank,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to such Borrower by such Bank shall, absent manifest
error, be final and conclusive and binding on all the parties hereto) and
(z) in the case of clause (iii) above, the respective Borrower shall take
one of the actions specified in Section 1.11(b) as promptly as possible
and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan or Competitive Bid Loan
is affected by the circumstances described in Section 1.11(a)(ii) or (iii),
the respective Borrower may (and in the case of any Eurodollar Loan or
Competitive Bid Loan affected by the circumstances described in Section
1.11(a)(iii) shall) either (x) if the affected Eurodollar Loan or
Competitive Bid Loan is then being made initially or pursuant to a
conversion, cancel the respective Borrowing by giving the Administrative
Agent telephonic notice (confirmed in writing) on the same date that such
Borrower was notified by the affected Bank or the Administrative Agent
pursuant to Section 1.11(a)(ii) or (iii), (y) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' written notice
to the Administrative Agent, require the affected Bank to
-12-
convert such Eurodollar Loan into a Base Rate Loan or (z) if the affected
Competitive Bid Loan is then outstanding, repay such Competitive Bid Loan
in full; provided that, if more than one Bank is affected at any time, then
--------
all affected Banks must be treated the same pursuant to this Section
1.11(b).
(c) If at any time any Bank determines that the introduction of
or any change in any applicable law or governmental rule, regulation,
order, guideline, directive or request (whether or not having the force of
law and including, without limitation, those announced or published prior
to the Effective Date) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority,
central bank or comparable agency, will have the effect of increasing the
amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank based on the existence of such Bank's
Revolving Loan Commitment hereunder or its obligations hereunder, then the
Borrowers shall pay (and shall be jointly and severally obligated to pay)
to such Bank, upon its written demand therefor, such additional amounts as
shall be required to compensate such Bank or such other corporation for the
increased cost to such Bank or such other corporation or the reduction in
the rate of return to such Bank or such other corporation as a result of
such increase of capital. In determining such additional amounts, each
Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that such Bank's deter-
--------
mination of compensation owing under this Section 1.11(c) shall, absent
manifest error, be final and conclusive and binding on all the parties
hereto. Each Bank, upon determining that any additional amounts will be
payable pursuant to this Section 1.11(c), will give prompt written notice
thereof to the Borrowers, which notice shall show the basis for calculation
of such additional amounts.
1.12 Compensation. The respective Borrower shall compensate
------------
each Bank, upon its written request (which request shall (x) set forth the
basis for requesting such compensation and (y) absent manifest error, be
final and conclusive and binding upon all the parties hereto), for all
reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Bank to fund its
Eurodollar Loans or Competitive Bid Loans) which such Bank may sustain:
(i) if for any reason (other than a default by such Bank or the Admin-
istrative Agent) a Borrowing of Eurodollar Loans or
-13-
Competitive Bid Loans, or conversion from or into Eurodollar Loans, does
not occur on a date specified therefor in a Notice of Borrowing, Notice of
Competitive Bid Borrowing or Notice of Conversion (whether or not withdrawn
by such Borrower or deemed withdrawn pursuant to Section 1.11(a)); (ii) if
any repayment (including any repayment made pursuant to Section 3.01 or
3.02 or a result of an acceleration of the Loans pursuant to Section 9) or
conversion of any of its Eurodollar Loans or Competitive Bid Loans occurs
on a date which is not the last day of an Interest Period with respect
thereto or the maturity date thereof; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepay-
ment given by such Borrower; or (iv) as a consequence of (x) any other
default by such Borrower to repay its Loans when required by the terms of
this Agreement or any Revolving Note held by such Bank or (y) any election
made pursuant to Section 1.11(b).
1.13 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of Section 1.11(a)(ii)
or (iii), Section 1.11(c) or Section 3.04 with respect to such Bank, it
will, if requested by the Company, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending
office for any Loans affected by such event, provided that such designation
--------
is made on such terms that such Bank and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section.
Nothing in this Section 1.13 shall affect or postpone any of the obliga-
tions of any Borrower or the right of any Bank provided in Sections 1.11
and 3.04.
1.14 Replacement of Banks. If any Bank (1) becomes a Defaulting
--------------------
Bank or otherwise defaults in its obligation to make Revolving Loans,
(2) is incurring or is reasonably expected to incur costs which are or
would be material in amount and are associated with a Gaming Authority's
investigation of whether or not such Bank is a Qualified Person, (3)
refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 12.12(b) or (4) if any Bank becomes a
Non-Continuing Bank, the Company shall have the right, if no Default or
Event of Default will exist immediately after giving effect to such
replacement, to replace such Bank (the "Replaced Bank") with one or more
other Qualified Person or Persons, none of whom shall constitute a
Defaulting Bank at the time of such replacement (collectively, the
"Replacement
-14-
Bank"), acceptable to the Administrative Agent; provided that:
--------
(i) at the time of any replacement pursuant to this Section
1.14, the Replacement Bank shall enter into one or more Assignment and
Assumption Agreements pursuant to, and in accordance with the terms
of, Section 12.04(b) (and with all fees payable pursuant to said
Section 12.04(b) to be paid by the Replacement Bank) pursuant to which
the Replacement Bank shall acquire the Revolving Loan Commitment and
all outstanding Loans of the Replaced Bank and, in connection there-
with, shall pay to the Replaced Bank in respect thereof an amount
equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Bank and
(B) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 2.01;
(ii) all obligations of the Borrowers owing to the Replaced Bank
(including all obligations, if any, owing pursuant to Section 1.12,
but excluding those obligations specifically described in clause (i)
above in respect of which the assignment purchase price has been, or
is concurrently being, paid) shall be paid in full to such Replaced
Bank concurrently with such replacement; and
(iii) the Maturity Date applicable to the Replacement Bank's
Revolving Loan Commitment shall be the Final Maturity Date then in
effect (or as same may be extended from time to time thereafter by
such Bank pursuant to Section 2.04).
Upon the execution of the respective Assignment and Assumption Agreements,
the payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Revolving Notes executed by the Borrowers, the Replacement Bank
shall become a Bank hereunder and the Replaced Bank shall cease to consti-
tute a Bank hereunder, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.11, 1.12,
3.04, 12.01 and 12.06), which shall survive as to such Replaced Bank.
-15-
SECTION 2. Fees; Reductions of Revolving Loan Commitment; Final
----------------------------------------------------
Maturity Date Extensions.
------------------------
2.01 Fees. (a) The Company agrees to pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank a facility fee (the
"Facility Fee") for the period from the Effective Date to but excluding the
Final Maturity Date then in effect (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), computed at a rate
for each day equal to the Applicable Facility Fee Percentage on the daily
average Revolving Loan Commitment of such Non-Defaulting Bank. Accrued
Facility Fees shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the Final
Maturity Date then in effect or such earlier date upon which the Total
Revolving Loan Commitment shall have been terminated and, with respect to
any Facility Fee owing to any Bank whose Revolving Loan Commitment shall
have been terminated pursuant to Section 1.14, on the date on which such
Bank's Revolving Loan Commitment shall have been terminated.
(b) Each Borrower agrees to pay to the Administrative Agent, for
its own account, such other fees as have been agreed to in writing by such
Borrower and the Administrative Agent.
2.02 Voluntary Termination of Unutilized Revolving Loan Commit-
----------------------------------------------------------
ments. (a) Upon at least two Business Days' prior written notice to the
-----
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Company shall have
the right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in whole or in
part, in integral multiples of $5,000,000 in the case of partial reductions
to the Total Unutilized Revolving Loan Commitment, provided that each such
--------
reduction shall apply proportionately to permanently reduce the Revolving
Loan Commitment of each Bank.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect
to this Agreement which have been approved by the Required Banks as
provided in Section 12.12(b), the Company shall have the right, upon five
Business Days' prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks), to terminate the entire Revolving Loan
Commitment of such Bank, so long as
-16-
all Loans, together with accrued and unpaid interest, Fees and all other
amounts owing to such Bank are repaid concurrently with the effectiveness
of such termination (at which time Schedule I shall be deemed modified to
reflect such changed amounts), and at such time, such Bank shall no longer
constitute a "Bank" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without limitation,
Sections 1.11, 1.12, 3.04, 12.01 and 12.06), which shall survive as to such
repaid Bank.
2.03 Mandatory Reduction of Revolving Loan Commitments. (a)
-------------------------------------------------
(i) In addition to any other mandatory commitment reductions pursuant to
this Section 2.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the Final
Maturity Date then in effect.
(ii) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, each Bank's Revolving Loan Commitment shall
terminate on such Bank's Maturity Date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on the 15th day after the date on which any
Change of Control occurs, the Total Revolving Loan Commitment shall be
reduced to zero unless the Required Banks otherwise agree in writing in
their sole discretion.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on each date after the Effective Date upon
which Parent or any of its Subsidiaries receives any proceeds from any
incurrence by Parent or any of its Subsidiaries of Permitted Designated
Indebtedness, the Total Revolving Loan Commitment shall be reduced by an
amount equal to its Share of the cash proceeds of the respective incurrence
of Permitted Designated Indebtedness (net of underwriting or placement
discounts and commissions and other reasonable costs associated therewith),
provided that in the case of each incurrence of Existing Casino Non-
--------
Recourse Financing, the Total Revolving Loan Commitment shall only be
reduced by an amount equal to its Share of the Minimum Proceeds Amount for
the respective Casino Property; provided further, to the extent that the 5-
-------- -------
Year Banks do not require that their full Share be applied to reduce the
Total 5-Year Revolving Loan Commitment, the amount of their Share not so
applied shall instead be applied to reduce the Total Revolving Loan
Commitment as required by clause (e) of this Section 2.03.
-17-
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on each date after the Effective Date upon
which Parent or any of its Subsidiaries receives proceeds from any sale of
assets constituting Collateral (but excluding (i) sales of inventory,
materials and equipment in the ordinary course of business and (ii) sales
of obsolete, uneconomic or worn-out equipment or materials), the Total
Revolving Loan Commitment shall be reduced by an amount equal to its Share
of 100% of the Net Sale Proceeds thereof, provided that, in the case of any
sale of a Casino Property, the Total Revolving Loan Commitment shall only
be reduced by an amount equal to its Share of the Minimum Proceeds Amount
for the respective Casino Property or Casino Owner thereof; provided
further, to the extent that the 5-Year Banks do not require that their full
Share be applied to reduce the Total 5-Year Revolving Loan Commitment, the
amount of their Share not so applied instead be applied to reduce the Total
Revolving Loan Commitment as required by clause (e) of this Section 2.03.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, following any mandatory commitment reduction
required by Section 2.03(c) or (d) with respect to which the Shares of the
various Issues of Senior Debt have been calculated in accordance with
clause (A) of the definition of "Share," on the first date thereafter upon
which it is subsequently determined that the amount which will actually be
required to mandatorily reduce the Total 5-Year Revolving Loan Commitment
is less than the Share applicable thereto (whether because the 5-Year Banks
elected not to require such reduction or otherwise), then the amount which
will not be so required to mandatorily reduce the Total 5-Year Revolving
Loan Commitment shall instead be required to reduce the Total Revolving
Loan Commitment as required by Section 2.03(c) or (d), as the case may be.
(f) The Total Revolving Loan Commitment shall be reduced, and
the Revolving Loan Commitment of the respective Former Bank shall be
terminated, in the amount and at the times provided in Section 12.04(d).
(g) Except as otherwise provided in clauses (a)(ii) and (f) of
this Section 2.03, each reduction to the Total Revolving Loan Commitment
pursuant to this Section 2.03 shall be applied proportionately to reduce
the Revolving Loan Commitment of each Bank.
2.04 Final Maturity Date Extensions. (a) Not less than 45 days
------------------------------
and not more than 90 days prior to the Final
-18-
Maturity Date then in effect, the Company may make a written request to the
Administrative Agent, who shall forward a copy of each such request to each
of the Banks, that the Final Maturity Date then in effect be extended to
the date which occurs 364 days after the Requested Extension Effective Date
specified by the Company in its written request as described in the
immediately succeeding sentence. Each request by the Company pursuant to
the immediately preceding sentence shall specify a date (the "Requested
Extension Effective Date"), which shall be not earlier than 15 days after
the giving of the respective notice and not later than 15 days prior to the
Final Maturity Date then in effect, which would be the date of the
effectiveness of the changes to the Final Maturity Date and the Maturity
Dates of the consenting Banks. Each request pursuant to the first sentence
of this Section 2.04 shall also be accompanied by a certificate of a senior
officer of the Company stating that no Default or Event of Default has
occurred and is continuing. Each Bank, acting in its sole discretion and
with no obligation to grant any extension pursuant to this Section 2.04,
shall, by written notice to the Company and the Administrative Agent, such
notice to be given on or prior to the earlier of (x) the Requested
Extension Effective Date and (y) the 30th day following receipt by such
Bank of such request by the Company, advise the Company and the
Administrative Agent whether or not such Bank agrees to such extension,
provided that any Bank which fails to so notify the Company and the
Administrative Agent as provided above shall be deemed to have elected not
to grant such extension. In giving any extensions pursuant to the immedi-
ately preceding sentence, any Bank, at its option, may specify that its
extension is conditioned upon each other Bank agreeing to the extension of
the Final Maturity Date or, in lieu thereof, may specify that Banks with a
certain minimum aggregate amount of Revolving Loan Commitments (to be
specified by such Bank) shall have agreed to such extension. The
Administrative Agent shall notify the Company and each of the Banks as to
which Banks have agreed to such extension and as to the new Final Maturity
Date as a result thereof.
(b) In the event that the Final Maturity Date is extended by
some but not all of the Banks, unless the Non-Continuing Bank or Banks
shall have been replaced by a Replacement Bank on or before the Maturity
Date of each such Non-Continuing Bank pursuant to Section 1.14, on the
Maturity Date of each such Non-Continuing Bank the Borrower shall repay all
Loans of each such Non-Continuing Bank, together with all accrued and
unpaid interest thereon, and all Fees and other amounts owing to each such
Non-Continuing Bank and
-19-
upon such payment each such Non-Continuing Bank shall cease to constitute a
Bank hereunder, except with respect to the indemnification provisions under
this Agreement (including, without limitation, Sections 1.11, 1.12, 3.04,
12.01 and 12.06), which shall survive as to each such Non-Continuing Bank.
SECTION 3. Prepayments; Payments; Taxes.
----------------------------
3.01 Voluntary Prepayments. Each Borrower shall have the right
---------------------
to prepay the Loans made to it, without premium or penalty, in whole or in
part at any time and from time to time on the following terms and
conditions:
(i) such Borrower shall give the Administrative Agent prior to
12:00 Noon (New York time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans and (y)
at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, the amount of such prepayment and the Types of
Revolving Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, which
notice the Administrative Agent shall promptly transmit to each of the
Banks;
(ii) each prepayment shall be in an aggregate principal amount of
at least $5,000,000, provided that, if any partial prepayment of
--------
Eurodollar Loans made pursuant to any Borrowing shall reduce the out-
standing Eurodollar Loans made pursuant to such Borrowing to an amount
less than $5,000,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Loans and any election of an Interest Period
with respect thereto given by the Borrower shall have no force or
effect;
(iii) each prepayment in respect of any Revolving Loans made pur-
suant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans, provided that, at the respective Borrower's election in connec-
--------
tion with any prepayment of Revolving Loans pursuant to this Section
3.01, such prepayment shall not be applied to any Revolving Loan of a
Defaulting Bank;
(iv) in the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which
-20-
have been approved by the Required Banks as provided in Section
12.12(b), the Borrowers shall have the right, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each
of the Banks) repay all Loans, together with accrued and unpaid
interest, Fees, and other amounts owing to such Bank in accordance
with said Section 12.12(b) so long as (A) the Revolving Loan Commit-
ment of such Bank is terminated concurrently with such repayment (at
which time Schedule I shall be deemed modified to reflect the changed
Revolving Loan Commitments) and (B) the consents required by Section
12.12(b) in connection with the repayment pursuant to this clause (iv)
have been obtained; and
(v) except as otherwise provided in preceding clause (iv), the
Company may not voluntarily prepay any Competitive Bid Loans without
the consent of the Bank that had made such Competitive Bid Loans.
3.02 Mandatory Repayments. (a)(i) On any day on which the sum
--------------------
of the aggregate outstanding principal amount of Revolving Loans and
Competitive Bid Loans exceeds the Total Revolving Loan Commitment as then
in effect, there shall be required to be repaid on such date that principal
amount of Revolving Loans and, after all such Revolving Loans have been
repaid in full, Competitive Bid Loans in an amount equal to such excess.
(ii) On any day on which the aggregate outstanding principal
amount of Revolving Loans made to any Subsidiary Borrower exceeds such
Subsidiary Borrower's Sub-Limit, such Subsidiary Borrower shall repay
principal of its Revolving Loans in an amount equal to such excess.
(b) With respect to each repayment of Revolving Loans required
by this Section 3.02, the respective Borrower may designate the Types of
Revolving Loans which are to be repaid and, in the case of Eurodollar
Loans, the specific Borrowing or Borrowings pursuant to which made,
provided that: (i) repayments of Eurodollar Loans pursuant to this Section
--------
3.02 may only be made on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans with Interest Periods ending on such
date of required repayment and all Base Rate Loans have been paid in full;
(ii) if any repayment of Eurodollar Loans made pursuant to a single
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than $5,000,000,
-21-
such Borrowing shall be converted on such day into a Borrowing of Base Rate
Loans; and (iii) each repayment of any Revolving Loans made pursuant to a
Borrowing shall be applied pro rata among such Revolving Loans. Each
--- ----
prepayment of Competitive Bid Loans required by this Section 3.02 shall be
applied pro rata among all outstanding Competitive Bid Loans. In the
--- ----
absence of a designation by any Borrower as described in the second preced-
ing sentence, the Administrative Agent shall, upon telephonic notice to the
Company and subject to the above, make such designation in its sole
discretion.
(c) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, (i) all then outstanding Competitive Bid Loans shall be
repaid in full on the fifth Business Day preceding the Final Maturity Date
then in effect and (ii) all then outstanding Revolving Loans shall be
repaid in full on the Final Maturity Date then in effect.
3.03 Method and Place of Payment. Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement or under
any Revolving Note shall be made to the Administrative Agent for the
account of the Bank or Banks entitled thereto not later than 12:00 Noon
(New York time) on the date when due and shall be made in Dollars in
immediately available funds at the Payment Office of the Administrative
Agent. Whenever any payment to be made hereunder or under any Revolving
Note shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
3.04 Net Payments. (a) All payments made by any Borrower
------------
hereunder or under any Revolving Note, will be made without setoff,
counterclaim or other defense. Except as provided in Section 3.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties,
fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the immediately succeeding sentence, any tax imposed
on or measured by the net income or profits of a Bank pursuant to the laws
of the United States and the jurisdiction in which it is organized or in
which the principal office or applicable lending office of such Bank is
located or any subdivision or taxing authority thereof or therein) and all
interest, penalties or similar liabilities with respect
-22-
thereto (collectively, "Taxes"). If any amounts are payable in respect of
Taxes pursuant to the preceding sentence, then the Borrowers agree to
reimburse each Bank, upon the written request of such Bank, for taxes
imposed on or measured by the net income of such Bank pursuant to the laws
of the jurisdiction in which the principal office or applicable lending
office of such Bank is located or under the laws of any political subdivi-
sion or taxing authority of any such jurisdiction in which the principal
office or applicable lending office of such Bank is located and for any
withholding of income or similar taxes imposed by the United States as such
Bank shall determine are payable by, or withheld from, such Bank in respect
of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of
such Bank pursuant to this sentence. If any Taxes are so levied or
imposed, the Borrowers agree to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Revolving Note, after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein or in such Revolving Note. The Borrowers will furnish
to the Administrative Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law copies of official tax receipts
received from the relevant taxing authority evidencing such payment by the
Borrowers. The Borrowers agree to indemnify and hold harmless each Bank,
and reimburse such Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Bank.
(b) Each Bank which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees (i) in the case of any such Bank that is a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and which constitutes a
Bank hereunder on the Effective Date, to provide to the Company and the
Administrative Agent within five days after the Effective Date two original
signed copies of Internal Revenue Service Form 4224 or Form 1001 certifying
to such Bank's entitlement to an exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any
Revolving Note, (ii) in the case of any such Bank that is a "bank" within
the meaning of Section 881(c) (3)(A) of the Code, that, to the extent
legally entitled to do so, (x) with respect to a Bank that is an assignee
or transferee of an interest under this Agreement pursuant to Section 1.14
or 12.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or
-23-
transfer), within five days after such assignment or transfer to such Bank,
and (y) with respect to any such Bank, from time to time upon the
reasonable written request of the Company or the Administrative Agent after
the Effective Date, such Bank will provide to the Company and the
Administrative Agent two original signed copies of Internal Revenue Service
Form 4224 or Form 1001 (or any successor forms) certifying to such Bank's
entitlement to an exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement
and under any Revolving Note, (iii) in the case of any such Bank (other
than a Bank described in clause (i) or (ii) above) which constitutes a Bank
hereunder on the Effective Date, to provide to the Company and the
Administrative Agent, within five days after the Effective Date (x) a
certificate substantially in the form of Exhibit D (any such certificate, a
"Section 3.04(b)(iii) Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8, certifying to
such Bank's entitlement at the date of such certificate (assuming
compliance by the Company with Section 7.11) to an exemption from United
States withholding tax under the provisions of Section 881(c) of the Code
with respect to payments to be made under this Agreement and under any
Revolving Note and (iv) in the case of any such Bank (other than a Bank
described in clause (i) or (ii) above), to the extent legally entitled to
do so, (x) with respect to a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.14 or 12.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), within five days after such assignment or transfer
to such Bank, and (y) with respect to any such Bank, from time to time upon
the reasonable written request of the Company or the Administrative Agent
after the Effective Date, to provide to the Company and the Administrative
Agent such other forms as may be required in order to establish the enti-
tlement of such Bank to an exemption from withholding with respect to
payments under this Agreement and under any Revolving Note. Notwith-
standing anything to the contrary contained in Section 3.04(a), but subject
to the immediately succeeding sentence, each Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder (without any obligation to pay the respective Bank
additional amounts with respect thereto) for the account of any Bank which
is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes
-24-
and which has not provided to the Company such forms required to be
provided to the Company pursuant to the first sentence of this Section
3.04(b). Notwithstanding anything to the contrary contained in the
preceding sentence and except as set forth in Section 12.04(b), each
Borrower agrees to indemnify each Bank in the manner set forth in Section
3.04(a) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of income or similar Taxes.
(c) If any Borrower pays any additional amount under this
Section 3.04 to a Bank and such Bank determines that it has received or
realized in connection therewith any refund or any reduction of, or credit
against, its Tax liabilities in or with respect to the taxable year in
which the additional amount is paid, such Bank shall pay to the respective
Borrower an amount that the Bank shall, in its sole discretion, determine
is equal to the net benefit, after tax, which was obtained by the Bank in
such taxable year as a consequence of such refund, reduction or credit.
SECTION 4. Conditions Precedent to the Effective Date. The
------------------------------------------
occurrence of the Effective Date pursuant to Section 12.10, and the obli-
gation of each Bank to make Revolving Loans on the Effective Date is
subject to the satisfaction of the following conditions:
4.01 Execution of Agreement; Notes. On or prior to the
-----------------------------
Effective Date, (i) this Agreement shall have been executed and delivered
as provided in Section 12.10 and (ii) there shall have been delivered to
the Administrative Agent for the account of each Bank the appropriate
Revolving Notes executed by the respective Borrowers, in the amount,
maturity and as otherwise provided herein.
4.02 Officer's Certificate. On the Effective Date, the
---------------------
Administrative Agent shall have received a certificate dated the Effective
Date signed on behalf of the Company by the President, any Senior Vice
President or any Vice President of the Company stating that all of the
conditions in Sections 4.14, 4.15, 4.16, 4.17, 4.19, 4.20 and 5.01 have
been satisfied on such date.
4.03 Opinions of Counsel. On the Effective Date, the
-------------------
Administrative Agent shall have received (i) from Latham
-25-
& Watkins, counsel to Parent, the Company and the Subsidiary Borrowers, an
opinion addressed to the Administrative Agent and each of the Banks and
dated the Effective Date in form and substance satisfactory to the
Administrative Agent and the Required Banks, (ii) from E.O. Robinson, Jr.,
General Counsel to Parent and the Company, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Effective Date in
form and substance satisfactory to the Administrative Agent and the
Required Banks and (iii) from local counsel reasonably satisfactory to the
Administrative Agent, opinions each of which shall be in form and substance
satisfactory to the Administrative Agent and the Required Banks and shall
cover the New Jersey and Nevada Gaming Regulations and the perfection and
priority of the security interests granted pursuant to the Security
Agreement and the Mortgages (except that no opinion need be given with
respect to the priority of the Lien of any Mortgage) and such other matters
incident to the transactions contemplated herein as the Administrative
Agent may reasonably request.
4.04 Corporate Documents; Proceedings. (a) On the Effective
--------------------------------
Date, the Administrative Agent shall have received a certificate, dated the
Effective Date, signed by the President, any Senior Vice President or any
Vice President of each of the Credit Parties, and attested to by the
Secretary or any Assistant Secretary of each such Credit Party, in the form
of Exhibit E to the 5-Year Credit Agreement with appropriate insertions,
together with copies of the certificate of incorporation, partnership
agreement and by-laws of such Credit Party, as the case may be, and the re-
solutions of such Credit Party referred to in such certificate, and the
foregoing shall be acceptable to the Administrative Agent in its reasonable
discretion.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement, the other Credit Documents and the Hotel Transaction Documents
shall be satisfactory in form and substance to the Administrative Agent and
the Required Banks, and the Administrative Agent shall have received true
and correct copies of all Hotel Transaction Documents, together with all
information and copies of all other documents and papers, including records
of corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams, if any, which the Administrative
Agent reasonably may have requested in connection therewith, such documents
and papers where appropriate to be certified by proper corporate or
governmental authorities.
-26-
4.05 Master Collateral Agreement. On the Effective Date, the
---------------------------
Administrative Agent, the Collateral Agent and each Collateral Grantor
shall have entered into an amendment to the Master Collateral Agreement in
the form of Exhibit F to the 5-Year Credit Agreement, and the Master
Collateral Agreement, as so amended, shall be in full force and effect.
4.06 Pledge Agreements. (a) On the Effective Date, the
-----------------
Collateral Agent and Parent shall have entered into an amendment to the
Parent Pledge Agreement in the form of Exhibit G-1 to the 5-Year Credit
Agreement, and the Parent Pledge Agreement, as so amended, shall be in full
force and effect. On the Effective Date, the Collateral Agent, as Pledgee,
shall have in its possession all the Pledged Securities referred to in the
Parent Pledge Agreement then owned by Parent, together with executed and
undated stock powers.
(b) On the Effective Date, the Collateral Agent and each
Collateral Grantor party to the Company/Sub Pledge Agreement shall have
entered into an amendment to the Company/Sub Pledge Agreement in the form
of Exhibit G-2 to the 5-Year Credit Agreement, and the Company/Sub Pledge
Agreement, as so amended, shall be in full force and effect. On the
Effective Date, the Collateral Agent, as Pledgee, shall have in its
possession all the Pledged Securities referred to in the Company/Sub Pledge
Agreement then owned by the respective Collateral Grantor, together with
executed and undated stock powers.
4.07 Security Agreement. On the Effective Date, the Collateral
------------------
Agent and each Collateral Grantor party to the Security Agreement shall
have entered into an amendment to the Security Agreement in the form of
Exhibit H to the 5-Year Credit Agreement, and the Security Agreement, as so
amended, shall be in full force and effect. On the Effective Date, no
filings, recordings or registrations (other than those made prior to the
Effective Date) shall be necessary or required to perfect (or maintain the
perfection and priority of) the security interest created under the
Security Agreement.
4.08 Company/Sub Guaranty. On the Effective Date, the
--------------------
Collateral Agent, the Company and each other Guarantor (other than Parent)
shall have entered into an amendment to the Company/Sub Guaranty in the
form of Exhibit I to the 5-Year Credit Agreement, and the Company/Sub
Guaranty, as so amended, shall be in full force and effect.
-27-
4.09 Mortgages; Title Insurance; Surveys; etc. On the Effective
-----------------------------------------
Date, the Collateral Agent shall have received:
(i) fully executed counterparts of amendments (each a "Mortgage
Amendment" and, collectively, the "Mortgage Amendments") to each of
the Mortgages in the form of Exhibit J-1 to the 5-Year Credit
Agreement in the case of the Atlantic City Property and Exhibit J-2 to
the 5-Year Credit Agreement in the case of the other Casino
Properties, together with evidence that counterparts of the Mortgage
Amendments have been delivered to the title insurance company insuring
the Lien of such Mortgages for recording in all places to the extent
necessary or desirable, in the judgment of the Collateral Agent,
effectively to create or maintain a valid and enforceable first
priority mortgage lien on each such Mortgaged Property in favor of the
Collateral Agent for the benefit of the Secured Parties;
(ii) endorsements to the Mortgage Policies issued by First
American Title Insurance Company or such other title insurers
reasonably satisfactory to the Administrative Agent in amounts satis-
factory to the Administrative Agent assuring the Administrative Agent
that the Mortgages on the Mortgaged Properties are valid and enforce-
able first priority mortgage liens on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Per-
mitted Encumbrances and such endorsements shall otherwise be in form
and substance satisfactory to the Administrative Agent, and shall
include, as appropriate, an endorsement for future advances under this
Agreement and the Revolving Notes and for any other matter that the
Administrative Agent in its discretion may reasonably request, shall
not include an exception for mechanics' liens, and shall provide for
affirmative insurance and such reinsurance as the Administrative Agent
in its discretion may reasonably request; and
(iii) either (x) an officer's certificate of the Company with
respect to each Mortgaged Property certifying that there has been no
material alterations or improvements to such Mortgaged Property, which
certificate shall be in form and substance satisfactory to the
Administrative Agent or (y) in the case of any Mortgaged Property for
which the foregoing certification cannot be made, an updated survey
for such Mortgaged Property, in form and substance reasonably satis-
factory to the Administrative Agent, certified by a licensed
-28-
professional surveyor reasonably satisfactory to the Administrative
Agent.
4.10 Assignment of Partnership Interests Agreement. On the
---------------------------------------------
Effective Date, the Collateral Agent, Marina, Harrah's Atlantic City and
Harrah's New Jersey shall have entered into an amendment to the Assignment
of Partnership Interests Agreement in the form of Exhibit K to the 5-Year
Credit Agreement, and the Assignment of Partnership Interests Agreement, as
so amended, shall be in full force and effect.
4.11 Assignment of Leases. On the Effective Date, the
--------------------
Collateral Agent and Marina shall have entered into an amendment to the
Assignment of Leases in the form of Exhibit L to the 5-Year Credit
Agreement, and the Assignment of Leases, as so amended, shall be in full
force and effect.
4.12 Net Lease Agreements. On the Effective Date, each of the
--------------------
Net Lease Agreements shall be in full force and effect, provided that, to
the extent the Company transfers its ownership interest in any of the
Casino Properties located in Nevada to Harrah's Club as permitted by
Section 8.02(a), the Net Lease Agreement with respect to each such Casino
Property may be terminated.
4.13 Consent Letter. On the Effective Date, the Administrative
--------------
Agent shall have received a letter from CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, substantially in the
form of Exhibit M to the 5-Year Credit Agreement, indicating its consent to
its appointment by each Credit Party as its agent to receive service of
process as specified in Section 12.08.
4.14 Adverse Change. On or prior to the Effective Date, nothing
--------------
shall have occurred (and the Banks shall have become aware of no facts or
conditions not previously known) which the Administrative Agent or the
Required Banks shall determine has, or could reasonably be expected to
have, a material adverse effect on the rights or remedies of the Admin-
istrative Agent, the Collateral Agent or the Banks, or on the ability of
Parent or any Borrower or any other Credit Party to perform its obligations
to the Administrative Agent, the Collateral Agent and the Banks or which
has, or could reasonably be expected to have, a materially adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole.
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4.15 Litigation. On the Effective Date, no litigation by any
----------
entity (private or governmental) shall be pending or threatened with
respect to this Agreement, the Hotel Transaction or any documentation
executed in connection herewith or therewith or the transactions
contemplated hereby or thereby, or with respect to any material Indebt-
edness of Parent or any of its Subsidiaries or which the Administrative
Agent or the Required Banks shall determine could reasonably be expected to
have a materially adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
4.16 Hotel Transaction. (a) On the Effective Date, Parent shall
-----------------
have changed its legal corporate name to "Harrah's Entertainment, Inc.",
and the Company shall have changed its legal corporate name to "Harrah's
Operating Company, Inc."
(b) On the Effective Date, the Company and the Hotel Subsidiaries
shall have entered into the Hotel Facility, no default or event of default
shall exist thereunder and the Company shall have incurred not less than
$210,000,000 of loans thereunder.
(c) On the Effective Date, the Company shall have consummated the
Hotel Transfer.
(d) On the Effective Date, in consideration of the Hotel Transfer
described in clause (c) of this Section 4.16, the Company shall have
irrevocably and unconditionally assigned to the Hotel Company, and the
Hotel Company shall have irrevocably and unconditionally assumed from the
Company, and the Company shall have been irrevocably and unconditionally
released from, all of the Company's rights and obligations under the Hotel
Facility.
(e) On the Effective Date, Parent and the Company shall have
declared and paid the Hotel Stock Dividend.
4.17 Approvals, etc. (a) On or prior to the Effective Date, all
---------------
necessary governmental (domestic and foreign) and third party approvals
(including, without limitation, the approval of the holders of the 8-3/4%
Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes) in
connection with the transactions contemplated by this Agreement, the Hotel
Transaction Documents and otherwise referred to herein or therein shall
have been obtained and remain in effect, and all applicable waiting periods
shall
-30-
have expired without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon the
consummation of the transactions contemplated by this Agreement, the Hotel
Transaction Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially
adverse conditions upon the consummation of the transactions contemplated
by this Agreement, the Hotel Transaction Documents or otherwise referred to
herein or therein.
(b) On or prior to the Effective Date, the Company shall have
received sufficient Consents to authorize the execution and delivery of the
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture and such indenture
supplements shall have been duly executed and delivered by the Company and
the respective indenture trustee thereunder and all conditions to the
effectiveness thereof shall have been satisfied. All of the terms and
conditions of the Consents and the respective indenture supplements shall
be reasonably satisfactory to the Administrative Agent and the Required
Banks and in compliance with the applicable Hotel Transaction Documents and
all applicable laws (including, without limitation, Federal and state
securities laws).
(c) On or prior to the Effective Date, the Administrative Agent
shall have received evidence that the Banks are qualified under the New
Jersey Gaming Regulations as financial sources or qualifiers, or are exempt
or waived therefrom, and shall be satisfied that no other New Jersey or
Nevada gaming license, authorization, qualification, waiver or exemption of
the Banks is required on or prior to the Effective Date by reason of this
Agreement or the Collateral Documents. The Administrative Agent also shall
be satisfied in its discretion with any conditions or requirements imposed
by the New Jersey, Nevada or other relevant Gaming Authorities upon the
Banks, this Agreement, the Collateral Documents, the Collateral or the
Hotel Transaction.
(d) Parent, its shareholders and Subsidiaries shall have
received any qualifications required under applicable Gaming Regulations in
connection with this Agreement, the Collateral Documents and the Hotel
Transaction, and the Borrowers and the Guarantors shall have received all
other approvals, authorizations or consents of, or notices to or
registrations with any governmental body and
-31-
required releases and consents from other appropriate Persons (including,
without limitation, the shareholders of Parent) in connection with this
Agreement, the Collateral Documents and the Hotel Transaction and shall
have provided copies or other satisfactory evidence of all approvals,
authorizations or consents referred to above to the Administrative Agent.
4.18 Solvency Certificate; Evidence of Insurance. On the
-------------------------------------------
Effective Date, there shall have been delivered to the Administrative Agent
(i) a certificate in the form of Exhibit N to the 5-Year Credit Agreement,
addressed to the Administrative Agent and each of the Banks and dated the
Effective Date, from the chief financial officer of Parent, providing the
opinion of such chief financial officer as to the solvency of Parent, the
Company, each Subsidiary Borrower and Parent and its Subsidiaries taken as
a whole, and (ii) evidence of insurance (A) satisfactory to the
Administrative Agent that insurance is in effect with respect to each of
the Mortgaged Properties and covering such risks and in such amounts and
with such coverages as required by the Administrative Agent and (B) that
each insurance policy covering the Collateral and each other material
insurance policy is effective as required in accordance with the
requirements of Section 7.03 for the business and properties of Parent and
its Subsidiaries, in scope, form and substance satisfactory to the Admin-
istrative Agent and the Required Banks and naming the Collateral Agent, in
the case of Collateral, as an additional insured and/or loss payee, and
stating that such insurance shall not be cancelled or revised without at
least 30 days' prior written notice by the respective insurer to the
Collateral Agent.
4.19 Payment of Fees. On the Effective Date, all costs, fees
---------------
and expenses (including, without limitation, legal fees and expenses) and
other compensation contemplated hereby or otherwise agreed and payable to
the Banks or the Administrative Agent shall have been paid to the extent
due.
4.20 5-Year Credit Agreement. On the Effective Date, Parent,
-----------------------
the Company, the Subsidiary Borrowers, the 5-Year Banks and the
Administrative Agent shall have entered into the 5-Year Credit Agreement,
and the 5-Year Credit Agreement shall be in full force and effect. On the
Effective Date, the Company shall have delivered to the Administrative
Agent a true and correct copy of the 5-Year Credit Agreement, which shall
be required to be in form and substance satisfactory to the Administrative
Agent and the Required Banks.
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4.21 Schedules. On the Effective Date, the Company shall have
---------
delivered to each of the Banks true and complete copies of Schedules II
through VIII, which Schedules shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks.
SECTION 5. Conditions Precedent to All Loans. The obligation of
---------------------------------
each Bank to make Loans (including Loans made on the Effective Date), is
subject, at the time of the making of each such Loan (except as hereinafter
indicated), to the satisfaction of the following conditions:
5.01 No Default; Representations and Warranties. At the time of
------------------------------------------
each such Loan and also after giving effect thereto (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date of the making of
such Loan (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of such
specified date).
5.02 Notice of Borrowing; Competitive Bid Loans. (a) Prior to
------------------------------------------
the making of each Revolving Loan, the Administrative Agent shall have
received a Notice of Borrowing meeting the requirements of Section 1.03.
(b) Prior to the making of any Competitive Bid Loans, (i) all of
the applicable conditions specified in Section 1.04 shall have been
satisfied and (ii) the Company's Indebtedness shall be rated at least BBB-
Senior Implied by S&P or at least Baa3 Senior Implied by Moody's.
5.03 Election to Become a Subsidiary Borrower. Prior to the
----------------------------------------
incurrence of any Revolving Loans by a Subsidiary Borrower which is not a
Subsidiary Borrower on the Effective Date, the following additional
conditions shall be satisfied:
(i) such new Subsidiary Borrower shall have duly authorized,
executed and delivered to the Administrative Agent an Election to
Become a Subsidiary Borrower in the form of Exhibit E, which shall be
in full force and effect;
(ii) such Subsidiary Borrower shall have duly authorized,
executed and delivered to the Administrative
-33-
Agent for the account of each of the Banks the appropriate Revolving
Note in the amount, maturity and as otherwise provided herein; and
(iii) to the extent not previously accomplished, such Subsidiary
Borrower shall have duly authorized, executed and delivered to the
Administrative Agent counterparts of the Company/Sub Guaranty and each
Collateral Document to the extent applicable, together with (x) such
financing statements and instruments required to be delivered by the
respective Collateral Documents and (y) such other documents,
certificates, resolutions, opinions and writings that would have been
required to be delivered pursuant to Sections 4.03 and 4.04 of this
Agreement and Section 5.19 of the Original Five-Year Credit Agreement
if such Subsidiary Borrower had been subject to such Sections on the
Effective Date, all of which shall be in form and substance
satisfactory to the Administrative Agent.
The occurrence of the Effective Date and the acceptance of the
proceeds of each Loan shall constitute a representation and warranty by
Parent and the respective Borrower to the Administrative Agent and each of
the Banks that all the conditions specified in Section 4 and in this
Section 5 and applicable to such Loan have been satisfied as of that time.
All of the Revolving Notes, certificates, legal opinions and other docu-
ments and papers referred to in Section 4 and in this Section 5, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the
Revolving Notes, in sufficient counterparts for each of the Banks and shall
be in form and substance satisfactory to the Required Banks.
Notwithstanding anything to the contrary contained above or in
Section 12.10, if the Effective Date does not occur on or prior to
September 30, 1995, then it shall not thereafter occur (unless the Required
Banks agree in writing to an extension of such date), and this Agreement
shall cease to be of any force or effect.
SECTION 6. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Loans,
each of Parent, the Company and each Subsidiary Borrower makes the
following representations, warranties and agreements, in each case after
giving effect to the Hotel Transaction, all of which shall survive the
execution and delivery of this Agreement and the Revolving
-34-
Notes and the making of the Loans, with the occurrence of the Effective
Date and the making of each Loan on or after the Effective Date being
deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct on and as of the Effective
Date and on the date of each such Loan (it being understood and agreed that
(i) any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date and (ii) for purposes of making any
representation or warranty in this Section 6 after the Effective Date the
term Documents shall not include the Hotel Transaction Documents).
6.01 Corporate or Partnership Status. Each of Parent and its
-------------------------------
Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate or partnership power and authority to
own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of
its business requires such qualifications except for failures to be so
qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or pros-
pects of Parent and its Subsidiaries taken as a whole.
6.02 Corporate or Partnership Power and Authority. Each Credit
--------------------------------------------
Party has the corporate or partnership power and authority to execute,
deliver and perform the terms and provisions of each of the Documents to
which it is party and has taken all necessary corporate or partnership
action to authorize the execution, delivery and performance by it of each
of such Documents. Each Credit Party has duly executed and delivered each
of the Documents to which it is party, and each of such Documents
constitutes its legal, valid and binding obligation enforceable in accord-
ance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and
by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.03 No Violation. Neither the execution, delivery or
------------
performance by any Credit Party of the Documents to which it is a party,
nor compliance by it with the terms and
-35-
provisions thereof, (i) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or con-
stitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Collateral
Documents and, in the case of the Hotel Company and the Hotel Subsidiaries,
pursuant to the Hotel Facility) upon any of the property or assets of
Parent or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which Parent or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of
the certificate of incorporation, partnership agreement or by-laws of
Parent or any of its Subsidiaries.
6.04 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made on or prior to the
Effective Date), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the Hotel Transaction, (ii) the execution,
delivery and performance of any Document or (iii) the legality, validity,
binding effect or enforceability of any such Document.
6.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The statements of financial condition
------------------------------
of Parent and its Consolidated Subsidiaries at December 31, 1994 (including
the December 31, 1994 financial statements contained in the Proxy Statement
which shows the Hotel Business as discontinued operations) and March 31,
1995, and the related statements of income and cash flow and changes in
shareholders' equity of Parent and its Consolidated Subsidiaries for the
fiscal year and three-month period ended on such date, as the case may be,
and furnished to the Banks prior to the Effective Date present fairly the
financial condition of Parent and its Consolidated Subsidiaries at the date
of such statements of financial condition and the results of the operations
of Parent and its Consolidated Subsidiaries for the respective fiscal year
or three-month period, as the case may be. All such financial statements
have been prepared in accordance with generally accepted accounting
principles and practices consistently applied. Since December 31, 1994
(but after giving effect to
-36-
the Hotel Transaction), there has been no material adverse change in the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
(b) On and as of the Effective Date, both before and after
giving effect to the Hotel Transaction and to all Indebtedness (including
the Loans) being incurred or assumed and Liens created by Parent and its
Subsidiaries in connection therewith, (a) the sum of the assets, at a fair
valuation, of each of Parent, the Company, each Subsidiary Borrower, Parent
and its Subsidiaries taken as a whole and the Company and its Subsidiaries
taken as a whole will exceed their respective debts; (b) none of Parent,
the Company, any Subsidiary Borrower, Parent and its Subsidiaries taken as
a whole or the Company and its Subsidiaries taken as a whole has incurred,
nor do they intend to incur or believe that they will incur, debts beyond
their ability to pay such debts as such debts mature; and (c) each of
Parent, the Company, each Subsidiary Borrower, Parent and its Subsidiaries
taken as a whole and the Company and its Subsidiaries taken as a whole will
have sufficient capital with which to conduct its respective business. For
purposes of this Section 6.05(b), "debt" means any liability on a claim,
and "claim" means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or
(ii) right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy
is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 6.05(a), there were as of the Effective Date
no liabilities or obligations with respect to Parent or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in aggregate, would be material to Parent and its Subsidiaries taken as
a whole. As of the Effective Date, neither Parent nor any Borrower knows
of any basis for the assertion against Parent or any of its Subsidiaries of
any liability or obligation of any nature whatsoever that is not fully
disclosed in the financial statements delivered pursuant to Section 6.05(a)
which, either individually or in the aggregate, is material to Parent and
its Subsidiaries taken as a whole.
-37-
(d) On and as of the Effective Date, (i) the financial
projections (the "Projections") prepared by the Company and delivered to
the Banks by the Administrative Agent prior to the Effective Date were
prepared based upon the assumptions concerning various industry trends
described therein for the periods presented, (ii) the Projections were
based on good faith assumptions and estimates, and (iii) although a range
of possible different assumptions and estimates might also be reasonable,
the Company is not aware of any facts that would lead it to believe that
the assumptions and estimates on which the Projections were based are not
reasonable; provided that no assurance can be given that the projected
results will be realized or with respect to the ability of the Company to
achieve the projected results, and while the Projections are necessarily
presented with numerical specificity, the actual results achieved during
the periods presented in all likelihood will differ from the projected
results and such differences may be material.
6.06 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of Parent or any Borrower, threatened (i)
with respect to any Document or the Hotel Transaction, (ii) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (iii)
that could reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
6.07 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) furnished by or on behalf of Parent or its Subsidiaries
in writing to the Administrative Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or
in connection with this Agreement, the other Credit Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of
Parent or its Subsidiaries in writing to the Administrative Agent or any
Bank will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circum-
stances under which such information was provided.
6.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
-----------------------------------
the Loans shall be used by the Borrowers (i) to pay fees and expenses re-
lated to this Agreement and (ii)
-38-
for the Borrowers' and their Subsidiaries' general corporate purposes.
(b) No part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit for the purpose of purchasing
or carrying any Margin Stock. Neither the making of any Loan nor the use
of the proceeds thereof will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
6.09 Tax Returns and Payments. Each of Parent and its
------------------------
Subsidiaries and each Person for whose tax Parent or any of its
Subsidiaries could be liable has filed or caused to be filed with the
appropriate taxing authority, all Federal and all other material returns,
statements, forms and reports for all taxes (the "Returns") required to be
filed by it and has paid or caused to be paid (i) all material taxes due
for the periods covered thereby and (ii) all taxes pursuant to any
assessment received by Parent, any of its Subsidiaries or any such Person,
excluding, in each case, any such taxes that have been contested in good
faith and for which adequate reserves have been established in accordance
with generally accepted accounting principles. Except as disclosed on
Schedule II, as of the Effective Date, there is no action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge
of Parent or any of its Subsidiaries, threatened by any governmental or
taxing authority regarding any material taxes relating to Parent or any of
its Subsidiaries. Except as disclosed on Schedule II, as of the Effective
Date, neither Parent nor any of its Subsidiaries has entered into an agree-
ment or waiver extending any statute of limitations relating to the payment
or collection of any material taxes of Parent or any of its Subsidiaries.
6.10 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither Parent nor any Subsidiary of Parent nor
any ERISA Affiliate has incurred any material liability to or on account of
a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or expects to incur any liability under any of the foregoing
Sections with respect to
-39-
any Plan; no proceedings have been instituted by the PBGC to terminate or
appoint a trustee to administer any Plan; no condition exists which
presents a material risk to Parent or any Subsidiary of Parent or any ERISA
Affiliate of incurring a liability to or on account of a Plan pursuant to
the foregoing provisions of ERISA and the Code; no lien imposed under the
Code or ERISA on the assets of Parent or any Subsidiary of Parent or any
ERISA Affiliate exists or is likely to arise on account of any Plan; and
Parent and its Subsidiaries may cease contributions to or terminate any
employee benefit plan maintained by any of them without incurring any
material liability to any person interested therein other than accrued
benefits; it being understood that any representation or warranty made in
this Section 6.10 with respect to any multiemployer plan (labor union) is
to the best knowledge of Parent, the Company and each Subsidiary Borrower.
6.11 The Collateral Documents. (a) The provisions of the
------------------------
Security Agreement are effective to create in favor of the Collateral Agent
for the benefit of the Secured Parties a legal, valid and enforceable
security interest in all right, title and interest of the Collateral
Grantors in the Security Agreement Collateral described therein, and the
Security Agreement creates a fully perfected first lien on, and security
interest in, all right, title and interest of the Collateral Grantors, in
all of the Security Agreement Collateral described therein, subject to no
other Liens other than Permitted Liens. The recordation of the Security
Agreement in the United States Patent and Trademark Office together with
filings on Form UCC-1 made pursuant to the Security Agreement will be
effective, under federal law, to perfect the security interest granted to
the Collateral Agent in the trademarks and patents covered by the Security
Agreement and the filing of the Security Agreement with the United States
Copyright Office together with filings on Form UCC-1 made pursuant to the
Security Agreement will be effective under federal law to perfect the
security interest granted to the Collateral Agent in the copyrights covered
by the Security Agreement. Each Collateral Grantor has good and marketable
title to all Security Agreement Collateral described therein, free and
clear of all Liens except those described above in this clause (a).
(b) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Pledge Agreements
constitute first perfected security interests in the Pledged Securities
described in the Pledge Agreements, subject to no security interests of any
other Person. No filings or recordings are required in order to
-40-
perfect (or maintain the perfection or priority of) the security interests
created in the Pledged Securities under the Pledge Agreements.
(c) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Assignment of
Partnership Interests Agreement constitute first perfected security
interests in the Partnership Interests described in the Assignment of
Partnership Interests Agreement, subject to no security interests of any
other Person. Except for filings that have been made prior to the
Effective Date, no filings or recordings are required in order to perfect
(or maintain the perfection or priority of) the security interests created
in the Partnership Interests under the Assignment of Partnership Interests
Agreement.
(d) The Mortgages create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and mortgage lien on all of the Mortgaged Properties in favor
of the Collateral Agent for the benefit of the Secured Parties, superior to
and prior to the rights of all third Persons (except that the security
interest and mortgage lien created in the Mortgaged Properties may be
subject to the Permitted Encumbrances related thereto) and subject to no
other Liens (other than Liens permitted under Section 8.01). The Company
or Harrah's Club, as the case may be, has good and marketable title to the
following three Mortgaged Properties, Harrah's Reno Hotel Casino, Harrah's
Lake Tahoe Hotel Casino (including Bill's Casino) and Harrah's Las Vegas
Hotel Casino; Marina has good and marketable title to the Mortgaged
Property at the Harrah's Atlantic City Hotel Casino; and Harrah's Laughlin
has good and marketable title to the Mortgaged Property at Harrah's
Laughlin Hotel Casino, in each case free and clear of all Liens except
those described in the first sentence of this subsection (d).
(e) The Assignment of Leases and, to the extent not theretofore
terminated, the Net Lease Agreements create, as security for the
obligations purported to be secured thereby, a valid and enforceable
perfected security interest in and Lien on the respective Collateral
covered thereby in favor of the Collateral Agent for the benefit of the
Secured Parties, superior to and prior to the rights of all third Persons
and subject to no other Liens.
(f) Pursuant to the Collateral Documents, perfected security
interests have been created in favor of the
-41-
Collateral Agent for the benefit of the Secured Parties in all of the
Required Collateral.
6.12 Properties. Parent and each of its Subsidiaries have good
----------
title to all material properties owned by them, free and clear of all
Liens, other than Liens permitted by Section 8.01.
6.13 Capitalization. (a) On the Effective Date, the authorized
--------------
capital stock of Parent shall consist of 360,000,000 shares of common
stock, $.10 par value per share, of which, as of March 31, 1995,
102,518,639 shares shall be issued and outstanding. All such outstanding
shares have been duly and validly issued, are fully paid and nonassessable
and are free of preemptive rights. As of the Effective Date and except as
disclosed in the most recent report on Form 10-K or 10-Q filed by Parent
with the SEC, Parent does not have outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital
stock.
(b) On the Effective Date, the authorized capital stock of the
Company shall consist of 1,000 shares of common stock, $1.00 par value per
share, all of which shares were issued and outstanding and owned by Parent.
All such outstanding shares have been duly and validly issued, are fully
paid and nonassessable and are free of preemptive rights. The Company does
not have outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to pur-
chase, or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock.
6.14 Subsidiaries. Except as otherwise agreed by the Required
------------
Banks, Parent has no Subsidiaries other than (i) the Company and its
Subsidiaries and (ii) Aster Insurance Ltd. All Subsidiaries of the Company
as of the Effective Date, and the direct owner of the capital stock
thereof, are listed on Schedule III. Schedule III also accurately shows,
as of the Effective Date, with respect to each Subsidiary (i) whether such
Subsidiary is a Material Subsidiary and (ii) whether such Subsidiary is a
Guarantor.
-42-
6.15 Compliance with Statutes, etc. Each of Parent and its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
6.16 Investment Company Act. Neither Parent nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.17 Public Utility Holding Company Act. Neither Parent nor any
----------------------------------
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
6.18 Environmental Matters. (a) Parent and each of its
---------------------
Subsidiaries have complied with, and on the date of each such Loan are in
compliance with, all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws. There are no pending or,
to the best knowledge of Parent or any Borrower after due inquiry, past or
threatened Environmental Claims against Parent or any of its Subsidiaries
or any Real Property owned or operated by Parent or any of its Subsidiaries
that individually or in the aggregate could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole. There are no facts, circumstances,
conditions or occurrences on any Real Property owned or operated by Parent
or any of its Subsidiaries or, to the best knowledge of Parent or any
Borrower after due inquiry, on any property adjoining or in the vicinity of
any such Real Property that, to the best knowledge of Parent or any Bor-
rower after due inquiry, could reasonably be expected (i) to form the basis
of an Environmental Claim against Parent or any of its Subsidiaries or any
such Real Property that individually or in the aggregate could reasonably
be expected to materially
-43-
and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole, or (ii) to cause any such Real Property
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by Parent or any of its Subsidiaries
under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property
owned or operated by Parent or any of its Subsidiaries where such
generation, use, treatment or storage has violated or could reasonably be
expected to violate any Environmental Law. Hazardous Materials have not at
any time been Released on or from any Real Property owned or operated by
Parent or any of its Subsidiaries where such Release has violated or could
reasonably be expected to violate any applicable Environmental Law. There
are not now any underground storage tanks located on any Real Property
owned or operated by Parent or any of its Subsidiaries which are not in
compliance with all Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section
6.18, the representations made in this Section 6.18 shall only be untrue if
the aggregate effect of all failures and noncompliances of the types
described above could reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
6.19 Labor Relations. Neither Parent nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against Parent or any of its Subsidiaries or, to the best
knowledge of the Parent or any Borrower, threatened against any of them,
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
so pending against Parent or any of its Subsidiaries or, to the best knowl-
edge of Parent or any Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or any Borrower,
threatened against Parent or any of its Subsidiaries and (iii) to the best
knowledge of Parent or any Borrower, no union representation question
existing with respect to the employees of Parent or
-44-
any of its Subsidiaries, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate)
such as could not reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole.
6.20 Patents, Licenses, Franchises and Formulas. Each of Parent
------------------------------------------
and its Subsidiaries own all the patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises and formulas, or
rights with respect to the foregoing, and has obtained assignments of all
leases and other rights of whatever nature, necessary for the present
conduct of its business, without any known conflict with the rights of
others which, or the failure to obtain which, as the case may be, would
result in a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
6.21 Existing Indebtedness. Schedule IV sets forth a true and
---------------------
complete list of all Indebtedness of Parent and its Subsidiaries as of the
Effective Date and which is to remain outstanding after giving effect
thereto, in each case showing the respective borrower thereof (excluding
Indebtedness under this Agreement and the 5-Year Credit Agreement), with
Part A of such Schedule IV to indicate that Indebtedness which constitutes
"Existing Indebtedness" under (and as defined in) the Original 5-Year
Credit Agreement and Part B of such Schedule IV to indicate all such other
Indebtedness outstanding on the Effective Date. The subordination
provisions of the Subordinated Debt set forth on Schedule IV are enforce-
able against the respective borrower or guarantor thereunder, as the case
may be, and all Obligations hereunder and under the other Credit Documents
are within the definition of "Senior Debt," "Guarantor Senior Debt,"
"Designated Senior Debt" and "Designated Senior Debt of the Guarantor"
included in such subordination provisions, as the case may be.
6.22 Hotel Transaction. At the time of consummation thereof,
-----------------
the Hotel Transaction shall have been consummated in accordance with the
terms of the respective Hotel Transaction Documents and all applicable laws
and all conditions precedent thereto shall have been satisfied, or waived
with the consent of the Required Banks. At the time of consummation
thereof, all consents and approvals of, and filings and registrations with,
and all other actions in
-45-
respect of, all governmental agencies, authorities or instrumentalities
required in order to make or consummate the Hotel Transaction have been
obtained, given, filed or taken and are or will be in full force and effect
(or effective judicial relief with respect thereto has been obtained). All
applicable waiting periods with respect thereto have or, prior to the time
when required, will have, expired without, in all such cases, any action
being taken by any competent authority which restrains, prevents, or
imposes material adverse conditions upon the Hotel Transaction.
Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the Hotel
Transaction, or the making of any Loan or the performance by Parent or any
other Credit Party of their obligations under the respective Documents.
All actions taken by Parent and its Subsidiaries pursuant to or in
furtherance of the consummation of the Hotel Transaction have been taken in
compliance with the respective documents therefor and all applicable laws.
The Hotel Transaction has been consummated in accordance with the terms of
the Hotel Transaction Documents and all applicable laws.
6.23 No Other Ventures. Except as set forth on Schedule V, as
-----------------
of the Effective Date, neither Parent nor any of its Subsidiaries is
engaged in any Joint Venture or partnership with any other Person.
SECTION 7. Affirmative Covenants. Each of Parent, the Company
---------------------
and each Subsidiary Borrower covenants and agrees that on and after the
Effective Date and until the Total Revolving Loan Commitment has terminated
and the Loans and the Revolving Notes, together with interest, Fees and
all other obligations incurred hereunder and thereunder, are paid in full:
7.01 Information Covenants. Parent will furnish to each Bank:
---------------------
(a) Quarterly Financial Statements. Within 45 days after the
------------------------------
close of the first three quarterly accounting periods in each fiscal
year of Parent and within 90 days after the close of the fourth
quarterly accounting period in each fiscal year of Parent, the
consolidated balance sheet of Parent and its Consolidated Subsidiaries
as at the end of such quarterly accounting period and the related
consolidated statements of income and statement of cash flows, in each
case for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last
-46-
day of such quarterly accounting period, in each case setting forth
comparative figures for the related periods in the prior fiscal year,
all of which shall be certified by the chief financial officer,
controller or treasurer of Parent, subject to normal year-end audit
adjustments.
(b) Annual Financial Statements. Within 120 days after the
---------------------------
close of each fiscal year of Parent, the consolidated balance sheet of
Parent and its Consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and retained
earnings and statement of cash flows for such fiscal year setting
forth comparative figures for the preceding fiscal year and certified
by Arthur Andersen & Co. or such other independent certified public
accountants of recognized national standing reasonably acceptable to
the Required Banks, together with a statement of the firm of such
independent accountants as to whether, in conducting their audit,
anything came to their attention to cause them to believe that Parent
and the Company were not in compliance with Sections 8.07, 8.08 and
8.09, insofar as such Sections relate to accounting and auditing
matters, on the date of such statements.
(c) Budgets. No later than 90 days after the commencement of
-------
each fiscal year of Parent, a budget which shall include an annual
balance sheet for such fiscal year, quarterly statements of income and
sources and uses of cash for each of the four fiscal quarters of such
fiscal year, together with a business plan for such fiscal year, in
each case consolidated for Parent and its Subsidiaries, and accom-
panied by a statement of the chief financial officer, controller or
treasurer of Parent that the budget has been approved by the Board of
Directors of Parent or the Company.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(a) and (b), a
certificate of the chief financial officer, controller or treasurer of
Parent to the effect that, to the best of such officer's knowledge, no
Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate shall set forth (i)
the calculations required to establish whether Parent and the
Borrowers were in compliance with the provisions of Sections 2.03(c)
and (d), 8.03(v), 8.04(vi), (ix)
-47-
through and including (xii), (xiv) and (xv), 8.05 and 8.07 through
8.09, inclusive, at the end of such fiscal quarter or year, as the
case may be and (ii) the Senior Implied Indebtedness ratings, if any,
assigned by Moody's and S&P to the Company's Indebtedness at the end
of such fiscal quarter or year, as the case may be.
(e) Notice of Default or Litigation. Promptly upon, and in any
-------------------------------
event within three Business Days after, an officer of Parent or any
Borrower obtains knowledge thereof, notice of (i) the occurrence of
any event which constitutes a Default or an Event of Default and (ii)
any litigation or governmental investigation or proceeding (including
any investigation by any Gaming Authority) pending (x) against Parent
or any of its Subsidiaries which could reasonably be expected to mate-
rially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects
of Parent and its Subsidiaries taken as a whole, (y) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (z)
with respect to any Credit Document.
(f) Other Reports and Filings. Promptly, (i) copies of all
-------------------------
financial statements, reports and proxy materials which Parent has
mailed to its shareholders generally, (ii) copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalent) which Parent or any of its
Subsidiaries shall file with the Securities and Exchange Commission or
any successor thereof (the "SEC") and (iii) to the extent not
otherwise provided to the Banks, copies of all notices, reports and
financial statements which Parent or any of its Subsidiaries shall
deliver to holders of any issue of Indebtedness if the aggregate
principal amount thereof exceeds (or upon the utilization of any used
commitments may exceed) $25,000,000 pursuant to the terms of the
documentation governing any such issue of Indebtedness (or any
trustee, agent or other representative therefor).
(g) Environmental Matters. Promptly upon, and in any event
---------------------
within ten Business Days after, an officer of Parent or any Borrower
obtains knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters could not,
individually or when aggregated with all other such environmental
-48-
matters, be reasonably expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (finan-
cial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole: (i) any pending or threatened Environmental Claim against
Parent or any of its Subsidiaries or any Real Property owned or oper-
ated by Parent or any of its Subsidiaries; (ii) any condition or
occurrence on or arising from any Real Property owned or operated by
Parent or any of its Subsidiaries that (a) results in noncompliance by
Parent or any of its Subsidiaries with any applicable Environmental
Law or (b) could reasonably be expected to form the basis of an
Environmental Claim against Parent or any of its Subsidiaries or any
such Real Property; (iii) any condition or occurrence on any Real
Property owned or operated by Parent or any of its Subsidiaries that
could reasonably be expected to cause such Real Property to be subject
to any restrictions on the ownership, occupancy, use or transfer-
ability by Parent or any of its Subsidiaries of such Real Property
under any Environmental Law; and (iv) the taking of any removal or
remedial action in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned or operated by Parent or
any of its Subsidiaries as required by any Environmental Law or any
governmental or other administrative agency; provided that in any
--------
event Parent shall deliver to each Bank all notices received by Parent
or any of its Subsidiaries from any government or governmental agency
under, or pursuant to, CERCLA. All such notices shall describe in
reasonable detail the nature of the claim, investigation, condition,
occurrence or removal or remedial action and Parent's or such Subsidi-
ary's response thereto. In addition, Parent will provide the Banks
with copies of all material written communications by Parent or any of
its Subsidiaries with any government or governmental agency relating
to Environmental Laws, all material written communications with any
person relating to Environmental Claims, and such detailed reports of
any Environmental Claim as may reasonably be requested by the Banks.
(h) Other Information. From time to time, such other
-----------------
information or documents (financial or otherwise) with respect to
Parent or its Subsidiaries as the Administrative Agent or any Bank may
reasonably request.
7.02 Books, Records and Inspections. Parent will, and will
------------------------------
cause each of its Subsidiaries to, keep proper books
-49-
of record and account in which full, true and correct entries in conformity
with generally accepted accounting principles and all requirements of law
shall be made of all dealings and transactions in relation to its business
and activities. Parent will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Administrative Agent
or any Bank to visit and inspect, at the Administrative Agent's or such
Bank's expense and under guidance of officers of Parent or such Subsidiary,
any of the properties of Parent or such Subsidiary, and to examine the
books of account of Parent or such Subsidiary and discuss the affairs,
finances and accounts of Parent or such Subsidiary with, and be advised as
to the same by, its and their officers and independent public accountants,
provided that a representative of Parent or such Subsidiary is present, all
--------
at such reasonable times and intervals and to such reasonable extent as the
Administrative Agent or such Bank may request, provided that the
--------
Administrative Agent and the Banks shall have no right pursuant to this
Section 7.02 to obtain any information relating to (i) the identity of
gaming patrons obligated under Markers or (ii) any filings made pursuant
to Regulation 6A or 6.090 of the Regulations of the Nevada Gaming
Commission (except that the Administrative Agent and the Banks may review
the reports of an independent auditor with respect to such filings).
7.03 Maintenance of Property; Insurance. (a) Parent will, and
----------------------------------
will cause each of its Material Subsidiaries to, keep all property
necessary in the reasonable conduct of its business in good working order
and condition.
(b) Schedule VI sets forth a true and complete listing of all
insurance maintained by Parent and its Subsidiaries as of the Effective
Date. Parent will maintain, and will cause each of its Material
Subsidiaries to maintain, (i) physical damage insurance on all real and
personal property on an all risk basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for business interruption and extra expense,
and (ii) such other insurance coverage in such amounts and with respect to
such risks as the Administrative Agent or the Required Banks may reasonably
request; provided, however, that flood, earthquake and business
-------- -------
interruption insurance will be required only to the extent available on a
commercially reasonable basis and so long as it is consistent with
reasonable and prudent insurance underwriting practices. All such
insurance shall be provided by insurers having an A.M. Best general policy-
holders service rating of not less than "B+VI" or such other
-50-
insurers as the Administrative Agent may approve in writing. In addition,
all insurance with respect to the Collateral shall name the Collateral
Agent as loss payee, for the benefit of the Secured Parties, and shall
provide that (a) the proceeds thereof shall be paid directly to the
Collateral Agent, subject to Section 3.01(c) of each Mortgage and Section
11 of the Security Agreement and (b) no cancellation, material change or
reduction thereof shall be effective until at least 30 days after receipt
by the Collateral Agent of written notice thereof. Parent will deliver to
the Banks (i) upon request of any Bank through the Administrative Agent
from time to time full information as to the insurance carried, (ii) for
insurance with respect to the Collateral and all other material insurance,
within five days of receipt of notice from any insurer, a copy of any
notice of cancellation or material change in coverage from that existing on
the date of this Agreement and (iii) forthwith, notice of any cancellation
or nonrenewal of any insurance coverage of Parent or any of its Material
Subsidiaries with respect to the Collateral or any other material insurance
coverage of Parent or any of its Subsidiaries. Nothing in this Section
7.03(b) shall be construed to restrict the right of Parent or any Material
Subsidiaries from obtaining blanket insurance as permitted under the
Mortgages, or self insurance of certain risks to the extent such insurance
is consistent with the past practices of Parent or such Material Subsidiary
and consistent with reasonable and prudent insurance underwriting
practices. The provisions of this Section 7.03(b) shall be deemed
supplemental to, but not duplicative of, the provisions of the Security
Agreement and the Mortgages. If Parent or any of its Material Subsidiaries
shall fail to insure its property in accordance with this Section 7.03(b),
the Collateral Agent shall have the right (but shall be under no
obligation) upon notice to Parent or the respective Material Subsidiary to
procure such insurance and Parent and each Borrower agrees to reimburse the
Collateral Agent for all costs and expenses of procuring such insurance.
7.04 Corporate Franchises. Parent will, and will cause each of
--------------------
its Material Subsidiaries to, do or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its
material rights, franchises, licenses and patents; provided, however, that
-------- -------
nothing in this Section 7.04 shall prevent (i) sales of stock or assets by
Parent or any of its Subsidiaries in accordance with Section 8.02, (ii) the
withdrawal by Parent or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
-51-
operations, property, assets, liabilities, condition (financial or other-
wise) or prospects of Parent and its Subsidiaries taken as a whole or (iii)
the taking of any action respecting any right, franchise, license or patent
determined by the management of Parent or such Subsidiary to be in the best
interest of Parent or such Subsidiary.
7.05 Compliance with Statutes, etc. Parent will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes,
regulations (including Gaming Regulations) and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
7.06 Compliance with Environmental Laws. (a) Parent will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all Environmental Laws applicable to ownership or use of the
Required Collateral now or hereafter owned or operated by Parent or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in such compliance, and will keep or cause to be kept all
such Required Collateral free and clear of any Liens imposed pursuant to
such Environmental Laws other than Liens which could not materially detract
from the value of any such Required Collateral. Neither Parent nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of,
or permit (to the extent within Parent's or such Subsidiary's reasonable
control) the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
managed by Parent or any of its Subsidiaries, or transport or permit (to
the extent within Parent's or such Subsidiary's reasonable control) the
transportation of Hazardous Materials to or from any such Real Property
except as in material compliance with all applicable Environmental Laws and
reasonably required in connection with the operation, use and maintenance
of any such Real Property in the conduct of Parent's or such Subsidiary's
business.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after either (i) an Event of
Default shall have
-52-
occurred and be continuing or (ii) the Banks shall have received notice
under Section 7.01(g) for any event for which notice is required to be
delivered for any such Real Property, Parent will provide, at Parent's sole
cost and expense, an environmental site assessment report concerning any
Real Property, prepared by an environmental consulting firm approved by the
Required Banks, indicating the presence or absence of Hazardous Materials
and the potential cost of any removal or remedial action in connection with
any Hazardous Materials on such Real Property. If Parent fails to provide
the same ninety (90) days after such request was made, the Administrative
Agent may order the same, and Parent and each Borrower shall grant and
hereby grants to the Administrative Agent and the Banks and their agents
access to such Real Property and specifically grants the Administrative
Agent and the Banks an irrevocable non-exclusive license, subject to the
rights of tenants, to undertake such an assessment, all at Parent's and the
Borrowers' expense.
7.07 ERISA. As soon as possible and, in any event, within 10
-----
days after Parent or any Borrower or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, Parent will
deliver to each of the Banks a certificate of the chief financial officer,
controller or treasurer of Parent setting forth details as to such
occurrence and the action, if any, which Parent, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by Parent, such
Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred;
that an accumulated funding deficiency has been incurred or an application
may be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under
Section 412 of the Code with respect to a Plan; that a Plan has been or may
be terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA; that a Plan has an Unfunded Current Liability giving rise to a
lien under ERISA or the Code; that proceedings may be or have been
instituted by the PBGC to terminate or appoint a trustee to administer a
Plan; that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan; that Parent, any Sub-
sidiary of Parent or any ERISA Affiliate will or may incur any liability
(including any contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA
-53-
or with respect to a Plan under Section 401(a)(29), 4971 or 4975 of the
Code or Section 409 or 502(i) or 502(l) of ERISA. Parent will deliver to
each of the Banks a complete copy of the annual report (Form 5500) of each
Plan (including, to the extent required to be filed with Form 5500, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certifi-
cates or notices delivered to the Banks pursuant to the first sentence
hereof, copies of annual reports and any notices received by Parent or any
Subsidiary of Parent or any ERISA Affiliate with respect to any Plan shall
be delivered to the Banks no later than 10 days after the date such report
has been filed with the Internal Revenue Service or such notice has been
received by Parent, the Subsidiary or the ERISA Affiliate, as applicable.
7.08 End of Fiscal Years; Fiscal Quarters. Parent and the
------------------------------------
Company will cause (i) each of its fiscal years to end on December 31, and
(ii) each of its fiscal quarters to end on March 31, June 30, September 30
and December 31.
7.09 Performance of Obligations. Parent will, and will cause
--------------------------
each of its Subsidiaries to, perform all of its obligations under the terms
of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
7.10 Payment of Taxes. Parent will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, in each case on a timely
basis, and all lawful claims which, if unpaid, might become a lien or
charge upon any properties of Parent or any of its Subsidiaries; provided
--------
that neither Parent nor any of its Subsidiaries shall be required to pay
any such tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if it has maintained adequate reserves
with respect thereto in accordance with generally accepted accounting
principles.
-54-
7.11 Registry. The Company hereby covenants that it shall
--------
maintain a register on which it will record the Revolving Loan Commitments
from time to time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the Loans of each
Bank. Failure to make any such recordation, or any error in such
recordation shall not affect any Borrower's obligations in respect of such
Loans. Upon the written request of the Company, the Administrative Agent
hereby agrees to use its reasonable efforts to provide to the Company such
information, not otherwise available to the Company, as the Company shall
reasonably request from time to time in order to enable it to fulfill its
obligations pursuant to this Section 7.11 and the Company shall have no
obligation to make any such recordation until it receives such requested
information from the Administrative Agent. Without limiting the Company's
obligations hereunder, the Company shall indemnify any Bank described in
Section 3.04(b)(iii) or (iv) for any losses (including withholding of Taxes
required) arising as a result of the Company's failure to comply with this
Section 7.11. With respect to any Bank described in Section 3.04(b)(iii)
or (iv), (a) the transfer of the Revolving Loan Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant
to such Revolving Loan Commitments shall not be effective until such
transfer is recorded on the register maintained by the Company with respect
to ownership of such Revolving Loan Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such
Revolving Loan Commitments and Loans shall remain owing to the transferor
and (b) the Company shall immediately record all such transfers when
notified thereof by the transferor Bank and such transfer shall be made
only through (x) the surrender of a Revolving Note and the reissuance of
such Revolving Note by the Company to the new holder of the old Revolving
Note or the issuance by the Company of a new Revolving Note to the new
holder (the "Issuance System") or (y) a register maintained by the Company
and referred to in the first sentence of this Section (the "Book Entry
System"). The Borrowers jointly and severally agree to indemnify any
transferee Bank from and against any and all losses, claims, damages and
liabilities (including, without limitation, any amounts paid by the trans-
feree to the transferor in connection with the transfer and all amounts
which would otherwise be owing to the transferee if the transfer had been
properly recorded) resulting from the Company's failure to record any such
transfer through either the Issuance System or the Book Entry System.
-55-
7.12 Additional Guarantors; Additional Collateral; etc. (a) In
--------------------------------------------------
the event that at any time after the Effective Date any Person becomes (x)
a First-Tier Material Subsidiary, (y) a Material Subsidiary pursuant to
clause (b) of this Section 7.12 or clause (ii) of the definition thereof or
(z) a guarantor under the 5-Year Credit Agreement, then Parent and the
Company will, except as otherwise provided in the last sentence of this
clause (a), cause such Person (each such Person a "Required Additional
Guarantor"), within 30 days after it becomes a Required Additional
Guarantor, to duly authorize, execute and deliver to the Administrative
Agent counterparts of the Company/Sub Guaranty, together with such other
documents, certificates, resolutions, opinions and writings that would have
been required to be delivered pursuant to Sections 4.03, 4.04 and 4.13 if
such Subsidiary had been a Guarantor on the Effective Date and subject to
such Sections on such date, all of which shall be in form and substance
satisfactory to the Administrative Agent. Notwithstanding the foregoing,
any Subsidiary of the Company which is not a Wholly-Owned Subsidiary or
which has incurred then outstanding Non-Recourse Indebtedness pursuant to
Section 8.04(ix) or (x) shall not be required to become a Guarantor
pursuant to the Company/Sub Guaranty.
(b) In the event that at any time after the Effective Date
Parent or any of its Subsidiaries acquires any Required Collateral, or it
is determined that any Required Collateral is not then subject to a
perfected security interest pursuant to the relevant Collateral Documents
or any additional collateral is provided under the 5-Year Credit Agreement,
then in each such case perfected security interests shall immediately be
granted in such Required Collateral or other collateral pursuant to the
respective Collateral Documents and, to the extent reasonably determined
necessary or desirable by the Administrative Agent, additional security
documents shall be entered into in order to effectively grant such
perfected security interests (all such additional security documents
entered into pursuant to this Section 7.12(b), "Additional Collateral
Documents"), together with such other documents, certificates, resolutions,
instruments, financing statements, opinions and writings that would have
been required to be delivered pursuant to Sections 4.03 and 4.04 of this
Agreement and Sections 5.06 through 5.13 of the Original 5-Year Credit
Agreement, as applicable, if perfected security interests had been created
in respect of such Required Collateral or other collateral on or prior to
the Effective Date, all of which shall be in form and substance
satisfactory to the Administrative Agent.
-56-
(c) In the event that the Administrative Agent or the Required
Banks at any time after the Effective Date determine in its or their good
faith discretion (as a result of events or circumstances affecting the
Collateral Agent or the Required Banks after the Effective Date) that real
estate appraisals satisfying the requirements set forth in 12 C.F.R., Part
34-Subpart C, or any successor or similar statute, rule, regulation,
guideline or order (any such appraisal a "Required Appraisal") are or were
required to be obtained, or should be obtained, in connection with any
Mortgaged Property or Mortgaged Properties, then, within 120 days after
receiving written notice thereof from the Administrative Agent or the
Required Banks, as the case may be, such Required Appraisal shall be
delivered, at the expense of the Company, to the Administrative Agent,
which Required Appraisal, and the respective appraiser, shall be
satisfactory to the Administrative Agent.
SECTION 8. Negative Covenants. Each of Parent, the Company and
------------------
each Subsidiary Borrower covenants and agrees that on and after the
Effective Date and until the Total Revolving Loan Commitment has terminated
and the Loans and the Revolving Notes, together with interest, Fees and all
other Obligations incurred hereunder and thereunder, are paid in full:
8.01 Liens. Parent will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of Parent or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
Parent or any of its Subsidiaries), or assign any right to receive income
or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute; pro-
----
vided that the provisions of this Section 8.01 shall not prevent the
-----
creation, incurrence, assumption or existence of the following (Liens
described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been estab
-57-
lished in accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of Parent or any of
its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money,
such as carriers', warehousemen's, materialmen's and mechanics' liens
and other similar Liens arising in the ordinary course of business,
and (x) which do not in the aggregate materially detract from the
value of Parent's or such Subsidiary's property or assets or materi-
ally impair the use thereof in the operation of the business of Parent
or such Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of prevent-
ing the forfeiture or sale of the property or assets subject to any
such Lien;
(iii) Liens permitted pursuant to Section 9.01(iii) of the
Original 5-Year Credit Agreement which remain in existence on the
Effective Date and which are listed, and the property subject thereto
described, in Schedule VII, but only to the respective date, if any,
set forth in such Schedule VII for the removal and termination of any
such Liens, without any renewals or extensions thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Collateral Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of Parent or any of its
Subsidiaries or materially detracting from the value of the respective
assets of Parent or such Subsidiary;
(vii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security in the ordinary course of
business;
(viii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Company or any of its Subsidiaries
at the time of acquisition thereof by the Company or any such
Subsidiary or within 90 days thereafter to secure Indebtedness
incurred to pay all or
-58-
a portion of the purchase price thereof provided that (x) the
aggregate principal amount of all Indebtedness secured by Liens
permitted by this clause (viii) incurred in any fiscal year of Parent
does not exceed $1,000,000 and (y) in all events, the Lien encumbering
the equipment or machinery so acquired does not encumber any other
asset of Parent or such Subsidiary;
(ix) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies,
in each case not securing Indebtedness and not materially interfering
with the conduct of the business of Parent or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(xi) Liens arising out of judgments or awards in respect of which
Parent or any of its Subsidiaries shall in good faith be prosecuting
an appeal or proceedings for review in respect of which there shall
have been secured a subsisting stay of execution pending such appeal
or proceedings provided that the aggregate amount of all such
judgments or awards (and any cash and the fair market value of any
property subject to such Liens) does not exceed $15,000,000 at any
time outstanding;
(xii) statutory and common law landlords' liens under leases to
which Parent or any of its Subsidiaries is a party;
(xiii) Liens incurred or deposits made to secure the performance of
tenders, bids, statutory obligations, government contracts, perform-
ance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations
for the payment of borrowed money);
(xiv) Liens securing reimbursement obligations with respect to
commercial and standby letters of credit incurred by the Company or
any of its Subsidiaries in the ordinary course of business provided
that (x) each such letter of credit is in a face amount of less than
$1,000,000 and (y) the aggregate face amount of all such letters of
credit does not exceed $5,000,000;
(xv) restrictions pursuant to legends on stock required by (x)
Gaming Regulations and (y) the
-59-
partnership agreement for Harrah's Jazz (as such partnership agreement
is in effect on the Effective Date, which restrictions, in any event,
do not prohibit the granting of the Liens on any Required Collateral
or the exercise of remedies pursuant to the Collateral Documents), in
each case to the extent such restrictions constitute a Lien;
(xvi) Liens securing Existing Casino Non-Recourse Financing
permitted under Section 8.04(ix) so long as such Liens only encumber
the Casino Property or the two Casino Properties (including the
furniture, fixtures and equipment related thereto) in respect of which
Existing Casino Non-Recourse Financing is then being or has
theretofore been obtained, provided that such Liens may attach to any
Casino Property only upon the occurrence of the respective Casino
Release in accordance with the terms hereof;
(xvii) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary of Parent so long as any
such Lien was not created in contemplation of such event;
(xviii) any Lien existing on any asset prior to the acquisition
thereof by the Company or any of its Subsidiaries so long as any such
Lien was not created in contemplation of such acquisition;
(xix) Liens on equipment or machinery subject to Capitalized
Lease Obligations to the extent permitted by Section 8.04(v);
(xx) Liens securing Non-Recourse Indebtedness of Specified
Subsidiaries permitted under Section 8.04(x) so long as such Liens
only encumber the Gaming Properties owned by Specified Subsidiaries
being developed or financed with such Non-Recourse Indebtedness,
including any Real Property and furniture, fixtures and equipment
related thereto, it being understood and agreed that such assets of
Specified Subsidiaries also may secure Non-Recourse Indebtedness
incurred by other Specified Subsidiaries pursuant to Section 8.04(x);
(xxi) Liens on the Company's or any of its Subsidiaries'
respective equity interest in any Joint Venture so long as such Liens
only secure Indebtedness of such Joint Venture; and
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(xxii) Liens placed upon the Hotel Collateral securing the
Indebtedness and other obligations of the Company and the Hotel
Subsidiaries under the Hotel Facility, it being understood that such
Liens shall not be permitted with respect to any assets or properties
of Parent or any Subsidiary of Parent after the Effective Date.
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
-------------------------------------------------------
(a) Parent will not, and will not permit any of its Material Subsidiaries
to, wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
substantially all of its assets, whether in a single transaction or a
series of related transactions, provided, however, (A) that in no event
-------- -------
shall Parent or any of its Subsidiaries sell, lease or otherwise dispose of
the capital stock or partnership interest in any Material Subsidiary or any
Casino Property unless, in the case of any sale of any Casino Property
(including any fixtures, furniture and equipment related thereto), or the
sale of capital stock or partnership interest of any Casino Owner that owns
the related Casino Property, (i) such sale is for cash and the Net Sale
Proceeds therefrom equals at least the Minimum Proceeds Amount for such
Casino Property or the Casino Owner thereof, provided that no more than two
Casino Properties or the two Casino Owners thereof in the aggregate may be
the subject of a Casino Release, whether pursuant to this Section 8.02 or
Section 8.04(ix), and only one of either the Atlantic City Property or the
Las Vegas Property may be the subject of a Casino Release, (ii) the Casino
Owner of such Casino Property, if a Subsidiary Borrower, ceases to be a
Subsidiary Borrower and all Loans incurred by such Subsidiary Borrower are
repaid in full, (iii) at the time of such sale no Default or Event of
Default then exists or would exist after giving effect thereto and the
Total Revolving Loan Commitment is reduced as required by Section 2.03(d),
(B) Harrah's New Jersey may merge with and into Harrah's Atlantic City so
long as at the time of such merger (i) no Default or Event of Default shall
exist, (ii) all of the assets of Marina are distributed to the surviving
corporation of such merger, (iii) the surviving corporation of such merger
is a Wholly-Owned Subsidiary of the Company all of the capital stock of
which is pledged by the Company pursuant to the terms of the Company/Sub
Pledge Agreement and (iv) all steps are taken that are necessary, or in the
opinion of the Collateral Agent desirable, to maintain the perfection and
priority of the Liens on the Collateral theretofore owned by Marina
pursuant
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to the terms of the respective Collateral Documents, (C) the Hotel Transfer
and the Hotel Stock Dividend shall be permitted, (D) the Company may
transfer its ownership interest in any of the Casino Properties located in
Nevada to Harrah's Club so long as at the time of any such transfer (i) no
Default or Event of Default shall exist and (ii) all steps are taken that
are necessary, or in the opinion of the Collateral Agent desirable, to
maintain the perfection and priority of the Liens on the Collateral
theretofore owned by the Company pursuant to the respective Collateral
Documents and so transferred to Harrah's Club and (E) Casino Holding
Company may merge with and into Harrah's Club so long as Harrah's Club is
the surviving corporation of such merger, Harrah's may merge with and into
the Company so long as the Company is the surviving corporation of such
merger, and Harrah's Club may merge with and into the Company so long as
the Company is the surviving corporation of such merger, in each case so
long as no Default or Event of Default then exists and all steps are taken
that are necessary, or in the opinion of the Collateral Agent desirable, to
maintain the perfection and priority of the Lien's on the Collateral
theretofore owned by Harrah's Club and Harrah's, as applicable, pursuant to
the terms of the respective Collateral Documents. Notwithstanding anything
to the contrary contained above, the Company may transfer any Casino
Property (and the fixtures, furniture and equipment related thereto) owned
by it to a special purpose Wholly-Owned Subsidiary of the Company for the
purpose of either (i) selling the capital stock of such special purpose
Wholly-Owned Subsidiary pursuant to clause (A) of this Section 8.02 or (ii)
permitting such special purpose Wholly-Owned Subsidiary to incur Existing
Casino Non-Recourse Financing pursuant to Section 8.04(ix) so long as in
either case such transfer occurs at the time of, or immediately prior to,
such sale or the incurrence of such Existing Casino Non-Recourse Financing.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent will not, and will not permit any of its Subsidiaries to,
sell, transfer or dispose of any Collateral (except for the Pledged
Securities of any Hotel Subsidiary as part of the Hotel Transfer), except
that (i) up to two Casino Properties (or the capital stock or partnership
interests in the respective Casino Owners) may be sold in accordance with
clause (A) of the proviso to the first sentence of Section 8.02(a), (ii)
sales of inventory, materials and equipment may be made in the ordinary
course of business, (iii) sales of obsolete, uneconomic or worn out
equipment or materials shall be permitted and (iv) so long as
-62-
no Default or Event of Default then exists or would exist after giving
effect thereto, Collateral (other than any Casino Property, the "Harrah's"
name (although same may be used or licensed on a non-exclusive basis in
connection with the extension of the Gaming Business of the Company and its
Subsidiaries and Joint Ventures) and any capital stock or partnership
interest in any Material Subsidiary) may be sold at fair market value as
determined in good faith by the Company and so long as at least 75% of the
gross proceeds therefrom consist of cash, and so long as any reduction to
the Total Revolving Loan Commitment required by Section 2.03(d) and (e) is
effected (and any resultant required payments are made pursuant to Section
3.02) in accordance with the terms thereof.
(c) To the extent the Required Banks waive in writing the provi-
sions of this Section 8.02 with respect to the sale of any Collateral, or
any Collateral is sold as permitted by this Section 8.02, such Collateral
shall be sold free and clear of the Liens created by the Collateral Docu-
ments, and the Administrative Agent and Collateral Agent shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.
8.03 Dividends. Parent will not, and will not permit any of its
---------
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Parent or any of its Subsidiaries, except that:
(i) any Subsidiary of the Company may pay Dividends to the
Company or any Wholly-Owned Subsidiary of the Company;
(ii) any non-Wholly-Owned Subsidiary of the Company may pay cash
Dividends to its shareholders generally on a pro rata basis;
--- ----
(iii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company
may pay cash Dividends to Parent which are used by Parent to pay cash
Dividends to its shareholders to the extent necessary, as determined
in the good faith judgment of the Board of Directors of Parent or the
Company, to prevent the filing of any disciplinary action by any
Gaming Authority or to prevent the loss or secure the reinstatement of
any license or franchise from any governmental agency, including
Gaming Authorities, held by Parent or any of its Subsidiaries which
license or franchise is conditioned
-63-
upon some or all of the holders of Parent's capital stock possessing
prescribed qualifications, in each case only if such loss or failure
to reinstate would have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a
whole, provided that the aggregate amount of cash Dividends permitted
to be paid pursuant to this clause (iii) shall not exceed $5,000,000;
(iv) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company
may pay cash Dividends to Parent in the amounts permitted pursuant to
clauses (v) and (vi) of this Section 8.03, provided that Parent uses
the proceeds thereof to pay Dividends within three days after receipt
thereof for the purposes set forth in such clauses (v) and (vi);
(v) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may pay
cash Dividends in an aggregate amount for any fiscal year of Parent
not to exceed the lesser of (x) 10% of Consolidated Net Income for the
prior fiscal year and (y) $20,000,000;
(vi) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may
redeem the Rights outstanding pursuant to the terms of the Rights
Agreement, provided that (i) Parent shall not pay more than $.05 per
Right in connection therewith and (ii) the aggregate amount of
Dividends paid pursuant to this clause (vi) shall not exceed
$2,500,000;
(vii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company
may pay cash Dividends to Parent so long as the proceeds thereof are
promptly used by Parent to pay (i) operating expenses in the ordinary
course of business and other similar corporate overhead costs and
expenses and (ii) amounts necessary to fund Aster Insurance Ltd. in
the ordinary course of its business;
(viii) the Company may pay cash Dividends to Parent in the amounts
and at the times of any payment by Parent in respect of federal,
state, franchise or other taxes
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(provided that any refund shall be promptly returned by Parent to the
Company); and
(ix) Parent and the Company may declare and, on the Effective
Date pay, the Hotel Stock Dividend.
Nothing in this Section 8.03 shall prohibit the making of any Dividend
within 45 days after the declaration thereof if such declaration was not
prohibited by this Section 8.03 at the time of such declaration.
8.04 Indebtedness. Parent will not, and will not permit any of
------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Indebtedness permitted under Section 9.04(ii) of the
Original 5-Year Credit Agreement which remains outstanding on the
Effective Date and which is listed on Schedule IV, provided that no
--------
refinancings or renewals thereof shall be permitted except as
expressly set forth on Part A of Schedule IV and then, in any event,
such refinancings and renewals shall not be in excess of the
respective amounts set forth on Part A of Schedule IV;
(iii) accrued expenses and current trade accounts payable incurred
in the ordinary course;
(iv) unsecured Indebtedness of Parent or the Company under
performance bonds and guarantees in respect of the completion of the
construction of any property in accordance with the plans or standards
as agreed with the obligee of such guarantee so long as such bonds or
guarantees are incurred by Parent or the Company in the ordinary
course of the Gaming Property development business of the Company and
its Subsidiaries;
(v) Indebtedness of the Company or any of its Subsidiaries
subject to Liens permitted under Section 8.01(viii) or evidenced by
Capitalized Lease Obligations provided that such Capitalized Lease
Obligations only relate to equipment or machinery (not constituting
Collateral) of the Company or any of its Subsidiaries;
(vi) Indebtedness of the Company or any of its Subsidiaries
consisting of (x) reimbursement obligations on
-65-
letters of credit, bankers acceptances or similar instruments,
provided that (i) the aggregate amount thereof at any one time
--------
outstanding shall not exceed $5,000,000 and (ii) any such Indebtedness
in excess of $1,000,000 in the aggregate at any one time outstanding
shall be unsecured other than by documents of title and (y) surety,
performance or appeal bonds to the extent permitted by Section
8.01(xi);
(vii) Indebtedness of the Company and the Hotel Subsidiaries under
the Hotel Facility, it being understood that neither Parent nor any
Subsidiary of Parent shall be liable in respect of such Indebtedness
after the Effective Date;
(viii) Indebtedness of Parent, the Company or any Wholly-Owned
Subsidiary of the Company to Parent, the Company or any Subsidiary of
the Company (other than a Subsidiary that has incurred Existing Casino
Non-Recourse Financing or other Non-Recourse Indebtedness) or
Indebtedness of any Subsidiary of Parent to the Parent, the Company or
any Wholly-Owned Subsidiary of the Company (other than a Subsidiary
that has incurred Existing Casino Non-Recourse Financing or other Non-
Recourse Indebtedness);
(ix) Existing Casino Non-Recourse Financing incurred by any
Casino Owner (including any special purpose Wholly-Owned Subsidiary of
the Company formed to become a Casino Owner in accordance with the
last sentence of Section 8.02(a)) so long as (i) the net cash proceeds
received by such Casino Owner therefrom equals at least the Minimum
Proceeds Amounts for such Casino Property, (ii) if such Casino Owner
is a Subsidiary Borrower, such Casino Owner ceases to be a Subsidiary
Borrower and all Loans incurred by such Casino Owner are repaid in
full, (iii) at the time of incurrence of such Existing Casino Non-
Recourse Financing and after giving effect thereto, no Default or
Event of Default shall exist, (iv) at the time of incurrence of such
Existing Casino Non-Recourse Financing, the respective Casino Owner's
business and assets shall consist substantially of only the Casino
Property (including related fixtures, furniture and equipment) subject
to such financing, (v) no more than two Casino Properties in the
aggregate may be the subject of a Casino Release, whether pursuant to
this Section 8.04(ix) or Section 8.02, and only one of either the
Atlantic City Property or the Las Vegas Property may be the subject of
a Casino Release and (vi)
-66-
at the time of the incurrence of such Existing Casino Non-Recourse
Financing, the Total Revolving Loan Commitment shall be reduced as
required by Section 2.03(c);
(x) Non-Recourse Indebtedness of Specified Subsidiaries to
finance the development of Gaming Properties so long as the aggregate
principal amount thereof at any time outstanding does not exceed
$300,000,000, it being understood and agreed, however, that (i) a
Specified Subsidiary which has incurred outstanding Non-Recourse
Indebtedness pursuant to this Section 8.04(x) may guaranty the Non-
Recourse Indebtedness incurred pursuant to this Section 8.04(x) by
other Specified Subsidiaries, and (ii) such Non-Recourse Indebtedness
may be guaranteed by the Company and its other Subsidiaries to the
extent provided in Section 8.04(xii);
(xi) Subordinated Debt of the Company not otherwise outstanding
on the date hereof so long as (i) the terms and conditions thereof
(including, but not limited to, subordination provisions) are no more
favorable to the holders of such Subordinated Debt than those set
forth in the 8-3/4% Senior Subordinated Notes Indenture (provided that
the indebtedness convenant contained in any such other issue of
Subordinated Debt shall have sufficient availability (without relying
on any incurrence ratios) to justify the full amount of the Total
Revolving Loan Commitment and the Total 5-Year Revolving Loan
Commitment) or the 10-7/8% Senior Subordinated Notes Indenture and
(ii) if such Subordinated Debt (or any portion thereof) constitutes
Permitted Designated Indebtedness, the Total Revolving Loan Commitment
shall be reduced as required by Section 2.03(c);
(xii) Parent and its Subsidiaries may guarantee on an unsecured
basis obligations of Specified Subsidiaries, Joint Ventures and
parties to management agreements with the Company or its Subsidiaries
or with such Joint Ventures, in each case with respect to the
development of Gaming Property in an amount not to exceed $100,000,000
at any one time outstanding for any individual Gaming Property and
$325,000,000 at any one time outstanding for all such Gaming
Properties, provided that (i) the aggregate limitation set forth above
--------
shall be (A) increased (or decreased if Consolidated Net Income is
negative) on the first day of each fiscal year
-67-
of the Company commencing on January 1, 1996 by an amount equal to 50%
(or 100% for each fiscal year for which Consolidated Net Income is
negative) of the Consolidated Net Income for the fiscal year last
ended, and (B) decreased from time to time by the amount of Dividends
paid by the Company to Parent pursuant to Section 8.03(iv) on and
after the Effective Date and prior to the date of determination, (ii)
the aggregate amount of guarantees permitted to be outstanding by
Parent and its Subsidiaries pursuant to this Section 8.04(xii) shall
be reduced by the amount of Investments outstanding pursuant to clause
(i) of the proviso to Section 8.05 and (iii) the $100,000,000
individual limitation set forth above shall not apply to the Cherokee
Investments;
(xiii) Parent, the Company and Harrah's may guarantee on an
unsecured basis any obligations (except that it may not provide any
guaranties, direct or indirect, of Non-Recourse Indebtedness pursuant
to this clause (xiii)) of their respective Subsidiaries;
(xiv) Indebtedness of Parent and the other
Guarantors under the 5-Year Credit Agreement (but only to the extent
that Parent or such other Guarantors are Guarantors under, or in
respect of, this Agreement) in an aggregate principal amount not to
exceed $600,000,000 (as reduced by any mandatory reductions thereto as
contemplated by Section 2.03(c) and (d)) at any one time outstanding;
and
(xv) Indebtedness of Parent or any of its Subsidiaries not
otherwise permitted under this Section 8.04 in an aggregate principal
amount not to exceed $25,000,000 at any one time outstanding.
At the time any Casino Owner obtains Existing Casino Non-Recourse
Financing in accordance with clause (ix) of this Section 8.04, the Casino
Property (and fixtures, furniture and equipment related thereto) subject to
such financing shall be so financed free and clear of the Liens created by
the respective Mortgage and Collateral Documents, and the Administrative
Agent and Collateral Agent shall be authorized to take any actions deemed
appropriate in order to effect the foregoing.
8.05 Advances, Investments and Loans. Parent will not, and will
-------------------------------
not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any
-68-
Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any other
Person (collectively, "Investments") other than Investments in the ordinary
course of business, Subsidiary Investments and other Investments existing
on the Effective Date, provided that:
(i) Investments other than Subsidiary Investments shall not be
made with respect to the development or operation of Gaming Properties
or in connection with Gaming Businesses (and reasonable extensions
thereof), except that Investments in any Joint Venture relating to the
Gaming Business or Investments in parties to management agreements
with the Company or its Subsidiaries or such Joint Ventures for gaming
projects may be made so long as the aggregate amount thereof does not
exceed $100,000,000 at any one time outstanding (determined without
regard to any write-downs or write-offs of such Investments) for any
individual Gaming Business or gaming project or $325,000,000 at any
one time outstanding (determined without regard to any write-downs or
write-offs of such Investments) for all such Gaming Businesses and
gaming projects, provided that (w) the aggregate limitation set forth
--------
above shall be (A) increased (or decreased if Consolidated Net Income
is negative) on the first day of each fiscal year of the Company
commencing on January 1, 1996 by an amount equal to 50% (or 100% for
each fiscal year for which Consolidated Net Income is negative) of the
Consolidated Net Income for the fiscal year last ended and (B)
decreased from time to time by the amount of Dividends paid by the
Company to Parent pursuant to Section 8.03(iv) on and after the
Effective Date, (x) the aggregate amount of such Investments permitted
to be made pursuant to this Section 8.05(i) shall be reduced by the
aggregate amount of guarantees outstanding pursuant to Section
8.04(xii), (y) the $100,000,000 individual limitation set forth above
shall not apply to the Cherokee Investments and (z) Investments in, to
or for the benefit of Harrah's Jazz and its Subsidiaries shall not be
permitted to be made pursuant to this Section 8.05(i); and
(ii) Investments constituting Harrah's Jazz Investments shall be
permitted, provided that the aggregate amount of all such Investments
(other than in respect of the Harrah's Jazz Completion Obligation
Loans, the Harrah's Jazz Title Indemnity Arrangements and the Harrah's
Jazz Completion Guaranties), whether
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made prior to, on or after the Effective Date, shall not exceed
$150,000,000.
Notwithstanding the foregoing provisions of this Section 8.05,
Investments in the ordinary course of business shall not include the
purchases of (i) Margin Stock and (ii) non-investment grade debt securities
of any Person.
8.06 Transactions with Affiliates. Parent will not, and will
----------------------------
not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business,
with any Affiliate of Parent or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to Parent or such Subsidiary as would reasonably be obtained by
Parent or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that
(i) Dividends may be paid to the extent provided in Section 8.03, (ii)
loans may be made and other transactions may be entered into by Parent and
its Subsidiaries to the extent permitted by Sections 8.04 and 8.05 and
(iii) transactions among Parent, the Company and any Subsidiary of the
Company shall be permitted so long as any such transactions, individually
or in the aggregate, would not have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
8.07 Maximum Leverage Ratio. Parent will not permit the ratio
----------------------
of Consolidated Debt to Consolidated Net Worth at any time during a period
set forth below to be greater than the ratio set forth opposite such period
below:
Period Ratio
------ -----
Effective Date to and
including December 31, 1996 2.75:1
January 1, 1997 to and
including December 31, 1997 2.50:1
January 1, 1998 to and
including December 31, 1998 2.25:1
January 1, 1999 and 2.00:1
thereafter
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8.08 Consolidated Interest Coverage Ratio. Parent will not
------------------------------------
permit the Consolidated Interest Coverage Ratio for any Test Period ended
on the last day of a fiscal quarter set forth below to be less than the
ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters ending
June 30, 1995,
September 30, 1995
and December 31, 1995 2.5:1
Fiscal quarters ending
March 31, 1996
and thereafter 3.0:1
8.09 Minimum Consolidated Net Worth. Parent will not permit
------------------------------
Consolidated Net Worth at any time during a period or calendar year set
forth below to be less than the amount set forth opposite such period or
calendar year below:
Period Amount
------ ------
Effective Date to and
including December 31, 1995 $ 450,000,000
Year ending December 31, 1996 $ 550,000,000
Year ending December 31, 1997 $ 650,000,000
Year ending December 31, 1998 $ 800,000,000
Year ending December 31, 1999 $1,000,000,000
Year ending December 31, 2000 $1,000,000,000
8.10 Limitation on Payments and Modifications of Subordinated
--------------------------------------------------------
Debt; Modifications of Certificate of Incorporation, Partnership Agreements
---------------------------------------------------------------------------
and By-Laws. Parent will not, and will not permit any of its Subsidiaries
-----------
to, (i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) any Subordinated Debt (other than the Company's 8-3/8%
Subordinated Debentures due 1996), (ii) make (or give any notice in respect
of) any mandatory payment or prepayment on
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or redemption or acquisition for value of (including, without limitation,
by way of depositing with the trustee with respect thereto money or
securities before due for the purpose of when due) any Subordinated Debt as
a result of any sale of assets by Parent or any of its Subsidiaries, (iii)
amend or modify, or permit the amendment or modification of, any provision
of any Subordinated Debt or of any agreement (including, without limit-
ation, any purchase agreement, indenture or loan agreement) relating
thereto (except modifications relating to the 10-7/8% Senior Subordinated
Notes Indenture and 8-3/4% Senior Subordinated Notes Indenture in order to
obtain the respective holders' consent to the Hotel Transaction so long as
the documentation with respect to such consent is in form and substance
satisfactory to the Administrative Agent and the Required Banks), (iv)
amend or modify, or permit the amendment or modification of, any financial
or business covenants and/or defaults of the 5-Year Credit Agreement which
would have the effect of making the same more stringent or restrictive as
applied to Parent or any of its Subsidiaries in each case unless parallel
changes are made to both this Agreement and the 5-Year Credit Agreement or
(v) amend, modify or change its certificate of incorporation (including,
without limitation, by the filing or modification of any certificate of
designation), partnership agreement or by-laws except such modifications
which would not have a material adverse effect on Parent and its
Subsidiaries taken as a whole or an adverse effect on the rights and
remedies of the Administrative Agent or the Banks under any of the Credit
Documents. Notwithstanding anything to the contrary contained in clause
(i) of this Section 8.10, the Company may prepay, repurchase, redeem,
defease or otherwise retire Subordinated Debt if no Default or Event of
Default then exists or would result therefrom to the extent necessary in
the good faith judgment of the Board of Directors of Parent or the Company
to prevent the filing of a disciplinary action by any Gaming Authority or
to prevent the loss or secure the reinstatement of any license or franchise
from any governmental agency (including the Gaming Authorities) held by
Parent, the Company or any Subsidiary of Parent or the Company which
license or franchise is conditioned upon some or all of the holders of such
Subordinated Debt possessing prescribed qualifications, if such loss or
failure to reinstate would have a material adverse effect on the business,
operations, property, assets, liabilities, conditions (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
-72-
8.11 Limitation on Certain Restrictions on Subsidiaries. Parent
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary
of Parent to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned
by Parent or any Subsidiary of Parent, or pay any Indebtedness owed to
Parent or a Subsidiary of Parent, (b) make loans or advances to Parent or
any Subsidiary of Parent or (c) transfer any of its properties or assets to
Parent or any Subsidiary of Parent, except for such encumbrances or
restrictions existing under or by reason of (i) regulatory actions or
applicable law, (ii) this Agreement, the other Credit Documents and the 5-
Year Credit Agreement, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Parent or a
Subsidiary of Parent, (iv) customary provisions restricting the assignment
or transfer of any licensing agreement, franchise agreement, management
contract, joint venture agreement or any similar types of agreement entered
into by Parent or a Subsidiary of Parent in the ordinary course of
business, (v) customary restrictions imposed in connection with any asset
sale permitted by this Agreement for the benefit of the purchaser or owner
of such asset, (vi) restrictions existing in any document executed in
connection with Existing Casino Non-Recourse Financing so long as such
restrictions only apply to the Casino Property (and any fixtures, furniture
and equipment related thereto) serving as security for such financing,
(vii) restrictions existing in any document executed in connection with
Non-Recourse Indebtedness permitted under Section 8.04(x) so long as such
restrictions only apply to the property serving as security for such debt,
(viii) customary restrictions on the transfer of assets used to secure
Indebtedness permitted to be incurred (and so long as the Liens are
permitted to exist) by this Agreement, (ix) restrictions imposed in
connection with any new gaming Subsidiaries of the Company which are not
Material Subsidiaries and (x) restrictions imposed on the Company and the
Hotel Subsidiaries pursuant to the Hotel Facility, provided that the
restrictions imposed pursuant to the Hotel Facility shall not apply to
Parent or any Subsidiary of Parent after the Effective Date.
8.12 Limitation on Issuance of Capital Stock. Parent will not
---------------------------------------
permit any of its Material Subsidiaries to issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, capital stock, except (i) for
trans-
-73-
fers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and similar issuances which do not decrease
the percentage ownership of Parent or any of its Subsidiaries in any class
of the capital stock of such Subsidiary and (iii) to qualify directors to
the extent required by applicable law.
8.13 Business. Parent will not, and will not permit any of its
--------
Subsidiaries to, engage (directly or indirectly) in any business other than
the business in which Parent or such Subsidiary is engaged on the Effective
Date (after giving effect to the Hotel Transaction) and any other
reasonably related businesses.
8.14 Ownership of Subsidiaries. Parent will maintain its direct
-------------------------
100% ownership interest in the Company, and, except as expressly provided
in Section 8.02(a), the Company will maintain the same direct or indirect
100% ownership interest in each of the Material Subsidiaries, provided that
if the Company owns (directly or indirectly) less than 100% of the capital
stock or other equity interest of any Material Subsidiary at the time same
becomes a Material Subsidiary, then the Company shall maintain at least
such direct or indirect ownership interest in such Material Subsidiary so
long as it remains a Material Subsidiary, it being understood that the
Company may divest its ownership interest in the Hotel Company and the
Hotel Subsidiaries as a result of the Hotel Stock Dividend.
8.15 Special Purpose Corporation. Parent will engage in no
---------------------------
material business activities other than the ownership of the capital stock
of the Company.
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
9.01 Payments. Any Borrower shall (i) default in the payment
--------
when due of any principal of any Loan or any Revolving Note or (ii)
default, and such default shall continue unremedied for three or more days,
in the payment when due of interest on any Loan or Revolving Note or any
regularly accruing Fees, or (iii) default, and such default shall continue
unremedied for five or more days after written notice to the Company by the
Administrative Agent or any Bank, in the payment when due of any other Fees
or amounts owing hereunder or under any other Credit Document, provided,
--------
however, that such notice shall not be required to be given
-------
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if a Bankruptcy Event shall have occurred and be continuing; or
9.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed
made; or
9.03 Covenants. Parent or any Borrower shall (i) default in the
---------
due performance or observance by it of any term, covenant or agreement con-
tained in Section 7.01(e)(i), 7.08 or 8 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for
a period of 30 days after written notice to the Company by the
Administrative Agent or any Bank; or
9.04 Default Under Other Agreements. Parent or any Subsidiary
------------------------------
of Parent shall (i) default in any payment of any Indebtedness (other than
the Loans and the Revolving Notes) beyond the period of cure or grace, if
any, provided in the instrument or agreement under which such Indebtedness
was created or (ii) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the Loans
and the Revolving Notes) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (iii) any Indebtedness (other
than the Loans and the Revolving Notes) of Parent or any Subsidiary of
Parent shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, provided that it shall not be a Default or an
--------
Event of Default under this Section 9.04 unless the aggregate principal
amount of all Indebtedness as described in preceding clauses (i) through
(iii), inclusive, is at least $25,000,000; or
9.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor
-75-
thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against Parent or any Subsidiary of Parent, and the petition is not contro-
verted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Parent or any Subsidiary of Parent, or Parent or any Subsidiary
of Parent commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now or hereafter
in effect relating to Parent or any Subsidiary of Parent, or there is
commenced against Parent or any Subsidiary of Parent any such proceeding
which remains undismissed for a period of 60 days, or Parent or any Subsid-
iary of Parent is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or Parent
or any Subsidiary of Parent suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue undis-
charged or unstayed for a period of 60 days; or Parent or any Subsidiary of
Parent makes a general assignment for the benefit of creditors; or any cor-
porate action is taken by Parent or any Subsidiary of Parent for the
purpose of effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had a trustee appointed
by the PBGC to administer such Plan, any Plan is, shall have been or is
likely to be terminated or to be the subject of termination proceedings
under ERISA, any Plan shall have an Unfunded Current Liability, Parent or
any Subsidiary of Parent or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, or Parent or any Subsidiary of Parent
has incurred or is likely to incur liabilities pursuant to one or more em-
ployee welfare benefit plans (as defined in Section 3(1) of ERISA) which
provide benefits to retired employees (other than as required by Section
601 of ERISA) or employee pension benefit plans (as defined in Section 3(2)
of ERISA); (b) there shall result from any such event or events the imposi-
tion of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) which lien, security
interest or liability, in the opinion of the Required Banks, could
reasonably be expected
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to have a material adverse effect upon the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole; or
9.07 Collateral Documents. At any time after the execution and
--------------------
delivery thereof, any of the Collateral Documents shall cease to be in full
force and effect, or shall cease to give the Collateral Agent for the
benefit of the Secured Parties the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a perfected
security interest in, and Lien on, all of the Collateral), in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 8.01), and subject to no other Liens (ex-
cept as permitted by Section 8.01), or any Credit Party shall default in
the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any of the Collateral Docu-
ments and such default shall continue beyond any cure or grace period
specifically applicable thereto pursuant to the terms of such Collateral
Document; or
9.08 Guarantees. Any Guaranty or any provision thereof shall
----------
cease to be a legal, valid and binding obligation enforceable against the
obligor thereof, or any Guarantor or any Person acting by or on behalf of
any Guarantor shall deny or disaffirm such Guarantor's obligations under
its Guaranty, or any Guarantor shall default in its due performance of any
term, covenant or agreement on its part to be performed or observed
pursuant to its Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be
---------
entered against Parent or any Subsidiary of Parent involving in the
aggregate for Parent and its Subsidiaries a liability (not paid or fully
covered by a reputable insurance company) and such judgments and decrees
either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 30 consecu-
tive days, and the aggregate amount of all such judgments exceeds
$10,000,000; or
9.10 Gaming Authority. Any Gaming Authority having jurisdiction
----------------
over any Casino Property shall determine that Parent or any of its
Subsidiaries that is required to be qualified under the Gaming Regulations
does not qualify, or that the qualification or license of any of them with
respect to any Casino Property should be revoked, not renewed or suspended
for more than 30 days, or any such Gaming Authority
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shall have appointed a conservator, supervisor or trustee to oversee any of
the operations of any of them;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the
written request of the Required Banks, shall by written notice to the
Borrowers, take any or all of the following actions, without prejudice to
the rights of the Administrative Agent, any Bank or the holder of any Note
to enforce its claims against any Credit Party (provided that, if an Event
--------
of Default specified in Section 9.05 shall occur with respect to Parent or
any Borrower, the result which would occur upon the giving of written
notice by the Administrative Agent to the Borrowers as specified in clauses
(i) and (ii) below shall occur automatically without the giving of any such
notice): (i) declare the Total Revolving Loan Commitment terminated,
whereupon the Revolving Loan Commitment of each Bank shall forthwith term-
inate immediately and any Facility Fees shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of
and any accrued interest in respect of all Loans and the Revolving Notes
and all Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; and (iii) enforce, as Collateral Agent, all of the Liens and
security interests created pursuant to the Collateral Documents.
SECTION 10. Definitions and Accounting Terms.
--------------------------------
10.01 Defined Terms. As used in this Agreement, the following
-------------
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Absolute Rate" shall mean an interest rate (rounded to the
nearest .0001) expressed as a decimal.
"Additional Collateral Documents" shall have the meaning provided
in Section 7.12(b).
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for
negotiable certificates of deposit with a three-month maturity in the
secondary market as published in the most recent Federal Reserve System
publication entitled "Select Interest Rates," published weekly
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on Form H.15 as of the date hereof, or if such publication or a substitute
containing the foregoing rate information shall not be published by the
Federal Reserve System for any week, the weekly average offering rate
determined by the Administrative Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in
New York of recognized standing or, if such quotations are unavailable,
then on the basis of other sources reasonably selected by the
Administrative Agent, by (y) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in Regulation D
applicable on such day to a three-month certificate of deposit of a member
bank of the Federal Reserve System in excess of $100,000 (including, with-
out limitation, any marginal, emergency, supplemental, special or other re-
serves), plus (2) the then daily net annual assessment rate as estimated by
the Administrative Agent for determining the current annual assessment
payable by the Administrative Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include
any successor to the Administrative Agent appointed pursuant to Section
11.09.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling (including, but not limited
to, all directors and officers of such Person), controlled by, or under
direct or indirect common control with, such Person or (ii) that directly
or indirectly owns more than 5% of the voting securities or capital stock
of such Person. A Person shall be deemed to control another Person if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean each of Bankers Trust Company, The Bank of New
York, CIBC Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
-79-
"Applicable Facility Fee Percentage" shall mean 15/100 of 1% less
the then applicable Reduction Discount.
"Applicable Margin" shall mean 3/4 of 1% less the then applicable
Reduction Discount.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit F
(appropriately completed).
"Assignment of Leases" shall mean the Assignment of Leases, dated
as of July 22, 1993, between Marina and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Assignment of Partnership Interests Agreement" shall mean the
Assignment of Partnership Interests Agreement, dated as of July 22, 1993,
among Harrah's New Jersey, Harrah's Atlantic City and the Collateral Agent,
as modified, supplemented or amended from time to time.
"Atlantic City Property" shall mean the Harrah's Atlantic City
Hotel Casino.
"Bank" shall mean each financial institution listed on Schedule
I, as well as any institution which becomes a "Bank" hereunder pursuant to
Section 1.14 or 12.04(b) or (c), provided that in any event each such
institution shall be a Qualified Person.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or
(ii) a Bank having notified in writing the Borrowers and/or the
Administrative Agent that it does not intend to comply with its obligations
under Section 1.01(a), in the case of either clause (i) or (ii) above as a
result of any takeover of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Bankruptcy Event" shall mean any Default or Event of Default of
the type described in Section 9.05.
"Base Rate" at any time shall mean the highest of (i) 1/2 of 1%
in excess of the Adjusted Certificate of Deposit Rate, (ii) the Prime
Lending Rate and (iii) 1/2 of 1% in excess of the overnight Federal Funds
Rate.
-80-
"Base Rate Loan" shall mean any Revolving Loan designated or
deemed designated as such by a Borrower at the time of the incurrence
thereof or conversion thereto.
"Bidder Bank" shall mean each Bank that has informed the
Administrative Agent and the Company in writing (which has not been
retracted) that such Bank desires to participate generally in the bidding
arrangements relating to Competitive Bid Borrowings.
"Book Entry System" shall have the meaning provided in Section
7.11.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean and include (i) the borrowing of one Type
of Revolving Loan from all the Banks on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, provided that Base Rate Loans incurred
--------
pursuant to Section 1.11(b) shall be considered part of the related
Borrowing of Eurodollar Loans and (ii) a Competitive Bid Borrowing.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action
to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) above and
which is also a day for trading by and between banks in the New York inter-
bank Eurodollar market.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles,
are or will be required to be capitalized on the books of such Person, in
each case taken at the amount thereof accounted for as indebtedness in
accordance with such principles.
"Casino Holding Company" shall mean Casino Holding Company, a
Delaware corporation.
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"Casino Owner" shall mean any Subsidiary of the Company that owns
a Casino Property.
"Casino Property" shall mean and include each of the Harrah's
Reno Hotel Casino, Harrah's Lake Tahoe Hotel Casino (including Bill's
Casino), Harrah's Las Vegas Hotel Casino, Harrah's Atlantic City Hotel
Casino and Harrah's Laughlin Hotel Casino.
"Casino Release" shall mean the release of a specific Casino
Property from the Liens created by the respective Collateral Documents as a
result of the sale thereof pursuant to Section 8.02 or the incurrence of
Existing Casino Non-Recourse Financing with respect thereto pursuant to
Section 8.04(ix).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from
time to time, 42 U.S.C. Sec. 9601 et seq.
-- ----
"Change of Control" shall mean (i) Parent shall cease to own 100%
of the capital stock of the Company, (ii) the direct or indirect
acquisition by any Person or group (as such term is defined in Section
13(d)(3) of the Securities Exchange Act) of beneficial ownership (as such
term is defined in Rule 13D-3 promulgated under the Securities Exchange
Act) of 25% or more of the outstanding shares of common stock of Parent,
(iii) the Board of Directors of Parent shall not consist of a majority of
Continuing Directors or (iv) any "change of control" or similar event shall
occur under any issue of Indebtedness of Parent or any of its Subsidiaries
in an aggregate principal amount which exceeds (or upon utilization of any
unused commitments may exceed) $25,000,000.
"Cherokee Casino" shall mean the casino to be constructed,
developed and operated by the Eastern Band of Cherokee Indians in Cherokee,
North Carolina, and the manager of which shall be Parent or a Wholly-Owned
Subsidiary of Parent.
"Cherokee Investments" shall mean (i) one or more guaranties
given by Parent and/or the Company for the benefit of the lenders providing
construction financing for the Cherokee Casino and (ii) additional
Investments in the Cherokee Casino.
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"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect
on the date of this Agreement, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or purport
to be granted) pursuant to any Collateral Document, including, without
limitation, all Pledge Agreement Collateral, all Security Agreement Collat-
eral and all Mortgaged Properties.
"Collateral Agent" shall mean and include the Administrative
Agent acting as collateral agent for the Secured Parties pursuant to the
Collateral Documents and any sub-agents or sub-trustees appointed by the
Administrative Agent pursuant to the Master Collateral Agreement and
permitted under applicable Gaming Regulations.
"Collateral Document" shall mean and include each Pledge
Agreement, the Security Agreement, each Mortgage, the Assignment of
Partnership Interests Agreement, the Assignment of Leases, each Net Lease
Agreement, the Master Collateral Agreement and, after the execution and
delivery thereof, each Additional Collateral Document.
"Collateral Grantor" shall mean and include Parent, the Company
and each Subsidiary of the Company which is party to any Collateral
Document, provided that, from and after the date of the release of all
--------
Collateral of any Subsidiary of the Company from the provisions of the
Collateral Documents, and so long as the respective Subsidiary at such time
owns no Required Collateral, such Subsidiary shall cease to constitute a
Collateral Grantor and the Collateral Agent shall be authorized to execute
such documentation as is necessary or desirable to effect such release.
"Company" shall have the meaning provided in the first paragraph
of this Agreement.
"Company/Sub Guaranty" shall mean the Company/Sub Guaranty, dated
as of July 22, 1993, made by the Company and the other Guarantors party
thereto, as modified, supplemented or amended from time to time.
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"Company/Sub Pledge Agreement" shall mean the Company/Sub Pledge
Agreement, dated as of July 22, 1993, among the Company, the other
Collateral Grantors party thereto and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Competitive Bid Borrowing" shall mean a Borrowing of Competitive
Bid Loans pursuant to Section 1.04 with respect to which the Company has
requested that the Bidder Banks offer to make Competitive Bid Loans at
Absolute Rates.
"Competitive Bid Loans" shall have the meaning provided in
Section 1.01(b).
"Consent" shall mean each written consent from a holder of the 8-
3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes
permitting the Company and the respective indenture trustee to enter into
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture.
"Consolidated Debt" shall mean, at any time, the sum of the
aggregate outstanding principal amount of all Indebtedness (including,
without limitation, guarantees, Non-Recourse Debt and the principal
component of Capitalized Lease Obligations) of Parent and its Consolidated
Subsidiaries.
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income plus Consolidated Interest Expense (to the extent same was
deducted in determining Consolidated Net Income) and provision for taxes,
and without giving effect to any extraordinary gains or losses or gains or
losses from sales of assets other than inventory sold in the ordinary
course of business.
"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBIT to Consolidated Interest Expense.
"Consolidated Interest Expense" shall mean, for any period, the
total consolidated interest expense of Parent and its Consolidated
Subsidiaries (without deduction for minority interests in Subsidiaries) for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, (i) that portion of Capitalized Lease
Obligations of Parent and its Consolidated Subsidiaries representing the
interest factor for such period and (ii) the
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Company's or such Consolidated Subsidiary's share of interest expense of
any Joint Venture.
"Consolidated Net Income" shall mean, for any period, net income
of Parent and its Consolidated Subsidiaries (without deduction for minority
interests in Subsidiaries) for such period.
"Consolidated Net Worth" shall mean, at any time, the net worth
of Parent and its Consolidated Subsidiaries determined on a consolidated
basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with generally accepted
accounting principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person
being a general partner of the other Person, unless the underlying
obligation is expressly made non-recourse as to such general partner) any
Indebtedness or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation (whether arising by virtue of partnership arrangements, by
agreement to keepwell, to purchase assets, goods, securities or services,
to take-or-pay or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect the obligee against loss in respect thereof (in whole or in
part), provided that the term Indebtedness shall not include endorsements
--------
for collection or deposit in the ordinary course of business.
"Continuing Directors" shall mean the directors of Parent on the
Effective Date and each other director, if such other director's nomination
for election to the Board of Directors of Parent is recommended by a
majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each Revolving
Note, each Guaranty and each Collateral Document.
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"Credit Party" shall mean Parent, the Company and each other
Subsidiary of Parent that is a Subsidiary Borrower, a Guarantor or a
Collateral Grantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Disqualified Stock" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or
in part on, or prior to, or is exchangeable for debt securities of Parent
or its Subsidiaries prior to, the first anniversary of the Final Maturity
Date.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to
its stockholders as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any
class of its capital stock outstanding on or after the Effective Date (or
any options or warrants issued by such Person with respect to its capital
stock), or set aside any funds for any of the foregoing purposes, or shall
have permitted any of its Subsidiaries to purchase or otherwise acquire for
a consideration any shares of any class of the capital stock of such Person
outstanding on or after the Effective Date (or any options or warrants
issued by such Person with respect to its capital stock). Without limiting
the foregoing, "Dividends" with respect to any Person shall also include
all payments made or required to be made by such Person with respect to any
stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Hotel
Transaction Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
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"Effective Date" shall have the meaning provided in Section
12.10.
"8-3/4% Senior Subordinated Notes" shall mean the Company's 8-
3/4% Senior Subordinated Notes due 2000.
"8-3/4% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 8-3/4% Senior Subordinated Notes.
"Election to Become a Subsidiary Borrower" shall mean an Election
to Become a Subsidiary Borrower substantially in the form of Exhibit E,
which shall be executed by each Subsidiary of the Company which becomes a
Subsidiary Borrower after the date hereof.
"End Date" shall have the meaning provided in the definition of
Reduction Discount.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations of
which Parent or any Borrower has received notice or proceedings relating in
any way to any Environmental Law or any permit issued, or any approval
given, under any such Environmental Law (hereafter, "Claims"), including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in
connection with alleged injury or threat of injury to health, safety or the
environment due to the presence of Hazardous Materials.
"Environmental Law" means any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as
amended, including any judicial or administrative order, consent decree or
judgment, relating to the environment, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the
Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Toxic
-- ----
Substances Control Act, 15 U.S.C. Sec. 2601 et seq.; the Clean Air Act, 42
-- ----
U.S.C. Sec. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et
-- ---- --
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the
---- -- ----
Emergency Planning and the Community Right-to-Know Act of
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1986, 42 U.S.C. Sec. 11001 et seq., the Hazardous Material Transportation Act,
-- ----
49 U.S.C. Sec. 1801 et seq. and the Occupational Safety and Health Act, 29
-- ----
U.S.C. Sec. 651 et seq.; and any state and local or foreign counterparts or
-- ----
equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement, and to any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Parent or any Subsidiary of Parent would
be deemed to be a "single employer" within the meaning of Section 414(b),
(c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Revolving Loan designated as
such by a Borrower at the time of the incurrence thereof or conversion
thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded
to the nearest 1/1000 of 1%) of the offered quotation to first-class banks
in the New York interbank Eurodollar market by each Reference Bank for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of such Reference Bank
with maturities comparable to the Interest Period applicable to such Euro-
dollar Loan commencing two Business Days thereafter as of 10:00 A.M. (New
York time) on the date which is two Business Days prior to the com-
mencement of such Interest Period, divided by (b) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (in-
cluding, without limitation, any marginal, emergency, supplemental, special
or other reserves required by applicable law) applicable to any member bank
of the Federal Reserve System in respect of Eurocurrency funding or liabil-
ities as defined in Regulation D (or any successor category of liabilities
under Regulation D); provided that if one or more of the Reference Banks
fails to provide the Administrative Agent with its aforesaid rate, then the
Eurodollar Rate shall be determined based on the rate or rates provided to
the Administrative Agent by the other Reference Bank or Banks.
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"Event of Default" shall have the meaning provided in Section 9.
"Existing Casino Non-Recourse Financing" shall mean Non-Recourse
Indebtedness incurred by any Casino Owner pursuant to Section 8.04(ix) and
which is to be secured solely by the Casino Property (including any
fixtures, furniture and equipment related thereto) owned by such Casino
Owner, except that if two Casino Properties are subject to Existing Casino
Non-Recourse Financings, then each issue (or either issue) of such Existing
Casino Non-Recourse Financing may be cross-collateralized by the other
Casino Property subject to Existing Casino Non-Recourse Financing.
"Facility Fee" shall have the meaning provided in Section
2.01(a).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal Funds brokers of recognized standing selected by
the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to
in Section 2.01.
"Final Maturity Date" shall mean the 364th day from the Effective
Date, as the same may be extended from time to time pursuant to Section
2.04, it being understood and agreed, however, that no extension pursuant
to such Section 2.04 shall be effective if the Final Maturity Date would
extend beyond July 31, 2000.
"First-Tier Material Subsidiary" shall mean each Material
Subsidiary which is a direct Subsidiary of the Company.
"5-Year Banks" shall mean the lenders from time to time party to
the 5-Year Credit Agreement.
"5-Year Credit Agreement" shall mean the Credit Agreement, dated
as of July 22, 1993 and amended and restated
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as of June 9, 1995, among Parent, the Company, the Subsidiaries of the
Company party thereto, the 5-Year Banks, the Agents and Bankers Trust
Company, as Administrative Agent, as amended, modified, supplemented,
extended, refinanced or replaced from time to time in accordance with the
terms thereof and hereof.
"Former Bank" shall have the meaning provided in Section
12.04(c).
"Gaming Authority" shall mean the governmental authorities
charged with the administration and enforcement of the Gaming Regulations.
"Gaming Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, the Casino
Properties and any other casinos, hotel casinos or gaming businesses now or
in the future owned by the Company or any of its Subsidiaries or in which
Parent or any of its Subsidiaries has an interest either through a Joint
Venture or as a party to a management agreement.
"Gaming Property" of any Person shall mean those properties and
assets of such Person which relate to such Person's casino or hotel casino
businesses and operations.
"Gaming Regulations" shall mean the laws, rules, regulations and
orders applicable to the casino and gaming business or activities of
Parent, the Company or any of their Subsidiaries, as in effect from time to
time, including the policies, interpretations and administration thereof by
the Gaming Authorities.
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by Parent under the Parent Guaranty to the
Administrative Agent and each Bank for the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Revolving Note issued by each Borrower to
the Administrative Agent and such Bank, and Loans made, under this Agree-
ment, together with all the other obligations and liabilities (including,
without limitation, indemnities, fees and interest thereon) of each of the
Borrowers to such Bank now existing or hereafter incurred under, arising
out of or in connection with this Agreement or any other Credit Document
and the due performance and compliance with the terms of the Credit
Documents by the Borrowers.
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"Guarantor", at any time, shall mean each of the Initial
Guarantors and each Required Additional Guarantor which has executed and
delivered a counterpart of the Company/Sub Guaranty in accordance with
Section 7.12(a), provided that, from and after the date of the release of
--------
any Subsidiary of the Company from the provisions of the Company/Sub
Guaranty in accordance with the terms thereof or hereof, such Subsidiary
shall cease to constitute a Guarantor.
"Guaranty" shall mean and include the Parent Guaranty and the
Company/Sub Guaranty.
"Harrah's" shall mean Harrah's, a Nevada corporation.
"Harrah's Atlantic City" shall mean Harrah's Atlantic City, Inc.,
a New Jersey corporation.
"Harrah's Club" shall mean Harrah's Club, a Nevada corporation.
"Harrah's Jazz" shall mean Harrah's Jazz Company, a Louisiana
general partnership.
"Harrah's Jazz Completion Guaranties" shall mean one or more
completion guaranties heretofore given by Parent and/or the Company in
favor of certain lenders to Harrah's Jazz, the City of New Orleans and one
or more other governmental agencies of the State of Louisiana.
"Harrah's Jazz Completion Obligation Loans" shall mean any
payments made by Parent and/or the Company under the Harrah's Jazz
Completion Guaranties or the Harrah's Jazz Title Indemnity Arrangements to
the extent that such payments are characterized as additional loans or
advances made by Parent and/or the Company to Harrah's Jazz.
"Harrah's Jazz Investments" shall mean Investments in or to
Harrah's Jazz and/or for the benefit of Harrah's Jazz, including the
Harrah's Jazz Completion Obligation Loans, the Harrah's Jazz Completion
Guaranties and the Harrah's Jazz Title Indemnity Arrangements.
"Harrah's Jazz Title Indemnity Arrangements" shall mean those
certain indemnity agreements heretofore given by Parent and the Company to
the title insurance companies providing title insurance for Harrah's Jazz's
casino the City of New Orleans.
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"Harrah's Laughlin" shall mean Harrah's Laughlin, Inc., a Nevada
corporation.
"Harrah's New Jersey" shall mean Harrah's New Jersey, Inc., a New
Jersey corporation.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (c) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"Hotel Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, its existing
(immediately prior to the Effective Date) hotel businesses and operations
and any other hotels owned by the Company or any of its Subsidiaries
immediately prior to the Effective Date that are not included in the Gaming
Business or in which Parent or any of its Subsidiaries has an interest
either through a Joint Venture or as a party to a management or franchise
agreement.
"Hotel Collateral" shall mean the collateral securing the Hotel
Facility, which collateral shall only consist of the properties
constituting the Hotel Business of the Company and the Hotel Subsidiaries
(including the capital stock of the Hotel Subsidiaries).
"Hotel Company" shall mean Promus Hotel Corporation, a newly
formed Wholly-Owned Subsidiary of the Company.
"Hotel Facility" shall mean two new senior secured credit
facilities aggregating $350,000,000 which shall be (i) secured by the Hotel
Collateral and (ii) guaranteed by the Hotel Subsidiaries.
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"Hotel Property" shall mean any hotel, any land or building under
development or any other property or asset which relates to the Hotel
Business of Parent and its Subsidiaries other than those properties or
assets which are included as Gaming Properties.
"Hotel Stock Dividend" shall mean, collectively, (i) the
distribution by the Company to Parent as a stock dividend of all of the
capital stock of the Hotel Company and (ii) the distribution by Parent to
its stockholders immediately thereafter as a stock dividend of all of the
capital stock of the Hotel Company.
"Hotel Subsidiaries" shall mean those existing Subsidiaries of
the Company which are engaged in the Hotel Business and which are set forth
on Schedule VIII.
"Hotel Transaction" shall mean, collectively, the Hotel Stock
Dividend, the Hotel Transfer, the entering into of the Hotel Facility and
the incurrence by the Company of at least $210,000,000 of loans thereunder,
the assignment to, and the assumption by, the Hotel Company of the Hotel
Facility, the obtaining of the Consents and the entering into of the
related indenture supplements and the obtaining of the consent of Parent's
shareholders to the Hotel Transaction.
"Hotel Transaction Documents" shall mean (i) the Hotel Facility,
(ii) the Consents, the indenture supplements to the 8-3/4% Senior
Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and the Proxy Statement delivered to Parent's shareholders in
connection with the Hotel Transaction and (iii) the Distribution Agreement,
the Tax Sharing Agreement, the Trademark Assignment Agreement and an
Employee Benefits Allocation Agreement, which agreements are in the forms
delivered to the Administrative Agent pursuant to Section 4.04(b) and are
to be entered into by the Company and the Hotel Company in connection with
the Hotel Transfer and the Hotel Stock Dividend.
"Hotel Transfer" shall mean the transfer by the Company to the
Hotel Company of the Hotel Properties and Hotel Business of the Company and
the capital stock of the Hotel Subsidiaries, it being understood and agreed
that $210,000,000 of proceeds from the loans incurred by the Company under
the Hotel Facility on the Effective Date shall not be transferred by the
Company to the Hotel Company.
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"Indebtedness" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such
person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all obligations of such Person to
reimburse or repay any bank or other Person in respect of amounts paid or
available to be drawn under a letter of credit, banker's acceptance,
surety, performance or appeal bond or any similar instrument (each such
obligation to be valued at the face amount of such instrument), (vi) all
Indebtedness of others secured by a Lien on any asset of such Person, (vii)
all Contingent Obligations of such Person with respect to any Indebtedness
of any other Person and (viii) the amount of any Disqualified Stock.
"Initial Guarantors" shall mean each of Parent, the Company,
Casino Holding Company, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Corporation, Hampton Inn
Equity Development Corporation, Hampton Inns, Inc., Harrah's, Harrah's
Atlantic City, Harrah's Club, Harrah's Las Vegas, Inc., Harrah's Laughlin,
Harrah's New Jersey, Harrah's Reno Holding Company, Inc., Homewood Suites
Equity Development Corporation and Marina; provided, that from and after
the Effective Date, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Corporation, Hampton Inn
Equity Development Corporation, Hampton Inns, Inc. and Homewood Suites
Equity Development Corporation shall be (and hereby are) released from the
Company/Sub Guaranty and shall no longer constitute Guarantors.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.10.
"Interest Rate Protection or Other Hedging Agreements" shall mean
one or more (i) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or
other
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similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time entered into by the Company or any of its
Subsidiaries.
"Investments" shall have the meaning provided in Section 8.05.
"Issuance System" shall have the meaning provided in Section
7.11.
"Issue" shall mean each of the two different types of Senior
Debt, there being two separate Issues for purposes of this Agreement, i.e.,
----
the Indebtedness under this Agreement and the Indebtedness under the 5-Year
Credit Agreement.
"Joint Venture" shall mean any entity or arrangement between the
Company or any of its Subsidiaries (so long as the Company and its
Subsidiaries own 50% or less of such entity) and one or more Persons other
than Parent or any of its Subsidiaries (whether now existing or created in
the future) for (i) the joint ownership, management, construction or
development of any Gaming Property or (ii) the joint ownership or operation
of any Gaming Business.
"Las Vegas Property" shall mean the Harrah's Las Vegas Hotel
Casino.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the UCC or any other similar recording or notice statute, and
any lease having substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Competitive Bid
Loan.
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial state-
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ments are delivered pursuant to Section 7.01(a) or (b) and which shall end
on the earlier of (i) the date of actual delivery of the next financial
statements pursuant to Section 7.01(a) or (b) and (ii) the latest date on
which the next financial statements are required to be delivered pursuant
to Section 7.01(a) or (b).
"Margin Stock" shall have the meaning provided in Regulation U.
"Marina" shall mean Marina Associates, a New Jersey general
partnership.
"Markers" shall have the meaning provided in the Master
Collateral Agreement.
"Master Collateral Agreement" shall mean the Master Collateral
Agreement, dated as of July 22, 1993, among Parent, the Company, the other
Collateral Grantors, the Administrative Agent and the Collateral Agent, as
modified, supplemented or amended from time to time.
"Material Subsidiary" shall mean each of (a) each Initial
Guarantor other than Parent and the Company, (b) each Subsidiary Borrower
and each Collateral Grantor and (c) as at the date of determination, (i)
any direct or indirect Subsidiary of Parent that holds any license or
licenses needed to conduct gaming operations with respect to any Casino
Property (which has not theretofore been released from the respective
Mortgage encumbering same in accordance with the terms thereof), (ii) any
direct or indirect Subsidiary of Parent that owns any Collateral or
Required Collateral or that directly or indirectly owns stock of a
Subsidiary which owns Collateral or Required Collateral or (iii) any Sub-
sidiary of Parent that (together with its Subsidiaries) accounts for, or
holds, at least 10% of any of (x) the consolidated assets of Parent and its
Subsidiaries, (y) the consolidated revenues of Parent and its Subsidiaries
or (z) the Consolidated EBIT of Parent and its Subsidiaries, in each case
as determined at the end of each fiscal quarter of Parent and, in the case
of preceding clauses (y) and (z), for the Test Period then last ended, it
being understood and agreed that Harrah's Jazz and Desplaines Development
Limited Partnership shall not be considered Material Subsidiaries under
this sub-clause (iii) to the extent that such Subsidiaries would otherwise
constitute such a Material Subsidiary so long as such Subsidiaries would
not otherwise constitute a Material Subsidiary under any of the other
clauses of this definition.
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"Maturity Date" shall mean, with respect to each Bank, the Final
Maturity Date in effect at the time such Bank first became party to this
Agreement, as the same may be extended pursuant to Section 2.04, provided
that such extension has been consented to by such Bank. It is understood
that in the event that a Bank does not consent to an extension of the Final
Maturity Date, the Maturity Date for such Bank shall be the Final Maturity
Date in effect immediately prior to the effectiveness of such extension.
"Minimum Proceeds Amount" with respect to any Casino Property (or
with respect to the Casino Owner that owns such Casino Property) shall mean
the amount set forth below opposite such Casino Property:
Harrah's Atlantic City
Hotel Casino $250,000,000
Harrah's Las Vegas
Hotel Casino $250,000,000
Harrah's Reno
Hotel Casino $150,000,000
Harrah's Lake Tahoe
Hotel Casino
(including Bill's Casino) $150,000,000
Harrah's Laughlin
Hotel Casino $150,000,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each of (i) the Deed of Trust, Leasehold
Deed of Trust, Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22, 1993, from the
Company, Harrah's Laughlin, Inc. and Harrah's Reno Holding Company, Inc.,
as Grantors, to First American Title Insurance Company of Nevada, as
Trustee, and BTCo, as Beneficiary, as modified, supplemented or amended
from time to time and (ii) the Mortgage, Leasehold Mortgage, Assignment,
Assignment of Leases and Rents and Security Agreement, dated as of July 22,
1993, from Marina and the Company, as Mortgagors, to BTCo, as Collateral
Agent and Mortgagee, as modified, supplemented or amended from time to
time.
"Mortgage Amendment" shall have the meaning provided in Section
4.09(i).
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"Mortgage Policies" shall mean each of the mortgage title
insurance policies delivered pursuant to Section 5.10(ii) of the Original
5-Year Credit Agreement.
"Mortgaged Property" shall mean and include each of the Casino
Properties until same are released from the Liens created by the respective
Mortgage in accordance with the terms hereof and thereof.
"Net Lease Agreement" shall mean each of (i) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's,
Harrah's Club and the Collateral Agent (Harrah's Hotel and Casino, Lake
Tahoe), (ii) the Net Lease Agreement, dated as of July 22, 1993, among
Parent, the Company, Harrah's Las Vegas, Inc. and the Collateral Agent
(Harrah's Hotel and Casino, Las Vegas), (iii) the Net Lease Agreement,
dated as of July 22, 1993, among Parent, the Company, Harrah's Club and the
Collateral Agent (Harrah's Hotel and Casino, Reno) and (iv) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's
Laughlin and the Collateral Agent (Harrah's Laughlin Hotel and Casino), in
each case as modified, supplemented or amended from time to time, it being
understood and agreed that in the event the Company transfers its ownership
interest in any of the Casino Properties located in Nevada to Harrah's Club
as permitted by Section 8.02(a), the Net Lease Agreement with respect to
each such Casino Property may be terminated.
"Net Sale Proceeds" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and
when received) received from any sale of assets, net of reasonable trans-
action costs and payments of unassumed liabilities relating to the assets
sold at the time of, or within 60 days after, the date of such sale and the
amount of such gross cash proceeds required to be used to repay any
Indebtedness (other than Indebtedness of the Banks pursuant to the Credit
Documents) which is secured by the respective assets which were sold.
"Non-Continuing Bank" shall mean, at any time, each Bank the
Maturity Date of which has not been extended pursuant to Section 2.04.
"Non-Defaulting Bank" shall mean and include each Bank other than
a Defaulting Bank.
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"Non-Recourse Indebtedness" shall mean (x) with respect to any
Casino Owner or Owners, Indebtedness incurred by such Casino Owner or
Owners meeting the requirements of Existing Casino Non-Recourse Financing
and which shall be (i) secured only by the Casino Property or Properties
owned by such Casino Owner or Owners, including any fixtures, furniture and
equipment related thereto (it being understood and agreed that, if two
Casino Properties are subject to Existing Casino Non-Recourse Financings,
then such properties may cross-collateralize the other issue of Existing
Casino Non-Recourse Financing) and (ii) expressly made non-recourse to
Parent and its Subsidiaries other than the respective Casino Owners,
provided that recourse may be had to the respective property serving as
security therefor and (y) with respect to any Specified Subsidiary,
Indebtedness incurred by such Specified Subsidiary which shall be (i)
secured only by Gaming Properties being developed with Non-Recourse
Indebtedness incurred pursuant to Section 8.04(x), including any fixtures,
furniture and equipment related thereto and (ii) non-recourse to Parent and
its Subsidiaries, provided that recourse may be had to the extent permitted
by Section 8.04(x) and to the respective property or properties serving as
security therefor.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Competitive Bid Borrowing" shall have the meaning
provided in Section 1.04(a).
"Notice of Conversion" shall have the meaning provided in Section
1.07.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention:
Patricia Rapisarda, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original 5-Year Credit Agreement" shall mean the Credit
Agreement, dated as of July 22, 1993, among Parent, the Company, the
Subsidiaries of the Company party thereto, the financial institutions party
thereto and Bankers Trust
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Company, as Administrative Agent, as in effect immediately prior to the
Effective Date.
"Parent" shall have the meaning provided in the first paragraph
of this Agreement.
"Parent Guaranty" shall mean the guaranty provided by Parent
pursuant to Section 13.
"Parent Pledge Agreement" shall mean the Parent Pledge Agreement,
dated as of July 22, 1993, between Parent and the Collateral Agent, as
modified, supplemented or amended from time to time.
"Payment Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, New York, New York 10006, or such
other office as the Administrative Agent may hereafter designate in writing
as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the
Total Revolving Loan Commitment at such time, provided that, if the
--------
Percentage of any Bank is to be determined after the Total Revolving Loan
Commitment has been terminated, then the Percentage of such Bank shall be
determined immediately prior (and without giving effect) to such
termination.
"Permitted Designated Indebtedness" shall mean (i) any Existing
Casino Non-Recourse Financing and (ii) all Subordinated Debt (or portions
thereof) incurred pursuant to Section 8.04(xi) to the extent the aggregate
amount of Subordinated Debt incurred after the Effective Date pursuant to
said Section is in excess of $200,000,000.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
with respect thereto.
"Permitted Liens" shall have the meaning provided in Section
8.01.
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"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), Parent or a
Subsidiary of Parent or an ERISA Affiliate, and each such plan for the five
year period immediately following the latest date on which Parent, or a
Subsidiary of Parent or an ERISA Affiliate maintained, contributed to or
had an obligation to contribute to such plan.
"Pledge Agreements" shall mean and include the Parent Pledge
Agreement and the Company/Sub Pledge Agreement.
"Pledged Securities" shall have the meaning assigned that term in
the respective Pledge Agreements.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. BTCo may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 6.05(d).
"Proxy Statement" shall mean Parent's Proxy Statement dated April
25, 1995 which was delivered to Parent's shareholders in connection with
the Hotel Transaction.
"Qualified Person" shall mean, with respect to any Bank party to
this Agreement on the Effective Date or that becomes a Bank pursuant to
Section 1.14, 12.04(b) or 12.04(c), a banking or other licensed lending
institution within the meaning of the New Jersey Gaming Regulations or a
financial source or qualifier approved under the Gaming Regulations of the
State of New Jersey applicable to lenders (or waived or exempted from the
applicable requirements thereof) and which shall not have been found
unsuitable under the Gaming Regulations of the State of Nevada applicable
to lenders and which meets the requirements of all other
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jurisdictions regulating the gaming business of Parent and its Subsidiaries
to the extent that the Company has so notified the Banks of such
requirements of such other jurisdiction pursuant to Section 12.04(e).
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. Sec. 6901 et seq.
-- ----
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Reduction Discount" shall mean initially zero and from and after
the first day of any Margin Reduction Period (the "Start Date") to and
including the last day of such Margin Reduction Period (the "End Date"),
the Reduction Discount shall be the respective percentage per annum set
forth in clause (A), (B) or (C) below if, but only if, as of the last day
of the most recent fiscal quarter of Parent ended immediately prior to such
Start Date (the "Test Date") the conditions in clause (A), (B) or (C) below
are met:
(A) (x) in the case of Eurodollar Loans, 1/8 of 1% and (y) in the
case of the Facility Fee, 4/100 of 1% in each case if, but only if, as
of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in none of clauses (B)
and (C) below are satisfied:
(i)the Consolidated Interest Coverage Ratio for the Test
Period ended on such Test Date shall be greater than 3.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB- Senior Implied by S&P or Baa3 Senior Implied
by Moody's;
(B) (x) in the case of Eurodollar Loans, 3/8 of 1% and (y) in the
case of the Facility Fee, 5.5/100 of 1% in each case if, but only if,
as of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in clause (C) below
are not satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test
Period ended on such Test Date shall be greater than 3.50:1.00; or
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(ii)the Indebtedness of the Company on such Test Date shall be
rated at least BBB Senior Implied by S&P or Baa2 Senior Implied by
Moody's; or
(C) (x) in the case of Eurodollar Loans, 1/2 of 1% and (y) in the
case of the Facility Fee, 7/100 of 1% in each case if, but only if, as
of the Test Date for such Start Date either of the following
conditions are met:
(i) the Consolidated Interest Coverage Ratio for the Test
Period ended on such Test Date shall be greater than 4.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB+ Senior Implied by S&P or Baa1 Senior Implied
by Moody's.
Notwithstanding anything to the contrary above in this definition, the
Reduction Discount shall be reduced to zero at all times when a Default
under Section 7.01(a) or (b) shall exist or an Event of Default shall
exist.
"Reference Banks" shall mean Bankers Trust Company, The Sumitomo
Bank, Limited, New York Branch, Credit Lyonnais and The Bank of New York.
"Register" shall have the meaning provided in Section 1.06(d).
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
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"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.14.
"Replacement Bank" shall have the meaning provided in
Section 1.14.
"Reply Date" shall have the meaning provided in Section 1.04(b).
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Requested Extension Effective Date" shall have the meaning
provided in Section 2.04(a).
"Required Additional Guarantor" shall have the meaning provided in
Section 7.12(a).
"Required Appraisal" shall have the meaning provided in Section
7.12(c).
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
Revolving Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Competitive Bid Loans) represent an amount greater than
fifty percent of the sum of the Total Revolving Loan Commitment (or after
the termination thereof, the sum of the then total outstanding Revolving
Loans and Competitive Bid Loans).
"Required Collateral" shall mean and include all the following
assets and property:
(i) each Casino Property;
(ii) 100% of the capital stock of the Company;
(iii) 100% of the capital stock of each of Harrah's, Harrah's
Club, Casino Holding Company, Harrah's Atlantic City, Harrah's New
Jersey, Harrah's Reno Holding Company, Inc., Harrah's Laughlin and
Harrah's Las Vegas, Inc.;
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(iv) 100% of the partnership interests in Marina;
(v) 100% of the capital stock or partnership interests, as the
case may be, of each Subsidiary Borrower;
(vi) 100% of the capital stock or partnership interests, as the
case may be, in any other Subsidiary of the Company which owns assets
or property, or is the direct or indirect parent of any Subsidiary
which owns assets or property, which constitutes Required Collateral
pursuant to any of the other clauses of this definition;
(vii) 100% of the capital stock or partnership interests owned
directly by the Company in any Guarantor or Material Subsidiary;
(viii) all of the Company's and its Subsidiaries' interests in
building fixtures and personal property located in or owned or used in
connection with the Casino Properties, including (subject to
applicable Gaming Regulations) gaming equipment; all trademarks and
trade names (including the Harrah's name, subject to a non-exclusive
license to be granted to the Company in accordance with the terms of
the Collateral Documents) and other intangible property owned or used
in connection with the Casino Properties; and all licenses and permits
held in connection with the Casino Properties (excluding (x) gaming
licenses and (y) non-transferable liquor licenses and other non-
transferable licenses); and all revenues derived from the Casino
Properties located in Nevada, including (subject to applicable Gaming
Regulations) gaming revenues; and
(ix) the assignment of leases and net lease agreements effected
pursuant to the Assignment of Leases and Net Lease Agreements.
Notwithstanding anything to the contrary contained above, assets or
property shall cease to constitute Required Collateral at such time, if
any, as same are released pursuant to the terms of the respective
Collateral Documents and this Agreement.
"Required Secured Parties" shall have the meaning provided in the
Master Collateral Agreement.
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"Returns" shall have the meaning provided in Section 6.09.
"Revolving Loan" shall have the meaning provided in Section
1.01(a).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time
to time pursuant to Sections 2.02, 2.03 and/or 9 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section
1.14, 12.04(b) or 12.04(c).
"Revolving Note" shall have the meaning provided in Section
1.06(a).
"Rights" shall have the meaning provided in the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated as of
February 7, 1990, between Parent and The Bank of New York, as Rights Agent,
as in effect on the date hereof.
"S&P" shall mean Standard & Poor's Corporation.
"SEC" shall have the meaning provided in Section 7.01(f).
"Section 3.04(b)(iii) Certificate" shall have the meaning provided
in Section 3.04(b).
"Secured Parties" shall have the meaning assigned that term in the
Collateral Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement, dated as
of July 22, 1993, among the Company, the other Collateral Grantors party
thereto and the Collateral Agent, as modified, supplemented or amended from
time to time.
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"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Senior Debt" shall mean the Indebtedness under this Agreement and
the Indebtedness under the 5-Year Credit Agreement.
"Share" shall mean, for each Issue, (A) if the event requiring a
mandatory commitment reduction to Senior Debt pursuant to Section 2.03(c)
or (d) would, in accordance with the terms of the 5-Year Credit Agreement,
give rise to a mandatory commitment reduction to the Total 5-Year Revolving
Loan Commitment, then the "Share" (x) applicable to the Total 5-Year
Revolving Loan Commitment shall equal the lesser of (1) the amount required
to be applied to reduce the commitments in respect of Senior Debt pursuant
to Section 2.03(c) or (d) multiplied by a fraction the numerator of which
is the amount of the Total 5-Year Revolving Loan Commitment then in effect
and the denominator of which is the sum of (i) the Total 5-Year Revolving
Loan Commitment then in effect plus (ii) the Total Revolving Loan
Commitment then in effect and (2) the maximum amount which would be re-
quired to be applied to mandatorily reduce the Total 5-Year Revolving Loan
Commitment in accordance with the terms of the 5-Year Credit Agreement as a
result of the respective event requiring a reduction to the commitments in
respect of Senior Debt pursuant to Section 2.03(c) or (d) and (y)
applicable to the Total Revolving Loan Commitment shall equal the remainder
of the amount required to be applied to reduce the commitments in respect
of Senior Debt pursuant to Section 2.03(c) or (d), less the "Share"
applicable to the Total 5-Year Revolving Loan Commitment as determined
pursuant to preceding clause (x), and (B) if the event giving rise to a
mandatory commitment reduction in respect of Senior Debt would not require
a mandatory reduction to the Total 5-Year Revolving Loan Commitment of the
5-Year Credit Agreement in accordance with the terms of the 5-Year Credit
Agreement, the "Share" of each Issue shall equal (x) in the case of the 5-
Year Credit Agreement, $0 and (y) in the case of this Agreement, the amount
required to be applied to Senior Debt pursuant to Section 2.03(c) or (d).
"Specified Subsidiary" shall mean any Subsidiary of the Company
(other than any Subsidiary Borrower, Collateral Grantor or Casino Owner) so
long as such Subsidiary has no material assets other than the Gaming
Properties to be developed and financed with Non-Recourse Indebtedness
incurred pursuant to Section 8.04(x).
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"Start Date" shall have the meaning provided in the definition of
Reduction Discount.
"Sub-Limit" shall mean (i) with respect to Marina, $150,000,000
and (ii) with respect to each other Subsidiary of the Company that becomes
a Subsidiary Borrower after the date hereof, such aggregate amount as shall
be established by the Administrative Agent and the Required Banks at the
time such Subsidiary becomes a Subsidiary Borrower hereunder.
"Subordinated Debt" shall mean each issue of Subordinated Debt of
the Company as is set forth on Schedule IV as well as any additional
issuance of Subordinated Debt by the Company that is permitted under
Section 8.04(xi).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any partner-
ship, association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a 50% equity
interest at the time.
"Subsidiary Borrower" shall mean Marina and any other Wholly-Owned
Subsidiary of the Company that is found acceptable to, and approved in
writing by, the Administrative Agent and the Required Banks, provided that
at the time any such Subsidiary incurs Existing Casino Non-Recourse
Financing pursuant to Section 8.04(ix) or the Casino Property owned by such
Subsidiary is sold pursuant to Section 8.02, such Subsidiary shall cease to
be a Subsidiary Borrower.
"Subsidiary Investments" shall mean any Investment by the Company
in one or more of its Subsidiaries provided that (x) any acquisition of a
new Subsidiary shall be through a transaction not involving the acquisition
by the Company or any of its Subsidiaries of Margin Stock and (y) any new
Subsidiary so acquired shall be engaged primarily in the Gaming Business.
"Substitute Bank" shall have the meaning in Section 12.04(c).
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"Taxes" shall have the meaning provided in Section 3.04(a).
"10-7/8% Senior Subordinated Notes" shall mean the Company's 10-
7/8% Senior Subordinated Notes due 2002.
"10-7/8% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 10-7/8% Senior Subordinated Notes.
"Test Date" shall have a meaning provided in the definition of
Reduction Discount.
"Test Period" shall mean the four consecutive fiscal quarters of
Parent then last ended (in each case taken as one accounting period).
"Total 5-Year Revolving Loan Commitment" shall mean the "Total
Revolving Loan Commitment" under, and as defined in, the 5-Year Credit
Agreement.
"Total 5-Year Outstandings" shall mean, at any time, the aggregate
principal amount of all loans outstanding pursuant to the 5-Year Credit
Agreement and the aggregate amount of all letters of credit and, without
duplication, unreimbursed drawings thereunder outstanding pursuant to the
5-Year Credit Agreement.
"Total Outstandings" shall mean, at any time, the aggregate
outstanding principal amount of Loans.
"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment less (y) the sum of the aggregate principal amount of Revolving
Loans and Competitive Bid Loans then outstanding.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the relevant jurisdiction.
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"Unfunded Current Liability" of any Plan means the amount, if any,
by which the actuarial present value of the accumulated benefits under the
Plan as of the close of its most recent plan year, determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of
America.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Wholly-
Owned Subsidiaries of such Person has a 100% equity interest at such time.
"Withdrawal Period" shall have the meaning provided in Section
12.04(d).
SECTION 11. The Administrative Agent and Agents.
-----------------------------------
11.01 Appointment. The Banks hereby designate Bankers Trust
-----------
Company as Administrative Agent (for purposes of this Section 11, the term
"Administrative Agent" shall include Bankers Trust Company in its capacity
as Collateral Agent pursuant to the Collateral Documents) to act as spec-
ified herein and in the other Credit Documents. The Banks hereby designate
Bankers Trust Company, The Bank of New York, CIBC Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale, and The Sumitomo Bank, Limited, New York Branch, as
Agents to act as specified herein and in the other Credit Documents. Each
Bank hereby irrevocably authorizes, and each holder of any Revolving Note
by the acceptance of such Revolving Note shall be deemed irrevocably to
authorize, the Administrative Agent or any Agent to take such action on its
behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and
to exercise such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Administrative Agent or
any Agent by the terms hereof and thereof and such other
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powers as are reasonably incidental thereto. The Administrative Agent and
any Agent may perform any of their duties hereunder by or through their
respective officers, directors, agents (including any sub-agents or sub-
trustees to act as a Collateral Agent pursuant to the Master Collateral
Agreement or any other Collateral Document) or employees. Each Bank
further agrees to be bound by all of the terms and conditions set forth in
the Collateral Documents.
11.02 Nature of Duties. Neither the Administrative Agent nor any
----------------
Agent shall have any duties or responsibilities except those expressly set
forth in this Agreement and the Collateral Documents, it being understood
and agreed, however, that none of the Agents in their capacities as such
shall have any duties or responsibilities under the Credit Documents.
Neither the Administrative Agent, any Agent nor any of their officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent
and Agents shall be mechanical and administrative in nature; neither the
Administrative Agent nor any Agent shall have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any
Bank or the holder of any Revolving Note; and nothing in this Agreement or
any other Credit Document, expressed or implied, is intended to or shall be
so construed as to impose upon the Administrative Agent or any Agent any
obligations in respect of this Agreement or any other Credit Document
except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Administrative Agent and Agents.
-------------------------------------------------------
Independently and without reliance upon the Administrative Agent or any
Agent, each Bank and the holder of each Revolving Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own inde-
pendent investigation of the financial condition and affairs of Parent and
its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of Parent and its
Subsidiaries and, except as expressly provided in this Agreement, neither
the Administrative Agent nor any Agent shall have any duty or responsibil-
ity, either initially or on a continuing basis, to provide any Bank or the
holder of any Revolving Note with any credit or other information with
respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. Neither the Administrative
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Agent nor any Agent shall be responsible to any Bank or the holder of any
Revolving Note for any recitals, statements, information, representations
or warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of this Agreement or any other Credit Document or the
financial condition of Parent or any of its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Parent or any of its Subsidiaries
or the existence or possible existence of any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks
with respect to any act or action (including failure to act) in connection
with this Agreement or any other Credit Document, the Administrative Agent
shall be entitled to refrain from such act or taking such action unless and
until the Administrative Agent shall have received instructions from the
Required Banks; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no
Bank or the holder of any Revolving Note shall have any right of action
whatsoever against the Administrative Agent as a result of the Adminis-
trative Agent acting or refraining from acting hereunder or under any other
Credit Document in accordance with the instructions of the Required Banks.
11.05 Reliance. The Administrative Agent and each Agent shall be
--------
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or
telephone message signed, sent or made by any Person that the
Administrative Agent or such Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent or such Agent.
11.06 Indemnification. To the extent the Administrative Agent or
---------------
any Agent is not reimbursed and indemnified by the Credit Parties, the
Banks will reimburse and indemnify the Administrative Agent or such Agent,
in proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities,
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obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed
on, asserted against or incurred by the Administrative Agent or such Agent
in performing its duties hereunder or under any other Credit Document, in
any way relating to or arising out of this Agreement or any other Credit
Document; provided that no Bank shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's or such Agent's gross negligence or willful misconduct.
11.07 The Administrative Agent and the Agents in their Individual
-----------------------------------------------------------
Capacities. With respect to its obligation to make Loans under this Agree-
----------
ment, the Administrative Agent and each Agent shall have the rights and
powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and
the term "Banks," "Required Banks," "holders of Revolving Notes" or any
similar terms shall, unless the context clearly otherwise indicates, in-
clude each of the Administrative Agent and Agent in its individual capac-
ity. The Administrative Agent and each Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Credit Party or any Affiliate of any Credit Party as if
it were not performing the duties specified herein, and may accept fees and
other consideration from the Borrowers or any other Credit Party for ser-
vices in connection with this Agreement and otherwise without having to
account for the same to the Banks.
11.08 Holders. The Administrative Agent may deem and treat the
-------
payee of any Revolving Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is
the holder of any Revolving Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of
such Revolving Note or of any Revolving Note or Revolving Notes issued in
exchange therefor.
11.09 Resignation by the Administrative Agent and Agents.
--------------------------------------------------
(a) The Administrative Agent and any Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time
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by giving 15 Business Days' prior written notice to the Company and the
Banks. In the case of the resignation by the Administrative Agent, such
resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below. In the case of a resignation by an Agent, such resignation
shall become effective immediately.
(b) Upon any such notice of resignation, the Company shall appoint
a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Required
Banks (it being understood and agreed that any Bank is deemed to be accept-
able to the Required Banks), provided that, if a Default or an Event of
--------
Default exists at the time of such resignation, the Required Banks shall
appoint such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Company, shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Company or Required Banks, as
the case may be, appoint a successor Administrative Agent as provided
above.
(d) If no successor Administrative Agent has been appointed pursu-
ant to clause (b) or (c) above by the 30th Business Day after the date such
notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks
shall thereafter perform all the duties of the Administrative Agent here-
under and/or under any other Credit Document until such time, if any, as
the Required Banks appoint a successor Administrative Agent.
SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. (a) The Borrowers jointly and
-------------------------
severally shall: (i) whether or not the transactions herein contemplated
are consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees
and disbursements of White & Case and local counsel and all appraisal fees,
trustee's fees, documentary and recording taxes, title insurance and
recording, filing and other expenses) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and
the docu-
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ments and instruments referred to herein and therein and any amendment,
waiver or consent relating hereto or thereto, of the Administrative Agent
in connection with its syndication efforts with respect to this Agreement
and of the Administrative Agent and each of the Banks in connection with
the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including,
without limitation, the reasonable fees and disbursements of counsel
(including allocated costs of in-house counsel) for the Administrative
Agent and for each of the Banks); (ii) pay and hold each of the Banks harm-
less from and against any and all present and future stamp, excise and
other similar taxes with respect to the foregoing matters and save each of
the Banks harmless from and against any and all liabilities with respect to
or resulting from any delay or omission (other than to the extent
attributable to such Bank) to pay such taxes; and (iii) indemnify the
Administrative Agent, each Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (in-
cluding reasonable attorneys' (including allocated costs of in-house
counsel) and consultants' fees and disbursements) incurred by, imposed on
or assessed against any of them as a result of, or arising out of, or in
any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent, any Agent or any
Bank is a party thereto) related to the entering into and/or performance of
this Agreement or any other Credit Document or the proceeds of any Loans
hereunder or the consummation of any transactions contemplated herein
(including, without limitation, the Hotel Transaction) or in any other
Credit Document or the exercise of any of their rights or remedies provided
herein or in the other Credit Documents, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or
on the surface or subsurface of any Real Property owned or at any time
operated by Parent or any of its Subsidiaries, the generation, storage,
transportation, handling or disposal of Hazardous Materials at any loca-
tion, whether or not owned or operated by Parent or any of its Subsidi-
aries, the non-compliance of any Real Property with foreign, federal, state
and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
relating in any way to Parent, any of its Subsidiaries, their operations or
any Real Property owned or at any time operated by Parent or any of
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its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding
(but excluding any losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless the Administrative Agent, any Agent or any
Bank set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
(b) The Borrowers further jointly and severally agree to pay the
reasonable legal fees of gaming counsel for the Administrative Agent in
Nevada and New Jersey and any other relevant state and all reasonable costs
(including costs of investigation) associated with any qualification (or
exemption or waiver therefrom) of any Bank under, or compliance in
connection with the Gaming Regulations in connection with the syndication
under this Agreement, provided that in the event that any assignee Bank or
potential assignee Bank is not already a Qualified Person (before giving
effect to any actions taken to become such in connection with this
Agreement), then all costs associated with such Person becoming a Qualified
Person shall be borne by the respective assignee Bank or potential assignee
Bank. Notwithstanding the foregoing, after a Bank has been replaced
pursuant to Section 1.14, the Borrowers shall not be required to reimburse
such Bank for any such costs incurred by it after the date of such
replacement.
12.02 Right of Setoff. In addition to any rights now or
---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
each Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing
by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of the
Credit Parties against and on account of the Obligations and liabilities of
the Credit Parties to such Bank under this Agreement or under any of the
other Credit Documents, includ-
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ing, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Bank shall have made
any demand hereunder and although said Obligations, liabilities or claims,
or any of them, shall be contingent or unmatured, provided that such right
--------
of set-off may only be exercised by any such Bank if Nevada Revised
Statutes 40.430(4)(g) (1989) remains in force and effect without
modification, and such Bank has received advice of New Jersey and Nevada
counsel acceptable to the Administrative Agent that there is no other
provision of Nevada or New Jersey law, as appropriate, under which such
action of set off might jeopardize any right of the Collateral Agent or any
Bank in or with respect to any Collateral. The provisions of the foregoing
proviso to this Section 12.02 are for the benefit of the Banks only, and
may be amended, modified or waived in any respect by the Required Banks
without the requirements of prior notice to or consent by any Credit Party
and does not constitute a waiver of any rights against any Credit Party or
against any Collateral.
12.03 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to
Parent or any Borrower, at such Credit Party's address specified opposite
its signature below or in the respective Election to Become a Subsidiary
Borrower; if to any Bank, at its address specified opposite its name below;
and if to the Administrative Agent, at its Notice Office; or, as to any
Credit Party or the Administrative Agent, at such other address as shall be
designated by such party in a written notice to the other parties hereto
and, as to each Bank, at such other address as shall be designated by such
Bank in a written notice to the Company and the Administrative Agent. All
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective when
deposited in the mails, delivered to the telegraph company, cable company
or overnight courier, as the case may be, or sent by telex or telecopier,
except that notices to the Administrative Agent and the Company shall not
be effective until received by such Person.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the
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parties hereto; provided, however, except as provided in Sections 8.02,
-------- -------
8.04(ix) and 12.17(a), no Borrower may assign or transfer any of its
rights, obligations or interest hereunder or under any other Credit
Document without the prior written consent of the Administrative Agent and
the Banks (although any Subsidiary Borrower may, at its request and with
the consent of the Required Banks, otherwise cease to be a Subsidiary
Borrower hereunder so long as no Default or Event of Default then exists
and all Loans incurred by such Subsidiary are repaid in full and, provided
--------
further, that, although any Bank may transfer, assign or grant participa-
-------
tions in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of
its Revolving Loan Commitments hereunder except as provided in Section
12.04(b)) and the transferee, assignee or participant, as the case may be,
shall not constitute a "Bank" hereunder and, provided further, that no Bank
----------------
shall transfer or grant any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
extend the final scheduled maturity of any Loan or Revolving Note in which
such participant is participating, or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Revolving Loan Commitment shall not constitute a
change in the terms of such participation, and that an increase in any
Revolving Loan Commitment or Loan shall be permitted without the consent of
any participant if the participant's participation is not increased as a
result thereof). In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank
in favor of the participant relating thereto) and the Borrowers shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement and the other Credit
Documents and all amounts payable by the Borrowers hereunder shall be
determined as if such Bank had not sold such participation. Any agreement
pursuant to which any Bank may grant such a participation shall be in a
form approved by the Administrative Agent and Parent and shall be
satisfactory under the Gaming Regulations of the State of New
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Jersey so as not to require participants to be approved financial sources
or qualified under such Gaming Regulations applicable to lenders.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its
Revolving Loan Commitments and related outstanding Obligations hereunder to
its parent company and/or any affiliate of such Bank which is at least 50%
owned by such Bank or its parent company or to one or more Banks or (y)
assign all, or if less than all, a portion equal to at least $2,500,000 in
the aggregate for the assigning Bank or assigning Banks, of such Revolving
Loan Commitments and related outstanding Obligations hereunder, in either
case to one or more Qualified Persons, each of which assignees shall become
a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement, provided that, (i) at such time Schedule I shall be
--------
deemed modified to reflect the Revolving Loan Commitments of such new Bank
and of the existing Banks, (ii) new Revolving Notes will be issued to such
new Bank and to the assigning Bank upon the request of such new Bank or
assigning Bank, such new Revolving Notes to be in conformity with the
requirements of Section 1.06 to the extent needed to reflect the revised
Revolving Loan Commitments, (iii) the consent of the Administrative Agent
shall be required in connection with any assignment (which consent shall
not be unreasonably withheld) and (iv) the Administrative Agent shall re-
ceive at the time of each such assignment, from either the assigning or
assignee Bank or Banks, the payment of a non-refundable assignment fee of
$3,500 in the case of any assignment to a Qualified Person which is not a
Bank immediately prior to such assignment or $1,000 in the case of any
assignment to a then existing Bank. To the extent of any assignment
pursuant to this Section 12.04(b), the assigning Bank shall be relieved of
its obligations hereunder with respect to its assigned Revolving Loan
Commitments. At the time of each assignment pursuant to this Section
12.04(b) to a Person which is not already a Bank hereunder and which is not
a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank
shall, to the extent legally entitled to do so, provide to the Borrowers in
the case of a Bank described in clause (ii) or (iv) of Section 3.04(b), the
forms described in such clause (ii) or (iv), as the case may be. To the
extent that an assignment of all or any portion of a Bank's Revolving Loan
Commitments and related outstanding Obligations pursuant to Section 1.14 or
this Section 12.04(b) would, at the time of such assignment, result in
increased costs under Section
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1.11, 1.12 or 3.04 from those being charged by the respective assigning
Bank prior to such assignment, then the Borrowers shall not be obligated to
pay such increased costs (although the Borrowers shall be obligated to pay
any other increased costs of the type described above resulting from
changes after the date of the respective assignment).
(c) If the New Jersey Gaming Authorities shall determine that any
Bank is not qualified as an approved financial source or otherwise does not
meet the standards pursuant to the Gaming Regulations in New Jersey, or the
Nevada Gaming Authorities shall determine that any Bank does not meet the
Suitability Standards under the Nevada Gaming Regulations or any other
Gaming Authority with jurisdiction over the gaming business of Parent and
its Subsidiaries shall determine that any Bank does not meet its
suitability standards (in any such case, a "Former Bank"), the Admin-
istrative Agent or the Company shall have the right (but not the duty) to
designate a bank or banks (in each case, a "Substitute Bank," which may be
any Bank or Banks that agree to become a Substitute Bank) that has agreed
to assume the rights and obligations of the Former Bank, subject to receipt
by the Administrative Agent of evidence that such Substitute Bank is a
Qualified Person. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an
Assignment and Assumption Agreement, which assumption shall be required to
comply with, and shall become effective in accordance with, the provisions
of Section 12.04(b), provided that the purchase price to be paid by the
--------
Substitute Bank to the Administrative Agent for the account of the Former
Bank for such assumption shall equal the sum of (i) the unpaid principal
amount of any Revolving Notes held or Loans made by the Former Bank plus
accrued interest thereon plus (ii) such Former Bank's pro rata share of
--- ----
accrued Fees to the date of the assumption, and, provided further, the
----------------
Borrowers shall pay all obligations owing to the Former Bank under the
Credit Documents (including all obligations, if any, owing pursuant to
Section 1.12, but excluding those amounts in respect of which the purchase
price is being paid as provided above). Each Bank agrees that if it
becomes a Former Bank, upon payment to it by the Borrowers of all such
amounts, if any, owing to it under the Credit Documents, it will execute
and deliver an Assignment and Assumption Agreement, upon payment of such
purchase price.
(d) Notwithstanding the provisions of subsection (c) of this
Section 12.04, if any Bank becomes a Former Bank, and if the Administrative
Agent or the Company fails to find
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a Substitute Bank pursuant to subsection (c) of this Section within any
time period specified by the appropriate Gaming Authority for the
withdrawal of a Former Bank (the "Withdrawal Period"), the Borrowers shall,
immediately (i) prepay in full the outstanding principal amount of each
Revolving Note held or Loan made by such Former Bank, together with accrued
interest thereon to the earlier of (x) the date of payment or (y) the last
day of any Withdrawal Period, and (ii) if no Default or Event of Default
then exists, terminate the Revolving Loan Commitment of such Former Bank at
which time the other Banks' Percentages will be automatically adjusted as a
result thereof.
(e) Subject to the last sentence of this Section 12.04(e), each
Bank agrees that all participations and assignments made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable
to lenders. Each Bank agrees further that it will not grant participations
or assignments prior to receiving notice from the Administrative Agent that
it has completed the primary syndication of this facility. The
Administrative Agent shall provide such notice to the Banks promptly after
completing such primary syndication. Each Bank agrees to notify the New
Jersey Gaming Authorities of any dispute arising between such Bank and any
participant concerning Collateral located in New Jersey. Each Borrower
hereby acknowledges that unless the Company has provided the Banks with a
written opinion of counsel as to the suitability standards applicable to
lenders of any relevant Gaming Authority (excluding New Jersey and Nevada
except to the extent that the suitability standards set forth in the Gaming
Regulations of such States change from those in effect on the Effective
Date as described in the gaming memoranda delivered to the Banks prior to
the Effective Date) with jurisdiction over the Gaming Business of Parent
and its Subsidiaries, no Bank shall have the responsibility of determining
whether or not a potential assignee of such Bank would be a Qualified
Person under the Gaming Regulations of any such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Revolving Notes hereunder to a Federal Reserve
Bank in support of borrowings made by such Bank from such Federal Reserve
Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank or any holder of any Revolving
Note in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrowers or
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any other Credit Party and the Administrative Agent or any Bank or the
holder of any Revolving Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights, powers and remedies herein or in any other Credit
Document expressly provided are cumulative and not exclusive of any rights,
powers or remedies which the Administrative Agent or any Bank or the holder
of any Revolving Note would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or any Bank or the holder
of any Revolving Note to any other or further action in any circumstances
without notice or demand.
12.06 Payments Pro Rata. (a) Except as otherwise provided in
-----------------
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of a Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
--- ----
any such payment) pro rata based upon their respective shares, if any, of
--- ----
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents,
or otherwise), which is applicable to the payment of the principal of, or
interest on, the Loans or Facility Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than
the total of such Obligation then owed and due to such Bank bears to the
total of such Obligation then owed and due to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse or warranty from the other Banks an
interest in the Obligations of the respective Party to such Banks in such
amount as shall result in a proportional participation by all the Banks in
such amount; provided that if all or any portion of such excess amount is
--------
thereafter recovered from such Bank, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
-122-
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.06(a) and (b) shall be subject
to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Banks as opposed to
Defaulting Banks.
12.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by Parent
to the Banks); provided that, (i) except as otherwise specifically provided
--------
herein, all computations determining compliance with Sections 8.03 through
8.05, inclusive, and Sections 8.07 through 8.09, inclusive, shall utilize
accounting principles and policies in conformity with those used to prepare
the historical financial statements delivered to the Banks pursuant to
Section 6.05(a), provided that for all Test Periods which include periods
prior to the Effective Date, all calculations used in determining the
Consolidated Interest Coverate Ratio for such Test Periods (both for
purposes of Section 8.08 and the definition of Reduction Discount) shall be
made on a pro forma basis as if the Hotel Transaction had been consummated
--- -----
on the first day of each such Test Period and all historical financial
information shall be restated (on a basis consistent with that methodology
used in the Proxy Statement) to retroactively reflect the Hotel Business as
discontinued operations and to exclude from such calculations the results
of operations of the Hotel Business, and (ii) at no time shall Harrah's
Jazz and its Subsidiaries be treated as Subsidiaries of Parent for purposes
of this Agreement even though (x) Harrah's Jazz and its Subsidiaries may at
any time fall within the definition of "Subsidiary" or (y) generally
accepted accounting principles would require otherwise but shall instead be
treated as an equity investment by Parent.
(b) All computations of interest, Facility Fees and other Fees
hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest, Facility Fees or other
Fees are payable.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
----------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE
-123-
PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. EACH OF PARENT AND EACH BORROWER
HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM,
WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR
AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH SUCH CREDIT PARTY
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON
THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT. EACH OF PARENT AND EACH BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT ITS
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT, ANY BANK OR THE HOLDER OF ANY REVOLVING
NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY SUCH CREDIT PARTY IN ANY
OTHER JURISDICTION.
(b) EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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12.09 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrowers and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
-------------
the date (the "Effective Date") and at the time on which (i) Parent, the
Company, each existing Subsidiary Borrower and each Bank shall have signed
a counterpart hereof (whether the same or different counterparts) and shall
have delivered the same to the Administrative Agent at its Notice Office
or, in the case of the Banks, shall have given to the Administrative Agent
telephonic (confirmed in writing), written or telex notice (actually
received) at such office that the same has been signed and mailed to it and
(ii) the conditions contained in Sections 4 and 5 are met to the
satisfaction of the Administrative Agent and the Required Banks. Unless
the Administrative Agent has received actual notice from any Bank that the
conditions contained in Sections 4 and 5 have not been met to its
satisfaction, upon the satisfaction of the condition described in clause
(i) of the immediately preceding sentence and upon the Administrative
Agent's good faith determination that the conditions described in clause
(ii) of the immediately preceding sentence have been met, then the
Effective Date shall have been deemed to have occurred, regardless of any
subsequent determination that one or more of the conditions thereto had not
been met (although the occurrence of the Effective Date shall not release
Parent or any Borrower from any liability for failure to satisfy one or
more of the applicable conditions contained in Section 4 or 5). The
Administrative Agent will give Parent, the Company, each existing
Subsidiary Borrower and each Bank prompt written notice of the occurrence
of the Effective Date.
12.11 Headings Descriptive. The headings of the several sections
--------------------
and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Agreement.
12.12 Amendment or Waiver. (a) Neither this Agreement nor any
-------------------
other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party
thereto
-125-
(except as otherwise provided in Section 12.02) and the Required Banks (or
the Required Secured Parties in the case of a change, waiver, discharge or
termination with respect to a Collateral Document to the extent provided
therein), provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank)
(with Obligations being directly affected thereby), (i) extend the final
scheduled maturity of any Loan or Revolving Note, or reduce the rate or
extend the time of payment of interest or Fees thereon, or reduce the
principal amount thereof, (ii) release all or substantially all of the Col-
lateral (except as expressly provided in the Collateral Documents) under
all the Collateral Documents, provided that such release of Collateral may
--------
be effected by only the Required Banks if at the time of such release the
Company's Indebtedness shall be rated at least BBB- Senior Implied by S&P
or Baa3 Senior Implied by Moody's, (iii) amend, modify or waive any pro-
vision of this Section 12.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of
the Required Banks, additional extensions of credit pursuant to this Agree-
ment may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Revolving Loan
Commitments are included on the Effective Date) or (v) except as set forth
in Section 8.02, 8.04(ix) or 12.17(a), consent to the assignment or trans-
fer by any Borrower of any of its rights and obligations under this
Agreement (although any Subsidiary Borrower may, at its request and with
the consent of the Required Banks, otherwise cease to be a Subsidiary
Borrower hereunder so long as no Default or Event of Default exists and all
Loans incurred by such Subsidiary Borrower are repaid in full; provided
--------
further, that no such change, waiver, discharge or termination shall (x)
-------
increase the Revolving Loan Commitment of any Bank over the amount thereof
then in effect without the consent of such Bank (it being understood that
waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute an increase of the Revolving Loan Commit-
ment of any Bank, and that an increase in the available portion of any
Revolving Loan Commitment of any Bank shall not constitute an increase in
the Revolving Loan Commitment of such Bank), (y) without the consent of the
Administrative Agent, amend, modify or waive any provision of Section 11 or
any other provision as same relates to the rights or obligations of the
Administrative Agent and (z) without the consent of the Collateral Agent,
amend, modify or waive any provision relating to the rights or obligations
of the Collateral Agent.
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(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated
by clauses (i) through (v), inclusive, of the first proviso to Section
12.12(a), the consent of the Required Banks is obtained but the consent of
one or more of such other Banks whose consent is required is not obtained,
then the Company shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either
clauses (A) or (B) below, to either (A) replace each such non-consenting
Bank or Banks with one or more Replacement Banks pursuant to Section 1.14
so long as at the time of such replacement, each such Replacement Bank
consents to the proposed change, waiver, discharge or termination or (B)
terminate such non-consenting Bank's Revolving Loan Commitment and repay
all outstanding Loans of such Bank in accordance with Sections 2.02(b)
and/or 3.01(iv), provided that, unless the Revolving Loan Commitments are
--------
terminated, and Loans repaid, pursuant to preceding clause (B) are
immediately replaced in full at such time through the addition of new Banks
or the increase of the Revolving Loan Commitments and/or outstanding Loans
of existing Banks (who in each case must specifically consent thereto),
then in the case of any action pursuant to preceding clause (B) the
Required Banks (determined before giving effect to the proposed action)
shall specifically consent thereto, provided further, that in any event the
----------------
Company shall not have the right to replace a Bank, terminate its Revolving
Loan Commitment or repay its Loans solely as a result of the exercise of
such Bank's rights (and the withholding of any required consent by such
Bank) pursuant to the second proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein (including,
--------
without limitation, in Sections 1.11, 1.12, 3.04, 11.06 and 12.01) shall
survive the execution, delivery and termination of this Agreement and the
Revolving Notes and the making and repayment of the Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its
-----------------
Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to
the extent that a transfer of Loans pursuant to this Section 12.14 would,
at the time of such transfer, result in increased costs under Section 1.11,
1.12 or 3.04 from those being charged by the respective Bank prior to such
transfer, then the Borrowers shall not be obligated to pay such increased
costs (although the Borrowers shall be obligated to pay any other increased
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costs of the type described above resulting from changes after the date of
the respective transfer).
12.15 Application of Gaming Regulations. Parent, the Company,
---------------------------------
each Subsidiary Borrower and the Banks acknowledge that (i) the
consummation of the transactions contemplated by the Credit Documents is
subject to the Gaming Regulations (and Parent, the Company and each
Subsidiary Borrower represent and warrant that all requisite approvals
thereunder have been duly obtained) and (ii) the exercise of remedies under
the Collateral Documents with respect to the Collateral will be subject to
the Gaming Regulations.
12.16 Confidentiality. (a) Subject to the provisions of clause
---------------
(b) of this Section 12.16, each Bank agrees that it will use its best
effort not to disclose without the prior consent of the Company (other than
to its employees, auditors or counsel or to another Bank if the Bank or
such Bank's holding or parent company in its sole discretion determines
that any such party should have access to such information) any information
with respect to Parent or any of its Subsidiaries which is now or in the
future furnished pursuant to this Agreement or any other Credit Document
and which is designated by the Company to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a)
--------
as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or
ruling applicable to such Bank, and (e) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Revolving Notes or Revolving Loan Commitments
or any interest therein by such Bank, provided, that such prospective
--------
transferee executes an agreement with such Bank containing provisions
substantially identical to those contained in this Section.
(b) Each Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to Parent or
any of its Subsidiaries (including, without limitation, any nonpublic
customer informa-
-128-
tion regarding the creditworthiness of Parent and its Subsidiaries).
12.17 Miscellaneous. (a) Notwithstanding anything to the
-------------
contrary contained in this Agreement, the Required Banks may consent to a
corporate reorganization of Parent and its Subsidiaries, which corporate
reorganization may include the transfer of one or more Subsidiaries of the
Company as direct Subsidiaries of Parent. In connection with any such
corporate reorganization, the Required Banks may, at their option, require
that Parent or one or more of its Subsidiaries become direct borrowers with
respect to the Obligations. In addition, any necessary amendments or
supplements to this Agreement or the other Credit Documents to effect such
corporate reorganization, including to preserve the perfection and priority
of the Liens created under the Collateral Documents and retaining the
benefits of the Guarantees, may be made with consent of the Required Banks.
(b) Each of the Banks hereby acknowledges that the law firms of
Vargas & Bartlett, Norris, McLaughlin & Marcus and Saiber Schlesinger Satz
& Goldstein have jointly represented the Banks and the Credit Parties in
connection with certain of the local real estate and/or gaming matters
related to the transactions contemplated by this Agreement. Each of the
Banks further acknowledges that such dual representation may give rise to a
conflict of interest under the Rules of Professional Conduct under the laws
of the States of New Jersey and Nevada. In that such connection, the
Administrative Agent, on behalf (and with the authority) of the Banks and
at the request of such law firms, signed certain waivers in the forms of
Exhibits R-1, R-2 and R-3, respectively to the Original 5-Year Credit
Agreement. Each of the Banks understands the contents of such waivers and
acknowledges that such waivers remain in effect.
Section 12.18. Certain Agreements with Respect to Existing
-------------------------------------------
Indentures. (a) The Borrowers agree that they shall not incur or suffer
----------
to exist at any time any Debt (as defined in the 10-7/8% Senior
Subordinated Notes Indenture) pursuant to clause (a) of the first paragraph
of Section 1008 of the 10-7/8% Senior Subordinated Notes Indenture, except
that (x) Debt pursuant to this Agreement and the 5-Year Credit Agreement
shall be justified as outstanding pursuant to said clause (a) and (y) other
Debt in an aggregate outstanding principal amount not to exceed
$768,000,000 less the sum of (a) the then Total Revolving Loan Commitment
(or if greater, the Total Outstandings at such time) and (b) the
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Total 5-Year Revolving Loan Commitment (or, if greater, the Total 5-Year
Outstandings at such time) may be outstanding at any time pursuant to said
clause (a). For purposes of determining compliance with the 10-7/8% Senior
Subordinated Notes Indenture, all incurrences of Loans will be deemed
incurred pursuant to clause (a) of the first paragraph of Section 1008 of
the 10-7/8% Senior Subordinated Notes Indenture. The Borrowers represent
and warrant that all Indebtedness incurred under this Agreement shall be
permitted to be incurred and remain outstanding pursuant to the 10-7/8%
Senior Subordinated Notes Indenture, and the Borrowers hereby also covenant
and agree that they shall not take any action with respect to the
incurrence of any Indebtedness (including under this Agreement) which is
inconsistent with this Section 13.18(a). This clause (a) shall cease to be
of further force or effect at such time as all 10-7/8% Senior Subordinated
Notes have been repaid in full and the provisions of Section 1008 of the
10-7/8% Senior Subordinated Notes Indenture are no longer effective.
(b) The Borrowers agree that they (x) shall not incur or suffer
to exist at any time any Debt (as defined in the 8-3/4% Senior Subordinated
Notes Indenture) pursuant to clause (a) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, except that up to
$125,000,000 of outstanding Debt incurred from time to time pursuant to
this Agreement may be justified as outstanding pursuant to said clause (a)
and up to $450,000,000 (plus the amount of all reductions to the Total
Revolving Loan Commitment after the Effective Date so long as the Debt
outstanding under this Agreement does not exceed the Total Revolving Loan
Commitment as so reduced) of Debt outstanding from time to time pursuant to
the 5-Year Credit Agreement may be justified as having been incurred
pursuant to said clause (a) and (y) shall not incur or suffer to exist at
any time more than $25,000,000 of outstanding Debt (other than pursuant to
this Agreement) pursuant to clause (f) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, thereby leaving at
least $25,000,000 under said clause (f) to justify outstanding Debt
pursuant to this Agreement. For purposes of determining compliance with
the 8-3/4% Senior Subordinated Notes Indenture for all incurrences of Loans
under this Agreement, up to $125,000,000 of Loans incurred under this
Agreement will be deemed incurred pursuant to clause (a) of the first
paragraph of Section 1008 of the 8-3/4% Senior Subordinated Notes Indenture
and up to $25,000,000 of Loans incurred under this Agreement will be deemed
incurred pursuant to clause (f) of the first paragraph of such Section
1008. The Borrowers
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represent and warrant that all Indebtedness incurred under this Agreement
shall be permitted to be incurred and remain outstanding pursuant to the 8-
3/4% Senior Subordinated Notes Indenture, and the Borrowers hereby also
covenant and agree that they shall not take any action with respect to the
incurrence of any Indebtedness (including under this Agreement) which is
inconsistent with this Section 12.18(b). This clause (b) shall cease to be
of further force or effect at such time as all 8-3/4% Senior Subordinated
Notes have been repaid in full and the provisions of Section 1008 of the 8-
3/4% Senior Subordinated Notes Indenture are no longer effective.
SECTION 13. Parent Guaranty.
---------------
13.01 The Guaranty. In order to induce the Administrative Agent
------------
and Banks to enter into this Agreement and to extend credit hereunder and
in recognition of the direct benefits to be received by Parent from the
proceeds of the Loans, Parent hereby agrees with the Administrative Agent
and the Banks as follows: Parent hereby unconditionally and irrevocably
guarantees as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, by acceleration or otherwise, of
any and all of the Guaranteed Obligations of the Borrowers to the
Administrative Agent and the Banks. If any or all of the Guaranteed
Obligations of the Borrowers to the Administrative Agent and the Banks
becomes due and payable hereunder, Parent unconditionally promises to pay
such indebtedness to the Administrative Agent and the Banks, or order, on
demand, together with any and all reasonable expenses which may be incurred
by the Administrative Agent or the Banks in collecting any of the
Guaranteed Obligations.
13.02 Bankruptcy. Additionally, Parent unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrowers to the Administrative Agent and the Banks whe-
ther or not due or payable by the Borrowers upon the occurrence in respect
of any Borrowers of any of the events specified in Section 9.05, and
unconditionally and irrevocably promises to pay such Guaranteed Obligations
to the Administrative Agent or the Banks, as the case may be, or order, on
demand, in Dollars.
13.03 Nature of Liability. The liability of Parent hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrowers whether executed by Parent, any
other Guarantor, any other guarantor or by any other party, and the
liability of Parent
-131-
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by any Borrower or by any other party (other than
for misappropriation of funds by the respective Bank), or (b) any other
continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of any
Borrower, or (c) any payment on or in reduction of any such other guaranty
or undertaking, or (d) any dissolution, termination or increase, decrease
or change in personnel by any Borrower, or (e) any payment made to the
Administrative Agent or the Banks on the indebtedness which the Administra-
tive Agent or such Banks repay to such Borrower pursuant to court order in
any bankruptcy, reorganization, arrangement, moratorium or other debtor re-
lief proceeding, and Parent waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
13.04 Independent Obligation. The obligations of Parent
----------------------
hereunder are independent of the obligations of any other Guarantor, any
other guarantor or any Borrower, and a separate action or actions may be
brought and prosecuted against Parent whether or not action is brought
against any other Guarantor, any other guarantor or any Borrower and
whether or not any other Guarantor, any other guarantor or any Borrower be
joined in any such action or actions. Parent waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by any
Borrower or other circumstance which operates to toll any statute of
limitations as to such Borrower shall operate to toll the statute of
limitations as to Parent.
13.05 Authorization. Parent authorizes the Administrative Agent
-------------
and the Banks without notice or demand (except (i) as shall be required by
applicable statute and cannot be waived and (ii) for any consents of the
respective Credit Parties required by the terms of the respective Credit
Documents), and without affecting or impairing its liability hereunder,
from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate
or alter, any of the Guaranteed Obligations (including any increase or
decrease in the rate of interest thereon), any security therefor, or
any liability incurred directly or indirectly in respect thereof, and
the Parent Guaranty herein made shall apply to the Guaranteed
Obligations as so changed, extended, renewed or altered;
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(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
any Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of any Borrower to its creditors
other than the Administrative Agent and the Banks;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrowers to the Administrative
Agent and the Banks regardless of what liability or liabilities of
Parent or the Borrowers remain unpaid; and/or
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements.
13.06 Reliance. It is not necessary for the Administrative
--------
Agent or the Banks to inquire into the capacity or powers of Parent or its
Subsidiaries or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Guaranteed Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
13.07 Subordination. Any of the indebtedness of the Borrowers
-------------
relating to the Guaranteed Obligations now or hereafter owing to Parent is
hereby subordinated to the Guar
-133-
anteed Obligations of the Borrowers owing to the Administrative Agent and
the Banks, provided that payment may be made by any Borrower on any such
indebtedness relating to the Guaranteed Obligations owing to Parent so long
as the same is not prohibited by this Agreement and provided further, that
----------------
if the Administrative Agent so requests at a time when an Event of Default
exists, all such indebtedness relating to the Guaranteed Obligations of the
Borrowers to Parent shall be collected, enforced and received by Parent for
the benefit of the Banks and be paid over to the Administrative Agent on
behalf of the Administrative Agent and the Banks on account of the Guaran-
teed Obligations of the Borrowers to the Administrative Agent and the
Banks, but without affecting or impairing in any manner the liability of
Parent under the other provisions of this Parent Guaranty. Prior to the
transfer by Parent of any note or negotiable instrument evidencing any of
the indebtedness relating to the Guaranteed Obligations of the Borrowers to
Parent, Parent shall mark such note or negotiable instrument with a legend
that the same is subject to this subordination.
13.08 Waiver. (a) Parent waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require the
Administrative Agent or the Banks to (i) proceed against any Borrower, any
other Guarantor, any other guarantor or any other party, (ii) proceed
against or exhaust any security held from any Borrower, any other Guar-
antor, any other guarantor or any other party or (iii) pursue any other
remedy in the Administrative Agent's or the Banks' power whatsoever. Pare-
nt waives any defense based on or arising out of any defense of any
Borrower, any other Guarantor, any other guarantor or any other party other
than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of any
Borrower, any other Guarantor, any other guarantor or any other party, or
the unenforceability of the Guaranteed Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any Borrower
other than payment in full of the Guaranteed Obligations. The
Administrative Agent and the Banks may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the
Banks by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale
is permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and the Banks may have against any Borrower or any
other party, or any security, without affecting or impairing in any way the
liability of Parent hereunder except to the extent the Guaranteed Obliga
-134-
tions have been paid. Parent waives any defense arising out of any such
election by the Administrative Agent and the Banks, even though such elec-
tion operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of Parent against any Borrower or any
other party or any security.
(b) Parent waives all presentments, demands for performance,
protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this Parent Guaranty, and notices of the existence, creation
or incurring of new or additional Guaranteed Obligations. Parent assumes
all responsibility for being and keeping itself informed of the Borrowers'
financial condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the Guaranteed Obligations and the nature, scope
and extent of the risks which Parent assumes and incurs hereunder, and
agrees that the Administrative Agent and the Banks shall have no duty to
advise Parent of information known to them regarding such circumstances or
risks.
-135-
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/s/ William McCalmont
-------------------------
Title: Vice President &
with a copy to the same Treasurer
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: /s/ William McCalmont
--------------------------
Title: Vice President &
with a copy to the same Treasurer
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 By: /s/ William McCalmont
address to the attention -----------------------
of the Corporate Secretary Title: Assistant Secretary
By: HARRAH'S NEW JERSEY, INC.,
a general partner
By: /s/ William McCalmont
------------------------
Title: Assistant Secretary
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: /s/ Mary Kay Coyle
-------------------------
Title: Vice President
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: /s/ Gregory L. Batson
---------------------------
Title: Vice President
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: /s/ Paul Chakmak
-----------------------
Title: Vice President
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: /s/ David Cawrse
-----------------------
Title: Vice President
c/o Credit Lyonnais, CREDIT LYONNAIS CAYMAN ISLAND
Atlanta Agency BRANCH
303 Peachtree Street
Suite 4400
Atlanta, Georgia 30308 By: /s/ David Cawrse
Tel: (404) 524-3700 -----------------------
Fax: (404) 584-5249 Title: Vice President
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: /s/ Edith Lim
------------------------------
Title: Vice President
By: /s/ Charles W. Reed
------------------------------
Title: Senior Vice President
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: /s/ John Sullivan
---------------------------
Title: Joint General Mngr.
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: /s/ John E. Ball
Attention: Ashley Crabtree ------------------------------
Title: Senior Vice President
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: /s/ Donald J. Schubert
Attention: Donald L. Schubert ------------------------------
Title: Vice President
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: /s/ Y. Kawamura
---------------------------
Title: Joint General Mngr.
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: /s/ Scott L. Faber
Attention: Scott Faber ----------------------------
Title: Vice President
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: /s/ Bernardo E. Correa-Henschke
Attention: Jay Schwartz ---------------------------------
Title: Vice President & Mngr.
Atlanta Agency THE BANK OF NOVA SCOTIA
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308 By: /s/ F.C.H. Ashby
Tel: (404) 877-1500 -------------------------------
Fax: (404) 888-8998 Title: Senior Manager Loan
Attention: F.C.H. Ashby Operations
(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: Dhuane Stephens By: /s/ Dhuane Stephens
---------------------------
Title: Vice President
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: /s/ Stuart M. Schulman
Attention: Stuart Schulman ---------------------------
Title: Senior Vice President
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: /s/ Douglas W. Thornsberry
Fax: (314) 466-6499 -------------------------------
Attention: Doug Thornsberry Title: Assistant Vice President
One Peachtree Center THE DAIWA BANK, LIMITED
Suite 4420
303 Peachtree Street
Atlanta, Georgia 30303 By: /s/ Lauren P. Carrigan
Tel: (404) 524-6544 --------------------------
Fax: (404) 523-7983 Title: Asst. Vice President
Attention: Terry Herron
By: /s/ Diane M. Rhoades
-------------------------
Title: Executive Officer
4894 Poplar Avenue FIRST AMERICAN NATIONAL BANK
Memphis, Tennessee 38117
Tel: (901) 762-5688
Fax: (901) 762-5665 By: /s/ Elizabeth Vaughn
Attention: David May ------------------------
Title: Vice President
165 Madison Avenue FIRST TENNESSEE BANK NATIONAL
Memphis, Tennessee 38101 ASSOCIATION
Tel: (901) 523-4444
Fax: (901) 523-4267
Attention: Steve Wade By: /s/ James H. Moore, Jr.
-------------------------------
Title: Vice President
One Ninety One Peachtree THE INDUSTRIAL BANK OF JAPAN,
Tower LIMITED
191 Peachtree Street
Suite 3600
Atlanta, Georgia 30303-1757 By: /s/ Shusai Nagai
-----------------------
Tel: (404) 524-8770 Title: General Manager
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: /s/ Denise Killen
--------------------------------
Title: Vice President
Georgia-Pacific Center THE SANWA BANK, LIMITED,
Suite 4750 ATLANTA AGENCY
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Tel: (404) 586-8809 By: /s/ Virginia C. Mahoney
Fax: (404) 589-1629 ---------------------------
Attention: Virginia Mahoney Title: Vice President
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: /s/ Clare C. Jones
Attention: Claire Jones --------------------------
Title: Asst. Vice President
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: /s/ Frank E. Meigs, III
----------------------------
Title: Senior Vice President
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: /s/ Patricia Loret de Mola
----------------------------
Title: Senior Vice President
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: /s/ Alan Bookspan
---------------------------
Title: Vice President
By: /s/ Sol Battenelli
---------------------------
Title: Vice President
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:/s/ Jeff French
---------------------------
Title: Vice President
By:/s/ L.T Osborne
---------------------------
Title: Group Vice President
6000 Poplar Avenue THIRD NATIONAL BANK
Suite 145
Memphis, Tennessee 38119
Tel: (901) 766-7561
Fax: (901) 766-7565 By:/s/ Carol Yochem
Attention: Carol Yochem ------------------------------
Title: Group Vice President
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:/s/ Louis Ballero
------------------------------
Title:Senior Vice President
SCHEDULE I
----------
REVOLVING LOAN COMMITMENTS
--------------------------
Revolving Loan
Bank Commitment
---- ------------
Bankers Trust Company $ 11,500,000
The Bank of New York $ 8,500,000
CIBC Inc. $ 8,500,000
Credit Lyonnais, Atlanta Agency $ 8,500,000
First Interstate Bank of California $ 8,500,000
The Long-Term Credit Bank of Japan,
Limited, New York Branch $ 8,500,000
NationsBank of Georgia, N.A. $ 8,500,000
Societe Generale $ 8,500,000
The Sumitomo Bank, Limited, New York Branch $ 7,500,000
Bank of America National Trust and Savings
Association $ 6,500,000
The Bank of Nova Scotia $ 6,500,000
The Industrial Bank of Japan, Limited $ 6,000,000
The Mitsubishi Trust & Banking Corp. $ 6,000,000
The Tokai Bank, Limited, New York Branch $ 6,000,000
The Sanwa Bank, Limited,
Atlanta Agency $ 5,000,000
Midlantic Bank, N.A. $ 4,000,000
United States National Bank of Oregon $ 4,000,000
Westdeutsche Landesbank Girozentrale,
New York Branch $ 3,500,000
ABN Amro Bank N.V. $ 3,000,000
The Boatmen's National Bank of St. Louis $ 3,000,000
First American National Bank $ 3,000,000
First Tennessee Bank National Association $ 3,000,000
The Nippon Credit Bank, Ltd.,
Los Angeles Agency $ 3,000,000
The Daiwa Bank, Limited $ 2,000,000
Deposit Guaranty National Bank $ 2,000,000
Girocredit Bank A.G. Der
Sparkassen, Grand Cayman Island Branch $ 2,000,000
Third National Bank $ 2,000,000
First National Bank of Commerce $ 1,000,000
------------
TOTAL: $150,000,000
============
SCHEDULE II
BANKER'S TRUST CREDIT FACILITY
AUDITS AND EXTENSION OF STATUES AND OF 6/30/95:
1) IRS Examination of 1987-2/7/90 for Holiday Corporation and
Subsidiaries contains five issues that were retained by Harrah's
Entertainment, Inc. (HEI), formerly The Promus Companies Incorporated,
in their settlement agreement with Bass, PLC and Holiday Corporation
that was entered into March 21, 1995. Final resolution of these
issues are expected to result in either a refund or no material taxes
being paid by HEI. The statue on these years has been extended until
December 31, 1996.
2) IRS Examination of 1987-89 for Marina Associates, a wholly owned
partnership of HEI subsidiaries, has been concluded and all issues
resolved with no material taxes assessed. The statute on these years
has been extended until December 31, 1995.
3) IRS Examination of 1990-91 for The Promus Companies Incorporated is
completed and a protest of all unagreed issues is currently being
prepared by the company. HEI will retain, in connection with the
Spinoff of the Promus Hotel Corporation, only those issues related to
its remaining business and it is expected that resolution of all
unagreed issues will result in no material adverse effect to the
company. The statute on these years has been extended until March 31,
1996.
4) IRS Examination of 1990-91 for Marina Associates has been concluded
and a protest of all unagreed issues is currently being prepared by
the company. It is expected that the resolution of the unagreed
issues will result in no material adverse effect to the company. The
statute on these years has been extended until March 31, 1996.
The IRS Examination of 1992-93 for the Promus Companies and Marina
Associates has just begun. Additionally, various state audits for years
1990-94 are in process. HEI will retain, in connection with the Spinoff of
the Promus Hotel Corporation, only those issues related to its remaining
business and there are no known adjustments at this time which would result
in material taxes being paid by the company.
SCHEDULE III
------------
GAMING SUBSIDIARIES
Jurisdiction Percentage Date of
of of Incorpo- FEIN
Name Incorporation Ownership ration Number
---- ------------- --------- ------ ------
Harrah's Operating Company, Inc.1 2 Delaware 100% 08/08/83 75-1941623
Harrah's1 2 Nevada 100% 01/21/80 62-1076292
Harrah's-Holiday Inns of New Jersey, Inc. New Jersey 100% 09/19/79 62-1071040
Harrah's Laughlin, Inc.1 2 Nevada 100% 07/10/87 88-0230282
Harrah's Management Company Nevada 100% 04/07/83 88-0187173
Harrah's Pty. Limited Australia 100% 04/21/75 00-0000000
Harrah's Reno Holding Company, Inc.1 2 Nevada 100% 02/23/88 62-1440237
Harrah's Club1 2 Nevada 100% 06/07/71 88-0111242
Harrah's Atlantic City, Inc.1 2 New Jersey 100% 02/13/79 93-0737757
Harrah's New Jersey, Inc.1 2 New Jersey 100% 09/13/78 22-2219370
Harrah South Shore Corporation California 100% 10/02/59 88-0074793
Harrah's of Jamaica, Ltd. Jamaica 100% 07/12/85 00-0000000
Harrah's Alabama Corporation Nevada 100% 09/09/93 88-0308027
Harrah's Alberta Investment Corporation Alberta 100% 04/05/95 N/A
Harrah's Arizona Corporation Nevada 100% 01/26/93 62-1523519
Harrah's Arkansas Casino Corporation Nevada 100% 08/02/94 88-0323397
Harrah's Arkansas Casino Management Company Nevada 100% 08/02/94 88-0323395
Harrah's Biloxi Bay, Inc. Nevada 100% 01/07/93 62-1523549
Harrah's California Corporation Nevada 100% 02/02/94 88-0313169
Harrah's California SSR Corporation Nevada 100% 10/12/94 88-0329526
Harrah's Casino Saskatchewan Corporation Saskatchewan 100% 03/12/93
Harrah's Colorado Investment Corporation Nevada 100% 06/23/93 88-0307572
Harrah's Colorado Management Company Nevada 100% 06/23/93 88-0307574
Harrah's Colorado Standby Corporation Nevada 100% 11/10/93 88-0315104
Harrah's Connecticut Corporation Nevada 100% 01/25/94 88-0314254
Harrah's Huntington Corporation W. Virginia 100% 03/03/95 62-1597986
Harrah's Illinois Corporation Nevada 100% 12/18/91 88-0284653
Harrah's Indiana Investment Corporation Nevada 100% 09/09/93 88-0284653
Harrah's Indiana Management Corporation Nevada 100% 09/09/93 88-0308082
Harrah's Interactive Entertainment Company Nevada 100% 09/21/94 88-0326037
Harrah's Interactive Investment Company Nevada 100% 09/21/94 88-0326036
Harrah's Kenner Corporation Louisiana 100% 01/27/93 72-1230858
Harrah's Las Vegas, Inc.1 2 Nevada 100% 03/21/68 88-0116377
Harrah's Maine Corporation Nevada 100% 11/12/93 88-0313173
Harrah's Maryland Heights Corporation Nevada 100% 07/30/93 88-0306276
Harrah's Mexico Holding Company Nevada 100% 4/11/95 88-0337475
Harrah's Michigan Corporation Nevada 100% 06/15/93 88-0307990
Harrah's Minnesota Corporation Nevada 100% 10/20/92 88-0292681
Harrah's Mississippi Corporation Nevada 100% 07/13/92 88-0292679
GAMING SUBSIDIARIES
Jurisdiction Percentage Date of
of of Incorpo- FEIN
Name Incorporation Ownership ration Number
---- ------------- --------- ------ ------
Harrah's New Orleans Investment Company Nevada 100% 05/21/93 62-1534757
Harrah's New Orleans Management Company Nevada 100% 05/21/93 62-1534758
Harrah's New Zealand, Inc. Nevada 100% 02/28/92 88-0292682
Harrah's North Carolina Casino Corporation North Carolina 100% 12/22/94 56-1926496
Harrah's Nova Scotia Casino Limited Nova Scotia 100% 07/25/94 N\A
Harrah's-North Kansas City Corporation Nevada 100% 02/23/93 88-0297483
Harrah's Ohio Corporation Nevada 100% 11/02/94 88-0328475
Harrah's Ohio Management Company Nevada 100% 11/02/94 88-0328474
Harrah's Pennsylvania Development Co. Nevada 100% 05/18/94 88-0320301
Harrah's Pittsburgh Investment Company Nevada 100% 05/26/94 88-0319078
Harrah's Pittsburgh Management Company Nevada 100% 06/08/94 88-0320269
Harrah's Regina Casino Corporation Nevada 100% 09/09/94
Harrah's Shreveport Investment Company, Inc. Nevada 100% 04/23/92 88-0292677
Harrah's Shreveport Management Company, Inc. Nevada 100% 04/23/92 88-0292678
Harrah's Southwest Michigan Casino Corporation Nevada 100% 04/06/95 88-0337476
Harrah's Tunica Corporation Nevada 100% 08/10/92 88-0292680
Harrah's Vicksburg Corporation Nevada 100% 07/13/92 88-0292320
Harrah's Virginia Corporation Nevada 100% 12/01/94 88-0330522
Harrah's Washington Corporation Nevada 100% 02/03/94 88-0313171
Harrah's West Virginia Corporation W. Virginia 100% 03/03/95 62-1597966
Harrah's Wheeling Corporation Canada 100% 04/29/94 88-0317848
Harrah's Windsor, Inc. Nevada 100% 06/23/93 00-0000000
Ziwa Missouri Corporation Nevada 100% 10/11/93 88-0307991
1 Material Subsidiary
2 Guarantor
GAMING SUBSIDIARIES
DATE LOCATION SUBSIDIARY SERVING OWNERSHIP CONTROL
FORMED NAME AND ADDRESS OF PROPERTY AS PARTNER % % OTHER PARTNER
------ ---------------- ----------- ------------------- ------ ----- -------------
9/14/78 Marina Associates1 2 Atlantic City, Harrah's Atlantic City, Inc. 48.65% 48.65% N/A
Joint Venture New Jersey Harrah's New Jersey, Inc. 51.34% 51.34% N/A
1725 Brigantine Blvd.
Atlantic City, NJ 08401
2/28/92 Des Plaines Development North Joilet, IL Harrah's Illinois Corporation 80% 80% John Q. Hammons
Limited Partnership (Riverboats) 20%
150 N. Scott St.
Joilet, IL 60431
11/10/92 Red River Entertainment of Shreveport, LA Harrah's Shreveport 99% 99% ET River
Shreveport Partnership (Riverboat) Investment Company, Inc. Corp.
in Commendam
401 Market Street
Suite 800
Shreveport, LA 71101
11/29/93 Harrah's Jazz Company New Orleans, LA Harrah's New Orleans 52.93% 33.3% Grand Palais Casino,
365 Canal Street Investment Company Inc.- 33.3% (GP)
One Canal Plaza, Suite 2800 New Orleans
New Orleans, LA 70130 Louisiana
Development
Corporation - 13.77%
(GP)
12/17/93 Harrah's Jazz Finance New Orleans, LA Harrah's Jazz Company 100% 100%
Corp. (a Delaware corp.)
5/27/94 Harrah's Forest City Station Square Harrah's Pittsburgh 75% 75% Forest City
Associates Pittsburgh, PA Investment Company Square, Inc.
1023 Cherry Rd. 25%
Memphis, TN 38117
3/28/95 Tunica Partners L.P. Harrah's Casino Harrah's Tunica Corporation 83% 83% Belsino L.P. 17%
(a MS limited partnership) Tunica, MS
1 Material Subsidiary
2 Guarantor
Schedule IV
-----------
Existing Indebtedness
(a/o 6/30/95)
(AMOUNTS IN THOUSANDS)
Undiscounted Principal Debt Outstanding
Corporate
10 7/8% Senior Subordinated Notes, maturity 2002 $200,000
8 3/4% Senior Subordinated Notes, maturity 2000 200,000
10% Oveson Notes, Maturities to 1998 1,699
8 3/8% Notes, maturity 1996 227
Casino Entertainment
L & M Walter Note, 15% maturities to 2001 6,842
-----
Total Principal Debt Outstanding $408,768
--------
Guarantees
Turfway 25,000
Ak-Chin 26,150
Upper Skagit 22,800
Executive Life Insurance GIC 7,338*
NOLDC 16,000
------
Total Guarantees $97,288
-------
Letters of Credit
Date Expiration
Issued Bank Amount Purpose Date**
------ ---- ------ ------- ----------
13 Jun 90 NationsBank $ 225 Embassy Suites 16 Oct 93
10 Mar 93 1st Commercial Bank 8 ESI Rochester-Twn of Brighton 14 Mar 94
22 Oct 93 FNBC 100 Risk Mgt-LA workman's comp(Embassy) 22 Oct 94
------
Total mix (NOT under
Revolver of Credit Facility) 333
LC Guarantees:
11 Feb 94 Hibernia 5,000 Shreveport constr permit 11 Feb 95
-----
Total Misc including guar's $5,333
Total Letters of Credit $5,333
------
*Amount a/o 5-31-95. It is not expected to change significantly if at all in June.
Schedule V
-------- -
GAMING JOINT VENTURES
DATE LOCATION SUBSIDIARY SERVING OWNERSHIP CONTROL
FORMED NAME AND ADDRESS OF PROPERTY AS PARTNER % % OTHER PARTNER
------ -- -------- -- ------- - - ----- -------
12/15/95 ECRP Partnership Holds $4,687,150 Harrah's Colorado 17.284% 17.284% (Other GP's): G.
1023 Cherry Rd. Promissory Note in Investment Corporation Schneider Holdings Co.
Memphis, TN 38117 connection with (GP) 37.284%
financing of Roger W. Mason 24.691%
Colorado casinos Arthur A. Johnson, Jr.
3.457%
Dean A. Gilbert 2.469%
James W. Neese 3.704%
Curtis Rochell 8.642%
Marian H. Rochelle
2.469%
12/17/93 Eagle Gaming, L.P. Central City Harrah's Colorado 15.316% 15.316% Wild West Development
1023 Cherry rd. Black Hawk Casinos Investment Corporation (GP) 47.523%
Memphis, TN 38117 (LP) Limited Partners as
Harrah's Colorado 1% 1% set forth in the
Standby Corporation Partnership Agreement
(LP) comprising ownership
of remaining 36.17%
11/7/94 Interactive Entertainment N/A Harrah's Interactive 20% 20% SGI Holding
Limited Sky Games Investment Company Corporation Ltd.
Note: This is a Bermuda (In-flight gaming) (Shareholder) 80%
exempted company.
Sodak Gaming, Inc. N/A Harrah's Club 13.8% 13.8%
Sky City Limited Auckland, Harrah's Club 20% 20% Brierley Investments
New Zealand Limited
SCHEDULE VI
-----------
INSURANCE
---------
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
N/R 06/01/94- ASTER AST-012 DEDUCTIBLE REIMBURSEMENT AL-$1,000,000
6/1/95 GL-$1,900,00 XS
$100,000
A IX 06/01/94 OLD REPUBLIC MWTB-17541 PRIMARY AUTO. LIAB. (FR.) $1MM
6/1/95
A IX 06/01/94 OLD REPUBLIC HW2Y-54644 PRIMARY GEN. LIAB. (FR.) $2MM
6/1/95
A IX 06/01/94 WESTCHESTER CUA1002950 UMBRELLA LIABILITY $10MM XS $2MM GL
6/1/95 $10MM XS $1MM AL
A 06/01/93- ROYAL RHA007844 UMBRELLA LIABILITY $10MM XS $10MM
6/1/94
06/01/94- UMBRELLA LIABILITY $29M XS $20MM
6/1/95 AGRICULTURAL EXC-7637120 ($17MM P/O $29MM)
A++XIV FEDERAL EXC76377120 ($7MM P/O $29MM)
A X PLANET NEA1486491 ($5MM P/0 $29MM)
06/01/94- UMBRELLA LIABILITY $50MM XS $50MM
A XI 6/1/95 TRANSAMERICA XSX9180443 ($20MM P/O $50M)
A++ XV1 FEDERAL 79412206 ($18MM P/O $50MM)
AETNA 11XN24221994SCA ($12MM P/O $50MM)
N/R 06/01/94- XL UMBO1565 UMBRELLA LIABILITY $50MM XS $100MM
6/1/97
N/R 06/01/94- ACE PRMU750/4 UMBRELLA LIABILITY $150MM XS $150MM
6/1/97
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
06/01/94- ASTER AST-011 EXCESS WORKERS' COMP-SIR $400K XS $100K
6/1/95 STATES AND DEDUCTIBLE STATES
A IX 06/01/94- OLD REPUBLIC OMWC1025220 WORKERS' COMPENSATION (A/O COVERAGE A-$500K
6/1/95 STATES) INSURED STATES STAT XS $2MM
DEDUCTIBLE STATES COVERAGE B-
FEES, RML'S SURCHARGES $2MM/$2MM/$2MM
A+ XV 06/01/94- GENERAL REINSU CCN-2540-C EXCESS WORKERS' COMP. -INS. $1.5MM XS 500K
6/1/95 STATES EXCESS EMPLOYERS LIAB. $1.5MM XS 500M
A+ XV 06/01/94- GENERAL REINSU X121558 EXCESS WORKERS' COMP. -SIR $9.5MM XS 500K
6/1/95 STATES EXCESS EMPLOYERS LIAB $1.5MM XS 500K
A XIII 06/01/94- FIREMAN'S FUND XLX1655725 EXCESS WORKERS' COM.P -SIR STATE XS $10MM
6/1/95 STATES
N/A 07/01/94- SELF-INSURANCE WORKERS' COMP STATUTORY
7/1/95 NEVADA SELF
INSURANCE STATE ASSESSMENT
A+ XV 07/01/94- NATIONAL UNION 440-2638 CRIME $5MM
7/1/95 CREDIT CARD FORGERY $100K
SAFE DEPOSIT BOX $25K BOX\$2.5MM AGG
A- KI 07/01/94- FEDERAL 81323859A CRIME $5MM XS $5MM
7/1/95
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
03/01/95 ALL RISK PROPERTY-HARRAH'S $20.0MM
3/1/96 THE HOME MPL9107106 CASINOS $12.5MM P/O $20MM
A- XIV U.S. FIRE CO. 2441814642 $2.5MM P/O $20MM
A++ XV LEXINGTON U861082 $2.5MM P/O $20MM
A- VIII COMMONWEALTH GIC2058A $2.5MM P/O $20MM
03/01/95- ALL RISK PROPERTY-HARRAH'S $30MM XS $20MM
A-VIII 3/1/95 WESTCHESTER FXL421605 CASINOS $3.3MM P/O $20MM
A-XI ROYAL INS. RHD401368 $5MM P/O $20.MM
A VIII ALL INS. CO. CHF313006 $5MM P/O $20.MM
A VI ESSEX INS. MSP0472 $5MM P/O $20.MM
A-XV TRAVELER'S RTXJCMB204TJ94895 $2MM P/O $20.MM
A XIV FIREMAN'S FUND XSP2387190 $2MM P/O $20.MM
A-XIV U.S. FIRE 2441814642 $2.5MM P/O $20MM
A XVI AGRICULTURAL CPP8815644 $1MM P/O $20MM
N/A CTR RE U861083 $2.25MM P/O $20MM
N/A ABIELLE RE U861083 $1.5MM P/O $20MM
N/A MCR RE U861083 $.45MM P/O $20MM
3/1/1995- ALL RISK PROPERTY-HARRAH'S $60MM X/S $50MM
A XVI 3/1/96 AGRICULTURAL CPP8815645 CASINOS $3MM P/O $50MM
A+ XIV FEDERAL INS. 6585170 $10MM P/O $50MM
A-XIV U.S. FIRE 244J81642 $5MM P/O $50MM
A XIV FIREMAN'S FUND XSP2387191 $5MM P/O $50MM
A-VIII WESTCHESTER FXL421605 $6.6MM P/O $50MM
A-XV TRAVELER'S KTXJCMB204T394895 $5MM P/O $50MM
N/A CTR RE U861084 $4.5MM P/O $50MM
N/A ABIELLE RE U861084 $3MM P/O $50MM
N/A MCR RE U861084 $.9MM P/O $50MM
A-VII COMMONWEALTH CIC2059 $7.5MM P/O $50MM
N/A LONDON U861084 $9.5MM P/O $50MM
N/A 03/01/95- IRI 31363249 ALL RISK PROPERTY-HARRAH'S $640MM X/S $110MM
3/1/96 CASINOS
03/01/95- EXCESS DIC $150MM X/S $110MM
3/1/96 YASUDA PEP10345J04 HARRAH'S CASINOS $5MM P/O $110MM
A+XV WAUSAU 206603056560 $75MM P/O $110MM
A KIV FIREMAN'S FUND XSP2387192 $40MM P/O $110MM
SCHEDULE VII
HARRAH'S ENTERTAINMENT
INSURANCE POLICY SCHEDULE
BEST'S POLICY POLICY LIMIT OF
RATING PERIOD COMPANY NUMBER COVERAGE LIABILITY
------ ------ ------- ------ -------- ---------
A+ XIV FEDERAL INS. 6585170 $15MM P/O $110MM
A- XV TRAVELER'S RTXJCMB204T394895 $15MM P/O $110MM
A-XI 03/01/95- RELIANCE NZCC107532 BOILER & MACHINERY-HARRAH'S $100MM
3/1/96 CASINOS (INCLUDING RIVERBOATS)
N/R 03/01/95- AIG AV4794793 EXCESS AIRCRAFT/NON-OWNED $100MM
3/1/96 LIAB HARRAH'S (CHARTER FLIGHTS)
A+ 03/01/95- CIGNA AMFS0027545 AIRCRAFT HULL & LIABILITY $100MM
3/1/96 N290PC
N293PC
N/R 03/01/95- PROVIDENT LIFE GTA1503 TRAVEL ACCIDENT $250K
3/1/96
SCHEDULE VII
-------- ---
EXISTING LIENS
None
SCHEDULE VIII
-------- ----
Hotel Subsidiaries
Jurisdiction of Percentage
Incorporation or of
Name Organization Ownership
Promus Hotels, Inc. Delaware 100%
Buckleigh, Inc. Delaware 100%
Compass, Inc. Tennessee 100%
EJP Corporation Delaware 100%
Suite Life, Inc. Delaware 100%
Embassy Development Corporation Delaware 100%
ES/PA, L.P. [Pennsylvania] 98%
Embassy Equity Development Corporation Delaware 100%
Embassy Syracuse Development Corporation Delaware 100%
Southfield Hotel Management, Inc. Florida 100%
Embassy Memphis Corporation Tennessee 100%
Embassy Pacific Equity Corporation Delaware 100%
Embassy Suites Club No. 1, Inc. Kansas 100%
Embassy Suites Club No. Three, Inc. Louisiana 100%
Jurisdiction of Percentage
Incorporation or of
Name Organization Ownership
Embassy Suites De Mexico, S.A., De C.V. Mexico 97%
Embassy Suites (Isla Verde), Inc. Delaware 100%
Embassy Suites (Puerto Rico), Inc. Delaware 100%
Embassy Vacation Resorts, Inc. Delaware 100%
EPAM Corporation Delaware 100%
ESI Development, Inc. Tennessee 100%
ESI Mortgage Development Corporation Delaware 100%
ESI Mortgage Development Corporation II Delaware 100%
E.S. Philadelphia Airport Joint Venture Pennsylvania 90%
GOL (Heathrow), Inc. Tennessee 100%
Granada Royale Hometel-West, a limited partnership Arizona 50.003%
Granada Royale Hometel-Tucson, a limited partnership Arizona 65%
Hampton Inns, Inc. Delaware 100%
GOL Columbia Limited Partnership Maryland 99%
Old Town Hotel Corporation Delaware 100%
Pacific Hotels, Inc. Tennessee 100%
Promus Hotel Services, Inc. Delaware 100%
Jurisdiction of Percentage
Incorporation or of
Name Organization Ownership
Promus Hotels Florida, Inc. Delaware 100%
EXHIBIT 10(4)
FIRST AMENDMENT TO MASTER COLLATERAL AGREEMENT
----------------------------------------------
FIRST AMENDMENT TO MASTER COLLATERAL AGREEMENT
(this "Amendment"), dated as of June 30, 1995,
among THE PROMUS COMPANIES INCORPORATED (which will be
renamed "Harrah's Entertainment, Inc.") ("Parent"), EMBASSY
SUITES, INC. (which will be renamed "Harrah's Operating
Company, 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
Page 2
"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, 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
Page 3
words "for the Banks party to the Credit Agreements" in
lieu thereof.
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");".
Page 4
3. The fourth and sixth recitals (in each case,
before giving effect to this Amendment) of the Master
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.
Page 5
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 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
Page 6
outstanding principal amount of the Secured Interest
Rate Protection Obligations."
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.
Page 7
"Required 364-Day Banks" shall mean the "Required
Banks" under, and as defined in, the 364-Day Credit
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.
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:
Page 8
"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, applicable Gaming Regulations and
Bankruptcy Laws), the following rights of the Admin-
istrative 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 Agreement, (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 protection 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
Page 9
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 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
Page 10
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."
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.
Page 11
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.
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
Page 12
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 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:
Page 13
"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, 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.
Page 14
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 Collateral Grantor, the Administrative Agents and the
Collateral Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the
Collateral Agent, (ii) the Restatement Effective Date
under, and as defined in, the 5-year Credit Agreement
occurs and (iii) the Effective Date under, and as defined
in, the 364-Day Credit Agreement occurs.
46. From and after the First Amendment Effective
Date, all references in the Master Collateral Agreement and
each of the Credit Documents to the Master Collateral
Agreement shall be deemed to be references to the Master
Collateral Agreement as amended hereby.
Page 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:
THE PROMUS COMPANIES INCORPORATED
By /s/ Rebecca W. Ballou
-------------------------------
Title: Assistant Secretary
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
-------------------------------
Title: Assistant Secretary
HARRAH'S
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
HARRAH'S CLUB
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
Page 16
HARRAH'S RENO HOLDING
COMPANY, INC.
By /s/ Rebecca W. Ballou
------------------------------
Title: Authorized Signatory
HARRAH'S LAS VEGAS, INC.
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
HARRAH'S LAUGHLIN, INC.
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
MARINA ASSOCIATES,
a New Jersey partnership
By HARRAH'S NEW JERSEY, INC.,
a New Jersey corporation, a
General Partner
By /s/ Rebecca Ballou
----------------------------
Title: Authorized Signatory
Page 17
By HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation, a
General Partner
By /s/ Rebecca W. Ballou
----------------------------
Title: Authorized Signatory
HARRAH'S ATLANTIC CITY, INC.
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
HARRAH'S NEW JERSEY, INC.
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
Administrative Agent:
--------------------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------------
Title: Vice President
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------------
Title: Vice President
EXHIBIT 10(5)
FIRST AMENDMENT TO PARENT PLEDGE AGREEMENT
------------------------------------------
FIRST AMENDMENT TO PARENT PLEDGE AGREEMENT (this
"Amendment"), dated as of June 30, 1995, among THE
PROMUS COMPANIES INCORPORATED (which will be renamed
"Harrah's Entertainment, Inc.") (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, Embassy Suites, Inc. (which
will be renamed "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, 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,
Page 2
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 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, Embassy Suites, Inc.
(which will be renamed "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
Page 3
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"), 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"
appearing therein and inserting the words "Administrative
Page 4
Agents" in lieu thereof and (ii) deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
4. The introductory paragraph of Section 1 of
the Parent Pledge Agreement is hereby amended by deleting
the words "Credit Agreement" appearing therein and
inserting the words "5-Year Credit Agreement or 364-Day
Credit Agreement, as the case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1 of the Parent Pledge Agreement is
hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. The definition of "Parent" appearing in
Section 1 of the Parent Pledge Agreement is hereby deleted
in its entirety.
7. Section 1 of the Parent Pledge Agreement is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Pledgor" shall have the meaning provided in the
introductory paragraph of this Agreement.
Page 5
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
8. Section 7 of the Parent Pledge Agreement is
hereby amended by (i) deleting the words "Credit Agreement"
appearing in clause (x) of the first sentence thereof and
inserting the following words in lieu thereof:
"5-Year Credit Agreement and Section 8.03(viii)
of the 364-Day Credit Agreement";
(ii) deleting the words "Credit Agreement" appearing in
clause (y) of the first sentence thereof and inserting the
following words in lieu thereof:
"5-Year Credit Agreement and Section 8.03 of the
364-Day Credit Agreement";
and (iii) deleting the word "the" appearing immediately
before the words "Credit Agreement" appearing in the third
sentence thereof and inserting the word "each" in lieu
thereof.
9. Section 8 of the Parent Pledge Agreement is
hereby amended by deleting the second parenthetical
appearing in the second paragraph thereof and inserting the
following parenthetical in lieu thereof:
"(which notice (i) shall be deemed to have been
given if the respective Administrative Agent
gives notice pursuant to Section 10.03 of the 5-
Year Credit Agreement or Section 9.03 of the 364-
Day Credit Agreement and (ii) shall not be
required if an Event of Default specified in
Section 10.05 of the 5-Year Credit Agreement or
Section 9.05 of the 364-Day Credit Agreement has
occurred)".
Page 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
Page 7
shall be deemed to be references to the Parent Pledge
Agreement as amended hereby.
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
-------
THE PROMUS COMPANIES INCORPORATED
By /s/ Rebecca W. Ballou
-------------------------------
Title: Assistant Secretary
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------------
Title: Vice President
EXHIBIT 10(6)
FIRST AMENDMENT TO COMPANY/SUB PLEDGE AGREEMENT
-----------------------------------------------
FIRST AMENDMENT TO COMPANY/SUB PLEDGE AGREEMENT
(this "Amendment"), dated as of June 30, 1995, among
EMBASSY SUITES, INC. (which will be renamed "Harrah's
Operating Company, 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, The Promus Companies Incorporated (which
will be renamed "Harrah's Entertainment, Inc.") ("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");
Page 2
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 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:
Page 3
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:
"WHEREAS, The Promus Companies Incorporated
(which will be renamed "Harrah's Entertainment, Inc.")
("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");".
Page 4
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 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.
Page 5
"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.
"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"
Page 6
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "either" in lieu
thereof.
12. Each Pledgor hereby reaffirms its
obligations under the Company/Sub Agreement and the grant
by such Pledgor of the Security Interests contemplated
thereby.
13. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Company/Sub Pledge Agreement.
14. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Pledgors, the General Collateral Agent and the
Nevada Collateral Sub-Agent.
15. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
16. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Pledgor, the General Collateral Agent and the Nevada
Collateral Sub-Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the
General Collateral Agent, (ii) the Restatement Effective
Date under, and as defined in, the 5-Year Credit Agreement
occurs and (iii) the Effective Date under, and as defined
in, the 364-Day Credit Agreement occurs.
17. From and after the First Amendment Effective
Date, all references in the Company/Sub Pledge Agreement
and each of the Credit Documents to the Company/Sub Pledge
Agreement shall be deemed to be references to the
Company/Sub Pledge Agreement as amended hereby.
Page 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:
--------
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
--------------------------------
Title: Assistant Secretary
HARRAH'S
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
HARRAH'S CLUB
By /s/ Rebecca W. Ballou
-------------------------------
Title: Authorized Signatory
General Collateral Agent:
------------------------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------------
Title: Vice President
EXHIBIT 10(7)
FIRST AMENDMENT TO SECURITY AGREEMENT
-------------------------------------
FIRST AMENDMENT TO SECURITY AGREEMENT (this
"Amendment"), dated as of June 30, 1995, among
EMBASSY SUITES, INC. (which will be renamed "Harrah's
Operating Company, 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, The Promus Companies Incorporated (which
will be renamed "Harrah's Entertainment, Inc.") ("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
Page 2
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 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, The Promus Companies Incorporated
(which will be renamed "Harrah's Entertainment, Inc.")
("Parent"), the Company, each Subsidiary Borrower
Page 3
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");".
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
Page 4
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. Section 1(a) of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or 364-Day Credit Agreement, as the case may be,"
in lieu thereof.
5. The definition of "Bank" appearing in
Section 1(b) of the Security Agreement is hereby deleted in
its entirety and the following new definition is inserted
in lieu thereof:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
6. The definition of Credit Agreement appearing
in Section 1(b) of the Security Agreement is hereby deleted
in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
7. The definition of "Permitted Personalty
Liens" appearing in Section 1(b) of the Security Agreement
is hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing in clause (2) thereof and inserting the word
"any" in lieu thereof.
8. Section 1(b) of the Security Agreement is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
"Collateral Grantors" shall have the meaning
provided in the introductory paragraph of this
Agreement.
Page 5
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Parent" shall have the meaning provided in the
first recital of this Agreement.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
9. Section 2 of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
in clause (g) thereof and inserting the word "each" in lieu
thereof.
10. Section 6(a) of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent" each
place such word appear therein and inserting the word "any"
in lieu thereof in each such place.
11. Section 17(b) of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "either" in lieu thereof.
12. Section 17(c) of the Security Agreement is
hereby deleted in its entirety and the following new
Section 17(c) is inserted in lieu thereof:
"(c) In addition to the foregoing clauses (a) and
(b) of this Section 17, upon the sale of a Casino
Property pursuant to Section 9.02 of the 5-Year Credit
Page 6
Agreement and Section 8.02 of the 364-Day Credit
Agreement or the incurrence of Existing Casino Non-
Recourse Financing with respect thereto pursuant to
Section 9.04(ix) of the 5-Year Credit Agreement and
Section 8.04(ix) of the 364-Day Credit Agreement, the
personal property and fixtures relating solely to such
Casino Property shall automatically be released from
the Lien and security interest created by this
Agreement in accordance with Article VII of the Master
Collateral Agreement."
13. Section 22(b) of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Section 12.16 of the 364-Day Credit
Agreement" in lieu thereof.
14. Section 25 of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" each place
such words appear therein and inserting the word "each" in
lieu thereof in each such place.
15. Section 27 of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or Section 7.12(b) of the 364-Day Credit
Agreement" in lieu thereof.
16. Each Collateral Grantor hereby reaffirms its
obligations under the Security Agreement and the grant by
such Collateral Grantor of the Security Interests
contemplated thereby.
17. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Security Agreement.
18. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Collateral Grantors and the Collateral Agent.
Page 7
19. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
20. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Collateral Grantor and the Collateral Agent shall have
signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
21. From and after the First Amendment Effective
Date, all references in the Security Agreement and each of
the Credit Documents to the Security Agreement shall be
deemed to be references to the Security Agreement as
amended hereby.
Page 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:
-------------------
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
--------------------------
Title: Assistant Secretary
HARRAH'S
By /s/ Rebecca W. Ballou
-------------------------
Title: Authorized Signatory
HARRAH'S CLUB
By /s/ Rebecca W. Ballou
-------------------------
Title: Authorized Signatory
HARRAH'S RENO HOLDING
COMPANY, INC.
By /s/ Rebecca W. Ballou
-------------------------
Title: Authorized Signatory
Page 9
HARRAH'S LAS VEGAS, INC.
By /s/ Rebecca W. Ballou
-------------------------
Title: Authorized Signatory
HARRAH'S LAUGHLIN, INC.
By /s/ Rebecca W. Ballou
-------------------------
Title: Authorized Signatory
MARINA ASSOCIATES,
a New Jersey partnership
By HARRAH'S NEW JERSEY, INC.,
a New Jersey corporation, a
General Partner
By /s/ Rebecca W. Ballou
-----------------------
Title: Authorized Signatory
By HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation, a
General Partner
By /s/ Rebecca W. Ballou
----------------------
Title: Authorized Signatory
HARRAH'S ATLANTIC CITY, INC.
By /s/ Rebecca W. Ballou
----------------------
Title: Authorized Signatory
Page 10
HARRAH'S NEW JERSEY, INC.
By /s/ Rebecca W. Ballou
----------------------
Title: Authorized Signatory
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------
Title: Vice President
EXHIBIT 10(8)
Recording Requested By Atlantic County, New Jersey
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 June 30, 1995, among EMBASSY SUITES, INC. (which will
be renamed "Harrah's Operating Company, 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, The Promus Companies Incorporated (which
will be renamed "Harrah's Entertainment, Inc.") ("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 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 and recorded July 26, 1993 in Mortgage Book 5093
page 1 in the County Clerk's Office for Atlantic County,
New Jersey (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;
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, The Promus Companies Incorporated
(which will be renamed "Harrah's Entertainment, Inc.")
("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");".
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 inserting the words "the 5-year Credit
Agreement or the 364-Day Credit Agreement, as the case may
be" in lieu thereof.
8. The definition of "Administrative Agent"
appearing in Section 1.01(a) of the Mortgage is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Mortgage.
9. The definition of "Bank" appearing in
Section 1.01(a) of the Mortgage is hereby amended by
deleting the word "First" appearing therein and inserting
the word "Second" in lieu thereof.
10. The definition of "Credit Agreement"
appearing in Section 1.01(a) of the Mortgage is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Mortgage.
11. The definition of "Interest Rate" appearing
in Section 1.01(a) of the Mortgage is hereby deleted in its
entirety and the following new definition is inserted in
lieu thereof:
"Interest Rate" is defined in Section 1.08(c) of
the 5-Year Credit Agreement.
12. Section 1.01(a) of the Mortgage is hereby
further amended by inserting in the appropriate
alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Mortgage.
"5-Year Banks" shall have the meaning provided in
the first recital of this Mortgage.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Mortgage.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Mortgage.
"364-Day Banks" shall have the meaning provided
in the second recital of this Mortgage.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Mortgage.
13. Section 1.01(b) of the Mortgage is hereby
amended by deleting the word "the" appearing immediately
before the words "Credit Agreement" appearing therein and
inserting the word "each" in lieu thereof.
14. Section 2.07(a) of the Mortgage is hereby
amended by deleting the words "Administrative Agent has"
and inserting the words "Administrative Agents have" in
lieu thereof.
15. Section 2.13(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit and Section
9 of the 364 Day Credit Agreement" in lieu thereof.
16. Section 2.14(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" and
inserting the words "Credit Agreements" in lieu thereof.
17. Section 3.06 of the Mortgage is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the word "Mortgagee" in
lieu thereof.
18. Section 4.01(a) of the Mortgage is hereby
amended by (i) inserting the words ", Competitive Bid
Loans" immediately following the words "Revolving Loans"
appearing therein and (ii) deleting the words "Credit
Agreement" each place such words appear therein and
inserting the words "respective Credit Agreements" in lieu
thereof in each such place.
19. Section 4.01(b) of the Mortgage is hereby
amended by deleting the amount "$650,000,000" appearing
therein and inserting the amount "$750,000,000" in lieu
thereof.
20. Section 4.03 of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 12.01 of the 364-Day Credit Agreement" in lieu
thereof.
21. Section 5.01(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 9 of the 364-Day Credit Agreement" in lieu
thereof.
22. Section 5.01(b) of the Mortgage is hereby
amended by deleting the word "the" appearing immediately
before the words "Credit Agreement" each place such word so
appears therein and inserting the word "each" in lieu
thereof in each such place.
23. Section 7.01(b) of the Mortgage is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
24. Each Mortgagor hereby reaffirms to the
Secured Parties each of their representations, warranties,
covenants and agreements set forth in the Mortgage with the
same force and affect as if each were separately stated
herein and made as of the date hereof.
25. Each Mortgagor hereby ratifies, affirms,
reaffirms, acknowledges, confirms and agrees that the
Mortgage, as modified by this Amendment, and each and every
other document and/or instrument which evidences and/or
secures payment of the Secured Obligations represent the
valid, enforceable and collectible obligations of the
Mortgagors and further acknowledges there are no existing
claims, defenses, personal or otherwise, or rights of set-
off whatsoever with respect to any of the aforementioned
instruments and/or documents known to the Mortgagors and
further acknowledges and represents that, to the
Mortgagors' knowledge no event has occurred and no
condition exists which would constitute a default under the
Mortgage or this Amendment either with or without notice or
lapse of time or both.
26. Each Mortgagor hereby waives, discharges and
releases forever any and all existing claims and defenses,
personal or otherwise, and rights of set-off known to each
of them that it may have against the Mortgagee or any other
Secured Party or which might affect the enforceability by
the Mortgagee or any other Secured Party of their various
rights and remedies under the Mortgage or any of the other
Credit Documents.
27. Except as specifically modified herein, all
of the terms and provisions of the Mortgage and all other
documents executed by the parties hereto or binding upon
the parties hereto in connection with the Mortgage are
ratified and reaffirmed by the parties hereto, and are
incorporated herein by reference, the Mortgagors
specifically acknowledging the validity and enforceability
thereof.
28. The Mortgagors agree to pay all costs in
connection herewith, including, but without limitation,
recordation and filing fees, taxes, reasonable attorneys'
fees and expenses charges for title examination and title
insurance premiums. The Mortgagors further agree to have
the Mortgagee's existing title insurance policy updated at
its sole cost and expense, the endorsement thereto being
subject to the Mortgagee's approval to the extent provided
in the 5-Year Credit Agreement and the 364-Day Credit
Agreement.
29. The liens, security interests, assignments
and other rights evidenced by the Mortgage are hereby
renewed, extended and modified to secure the Secured
Obligations.
30. This Amendment is limited as specified and
other than the specific amendments contained herein shall
not constitute an amendment, modification or waiver of, or
otherwise affect, in any way, any other provisions of the
Mortgage. As modified hereby, the Mortgage is ratified and
confirmed in all respects.
31. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Mortgagors and the Mortgagee.
32. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
the Mortgagors and the Mortgagee shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Mortgagee, (ii) the Restatement
Effective Date under, and as defined in, the 5-Year Credit
Agreement occurs and (iii) the Effective Date under, and as
defined in, the 364-Day Credit Agreement occurs.
33. From and after the First Amendment Effective
Date, all references in the Mortgage and each of the Credit
Documents to the Mortgage shall be deemed to be references
to the Mortgage as amended hereby.
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Mortgagors:
----------
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Assistant Secretary
MARINA ASSOCIATES
By: HARRAH'S ATLANTIC CITY, INC.
general partner
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
By: HARRAH'S NEW JERSEY, INC.
general partner
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Mortgagee:
---------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------
Name: Mary Kay Coyle
Title: Vice President
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Assistant Secretary
of EMBASSY SUITES, INC., and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires:
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S ATLANTIC CITY, INC., and that as such officer,
being duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S NEW JERSEY, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires:
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of June, 1995, before me, the
undersigned officer, personally appeared Mary Kay Coyle
(residing at 411 E. 53rd St., NY, NY), personally known
and acknowledged himself to me to be a Vice President of
BANKERS TRUST COMPANY, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ REGINA A. CRESPO
--------------------------
Notary Public
My Commission Expires:
Apply Stamp/Seal:
REGINA A. CRESPO
Notary Public, State of New York
No. 01CR5033610
Qualified in Queens County
Commission Expires: Sept. 26, 1996
EXHIBIT 10(9)
Recording Requested By Washoe County, Nevada
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED OF TRUST,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
----------------------------------------------------------
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED
OF TRUST, ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT (this
"Amendment"), dated as of June 30, 1995, among EMBASSY
SUITES, INC. (which will be renamed "Harrah's Operating
Company, Inc.") (the "Company"), HARRAH'S LAUGHLIN, INC.
("Laughlin"), HARRAH'S RENO HOLDING COMPANY, INC. ("Reno",
and together with the Company and Laughlin, the "Grantors"
and each a "Grantor"), HARRAH'S ("Harrah's"), HARRAH'S CLUB
("Harrah's Club") and HARRAH'S LAS VEGAS, INC. ("Harrah's
Las Vegas", and together with Harrah's and Harrah's Club,
the "Collateral Grantors" and each a "Collateral Grantor")
and BANKERS TRUST COMPANY, not in its individual capacity
but solely as Collateral Agent (the "Beneficiary"). Except
as otherwise defined herein, capitalized terms used herein
and defined in the Deed of Trust referred to below shall be
used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, The Promus Companies Incorporated (which
will be renamed "Harrah's Entertainment, Inc.") ("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 Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Grantors and the
Collateral Grantors executed and delivered to the Trustee
and the Beneficiary a Deed of Trust, Leasehold Deed of
Trust, Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22,
1993 and recorded July 26, 1993 as Document No. 695035 in
the Official Records of Washoe County, Nevada (as amended,
modified or supplemented from time to time, the "Deed of
Trust");
WHEREAS, the parties hereto wish to amend the
Deed of Trust to provide that the 364-Day Banks and the
364-Day Administrative Agent are secured on a pari passu
---- -----
basis with the 5-Year Banks, the 5-Year Administrative
Agent and the Secured Interest Rate Protection Creditors
with respect to the Collateral and to renew and extend the
liens granted therein;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Grantors and Collateral Grantors shall have executed and
delivered this Amendment to the Beneficiary; and
WHEREAS, the parties hereto wish to amend the
Deed of Trust as herein provided.
NOW, THEREFORE, it is agreed:
1. The first recital of the Deed of Trust is
hereby deleted in its entirety and the following two new
recitals are inserted in lieu thereof:
"WHEREAS, The Promus Companies Incorporated
(which will be renamed "Harrah's Entertainment, Inc.")
("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");".
2. Each reference to the word "Embassy"
contained in the Deed of Trust shall be deemed deleted and
the words "the Company" shall be inserted in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
deleting (i) the words "Credit Agreement" appearing therein
and inserting the words "respective Credit Agreements" in
lieu thereof, (ii) the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (iii) the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
4. The seventh recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
5. The eighth recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
(i) deleting the words "Administrative Agent" appearing
therein and inserting the words "Administrative Agents" in
lieu thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
6. The first paragraph of the granting clauses
of the Deed of Trust is hereby amended by deleting the
words "Credit Agreement" appearing therein and inserting
the words "Credit Agreements" in lieu thereof.
7. Section 1.01(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing in the second sentence of the introductory
paragraph thereof and inserting the words "the 5-year
Credit Agreement or the 364-Day Credit Agreement, as the
case may be" in lieu thereof.
8. The definition of "Administrative Agent"
appearing in Section 1.01(a) of the Deed of Trust is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Deed of Trust.
9. The definition of "Banks" appearing in
Section 1.01(a) of the Deed of Trust is hereby amended by
deleting the word "First" appearing therein and inserting
the word "Second" in lieu thereof.
10. The definition of "Credit Agreement"
appearing in Section 1.01(a) of the Deed of Trust is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Deed of Trust.
11. The definition of "Interest Rate" appearing
in Section 1.01(a) of the Deed of Trust is hereby deleted
in its entirety and the following new definition is
inserted in lieu thereof:
"Interest Rate" is defined in Section 1.08(c) of
the 5-Year Credit Agreement.
12. Section 1.01(a) of the Deed of Trust is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this Deed of
Trust.
"5-Year Banks" shall have the meaning provided in
the first recital of this Deed of Trust.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Deed of Trust.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this Deed of
Trust.
"364-Day Banks" shall have the meaning provided
in the second recital of this Deed of Trust.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Deed of Trust.
13. Section 1.01(b) of the Deed of Trust is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "each" in lieu thereof.
14. Section 2.07(a) of the Deed of Trust is
hereby amended by deleting the words "Administrative Agent
has" and inserting the words "Administrative Agents have"
in lieu thereof.
15. Section 2.13(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
and Section 9 of the 364 Day Credit Agreement" in lieu
thereof.
16. Section 2.14(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement" and
inserting the words "Credit Agreements" in lieu thereof.
17. Section 3.06 of the Deed of Trust is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the word "Beneficiary" in
lieu thereof.
18. Section 4.01(a) of the Deed of Trust is
hereby amended by (i) inserting the words ", Competitive
Bid Loans" immediately following the words "Revolving
Loans" appearing therein and (ii) deleting the words
"Credit Agreement" each place such words appear therein and
inserting the words "respective Credit Agreements" in lieu
thereof in each such place.
19. Section 4.01(b) of the Deed of Trust is
hereby amended by deleting the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
20. Section 4.03 of the Deed of Trust is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 12.01 of the 364-Day Credit Agreement" in lieu
thereof.
21. Section 5.01(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Section 9 of the 364-Day Credit Agreement" in
lieu thereof.
22. Section 5.01(b) of the Deed of Trust is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" each place
such word so appears therein and inserting the word "each"
in lieu thereof in each such place.
23. Section 7.01(b) of the Deed of Trust is
hereby amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
24. Each Grantor and each Collateral Grantor
hereby reaffirms to the Secured Parties each of their
representations, warranties, covenants and agreements set
forth in the Deed of Trust with the same force and affect
as if each were separately stated herein and made as of the
date hereof.
25. Each Grantor and each Collateral Grantor
hereby ratifies, affirms, reaffirms, acknowledges, confirms
and agrees that the Deed of Trust, as modified by this
Amendment, and each and every other document and/or
instrument which evidences and/or secures payment of the
Secured Obligations represent the valid, enforceable and
collectible obligations of the Grantors and Collateral
Grantors and further acknowledges there are no existing
claims, defenses, personal or otherwise, or rights of set-
off whatsoever with respect to any of the aforementioned
instruments and/or documents known to the Grantors and
Collateral Grantors and further acknowledges and represents
that, to the Grantors' and Collateral Grantors' knowledge
no event has occurred and no condition exists which would
constitute a default under the Deed of Trust or this
Amendment either with or without notice or lapse of time or
both.
26. Each Grantor and each Collateral Grantor
hereby waives, discharges and releases forever any and all
existing claims and defenses, personal or otherwise, and
rights of set-off known to each of them that it may have
against the Beneficiary or any other Secured Party or which
might affect the enforceability by the Beneficiary or any
other Secured Party of their various rights and remedies
under the Deed of Trust or any of the other
Credit Documents.
27. Except as specifically modified herein, all
of the terms and provisions of the Deed of Trust and all
other documents executed by the parties hereto or binding
upon the parties hereto in connection with the Deed of
Trust are ratified and reaffirmed by the parties hereto,
and are incorporated herein by reference, the Grantors and
Collateral Grantors specifically acknowledging the validity
and enforceability thereof.
28. The Grantors agree to pay all costs in
connection herewith, including, but without limitation,
recordation and filing fees, taxes, reasonable attorneys'
fees and expenses charges for title examination and title
insurance premiums. The Grantors further agree to have the
Beneficiary's existing title insurance policy updated at
its sole cost and expense, the endorsement thereto being
subject to the Beneficiary's approval to the extent
provided in the 5-Year Credit Agreement and the 364-Day
Credit Agreement.
29. The liens, security interests, assignments
and other rights evidenced by the Deed of Trust are hereby
renewed, extended and modified to secure the Secured
Obligations.
30. This Amendment is limited as specified and
other than the specific amendments contained herein shall
not constitute an amendment, modification or waiver of, or
otherwise affect, in any way, any other provisions of the
Deed of Trust. As modified hereby, the Deed of Trust is
ratified and confirmed in all respects.
31. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Grantors, the Collateral Grantors and the
Beneficiary.
32. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Grantor, each Collateral Grantor and the Beneficiary
shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including
by way of telecopier) the same to the Beneficiary, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
33. From and after the First Amendment Effective
Date, all references in the Deed of Trust and each of the
Credit Documents to the Deed of Trust shall be deemed to be
references to the Deed of Trust as amended hereby.
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Grantors:
--------
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Assistant Secretary
HARRAH'S LAUGHLIN, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S RENO HOLDING
COMPANY, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Collateral Grantors:
-------------------
HARRAH'S
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S CLUB
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S LAS VEGAS, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Beneficiary:
-----------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------
Name: Mary Kay Coyle
Title: Vice President
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Assistant Secretary
of EMBASSY SUITES, INC., and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: 6/2/96
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S LAUGHLIN, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: 6/2/96
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S RENO HOLDING COMPANY, INC., and that as such
officer, being duly authorized to do so pursuant to its by-
laws or a resolution of its board of directors, executed
and acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: 6/2/96
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S, and that as such officer, being duly authorized
to do so pursuant to its by-laws or a resolution of its
board of directors, executed and acknowledged the foregoing
instrument for the purposes therein contained, by signing
the name of the corporation by himself as such officer as
his free and voluntary act and deed and the free and
voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: 6/2/96
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S CLUB, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: 6/2/96
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S LAS VEGAS, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: 6/2/96
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of June, 1995, before me, the
undersigned officer, personally appeared Mary Kay Coyle
(residing at 411 E. 53rd St. NY, NY), personally known
and acknowledged himself to me to be a Vice President of
BANKERS TRUST COMPANY, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ REGINA A. CRESPO
--------------------------
Notary Public
My Commission Expires:
Apply Stamp/Seal:
REGINA A. CRESPO
Notary Public, State of New York
No. 01CR5033610
Qualified in Queens County
Commission Expires: Sept. 26, 1996
Recording Requested By Clark County, Nevada
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED OF TRUST,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
----------------------------------------------------------
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED
OF TRUST, ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT (this
"Amendment"), dated as of June 30, 1995, among EMBASSY
SUITES, INC. (which will be renamed "Harrah's Operating
Company, Inc.") (the "Company"), HARRAH'S LAUGHLIN, INC.
("Laughlin"), HARRAH'S RENO HOLDING COMPANY, INC. ("Reno",
and together with the Company and Laughlin, the "Grantors"
and each a "Grantor"), HARRAH'S ("Harrah's"), HARRAH'S CLUB
("Harrah's Club") and HARRAH'S LAS VEGAS, INC. ("Harrah's
Las Vegas", and together with Harrah's and Harrah's Club,
the "Collateral Grantors" and each a "Collateral Grantor")
and BANKERS TRUST COMPANY, not in its individual capacity
but solely as Collateral Agent (the "Beneficiary"). Except
as otherwise defined herein, capitalized terms used herein
and defined in the Deed of Trust referred to below shall be
used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, The Promus Companies Incorporated (which
will be renamed "Harrah's Entertainment, Inc.") ("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 Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Grantors and the
Collateral Grantors executed and delivered to the Trustee
and the Beneficiary a Deed of Trust, Leasehold Deed of
Trust, Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22,
1993 and recorded July 26, 1993 in Book 930726 in the
Official Records of Clark County, Nevada (as amended,
modified or supplemented from time to time, the "Deed of
Trust");
WHEREAS, the parties hereto wish to amend the
Deed of Trust to provide that the 364-Day Banks and the
364-Day Administrative Agent are secured on a pari passu
---- -----
basis with the 5-Year Banks, the 5-Year Administrative
Agent and the Secured Interest Rate Protection Creditors
with respect to the Collateral and to renew and extend the
liens granted therein;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Grantors and Collateral Grantors shall have executed and
delivered this Amendment to the Beneficiary; and
WHEREAS, the parties hereto wish to amend the
Deed of Trust as herein provided.
NOW, THEREFORE, it is agreed:
1. The first recital of the Deed of Trust is
hereby deleted in its entirety and the following two new
recitals are inserted in lieu thereof:
"WHEREAS, The Promus Companies Incorporated
(which will be renamed "Harrah's Entertainment, Inc.")
("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");".
2. Each reference to the word "Embassy"
contained in the Deed of Trust shall be deemed deleted and
the words "the Company" shall be inserted in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
deleting (i) the words "Credit Agreement" appearing therein
and inserting the words "respective Credit Agreements" in
lieu thereof, (ii) the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (iii) the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
4. The seventh recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
5. The eighth recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
(i) deleting the words "Administrative Agent" appearing
therein and inserting the words "Administrative Agents" in
lieu thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
6. The first paragraph of the granting clauses
of the Deed of Trust is hereby amended by deleting the
words "Credit Agreement" appearing therein and inserting
the words "Credit Agreements" in lieu thereof.
7. Section 1.01(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing in the second sentence of the introductory
paragraph thereof and inserting the words "the 5-year
Credit Agreement or the 364-Day Credit Agreement, as the
case may be" in lieu thereof.
8. The definition of "Administrative Agent"
appearing in Section 1.01(a) of the Deed of Trust is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Deed of Trust.
9. The definition of "Banks" appearing in
Section 1.01(a) of the Deed of Trust is hereby amended by
deleting the word "First" appearing therein and inserting
the word "Second" in lieu thereof.
10. The definition of "Credit Agreement"
appearing in Section 1.01(a) of the Deed of Trust is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Deed of Trust.
11. The definition of "Interest Rate" appearing
in Section 1.01(a) of the Deed of Trust is hereby deleted
in its entirety and the following new definition is
inserted in lieu thereof:
"Interest Rate" is defined in Section 1.08(c) of
the 5-Year Credit Agreement.
12. Section 1.01(a) of the Deed of Trust is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this Deed of
Trust.
"5-Year Banks" shall have the meaning provided in
the first recital of this Deed of Trust.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Deed of Trust.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this Deed of
Trust.
"364-Day Banks" shall have the meaning provided
in the second recital of this Deed of Trust.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Deed of Trust.
13. Section 1.01(b) of the Deed of Trust is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "each" in lieu thereof.
14. Section 2.07(a) of the Deed of Trust is
hereby amended by deleting the words "Administrative Agent
has" and inserting the words "Administrative Agents have"
in lieu thereof.
15. Section 2.13(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
and Section 9 of the 364 Day Credit Agreement" in lieu
thereof.
16. Section 2.14(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement" and
inserting the words "Credit Agreements" in lieu thereof.
17. Section 3.06 of the Deed of Trust is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the word "Beneficiary" in
lieu thereof.
18. Section 4.01(a) of the Deed of Trust is
hereby amended by (i) inserting the words ", Competitive
Bid Loans" immediately following the words "Revolving
Loans" appearing therein and (ii) deleting the words
"Credit Agreement" each place such words appear therein and
inserting the words "respective Credit Agreements" in lieu
thereof in each such place.
19. Section 4.01(b) of the Deed of Trust is
hereby amended by deleting the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
20. Section 4.03 of the Deed of Trust is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 12.01 of the 364-Day Credit Agreement" in lieu
thereof.
21. Section 5.01(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Section 9 of the 364-Day Credit Agreement" in
lieu thereof.
22. Section 5.01(b) of the Deed of Trust is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" each place
such word so appears therein and inserting the word "each"
in lieu thereof in each such place.
23. Section 7.01(b) of the Deed of Trust is
hereby amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
24. Each Grantor and each Collateral Grantor
hereby reaffirms to the Secured Parties each of their
representations, warranties, covenants and agreements set
forth in the Deed of Trust with the same force and affect
as if each were separately stated herein and made as of the
date hereof.
25. Each Grantor and each Collateral Grantor
hereby ratifies, affirms, reaffirms, acknowledges, confirms
and agrees that the Deed of Trust, as modified by this
Amendment, and each and every other document and/or
instrument which evidences and/or secures payment of the
Secured Obligations represent the valid, enforceable and
collectible obligations of the Grantors and Collateral
Grantors and further acknowledges there are no existing
claims, defenses, personal or otherwise, or rights of set-
off whatsoever with respect to any of the aforementioned
instruments and/or documents known to the Grantors and
Collateral Grantors and further acknowledges and represents
that, to the Grantors' and Collateral Grantors' knowledge
no event has occurred and no condition exists which would
constitute a default under the Deed of Trust or this
Amendment either with or without notice or lapse of time or
both.
26. Each Grantor and each Collateral Grantor
hereby waives, discharges and releases forever any and all
existing claims and defenses, personal or otherwise, and
rights of set-off known to each of them that it may have
against the Beneficiary or any other Secured Party or which
might affect the enforceability by the Beneficiary or any
other Secured Party of their various rights and remedies
under the Deed of Trust or any of the other
Credit Documents.
27. Except as specifically modified herein, all
of the terms and provisions of the Deed of Trust and all
other documents executed by the parties hereto or binding
upon the parties hereto in connection with the Deed of
Trust are ratified and reaffirmed by the parties hereto,
and are incorporated herein by reference, the Grantors and
Collateral Grantors specifically acknowledging the validity
and enforceability thereof.
28. The Grantors agree to pay all costs in
connection herewith, including, but without limitation,
recordation and filing fees, taxes, reasonable attorneys'
fees and expenses charges for title examination and title
insurance premiums. The Grantors further agree to have the
Beneficiary's existing title insurance policy updated at
its sole cost and expense, the endorsement thereto being
subject to the Beneficiary's approval to the extent
provided in the 5-Year Credit Agreement and the 364-Day
Credit Agreement.
29. The liens, security interests, assignments
and other rights evidenced by the Deed of Trust are hereby
renewed, extended and modified to secure the Secured
Obligations.
30. This Amendment is limited as specified and
other than the specific amendments contained herein shall
not constitute an amendment, modification or waiver of, or
otherwise affect, in any way, any other provisions of the
Deed of Trust. As modified hereby, the Deed of Trust is
ratified and confirmed in all respects.
31. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Grantors, the Collateral Grantors and the
Beneficiary.
32. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Grantor, each Collateral Grantor and the Beneficiary
shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including
by way of telecopier) the same to the Beneficiary, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
33. From and after the First Amendment Effective
Date, all references in the Deed of Trust and each of the
Credit Documents to the Deed of Trust shall be deemed to be
references to the Deed of Trust as amended hereby.
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Grantors:
--------
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Assistant Secretary
HARRAH'S LAUGHLIN, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S RENO HOLDING
COMPANY, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Collateral Grantors:
-------------------
HARRAH'S
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S CLUB
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S LAS VEGAS, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Beneficiary:
-----------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------
Name: Mary Kay Coyle
Title: Vice President
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Assistant Secretary
of EMBASSY SUITES, INC., and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S LAUGHLIN, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S RENO HOLDING COMPANY, INC., and that as such
officer, being duly authorized to do so pursuant to its by-
laws or a resolution of its board of directors, executed
and acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S, and that as such officer, being duly authorized
to do so pursuant to its by-laws or a resolution of its
board of directors, executed and acknowledged the foregoing
instrument for the purposes therein contained, by signing
the name of the corporation by himself as such officer as
his free and voluntary act and deed and the free and
voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S CLUB, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S LAS VEGAS, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of June, 1995, before me, the
undersigned officer, personally appeared Mary Kay Coyle
(residing at 411 E. 53rd St., NY, NY), personally known
and acknowledged himself to me to be a Vice President of
BANKERS TRUST COMPANY, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ REGINA A. CRESPO
--------------------------
Notary Public
My Commission Expires:
Apply Stamp/Seal:
REGINA A. CRESPO
Notary Public, State of New York
No. 01CR5033610
Qualified in Queens County
Commission Expires: Sept. 26, 1996
Recording Requested By Douglas County, Nevada
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT,
ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
----------------------------------------------------------
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT,
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT (this
"Amendment"), dated as of June 30, 1995, among EMBASSY SUITES, INC. (which will
be renamed "Harrah's Operating Company, Inc.") (the "Company"), HARRAH'S
LAUGHLIN, INC. ("Laughlin"), HARRAH'S RENO HOLDING COMPANY, INC. ("Reno", and
together with the Company and Laughlin, the "Grantors" and each a "Grantor"),
HARRAH'S ("Harrah's"), HARRAH'S CLUB ("Harrah's Club") and HARRAH'S LAS VEGAS,
INC. ("Harrah's Las Vegas", and together with Harrah's and Harrah's Club, the
"Collateral Grantors" and each a "Collateral Grantor") and BANKERS TRUST
COMPANY, not in its individual capacity but solely as Collateral Agent (the
"Beneficiary"). Except as otherwise defined herein, capitalized terms used
herein and defined in the Deed of Trust referred to below shall be used herein
as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, The Promus Companies Incorporated (which will be renamed
"Harrah's Entertainment, Inc.") ("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 Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced from time to time, the
"364-Day Credit Agreement," and together with the 5-Year Credit Agreement, the
"Credit Agreements");
WHEREAS, in connection with the initial execution of the 5-Year Credit
Agreement, the Grantors and the Collateral Grantors executed and delivered to
the Trustee and the Beneficiary a Deed of Trust, Leasehold Deed of Trust,
Assignment, Assignment of Leases and Rents, Security Agreement and Financing
Statement, dated as of July 22, 1993 and recorded on July 26, 1993 as Document
No. 313309 in the Official Records of Douglas County, Nevada (as amended,
modified or supplemented from time to time, the "Deed of Trust");
WHEREAS, the parties hereto wish to amend the Deed of Trust to provide
that the 364-Day Banks and the 364-Day Administrative Agent are secured on a
pari passu basis with the 5-Year Banks, the 5-Year Administrative Agent and the
---- -----
Secured Interest Rate Protection Creditors with respect to the Collateral and to
renew and extend the liens granted therein;
WHEREAS, it is a condition precedent to the extensions of credit under
the Credit Agreements that the Grantors and Collateral Grantors shall have
executed and delivered this Amendment to the Beneficiary; and
WHEREAS, the parties hereto wish to amend the Deed of Trust as herein
provided.
NOW, THEREFORE, it is agreed:
1. The first recital of the Deed of Trust is hereby deleted in its
entirety and the following two new recitals are inserted in lieu thereof:
"WHEREAS, The Promus Companies Incorporated (which will be renamed
"Harrah's Entertainment, Inc.") ("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");".
2. Each reference to the word "Embassy" contained in the Deed of
Trust shall be deemed deleted and the words "the Company" shall be inserted in
lieu thereof.
3. The fifth recital (before giving effect to this Amendment) of the
Deed of Trust is hereby amended by deleting (i) the words "Credit Agreement"
appearing therein and inserting the words "respective Credit Agreements" in lieu
thereof, (ii) the words "Administrative Agent" appearing therein and inserting
the words "Administrative Agents" in lieu thereof and (iii) the amount
"$650,000,000" appearing therein and inserting the amount "$750,000,000" in lieu
thereof.
4. The seventh recital (before giving effect to this Amendment) of
the Deed of Trust is hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit Agreements" in lieu thereof.
5. The eighth recital (before giving effect to this Amendment) of
the Deed of Trust is hereby amended by (i) deleting the words "Administrative
Agent" appearing therein and inserting the words "Administrative Agents" in lieu
thereof and (ii) deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
6. The first paragraph of the granting clauses of the Deed of Trust
is hereby amended by deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
7. Section 1.01(a) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" appearing in the second sentence of the
introductory paragraph thereof and inserting the words "the 5-year Credit
Agreement or the 364-Day Credit Agreement, as the case may be" in lieu thereof.
8. The definition of "Administrative Agent" appearing in Section
1.01(a) of the Deed of Trust is hereby deleted in its entirety and the following
new definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning provided in the second
recital of this Deed of Trust.
9. The definition of "Banks" appearing in Section 1.01(a) of the
Deed of Trust is hereby amended by deleting the word "First" appearing therein
and inserting the word "Second" in lieu thereof.
10. The definition of "Credit Agreement" appearing in Section 1.01(a)
of the Deed of Trust is hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Credit Agreements" shall have the meaning provided in the second
recital of this Deed of Trust.
11. The definition of "Interest Rate" appearing in Section 1.01(a) of
the Deed of Trust is hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Interest Rate" is defined in Section 1.08(c) of the 5-Year Credit
Agreement.
12. Section 1.01(a) of the Deed of Trust is hereby further amended by
inserting in the appropriate alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the meaning provided in the
first recital of this Deed of Trust.
"5-Year Banks" shall have the meaning provided in the first recital of
this Deed of Trust.
"5-Year Credit Agreement" shall have the meaning provided in the first
recital of this Deed of Trust.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this Deed of Trust.
"364-Day Banks" shall have the meaning provided
in the second recital of this Deed of Trust.
"364-Day Credit Agreement" shall have the meaning provided in the
second recital of this Deed of Trust.
13. Section 1.01(b) of the Deed of Trust is hereby amended by
deleting the word "the" appearing immediately before the words "Credit
Agreement" appearing therein and inserting the word "each" in lieu thereof.
14. Section 2.07(a) of the Deed of Trust is hereby amended by
deleting the words "Administrative Agent has" and inserting the words
"Administrative Agents have" in lieu thereof.
15. Section 2.13(a) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" appearing therein and inserting the words
"5-Year Credit and Section 9 of the 364 Day Credit Agreement" in lieu thereof.
16. Section 2.14(a) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" and inserting the words "Credit
Agreements" in lieu thereof.
17. Section 3.06 of the Deed of Trust is hereby amended by deleting
the words "Administrative Agent" appearing therein and inserting the word
"Beneficiary" in lieu thereof.
18. Section 4.01(a) of the Deed of Trust is hereby amended by (i)
inserting the words ", Competitive Bid Loans" immediately following the words
"Revolving Loans" appearing therein and (ii) deleting the words "Credit
Agreement" each place such words appear therein and inserting the words
"respective Credit Agreements" in lieu thereof in each such place.
19. Section 4.01(b) of the Deed of Trust is hereby amended by
deleting the amount "$650,000,000" appearing therein and inserting the amount
"$750,000,000" in lieu thereof.
20. Section 4.03 of the Deed of Trust is hereby amended by deleting
the words "Credit Agreement" appearing therein and inserting the words "5-Year
Credit Agreement and Section 12.01 of the 364-Day Credit Agreement" in lieu
thereof.
21. Section 5.01(a) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" appearing therein and inserting the words
"5-Year Credit Agreement and Section 9 of the 364-Day Credit Agreement" in lieu
thereof.
22. Section 5.01(b) of the Deed of Trust is hereby amended by
deleting the word "the" appearing immediately before the words "Credit
Agreement" each place such word so appears therein and inserting the word "each"
in lieu thereof in each such place.
23. Section 7.01(b) of the Deed of Trust is hereby amended by
deleting the words "Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
24. Each Grantor and each Collateral Grantor hereby reaffirms to the
Secured Parties each of their representations, warranties, covenants and
agreements set forth in the Deed of Trust with the same force and affect as if
each were separately stated herein and made as of the date hereof.
25. Each Grantor and each Collateral Grantor hereby ratifies,
affirms, reaffirms, acknowledges, confirms and agrees that the Deed of Trust, as
modified by this Amendment, and each and every other document and/or instrument
which evidences and/or secures payment of the Secured Obligations represent the
valid, enforceable and collectible obligations of the Grantors and Collateral
Grantors and further acknowledges there are no existing claims, defenses,
personal or otherwise, or rights of set-off whatsoever with respect to any of
the aforementioned instruments and/or documents known to the Grantors and
Collateral Grantors and further acknowledges and represents that, to the
Grantors' and Collateral Grantors' knowledge no event has occurred and no
condition exists which would constitute a default under the Deed of Trust or
this Amendment either with or without notice or lapse of time or both.
26. Each Grantor and each Collateral Grantor hereby waives,
discharges and releases forever any and all existing claims and defenses,
personal or otherwise, and rights of set-off known to each of them that it may
have against the Beneficiary or any other Secured Party or which might affect
the enforceability by the Beneficiary or any other Secured Party of their
various rights and remedies under the Deed of Trust or any of the other
Credit Documents.
27. Except as specifically modified herein, all of the terms and
provisions of the Deed of Trust and all other documents executed by the parties
hereto or binding upon the
parties hereto in connection with the Deed of Trust are ratified and reaffirmed
by the parties hereto, and are incorporated herein by reference, the Grantors
and Collateral Grantors specifically acknowledging the validity and
enforceability thereof.
28. The Grantors agree to pay all costs in connection herewith,
including, but without limitation, recordation and filing fees, taxes,
reasonable attorneys' fees and expenses charges for title examination and title
insurance premiums. The Grantors further agree to have the Beneficiary's
existing title insurance policy updated at its sole cost and expense, the
endorsement thereto being subject to the Beneficiary's approval to the extent
provided in the 5-Year Credit Agreement and the 364-Day Credit Agreement.
29. The liens, security interests, assignments and other rights
evidenced by the Deed of Trust are hereby renewed, extended and modified to
secure the Secured Obligations.
30. This Amendment is limited as specified and other than the
specific amendments contained herein shall not constitute an amendment,
modification or waiver of, or otherwise affect, in any way, any other provisions
of the Deed of Trust. As modified hereby, the Deed of Trust is ratified and
confirmed in all respects.
31. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Grantors, the Collateral Grantors and the
Beneficiary.
32. This Amendment shall become effective on the date (the "First
Amendment Effective Date") on which (i) each Grantor, each Collateral Grantor
and the Beneficiary shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including by way of
telecopier) the same to the Beneficiary, (ii) the Restatement Effective Date
under, and as defined in, the 5-Year Credit Agreement occurs and (iii) the
Effective Date under, and as defined in, the 364-Day Credit Agreement occurs.
33. From and after the First Amendment Effective Date, all references
in the Deed of Trust and each of the Credit Documents to the Deed of Trust shall
be deemed to be references to the Deed of Trust as amended hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
Grantors:
--------
EMBASSY SUITES, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Assistant Secretary
HARRAH'S LAUGHLIN, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S RENO HOLDING
COMPANY, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Collateral Grantors:
-------------------
HARRAH'S
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S CLUB
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
HARRAH'S LAS VEGAS, INC.
By /s/ Rebecca W. Ballou
-------------------------
Name: Rebecca W. Ballou
Title: Authorized Signatory
Beneficiary:
-----------
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-------------------------
Name: Mary Kay Coyle
Title: Vice President
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Assistant Secretary
of EMBASSY SUITES, INC., and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S LAUGHLIN, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S RENO HOLDING COMPANY, INC., and that as such
officer, being duly authorized to do so pursuant to its by-
laws or a resolution of its board of directors, executed
and acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S, and that as such officer, being duly authorized
to do so pursuant to its by-laws or a resolution of its
board of directors, executed and acknowledged the foregoing
instrument for the purposes therein contained, by signing
the name of the corporation by himself as such officer as
his free and voluntary act and deed and the free and
voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S CLUB, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of June, 1995, before me, the
undersigned officer, personally appeared Rebecca W. Ballou
(residing at 6288 Massey Oaks Cove, Memphis, TN), personally
known and acknowledged himself to me to be an Authorized Signatory
of HARRAH'S LAS VEGAS, INC., and that as such officer, being
duly authorized to do so pursuant to its by-laws or a
resolution of its board of directors, executed and
acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation
by himself as such officer as his free and voluntary act
and deed and the free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ SUSAN SHAPIRO
--------------------------
Notary Public
My Commission Expires: June 2, 1996
Apply Stamp/Seal:
SUSAN SHAPIRO
Notary Public, State of New York
No. 41-4861089
Qualified in Queens County
Commission Expires: June 2, 1996
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 28th day of June, 1995, before me, the
undersigned officer, personally appeared Mary Kay Coyle
(residing at 411 E. 53rd St., NY, NY), personally known
and acknowledged himself to me to be a Vice President of
BANKERS TRUST COMPANY, and that as such officer, being duly
authorized to do so pursuant to its by-laws or a resolution
of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as such
officer as his free and voluntary act and deed and the free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal.
/s/ REGINA A. CRESPO
--------------------------
Notary Public
My Commission Expires:
Apply Stamp/Seal:
REGINA A. CRESPO
Notary Public, State of New York
No. 01CR5033610
Qualified in Queens County
Commission Expires: Sept. 26, 1996
EXHIBIT 10(10)
EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS
ALLOCATION AGREEMENT
THIS EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS ALLOCATION
AGREEMENT ("Agreement") is made and entered into as of June 30, 1995, by and
between THE PROMUS COMPANIES INCORPORATED, a Delaware corporation ("Promus"), to
be known as HARRAH'S ENTERTAINMENT, INC. after the spin off of Promus' hotel
business, and PROMUS HOTEL CORPORATION, a Delaware corporation ("PHC", and
collectively with Promus, the "Parties"), effective as of the Distribution Date
(as herein after defined).
R E C I T A L S
WHEREAS, subject to shareholder approval and certain other
conditions, Promus intends to spin-off its hotel business by distributing a
special dividend of one share of PHC Common Stock per two shares of Promus
Common Stock to the holders of shares of Promus Common Stock (the
"Distribution") ; and
WHEREAS, in connection with said spin-off, PROMUS and PHC have
entered into a Distribution Agreement (the "Distribution Agreement"); and
WHEREAS, pursuant to the aforesaid Distribution Agreement, Promus
and PHC have agreed to enter into an agreement allocating responsibilities with
respect to employee compensation, benefits, labor and certain other employment
matters pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Promus and PHC agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the
following terms shall have the meanings indicated below:
Aggregate Spread: the difference between the exercise price of a
Promus Stock Option and the Pre-Distribution Stock Price, multiplied by the
number of shares covered by such Promus Stock Option remaining unexercised on
the Cut-off Date.
Asset Transfer Agreement: the Asset Transfer Agreement, dated as
of June 30, 1995 between the Trustees of the Promus Savings and Retirement Plan
and the Trustees of the PHC Savings and Retirement Plan, which provides for the
spin-off of that portion of the Promus Savings and Retirement Plan attributable
to Transferred Employees and Hotel Terminees to the PHC Savings and Retirement
Plan.
Assumed Deferred Compensation Liabilities: all liabilities and
obligations of Promus to Transferred Employees accrued through the Cut-off Date
with respect to the Promus Executive Deferred Compensation Plan and the Promus
Deferred Compensation Plan, along with earnings required to be credited to
account balances included therein through the Cut-off Date, to be assumed by PHC
in accordance with Section 2.03.
Base Matching Contribution: the base matching contribution of
Promus under the Promus Savings and Retirement Plan (as provided in the Promus
Savings and Retirement Plan document).
COBRA: Code Section 4980B and ERISA Sections 601 through 608,
establishing employer requirements for continuation of health care benefits for
the benefit of certain current and former employees or dependents thereof.
Code: the Internal Revenue Code of 1986, as amended, or any
successor legislation.
Collective Bargaining Agreement: any collective bargaining
agreement or other labor agreement to which Promus or any of its subsidiaries or
affiliates was a party on or before the Cut-off Date.
Commission: the Securities and Exchange Commission.
Common Stock: the common stock of Promus, Harrah's Entertainment
or PHC, as more specifically described below:
(i) Employer Common Stock: Harrah's Entertainment
Common Stock in the case of Retained Employees and Promus Terminees and PHC
Common Stock in the case of PHC Employees; or
(ii) Harrah's Entertainment Common Stock: the common
stock, par value $0.10 per share, of Harrah's Entertainment after the
Distribution Date; or
(iii) PHC Common Stock: the common stock, par value
$0.10 per share, of PHC; or
(iv) Promus Common Stock: the common stock, par value
$0.10 per share, of Promus prior to the Distribution Date.
Conversion Award: an award of an option to acquire Common Stock
made to a Transferred Employee or a Retained Employee to reflect the effect of
the Distribution on awards of Promus Stock Options held on the Cut-off Date, in
accordance with Section 2.04.
Current Plan Year: the plan year or fiscal year, to the extent
applicable with respect to any Plan, during which the Distribution occurs.
Cut-off Date: the Distribution Date.
Deferred Compensation Plan: a plan of deferred compensation that
is not intended to be tax-qualified under Section 401(a) of the Code and that is
maintained for Employees of Promus and their beneficiaries, or for Employees of
Harrah's Entertainment or PHC and their beneficiaries, as described below:
(i) Harrah's Entertainment Deferred Compensation Plan:
the Promus Deferred Compensation Plan, as continued by Harrah's Entertainment
pursuant to Section 2.03(b) after the Distribution Date; or
(ii) Harrah's Entertainment Executive Deferred
Compensation Plan: the Promus Executive Deferred Compensation Plan, as
continued by Harrah's Entertainment pursuant to Section 2.03(b) after the
Distribution Date; or
(iii) PHC Deferred Compensation Plan: the Promus Hotel
Corporation 1995 Deferred Compensation Plan as adopted on April 5, 1995, as
amended; or
(iv) PHC Executive Deferred Compensation Plan: the
Promus Hotel Corporation Executive Deferred Compensation Plan as adopted on
April 5, 1995, as amended; or
(v) Promus Deferred Compensation Plan: The Promus
Companies Incorporated Deferred Compensation Plan in existence immediately prior
to the Distribution; or
(vi) Promus Executive Deferred Compensation Plan: The
Promus Companies Incorporated Executive Deferred Compensation Plan in existence
immediately prior to the Distribution.
Director: a member of the Board of Directors of Harrah's
Entertainment, Promus or PHC, as the context indicates.
Discretionary Matching Contribution: the employer discretionary
matching contribution under the Employer's Savings and Retirement Plan, as may
be determined by the Chief Executive Officer in his sole and absolute
discretion.
Distribution Agreement: the agreement described in the second
recital of this Agreement.
Distribution Date: the date on which the Distribution occurs.
Distribution Record Date: June 21, 1995.
Employee: an individual who is identified as being in any of the
following categories:
(i) Harrah's Employee: any individual who is (a) a
Retained Employee, or (b) not a Retained Employee but becomes an employee of
Harrah's Entertainment on or after the Distribution Date; or
(ii) Hotel Terminee: any Promus Terminee who, as of
January 1, 1995 had terminated his employment with Promus within the five
consecutive years preceding that date or who had terminated his employment with
Promus between January 1, 1995 and the Distribution Date and whose remaining
account balances as of the Distribution Date under the Promus Savings and
Retirement Plan are entirely unvested and whose last employment with Promus was
primarily related to a Transferred Business; or
(iii) PHC Employee: any individual who is (a) a
Transferred Employee, or (b) not a Transferred Employee but becomes an employee
of PHC on or after the Distribution Date; or
(iv) Promus Employee: any individual who is an
employee of Promus prior to the Distribution Date; or
(v) Promus Terminee: any individual formerly employed
by Promus who terminated such employment prior to the Distribution Date,
including but not limited to any Promus employee or director who has retired
prior to the Distribution Date; or
(vi) Retained Employee: any individual who immediately
prior to the Distribution was a Promus Employee and who is an Employee of
Harrah's Entertainment immediately following the Distribution; or
(vii) Transferred Employee: any individual who
immediately prior to the Distribution was a Promus Employee and whose
employment, immediately after the Distribution, is to be transferred to PHC
pursuant to the Spin-off. It also includes any director of Promus who resigns
from the Promus Board before the Distribution and concurrently or within 90 days
thereafter is elected to the PHC Board.
Employee Bonus Plan: a plan providing incentive compensation to
eligible Employees based upon achievement of performance criteria by the
Employer or the operating unit of the Employer to which the Employee is
assigned, as more particularly described below:
(i) Harrah's Entertainment Bonus Plan: the Promus
Bonus Plan as renamed and continued by Harrah's Entertainment after the
Distribution; or
(ii) PHC Bonus Plan: the Promus Hotel Corporation
Annual Management Bonus Plan, as established by PHC pursuant to Section 2.06,
effective as of the Distribution Date; or
(iii) Promus Bonus Plan: The Promus Companies
Incorporated Annual Management Bonus Plan as in effect on the Distribution Date.
Employer: Harrah's Entertainment, PHC or Promus, as the context
indicates.
Employer Restricted Stock Plan: a plan which provides for awards
of additional compensation to key Employees and non-employee Directors in the
form of shares of Employer Restricted Stock, as described below:
(i) Harrah's Entertainment Restricted Stock Plan: the
Harrah's Entertainment, Inc. 1990 Restricted Stock Plan, as the Promus
Restricted Stock Plan shall be renamed and continued immediately after the
Distribution pursuant to Section 2.04(b).
(ii) PHC Restricted Stock Plan: the Promus Hotel
Corporation 1995 Restricted Stock Plan as established by PHC effective as of the
Distribution pursuant to Section 2.04(a).
Employer Stock Option Plan: a plan which provides for awards of
additional compensation to eligible Employees in the form of nonqualified or
incentive options to purchase Employer Common Stock, as more particularly
described below:
(i) Harrah's Entertainment Stock Option Plan: the
Harrah's Entertainment, Inc. 1990 Stock Option Plan, as the Promus Stock Option
Plan shall be renamed and continued by Harrah's Entertainment immediately after
the Distribution pursuant to Section 2.04(b); or
(ii) PHC Stock Option Plan: the Promus Hotel
Corporation 1995 Stock Option Plan, as established by PHC pursuant to Section
2.04(a).
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation.
Existing Stock Plans: certain stock-based compensation plans
maintained by Promus prior to the Distribution Date for eligible Promus
Employees and eligible Promus Directors, as described below:
(i) Promus Restricted Stock Plan: the Promus
Companies Incorporated 1990 Restricted Stock Plan, a plan which provides for
awards of additional compensation to key Employees and non-Employee Directors in
the form of shares of Promus Restricted Stock; and
(ii) Promus Stock Option Plan: the Promus Companies
Incorporated 1990 Stock Option Plan, which provides for awards of non-qualified
and incentive Promus Stock Options to eligible Promus Employees.
Harrah's Entertainment: Harrah's Entertainment, Inc., a Delaware
corporation (to which Promus shall change its name after the spin-off of Promus'
hotel business), or any of its direct or indirect subsidiaries.
Harrah's Entertainment Stock Option: an option to purchase
Harrah's Entertainment Common Stock pursuant to the Harrah's Entertainment Stock
Option Plan.
HMO: any health maintenance organization organized under 42
U.S.C. Sec.300e-9, or a state health maintenance organization statute that
provides medical services for Retained Individuals or PHC Individuals under
any Plan.
Human Resources Committee: the Human Resources Committee of the
Board of Directors of Promus, Harrah's Entertainment or PHC, as the context
indicates.
IRS: the Internal Revenue Service.
Medical/Dental Plan: a Welfare Plan providing health benefits to
Employees and their dependents as described below:
(i) Harrah's Entertainment Medical/Dental Plans: the
Promus Medical/Dental Plans as renamed and continued by Harrah's Entertainment
after the Distribution pursuant to Section 2.07; or
(ii) PHC Medical/Dental Plans: the Medical/Dental
Plans to be established by PHC in accordance with Section 2.08(a); or
(iii) Promus Medical/Dental Plans: any Medical/Dental
Plans maintained prior to the Distribution Date for Promus Individuals.
Medical Retirees: any Promus Terminee (or dependent or
beneficiary thereof) who was retired or disabled on or before the Cut-off Date,
and who was receiving or otherwise entitled to receive Retiree Medical/Dental
Benefits, other than, or in addition to, coverage mandated by COBRA, as a
retiree (or dependent or beneficiary thereof) under any Promus Medical/Dental
Plan immediately prior to the Distribution.
PHC: Promus Hotel Corporation, a Delaware Corporation, or any of
its direct or indirect subsidiaries.
PHC Individual: any individual who (i) is a Transferred
Employee, or (ii) a PHC Employee, or (iii) is a dependent or beneficiary of any
individual described in clause (i) or (ii).
PHC Participant: as defined in Section 2.02(a).
PHC Stock Option: an option to purchase PHC Common Stock
pursuant to the PHC Stock Option Plan.
Plan: any plan, policy, arrangement, contract or agreement
providing compensation benefits for any group of Employees or former Employees
or individual Employee or former Employee, or the dependents or beneficiaries of
any such Employee or former Employee, whether formal or informal or written or
unwritten, and including, without limitation, any means, whether or not legally
required, pursuant to which any benefit is provided by an Employer to any
Employee or former Employee or the beneficiaries of any such Employee or former
Employee, adopted or entered into by a Party prior to, or upon the Distribution.
The term "Plan" as used in this Agreement does not include any contract,
agreement or understanding entered into by Promus prior to the Distribution or
Harrah's Entertainment or PHC after the Distribution relating to settlement of
actual or potential Employee related litigation claims.
Post-Conversion Stock Price: the average of the per share New
York Stock Exchange closing prices of PHC Common Stock or Harrah's Entertainment
Common Stock, as the context indicates, during the ten-trading day period
immediately following the Distribution Date.
Pre-Distribution Stock Price: the New York Stock Exchange
closing price per share for Promus Common Stock on the Distribution Date (before
giving effect to the Distribution).
Prior Plan Year: a plan year or fiscal year or portion thereof,
to the extent applicable with respect to any Plan, ending on or prior to the
Cut-off Date.
Promus: The Promus Companies Incorporated, a Delaware
corporation (which will be renamed Harrah's Entertainment, Inc. effective as of
the Distribution Date), or any of its direct or indirect subsidiaries.
Promus Employee Stock Purchase Plan: that certain arrangement
between Promus and Merrill Lynch which provides Promus Employees with the
opportunity to purchase Promus Common Stock in market transactions at reduced
commissions, the cost of such commissions being borne by Promus.
PHC: Promus Hotel Corporation, a Delaware Corporation, or any of
its direct or indirect subsidiaries.
Promus Individual: any individual who is (i) a Promus Employee,
(ii) a Promus Terminee, or (iii) a dependent or beneficiary of any individual
specified in clauses (i) or (ii).
Promus Stock Option: an option to purchase Promus Common Stock
pursuant to the Promus Stock Option Plan.
Qualified Beneficiary: an individual (or dependent thereof) who
either (1) experiences a "Qualifing event" (as that term is defined in Code
Section 4980B(f)(3) and ERISA Section 603) while a participant in any
Medical/Dental Plan, or (2) becomes a "qualified beneficiary" (as that term is
defined in Code Section 4980B(g)(1) and ERISA 607(3)) under any Medical/Dental
Plan, and who is included in any one of the following categories:
(i) Harrah's Entertainment Qualified Beneficiary: any
Retained Individual (or dependent thereof) who, on or before the Cut-off Date,
was a Qualified Beneficiary under any Promus Medical/Dental Plan; or
(ii) PHC Qualified Beneficiary: any Transferred
Individual (or dependent thereof) who, on or before the Cut-off Date, was a
Qualified Beneficiary under any Promus Medical/Dental Plan; or
(iii) Promus Qualified Beneficiary: any Promus
Individual who, immediately following the Distribution, is not a Harrah's
Entertainment Qualified Beneficiary or a PHC Qualified Beneficiary and who,
immediately prior to the Distribution, was a Qualified Beneficiary under any
Promus Medical/Dental Plan.
Rabbi Trust: a trust maintained by an Employer which holds
assets to satisfy certain contingent or deferred payment obligations of an
Employer to an Employee under a Deferred Compensation Plan or severance
agreement with such Employee, as more particularly described below:
(i) Harrah's Entertainment Rabbi Trust: the Promus
Rabbi Trust as renamed, amended and continued by Harrah's Entertainment
immediately after the Distribution; or
(ii) PHC Rabbi Trust: the Escrow Agreement to be
entered into between PHC and NationsBank effective immediately after the
Distribution; or
(iii) Promus Rabbi Trust: the Escrow Agreement dated
February 6, 1990, between Promus and NationsBank (formerly Sovran Bank), as
amended.
Restricted Stock: any of the following shares of Employer Common
Stock issued pursuant to an Employer Restricted Stock Plan:
(i) Harrah's Restricted Stock: shares of common stock
of Harrah's Entertainment issued pursuant to the Harrah's Entertainment
Restricted Stock Plan and subject to certain restrictions set forth therein or
in a related agreement or certificate; or
(ii) PHC Restricted Stock: shares of common stock of
PHC issued pursuant to the PHC Restricted Stock Plan and subject to certain
restrictions set forth therein or in a related agreement or certificate; or
(iii) Promus Restricted Stock: shares of common stock
of Promus issued pursuant to the Promus Restricted Stock Plan and subject to
certain restrictions set forth therein or in a related agreement or certificate.
Retained Business: any business or operation of Promus or its
subsidiaries which is, pursuant to the Distribution Agreement, to be conducted,
following the Distribution, by Harrah's Entertainment.
Retained Individual: any individual who (i) is a Retained
Employee, or (ii) is, as of the Cut-off Date, a Promus Terminee whose last
employment with Promus or subsidiary of Promus was with a Retained Business, or
(iii) is a dependent or beneficiary of any individual described in clause (i) or
(ii).
Retiree Medical/Dental Benefits: health, medical and dental
benefits provided to a Promus Terminee (or a dependent or beneficiary thereof)
who is a retiree under any Promus Medical/Dental Plan, not including any
coverage mandated by COBRA.
Savings and Retirement Plan: any of the following Plans, as the
context indicates, maintained pursuant to Section 401(a) of the Code:
(i) Harrah's Entertainment Savings and Retirement
Plan: the Promus Savings and Retirement Plan, as renamed, amended and continued
after the Distribution Date pursuant to Section 2.02(g); or
(ii) Promus Savings and Retirement Plan: The Promus
Companies Incorporated Savings and Retirement Plan, as maintained by Promus
immediately prior to the Distribution Date; or
(iii) PHC Savings and Retirement Plan: the Savings and
Retirement Plan established by PHC pursuant to Section 2.02(a) as of the
Distribution Date primarily for the benefit of PHC Employees.
Service Credit: the period taken into account under any Plan for
purposes of determining length of service or plan participation to satisfy
eligibility, vesting, benefit accrual and similar requirements under such Plan.
Stock Option: a nonqualified or incentive option to purchase
Employer Common Stock under an Employer Stock Option Plan.
Transferred Business: any business or operation of Promus or its
subsidiaries which is, pursuant to the Distribution Agreement, to be conducted
by PHC immediately following the Distribution.
Transferred Individual: any individual who (i) is a Transferred
Employee or (ii) is, as of the Cut-off Date, a Promus Terminee (x) whose last
employment with Promus or a subsidiary of Promus was with a Transferred Business
or (y) whose employment with Promus was primarily related to the hotel business
to be conducted by PHC after the Distribution, or (iii) is a dependent or
beneficiary of any individual described in clause (i) or (ii).
Welfare Plan: any Plan which provides medical, health,
disability, accident, life insurance, death, dental or any other welfare
benefit, including, without limitation, any post-employment benefit, but
excluding vacation benefits covered under Section 2.09.
Section 1.02 Other Terms. Any capitalized terms used herein
but not defined herein shall have the meaning set forth in the Distribution
Agreement.
Section 1.03 Certain Constructions. References to the singular
in this Agreement shall refer to the plural and vice-versa and references to the
masculine shall refer to the feminine and vice-versa.
Section 1.04 Sections. References to a "Section" are, unless
otherwise specified, to one of the Sections of this Agreement.
Section 1.05 Survival. Obligations described in this Agreement
shall remain in full force and effect and shall survive the Distribution Date.
ARTICLE II
EMPLOYEE BENEFITS
Section 2.01 Employment.
(a) Allocation of Responsibilities on Distribution Date.
On the Distribution Date, except to the extent retained or assumed by Harrah's
Entertainment under this Agreement or any other agreement relating to the
Distribution, PHC shall retain or assume, as the case may be, responsibility as
employer for the Transferred Employees. On the Distribution Date, except to the
extent retained or assumed by PHC under this Agreement or any other agreement
relating to the Distribution, Harrah's Entertainment shall retain or assume, as
the case may be, responsibility as employer for the Retained Employees. The
assumption or retention of responsibility as employer by Harrah's Entertainment
or PHC described in this Section 2.01 shall not, of itself, constitute a
severance or a termination of employment under any Plan of severance maintained
by Promus nor shall it constitute a change of control of Promus for purposes of
any Plan.
(b) Assumption of Liabilities on Distribution Date:
Except as specifically provided in this Agreement, or as otherwise agreed by the
Parties:
(i) Immediately following the Distribution, Harrah's
Entertainment shall assume or retain, as the case may be, all benefit
obligations and all related rights in connection with any Plan with respect to
the Retained Employees and Promus Terminees provided, however, that with respect
to such Retained Employees or Promus Terminees who become employed by PHC after
the Distribution, any benefit obligations and all related rights in connection
with any Plan with respect to such employment with PHC shall be assumed by PHC;
and
(ii) Immediately following the Distribution, PHC shall
assume or retain, as the case may be, all benefit obligations and all related
rights in connection with any Plan with respect to the Transferred Employees,
and Harrah's Entertainment shall have no further liability with respect thereto;
provided, however, that with respect to such Transferred Employees or Promus
Terminees who return to employment with Harrah's Entertainment after the
Distribution, any benefit obligations and all related rights in connection with
any Plan with respect to such employment with Harrah's Entertainment shall be
assumed by Harrah's Entertainment.
(c) Service Credits.
(i) Distribution Date Transfers. In connection
with the Distribution and for purposes of determining Service Credits under any
Plans, Harrah's Entertainment shall credit each Retained Employee and PHC shall
credit each PHC Employee with such Employee's Service Credits and original hire
date as reflected in the Promus payroll system records as of the Cut-off Date.
Such Service Credits and hire date shall continue to be maintained as described
herein for as long as the Employee does not terminate employment or as otherwise
may be required by applicable law or any applicable Plan.
(ii) Post-Distribution Date Terminations. Subject
to the provisions of applicable law and to Sections 2.01(d), 2.02(g), 2.03(c)
and 2.09(c) herein (governing post-Distribution transfers through December 31,
1995), (x) PHC may, in the case of Transferred Employees, in its sole
discretion, make such decisions as it deems appropriate with respect to
determining Service Credits accrued after the Distribution Date for such
Employees, and (y) Harrah's Entertainment may, in the case of Retained
Employees, in its sole discretion, make such decisions as it deems appropriate
with respect to determining Service Credits accrued after the Distribution Date
for such Employees.
(d) Post-Distribution Date Transfers Through December 31,
1995: Notwithstanding any provision of this Agreement to the contrary, except
to the extent prohibited by applicable law or any applicable agreement, where an
Employee leaves the service of one Party to immediately begin employment with
the other Party at any time on or before December 31, 1995, such Employee's
accrued benefits, account balances, or other rights or interests, to the extent
transferable, under any Plan maintained by the former Employer may be
transferred to the applicable Plan of the new Employer. The Parties hereby
agree to amend any Plan to the extent necessary to comply with the preceding
sentence of this Section 2.01(d). This Section 2.01(d) shall not apply to any
benefits, balances, rights or interests of such Employees in any Employer Stock
Option Plan or Employer Restricted Stock Plan.
Section 2.02 Savings and Retirement Plans.
(a) Establishment of PHC Savings and Retirement Plan.
Effective as of the Distribution Date, PHC shall take, or cause to be taken, all
action necessary and appropriate to establish and administer a new Plan named
the PHC Savings and Retirement Plan and Trust in substantially the form approved
by the Promus Board of Directors at its April 5, 1995 meeting. The PHC Savings
and Retirement Plan shall be a spin off of that portion of the Promus Savings
and Retirement Plan which is attributable to (i) Transferred Employees who,
immediately prior to the Distribution Date, were participants in or otherwise
entitled to benefits under the Promus Savings and Retirement Plan ("PHC
Participants"), and (ii) Hotel Terminees. PHC shall provide benefits under such
PHC Savings and Retirement Plan after the Distribution for all such Transferred
Employees and Hotel Terminees (and PHC Employees admitted to participation in
such Plan after the Distribution) subject to the terms and provisions of such
Plan. The PHC Savings and Retirement Plan shall be intended to qualify for
tax-favored treatment under Sections 401(a) and 401(k) of the Code and to comply
with the requirements of ERISA.
(b) Obligation to Make Base Matching Contribution.
Effective as of the Cut-off Date, PHC shall assume, and shall be solely
responsible for, Promus's obligation to make payment of the Base Matching
Contributions to the account of any Transferred Employee who is a participant
under the Promus Savings and Retirement Plan for the portion of the Current Plan
Year ending on the Cut-off Date. For the remainder of the 1995 Plan Year (the
Distribution Date through December 31, 1995) the rate of Base Matching
Contributions made to the PHC Savings and Retirement Plan will continue at the
same rate that Base Matching Contributions are made prior to the Distribution
under the Promus Savings and Retirement Plan. Commencing with the 1996 Plan
Year, Base Matching Contributions under the PHC Savings and Retirement Plan will
be as set forth in such Plan as it may be amended or, with respect to
discretionary contributions (including Discretionary Matching Contributions) at
the sole determination of the PHC Chief Executive Officer or the PHC Human
Resources Committee, or as otherwise provided in such Plan.
(c) Transfer and Acceptance of Account Balances. As soon
as practicable after the Distribution Date, Harrah's Entertainment shall cause
the trustees of the Harrah's Entertainment Savings and Retirement Plan to
transfer to the trustees or other funding agent of the PHC Savings and
Retirement Plan the amounts (in cash, securities, other property or a
combination thereof) representing the account balances of all PHC Participants
and Hotel Terminees, said amounts to be established as account balances or
accrued benefits of such individuals under the PHC Savings and Retirement Plan.
Each such transfer shall comply with Section 414(1) of the Code and the
requirements of ERISA and the regulations promulgated thereunder. PHC shall
cause the trustees or other funding agent of the PHC Savings and Retirement to
accept the plan-to-plan transfer from the Harrah's Entertainment Savings and
Retirement Plan trustees, and to credit the accounts of such Transferred
Employees and Hotel Terminees under the PHC Savings and Retirement Plan with
amounts transferred on their behalf, as provided in an Asset Transfer Agreement
between the plans. On and after the Distribution Date, PHC shall be responsible
for guaranteeing the recovery of the April 11, 1991 balances of the Executive
Life investment of Transferred Employees and Hotel Terminees to the extent
required by Addendum A to the PHC Savings and Retirement Plan and pursuant to
the applicable closing agreement with the IRS related thereto.
(d) Harrah's Entertainment to Provide Information.
Harrah's Entertainment shall provide PHC, as soon as practicable after the
Distribution Date (with the cooperation of PHC to the extent that relevant
information is in the possession of PHC, and in accordance with Section 5.02),
with a list of Transferred Employees and Hotel Terminees who, to the best
knowledge of Harrah's Entertainment, were participants in or otherwise entitled
to benefits under the Promus Savings and Retirement Plan on the Cut-off Date,
together with a listing of each participant's Service Credits under such Plan
and a listing of each such Transferred Employee's or Hotel Terminee's account
balance thereunder, and each Transferred Employee's investment election and
beneficiary designation. Harrah's Entertainment shall, as soon as practicable
after the Distribution Date and in accordance with Section 5.02, provide PHC
with such additional information in the possession of Harrah's Entertainment
(and not already in the possession of PHC) as may be reasonably requested by PHC
and necessary for PHC to administer effectively the PHC Savings and Retirement
Plan.
(e) Regulatory Filings. PHC and Harrah's Entertainment
shall, in connection with the plan-to-plan transfer described in Section
2.02(c), cooperate in making any and all appropriate filings required by the
Commission or the IRS, or required under the Code or ERISA or any applicable
securities laws and the regulations thereunder, and take all such action as may
be necessary and appropriate to cause such plan-to-plan transfer to take place
as soon as practicable after the Distribution Date or otherwise when required by
law. Further, PHC shall seek a favorable IRS determination letter that the PHC
Savings and Retirement Plan, as organized, satisfies all qualification
requirements under Section 401(a) of the Code. Notwithstanding the foregoing,
such plan-to-plan transfers shall take place pending issuance of such favorable
determination letter. PHC and Harrah's Entertainment shall each make any
necessary amendments on a retroactive basis to the PHC Savings and Retirement
Plan or the Harrah's Entertainment Savings and Retirement Plan, respectively, as
required by the IRS to issue the favorable determination letter described above.
(f) Account Balances of Retained Employees: Except as
provided in Section 2.02(a), on the Distribution Date, Harrah's Entertainment
shall retain sole responsibility for all liabilities and obligations under the
Promus Savings and Retirement Plan (including but not limited to, liabilities
and obligations to Promus Terminees except as to accounts of Hotel Terminees
that are transferred to the PHC Savings and Retirement Plan pursuant to Section
2.02(c)), and PHC shall have no liability or obligation with respect thereto.
As soon as practicable after the Distribution Date, Harrah's Entertainment shall
take, or cause to be taken, all action necessary and appropriate to amend and
rename the Promus Savings and Retirement Plan as the "Harrah's Entertainment
Savings and Retirement Plan". Harrah's Entertainment shall provide future
benefits thereunder accruing after the Cut-off Date for all Retained Employees
who, on the Cut-off Date, were participants in or otherwise entitled to benefits
under the Promus Savings and Retirement Plan and for Harrah's Employees who are
admitted to participate in the Harrah's Entertainment Savings and Retirement
Plan on or after the Distribution Date.
(g) Post-Distribution Employment Transfers: To the extent
permitted by applicable law, the accounts in the Harrah's Entertainment Savings
and Retirement Plan of any Retained Employee or Harrah's Employee who transfers
employment to PHC on or prior to December 31, 1995 (or, only with
respect to certain Retained Employees or Harrah's Employees, designated by
agreement of the Parties, who work in the Harrah's Entertainment Information
Technology Department and who transfer to a similar position with PHC, within a
specified period following the Distribution, as such period is determined by
agreement of the Parties), or through such extended period as may be agreed by
Promus (or Harrah's Entertainment) and PHC with respect to any Employee or group
of Employees, may be transferred to the PHC Savings and Retirement Plan. The
business operation or business unit from which such employee terminates
employment shall promptly notify the administrator of the Savings and Retirement
Plan in which any such employee participates of the occurrence of any transfers
subject to the provision of this Section 2.02(g). To the extent necessary, the
Harrah's Entertainment Savings and Retirement Plan and the PHC Savings and
Retirement Plan will be amended to permit such transfers.
Section 2.03 Deferred Compensation Plans.
(a) PHC Deferred Compensation Plans. Effective as of the
Distribution Date, PHC shall assume or retain sponsorship of and shall be solely
responsible for all Assumed Deferred Compensation Liabilities, and Harrah's
Entertainment shall transfer to the PHC Rabbi Trust an amount of assets held in
the Promus Rabbi Trust sufficient to fund the Assumed Deferred Compensation
Liability with approximately the same relative funding coverage as existed
immediately prior to the Distribution. Upon completion of such transfer,
Harrah's Entertainment shall have no additional liability or obligation with
respect to the Assumed Deferred Compensation Liabilities. Except as otherwise
provided herein, PHC shall not be responsible for any liabilities or obligations
of Promus or Harrah's Entertainment under any Deferred Compensation Plan.
Effective as of the Distribution Date, the PHC Board of Directors shall adopt
the PHC Executive Deferred Compensation Plan and the PHC Deferred Compensation
Plan and shall provide future deferred compensation benefits thereunder accruing
after the Cut-off Date for all Transferred Employees (or any beneficiaries of
such Transferred Employee) who, on the Cut-off Date, were participants in or
otherwise entitled to current or deferred benefits under the Promus Executive
Deferred Compensation Plan or the Promus Deferred Compensation Plan, as the case
may be, and for PHC Employees and PHC Directors who are admitted to participate
therein on or after the Distribution Date. PHC shall be responsible for all
reporting and withholding obligations relating to the Assumed Deferred
Compensation Liabilities with respect to pay-outs made after the Cut-off Date to
PHC Employees who, on the Cut-off Date, were participants in or otherwise
entitled to benefits under the Promus Executive Deferred Compensation Plan. All
accrued benefits, rights and service credit shall carry over from the Promus
Deferred Compensation Plans to the PHC Deferred Compensation Plans. Any such
Director who retires from the Promus Board prior to the Distribution and
commences service on the PHC Board within 90 days of such retirement shall be
credited with and vested in the Retirement Rate (as described in the PHC
Executive Deferred Compensation Plan) under the PHC Executive Deferred
Compensation Plan, which Retirement Rate for the Current Plan Year and all prior
plan years shall be the same as the Retirement Rate under the Promus Executive
Deferred Compensation Plan for each corresponding plan year.
(b) Harrah's Entertainment Deferred Compensation Plans.
Except as provided in Section 2.03(a), on the Distribution Date, Harrah's
Entertainment shall retain sole responsibility for all liabilities and
obligations under the Promus Deferred Compensation Plans (including but not
limited to, liabilities and obligations to Promus Terminees or their
beneficiaries), and PHC shall have no liability or obligation with respect
thereto. As soon as practicable after the Distribution Date, Harrah's
Entertainment shall take, or cause to be taken, all action necessary and
appropriate to amend and rename the Promus Executive Deferred Compensation Plan
and the Promus Deferred Compensation Plans as the "Harrah's Entertainment, Inc.
Executive Deferred Compensation Plan" and the "Harrah's Entertainment, Inc.
Deferred Compensation Plan" (collectively, the "Retained Deferred Compensation
Plans"). Harrah's Entertainment shall provide future benefits thereunder
accruing after the Cut-off Date for all Retained Employees, Promus Directors,
Promus Terminees and Harrah's Entertainment Directors who, on the Cut-off Date,
were participants in or otherwise entitled to benefits under the Retained
Deferred Compensation Plans and for Harrah's Employees and eligible Harrah's
Entertainment Directors who are admitted to participate therein on or after the
Distribution Date. All accrued benefits, rights and Service Credit shall
continue under the Retained Deferred Compensation Plans.
(c) Post-Distribution Employment Transfers Through
December 31, 1995. For purposes of determining whether a termination of
employment has occurred under the Promus Executive Deferred Compensation Plan or
the Promus Deferred Compensation Plan, termination of employment shall not be
deemed to occur where an Employee leaves the service of PHC or Harrah's
Entertainment to immediately begin employment with Harrah's Entertainment or
PHC, respectively, at any time on or before December 31, 1995 (i.e., leaving
Harrah's Entertainment employment to work for PHC, or leaving PHC employment to
work for Harrah's Entertainment); in any such case, the business operation or
business unit from which such Employee terminates employment shall promptly
notify the administrator of the Deferred Compensation Plan in which such
Employee participates of the occurrence of any termination subject to the
provisions of this Section 2.03(c). Whichever Party is the former Employer
shall inform the successor Employer of any termination of employment of such
transferred Employee, and the former Employer shall inform the Plan
administrator of the applicable Deferred Compensation Plan in which such
transferred Employee was a participant. Upon such transfer of employment by
such transferred Employee, the account balances of such Employee in the
applicable Deferred Compensation Plan may be transferred to the applicable
Deferred Compensation Plan of the successor Employer in a manner complying with
Section 2.03(a) and the successor Employer shall be solely responsible for the
payment of such account balances. This special rule shall apply both to the
Assumed Deferred Compensation Liabilities and Retained Deferred Compensation
Liabilities.
(d) Special Provisions With Respect To Allocation of
Deferred Compensation Liabilities of Michael D. Rose ("Mr. Rose").
Notwithstanding anything in this Section 2.03 to the contrary, Mr. Rose's Promus
Executive Deferred Compensation Plan account balances as of the Distribution
Date shall be prorated as follows:
(1) Proration to Harrah's Entertainment Executive
Deferred Compensation Plan. Harrah's Entertainment shall retain and be solely
responsible for 58.33 percent of Mr. Rose's Promus Executive Deferred
Compensation Plan account balance (the "Rose Retained Account Balance") and
shall administer it under the Harrah's Entertainment Executive Deferred
Compensation Plan, unless otherwise agreed by the Parties. PHC shall have no
liability or obligation with respect to the Rose Retained Account Balance,
unless otherwise agreed by the Parties.
(2) Proration to PHC Executive Deferred Compensation
Plan. Promus shall transfer to PHC 41.67 percent of Mr. Rose's Executive
Deferred Compensation Plan account balance (the "Rose Transferred Account
Balance"), and PHC shall administer such balance under the PHC Executive
Deferred Compensation Plan, unless otherwise agreed by the Parties. Harrah's
Entertainment shall have no further liability or obligation with respect to the
Rose Transferred Account Balance, unless otherwise agreed by the Parties.
(3) Proration Applicable to Each Year of Deferral.
The percentage allocations under this Section 2.03(d) shall be applied to each
year of deferral under the Promus Executive Deferred Compensation Plan and its
accrued interest as of the Distribution Date. It is agreed Mr. Rose is vested
at the Retirement Rate under the Executive Deferred Compensation Plans of both
Parties.
Section 2.04 Stock Plans.
(a) PHC Stock Plans. Effective as of the Distribution
Date, PHC shall take, or cause to be taken, all action necessary and appropriate
to establish and administer new stock-based compensation plans named the "Promus
Hotel Corporation 1995 Stock Option Plan" and the "Promus Hotel Corporation 1995
Restricted Stock Plan" (together, the "PHC Stock Plans") in substantially the
form approved by the Promus Board of Directors at its April 5, 1995 meeting.
PHC shall provide future benefits thereunder accruing after the Cut-off Date for
all Transferred Employees and PHC Directors who, on the Cut-off Date, were
participants in or otherwise entitled to benefits under the Existing Stock Plans
and for PHC Employees and PHC Directors who are admitted to participate in the
PHC Stock Plans on or after the Distribution Date.
(b) Harrah's Entertainment Stock Plans. On the
Distribution Date, except with respect to shares surrendered for Replacement
Shares (as defined below) and options replaced with PHC Stock Options, Harrah's
Entertainment shall retain sole responsibility for all liabilities and
obligations under the Existing Stock Plans, and PHC shall have no liability or
obligation with respect thereto. As soon as practicable after the Distribution
Date, Harrah's Entertainment shall take, or cause to be taken, all action
necessary and appropriate to amend and rename the Promus Restricted Stock Plan
and the Promus Stock Option Plan Plans as the "Harrah's Entertainment, Inc. 1990
Restricted Stock Plan" and the "Harrah's Entertainment, Inc. 1990 Stock Option
Plan". Harrah's Entertainment shall provide future benefits thereunder accruing
after the Cut-off Date for all Retained Employees and Harrah's Entertainment
directors who, on the Cut-off Date, were participants in or otherwise entitled
to benefits under the Existing Stock Plans and for Harrah's Employees and
Harrah's Entertainment Directors who are admitted to participate therein on or
after the Distribution Date.
(c) Effect of the Distribution on Awards Made Prior to the
Cut-off Date.
(i) Restricted Stock.
(A) Dividend: All Employees who hold Restricted
Stock as of the Distribution Record Date shall receive as part of the
Distribution one unrestricted share of PHC Common Stock for every two shares of
Promus Restricted Stock they hold. Fractional interests will be paid in cash.
Shares of PHC Common Stock so received shall be unrestricted.
(B) Harrah's Restricted Stock: As soon as
possible after the Distribution, Retained Employees who have been granted shares
of Promus Restricted Stock as of the Cut-off Date shall retain such shares,
which shall become Harrah's Restricted Stock. Shares so retained shall be
subject to the same terms and conditions as the shares of Promus Restricted
Stock surrendered in exchange therefor.
(C) PHC Restricted Stock: As soon as possible
following the Distribution, Transferred Employees who have been granted shares
of Promus Restricted Stock as of the Cut-off Date shall surrender such shares,
and shall receive shares of PHC Restricted Stock in replacement thereof (the
"Replacement Shares"). The number of Replacement Shares so received by a
Transferred Employee shall be determined by multiplying the number of shares of
Promus Restricted Stock held by such Employee by a fraction, the numerator of
which is equal to the sum of the Pre-Distribution Stock Price minus one half of
the PHC Post-Conversion Stock Price, and the denominator of which is the PHC
Post-Conversion Stock Price. Fractional shares will not be awarded, rather,
they will be rounded to the next highest share. The Replacement Shares shall be
subject to the same terms and conditions as the shares of Promus Restricted
Stock surrendered and replaced by such Replacement Shares.
(ii) Adjustment of Stock Options. As soon as
possible following the Distribution, each Employee who is a grantee of a
nonqualified or incentive award of a Promus Stock Option shall receive for each
such award a Conversion Award intended to maintain the Aggregate Spread of such
Employee. Retained Employees shall receive Conversion Awards for options to
purchase Harrah's Entertainment Common Stock, and Transferred Employees shall
receive Conversion Awards for Options to purchase PHC Common Stock, pursuant to
one of the following sets of formulas, as applicable:
(A) Harrah's Entertainment Stock Options:
(1) Number of Shares Subject to Options: The
number of shares of Harrah's Entertainment Common Stock subject to a Harrah's
Entertainment Stock Option held by a Retained Employee shall be determined by
multiplying the number of shares of Promus Common Stock subject to Promus Stock
Options held by such Employee by a fraction, the numerator of which is the Pre-
Distribution Stock Price, and the denominator of which is the Post-Distribution
Harrah's Entertainment Stock Price. Fractional shares shall be rounded to the
next highest whole share.
(2) Adjustment of Option Price: The exercise
price of a Conversion Award of a Harrah's Entertainment Stock Option held by a
Retained Employee shall be determined by multiplying the exercise price of the
Promus Stock Option from which it is being converted by a
fraction, the numerator of which is the Harrah's Entertainment Post-Conversion
Stock Price and the denominator of which is the Pre-Distribution Stock Price.
The exercise price shall be rounded down to the next lowest whole cent.
(B) PHC Stock Options:
(1) Number of Shares Subject to Options: The
number of shares of PHC Common Stock subject to a PHC Stock Option held by a
Transferred Employee shall be determined by multiplying the number of shares of
Promus Common Stock subject to the Promus Stock Option held by such Employee by
a fraction, the numerator of which is the Pre-Distribution Stock Price, and the
denominator of which is the Post-Distribution PHC Stock Price. Fractional
shares shall be rounded to the next highest whole share.
(2) Adjustment of Option Price: The exercise
price of a Conversion Award of a PHC Stock Option held by a Transferred Employee
shall be determined by multiplying the exercise price of the Promus Stock Option
from which it is being converted by a fraction, the numerator of which is the
PHC Post-Conversion Stock Price and the denominator of which is the Pre-
Distribution Stock Price. The exercise price shall be rounded down to the next
lowest whole cent.
Section 2.05 Promus Employee Stock Purchase Plan. The Promus
Employee Stock Purchase Plan shall continue in effect after the Distribution and
shall be renamed the "Harrah's Entertainment Employee Stock Purchase Plan".
Transferred Employees who were participants in the Promus Employee Stock
Purchase Plan shall no longer be eligible to participate in such plan. Harrah's
Entertainment shall provide Transferred Employees the opportunity to withdraw
their investments from the Harrah's Entertainment Employee Stock Purchase Plan
after the Distribution Date. PHC may, in its sole discretion and on terms it
may determine, establish a similar Employee Stock Purchase Plan.
Section 2.06 Employee Bonus Plans.
(a) Calculation of Bonuses for Transferred Employees for
the Current Plan Year.
(i) Calculation of Bonuses for Transferred
Employees Not Employed in a Transferred Business. With respect to the Current
Plan Year, Harrah's Entertainment shall credit to each Transferred Employee (and
to each Harrah's Employee who terminates employment with Harrah's Entertainment
to immediately begin employment with PHC after the Distribution Date but not
later than December 31, 1995) currently employed by a division or operating unit
of Promus which is not a Transferred Business a prorated portion of the bonus to
which such Employee would be entitled under the Promus Bonus Plan determined as
if such Employee had remained employed by Harrah's Entertainment for the entire
Current Plan Year. Such bonus shall be prorated based upon the length of such
Employee's employment with Promus and/or Harrah's Entertainment, as the case may
be, during the Current Plan Year, pursuant to procedures adopted in that certain
memorandum of understanding dated March 9, 1995 by and between Promus and PHC.
PHC shall calculate such Transferred Employee's bonus under the PHC Bonus Plan
in accordance with the terms of the PHC Bonus Plan for the remainder of the
Current Plan Year, prorated based upon the length of such Transferred Employee's
employment with PHC for the Current Plan Year.
(ii) Calculation of Bonuses for Transferred
Employees Covered By Operating Unit Matrix. Bonuses of Transferred Employees
who are employed by a division or operating unit that is a Transferred Business
shall be calculated for the entire Current Plan Year, without proration, under
the PHC Bonus Plan pursuant to the operating unit matrix established for such
division or operating unit under the Promus Bonus Plan.
(b) Payment of Bonuses for Current Plan Year. PHC shall
pay to Transferred Employees the entire amount of the bonus as calculated by
Harrah's Entertainment and PHC pursuant to Section 2.06(a). Harrah's
Entertainment shall pay to PHC the portion of such bonus attributable to such
Transferred Employee's employment with Promus and/or Harrah's Entertainment, as
the case may be, during the Current Plan Year.
(c) Harrah's Entertainment Bonus Plan. Harrah's
Entertainment shall assume and retain the Promus Annual Bonus Plan, which shall
be renamed the "Harrah's Entertainment Annual Management Bonus Plan" and shall
continue to provide benefits thereunder to eligible Harrah's Employees. Bonuses
of Retained Employees shall be calculated and paid pursuant to the terms of the
Harrah's Entertainment Bonus Plan, as such may be amended from time to time,
during the Current Plan Year and any subsequent Plan Year.
(d) No Right to Bonus Created. Bonuses may be awarded in
the absolute discretion of the Parties, subject to the terms of the applicable
Employee Bonus Plan, and this section 2.06 shall not be construed as creating
any right or entitlement in favor of any third party to receive any bonus under
any Employee Bonus Plan.
Section 2.07 Harrah's Entertainment Medical/Dental Plans.
(a) Liability for Claims. Except as otherwise provided
herein, as of the Distribution Date, Harrah's Entertainment shall assume or
retain and shall be responsible for, or cause its insurance carriers or HMOs to
be responsible for, all liabilities and obligations related to claims asserted
or incurred or premiums owed through the Cut-off Date in respect of any Retained
Employee (or any dependent or beneficiary thereof) or Promus Terminee (or any
dependent or beneficiary thereof) under any Promus Medical/Dental Plan and
claims asserted or incurred or premiums due after the Cut-off Date in respect of
any Retained Employee (or any dependent or beneficiary thereof) or Promus
Terminee (or any dependent or beneficiary thereof) under any Harrah's
Entertainment Medical/Dental Plan, and PHC shall have no liability or obligation
with respect thereto.
(b) Continuation Coverage Administration. As of the
Distribution Date, Harrah's Entertainment shall assume or retain and shall be
solely responsible for, or cause its insurance carriers or HMOs to be
responsible for, providing and administering the continuation coverage required
by COBRA as it relates to any Promus Qualified Beneficiary or Harrah's
Entertainment Qualified Beneficiary, except as provided in Section 2.08(d), and
PHC shall have no liability or obligation with respect thereto.
(c) Continuation Coverage Claims. As of the Distribution
Date, and except as provided in Sections 2.08(a) and (e), Harrah's Entertainment
shall assume or retain and shall be responsible for, or cause its insurance
carriers or HMOs to be responsible for, all liabilities and obligations in
connection with claims asserted or incurred or premiums owed
through the Cut-off Date under any Promus Medical/Dental Plan in respect of any
Promus Qualified Beneficiary and claims asserted or incurred or premiums owed
after the Cut-off Date under any Harrah's Entertainment Medical/Dental Plan in
respect of any Promus Qualified Beneficiary or Harrah's Entertainment Qualified
Beneficiary and PHC shall have no liability or obligation with respect thereto.
Through December 31, 1995, or through such other period to the extent required
by COBRA, each Promus Qualified Beneficiary and each Harrah's Entertainment
Qualified Beneficiary shall, to the extent applicable, for all purposes under
any new Harrah's Entertainment Medical/Dental Plan (i) have coverage which is
substantially comparable to that provided immediately prior to the Distribution
Date, (ii) have no preexisting condition limitation imposed other than that
which is or was already imposed under the applicable existing Plan, and (iii) be
credited with or otherwise have taken into account, to the extent applicable,
the expenses incurred towards deductibles, out-of-pocket limits, maximum benefit
payments, and any benefit usage towards plan limits credited to such individual
as of the Cut-off Date under the terms of the applicable existing Plan as if
such expenses and usage had originally been credited to such individual under a
Harrah's Entertainment Medical/Dental Plan.
(d) Liability for Medical Retirees. As of the
Distribution Date, Harrah's Entertainment shall assume or retain, as the case
may be, and shall be solely responsible for, or cause its insurance carriers or
HMOs to be responsible for, all liabilities and obligations whatsoever in
connection with claims asserted or incurred or premiums owed through or after
the Cut-off Date under the retiree coverage provisions of any Promus
Medical/Dental Plan (or successor thereto) or any Harrah's Entertainment
Medical/Dental Plan in respect of any Medical Retiree, and PHC shall have no
liability or obligation with respect thereto.
Section 2.08 PHC Medical/Dental Plans
(a) Establishment of New PHC Medical/Dental Plans. As
soon as practicable after the date hereof and effective as of the Distribution
Date, PHC shall take, or cause to be taken, all action necessary and appropriate
to establish and administer (or continue to administer) the PHC Medical/Dental
Plans and to provide benefits thereunder for all Transferred Employees (and any
dependents or beneficiaries thereof), and PHC Qualified Beneficiaries (with
respect to continuation coverage under COBRA only) who, immediately prior to the
Distribution Date, were participants in or otherwise entitled to benefits under
the Promus Medical/Dental Plans. Each such individual shall, to the extent
applicable, for all purposes under the new PHC Medical/Dental Plans (i) have
coverage which is substantially comparable to that provided immediately prior to
the Distribution Date, (ii) have no preexisting condition limitation imposed
other than that which is or was already imposed under the applicable existing
Plan, and (iii) be credited with or otherwise have taken into account, to the
extent applicable, Service Credits, any expenses incurred towards deductibles,
out-of-pocket limits, maximum benefit payments, and any benefit usage towards
plan limits credited to such individual as of the Cut-off Date under the terms
of the applicable existing Plan as if such service had been rendered to PHC and
as if such expenses and usage had originally been credited to such individual
under the new PHC Medical/Dental Plans.
(b) Harrah's Entertainment to Provide Information. As
soon as practicable after the Distribution Date, Harrah's Entertainment shall
provide PHC (with the cooperation of PHC to the extent that relevant information
is in the possession of PHC, and in accordance with Section 5.02), with a list
of individuals (and dependents thereof) employed by PHC who were, to the best
knowledge of Harrah's Entertainment, participants in or otherwise entitled to
benefits under the Promus Medical/Dental Plans immediately prior to the
Distribution Date, together with a listing of each such individual's Service
Credit under such Plans and a listing of each such individual's expenses
incurred towards deductibles, out-of-pocket limits, maximum benefit payments,
and any benefit usage towards plan limits thereunder. Harrah's Entertainment
shall, as soon as practicable after the Distribution Date, in accordance with
Section 5.02 provide PHC with such additional information in the possession of
Harrah's Entertainment (and not already in the possession of PHC) as may be
reasonably requested by PHC and necessary for PHC to establish and administer
effectively any new PHC Medical/Dental Plan.
(c) Liability for Claims. As of the Distribution Date,
PHC shall assume and shall be responsible for, or cause its insurance carriers
or HMOs to be responsible for, all liabilities and obligations in connection
with claims asserted or incurred or premiums due on and after the Cut-off Date
in respect of any Transferred Employee (or any dependent or beneficiary thereof)
and, with respect to COBRA only, any PHC Qualified Beneficiary (whether such
claims are asserted or incurred before, on or after the Cut-off Date) under any
Promus Medical/Dental Plan and Harrah's Entertainment shall have no liability or
obligation with respect thereto.
(d) Continuation Coverage Administration. As of the
Distribution Date, PHC shall assume or retain, as the case may be, and shall be
solely responsible for, or cause its insurance carriers or HMOs to be
responsible for, providing and administering the continuation coverage mandated
by COBRA as it relates to any PHC Qualified Beneficiary, and Harrah's
Entertainment shall have no liability or obligation with respect thereto.
(e) Continuation Coverage Claims. As of the Distribution
Date, PHC shall be solely responsible for, or cause its insurance carriers or
HMOs to be responsible for, all liabilities and obligations whatsoever in
connection with claims asserted or incurred or premiums due through and after
the Cut-off Date under any Promus Medical/Dental Plan (or successor thereto) in
respect of any PHC Qualified Beneficiary, and Harrah's Entertainment shall have
no liability or obligation with respect thereto. Through December 31, 1995, or
through such other period to the extent required by COBRA, each PHC Qualified
Beneficiary, shall, to the extent applicable, for all purposes under the Plans
established by PHC (i) have coverage which is substantially comparable to that
provided to him or her immediately prior to the Distribution Date, (ii) have no
preexisting condition limitation imposed other than that which is or was already
imposed under the applicable existing Plan, and (iii) be credited with or
otherwise have taken into account, to the extent applicable, the expenses
incurred towards deductibles, out-of-pocket limits, maximum benefit payments,
and any benefit usage towards plan limits credited to such individual as of the
Cut-off Date under the terms of the applicable existing Plan as if such expenses
and usage had originally been credited to such individual under a PHC
Medical/Dental Plan.
Section 2.09 Vacation and Sick Pay Liabilities.
(a) Division of Liabilities. Effective on the
Distribution Date, PHC shall assume, as to the Transferred Employees, and
Harrah's Entertainment shall retain, as to the Retained Employees, all accrued
liabilities (whether vested or unvested, and whether funded or unfunded) for
vacation and sick leave in respect of such employees as of the Cut-off Date.
PHC shall be solely responsible for the payment of such vacation or sick leave
to PHC Employees after the Cut-off Date, and Harrah's Entertainment shall be
solely responsible for the payment of such vacation or sick leave to Retained
Employees after the Cut-off Date. Each Party shall provide to its own Employees
on the Distribution Date the same vested and unvested balances of vacation and
sick leave as credited to such Employee on the Promus payroll system on the
Cut-off Date.
(b) Funded Reserves. Assets attributable to funded
reserves for the vacation leave liabilities being divided in accordance with
Section 2.09(a) (whether held in a trust, a voluntary employees beneficiary
association, or any other funding vehicle) shall be divided in accordance with
the division of liabilities described above, i.e., assets attributable to
obligations to Transferred Employees shall be transferred to PHC, and all
remaining assets shall be retained by or within the control of Harrah's
Entertainment; provided however, that assets of any Promus trust which is exempt
from tax under Section 501(c)(9) of the Code established to provide vacation
leave benefits to Employees of Promus shall be transferred only into another
tax-exempt trust with comparable terms established to provide vacation leave
benefits to PHC Employees.
(c) Post-Distribution Transfers. Through December 31,
1995, an Employee who leaves the service of one Party to immediately begin
employment with the other Party (i.e., leaving Harrah's Entertainment employment
to work for PHC, or leaving PHC employment to work for Harrah's Entertainment)
shall be provided by the successor employer with the same balance of vested and
unvested vacation and sick leave hours as had been accrued by the former
Employer through such termination date. The former Employer shall promptly
notify the successor Employer in writing of the occurrence of any termination
subject to the provisions of this Section 2.09(c), and shall make a payment to
such successor Employer within thirty (30) days of the aforesaid termination
date in an amount equal to the value of the terminating Employee's vested
balance of vacation leave accrued by the former Employer through such
termination date, based on the Employee's final rate of pay with the former
Employer. No payment shall be made by the former Employer to the successor
Employer for any sick leave or unvested vacation leave balance relating to any
post-Distribution transfer.
Section 2.10 Adjustments for Welfare Plans. Except as
otherwise expressly provided herein, Harrah's Entertainment shall retain all
liabilities accrued though the Cut-off Date under all Welfare Plans of Promus to
the extent relating to Retained Individuals, Promus Qualified Beneficiaries,
Promus Terminees and Medical Retirees, and PHC shall be responsible for all
liabilities accrued under such Welfare Plans, to the extent relating to PHC
Individuals or PHC Qualified Beneficiaries as of the Cut-off Date.
Section 2.11 Preservation of Right To Amend or Terminate Plans.
Except as otherwise expressly provided in this Article II, no provisions of this
Agreement, including, without limitation, the agreement of Harrah's
Entertainment or PHC to make a contribution or payment to or under any Plan
herein referred to for any period, shall be construed as a limitation on the
right of Harrah's Entertainment or PHC to amend such Plan or terminate its
participation therein which Harrah's Entertainment or PHC would otherwise have
under the terms of such Plan or otherwise, and no provision of this Agreement
shall be construed to create a right in any employee or former employee, or
dependent or beneficiary of such employee or former employee under a Plan which
such person would not otherwise have under the terms of the Plan itself;
provided, however, that neither Party shall amend any Plan to the extent that
such amendment would have the effect of increasing the liabilities of the other
Party under any Plan of the other Party, without such other Party's consent.
Section 2.12 Reimbursement. Promus and PHC acknowledge that
Harrah's Entertainment, on the one hand, and PHC, on the other hand, may incur
costs and expenses, including, but not limited to, contributions to Plans and
the payment of insurance premiums arising from or related to any of the Plans
which are, as set forth in this Agreement, the responsibility of the other Party
hereto. Accordingly, Harrah's Entertainment and PHC shall reimburse each other,
as soon as practicable, but in any event within thirty (30) days of receipt from
the other Party of appropriate verification, for all such costs and expenses.
Section 2.13 Payroll Reporting and Withholding.
(a) Form W-2 Reporting. PHC and Harrah's Entertainment
hereby adopt the "alternative procedure" for preparing and filing IRS Forms W-2
(Wage and Tax Statements), as described in Section 5 of Revenue Procedure 84-77,
1984-2 IRS Cumulative Bulletin 753 ("Rev. Proc. 84-77"). Under this procedure
PHC as the successor employer shall provide all required Forms W-2 to all
Transferred Employees reflecting all wages paid and taxes withheld by both
Promus as the predecessor and PHC as the successor employer for the entire year
during which the Distribution takes place. Harrah's Entertainment shall provide
all required Forms W-2 to all Retained Employees reflecting all wages and taxes
paid and withheld by Promus before the Distribution Date and by Harrah's
Entertainment on and after the Distribution Date.
In connection with the aforesaid agreement under Rev. Proc.
84-77, each business unit or business operation of Promus shall be assigned to
either Harrah's Entertainment or PHC, depending upon whether it is a Retained
Business or a Transferred Business, and each Retained Employee or Transferred
Employee associated with such business unit or business operation shall be
assigned for payroll reporting purposes to Harrah's Entertainment or PHC, as the
case may be. Harrah's Entertainment and PHC shall be responsible for filing IRS
Forms 941 for their respective Employees.
(b) Forms W-4 and W-5. PHC and Harrah's Entertainment
agree to adopt the alternative procedure of Rev. Proc. 84-77 for purposes of
filing IRS Forms W-4 (Employee's Withholding Allowance Certificate) and W-5
(Earned Income Credit Advance Payment Certificate). Under this procedure
Harrah's Entertainment shall provide to PHC as the successor employer all IRS
Forms W-4 and W-5 on file with respect to each Transferred Employee, and PHC
will honor these forms until such time, if any, that such Transferred Employee
submits a revised form.
(c) Garnishments, Tax Levies, Child Support Orders, and
Wage Assignments. With respect to Employees with garnishments, tax levies,
child support orders, and wage assignments in effect with Promus on the Cut-off
Date, PHC as the successor employer with respect to each Transferred Employee
shall honor such payroll deduction authorizations and will continue to make
payroll deductions and payments to the authorized payee, as specified by the
court or governmental order which was filed with Promus.
(d) Authorizations for Payroll Deductions. Unless
otherwise prohibited by this or another agreement entered into in connection
with the Distribution, or by a Plan document, with respect to Transferred
Employees with authorizations for payroll deductions in effect with Promus on
the Cut-off Date, PHC as the successor employer will honor such payroll
deduction authorizations relating to each Transferred Employee, and shall not
require that such Transferred Employee submit a new authorization to the extent
that the type of deduction by PHC does not differ from that made by Promus.
Such deduction types include, without limitation, contributions to any Plan,
U.S. Savings Bonds, and United Giver's Fund; scheduled loan repayments to the
Profit Sharing Plan or to an employee credit union; and Direct Deposit of
Payroll, bonus advances, union dues, employee relocation loans, and other types
of authorized company receivables usually collectible through payroll
deductions.
(e) Withholding Taxes on Account of The Distribution to
Promus Restricted Stockholders Who Are Transferred Employees. PHC shall
cooperate with Harrah's Entertainment in the collection of withholding tax
liability of Transferred Employees who received the Distribution on account of
Promus Restricted Stock held by such Transferred Employee on the Distribution
Date. PHC shall collect such amounts, by payroll deduction or otherwise,
commencing on October 2, 1995, from those Transferred Employees who have not as
of that date satisfied the full amount of their liability for such withholding
taxes to Harrah's Entertainment. Such payroll deductions shall be made ratably
over 6 to 10 pay periods as determined by Harrah's Entertainment. Any amount
collected on account of such liability shall be remitted to Harrah's
Entertainment as soon as practicable after collection.
ARTICLE III
LABOR AND EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any
other Agreement between PHC and Harrah's Entertainment to the contrary, PHC and
Harrah's Entertainment understand and agree that:
Section 3.01 Separate Employers. On and after the Distribution
Date and the separation of Employees into their respective companies, PHC and
Harrah's Entertainment will be separate and independent employers.
Section 3.02 Employment Policies and Practices. Subject to the
provisions of ERISA and Sections 2.01(b) on Service Credits and 2.02(g), 2.03(c)
and 2.09(c) governing post-Distribution transfers through December 31, 1995, and
except as limited by applicable law or agreement, PHC and Harrah's Entertainment
may adopt, continue, modify or terminate such employment
policies, compensation practices, retirement plans, welfare benefit plans, and
other employee benefit plans of any kind or description, as each may determine,
in its sole discretion, are necessary or appropriate.
Section 3.03 Collective Bargaining Agreements. With regard to
Employees covered by a Collective Bargaining Agreement on the Cut-off Date who
become PHC Employees or Retained Employees, PHC and Harrah's Entertainment
promise and covenant to each other not to take any action which disrupts or
otherwise negatively impacts the labor relations of the other. PHC and Harrah's
Entertainment will diligently work to substitute the appropriate employer for
Promus in Collective Bargaining Agreements.
Section 3.04 Special Matters.
(a) Administrative Services In Connection With The PHC
Savings And Retirement Plan. It is agreed that Promus will provide
administrative services to the PHC Savings and Retirement Plan from the
Distribution Date through December 31, 1995 at a reasonable fee to be agreed
upon by Promus and the Trustees of the PHC Savings and Retirement Plan, which
fee shall comply with ERISA and other applicable law. Such services will be
substantially similar to the services provided by Promus employees to the Promus
Savings and Retirement Plan. These administrative services may be extended
beyond December 31, 1995, if agreed to by Promus and the Trustees of the PHC
Savings and Retirement Plan.
(b) Allocation of Group Insurance Reserves. The Parties
hereby agree to divide and allocate any surplus balances and any reserves
relating to any group insurance Plan maintained by Promus prior to the
Distribution, in accordance with a formula and procedures to be adopted by the
Parties prior to the Distribution Date.
Section 3.05 Funding of Union Plans. Without limitation to the
scope and application of Section 3.04, any claims by or on behalf of employees
or their collective bargaining agent or any federal, state or local governmental
agency for alleged underfunding of, or failure to make payments to, union or
collectively bargained health, welfare and pension plans and funds based on acts
or omissions with respect to such plans and funds occurring on or before the
Distribution Date or arising from or in connection with the Distribution, or
resulting from actuarial recalculation by auditors of such plans and funds, will
be the sole responsibility of each Party as to its own employees (i.e., PHC with
respect to Transferred Employees, and Harrah's Entertainment with respect to
Retained Employees), and the responsible Party will indemnify, defend, and hold
harmless the other from any such claims.
Section 3.06 Notice of Claims. Without limitation to the scope
and application to each Party in the performance of its duties under Sections
3.04 and 3.05 herein, each Party will notify in writing and consult with the
other Party prior to making any settlement of an employee claim, for the purpose
of avoiding any prejudice to such other Party arising from the settlement.
Section 3.07 Assumption of Unemployment Tax Rates. Changes in
state unemployment tax experience from that of Promus as of the Cut-off Date
shall be handled as follows. In the event an option exists to allocate state
unemployment tax experience of Promus, the Promus experience shall be
transferred to PHC if this results in the lowest aggregate unemployment tax
costs for both Harrah's Entertainment and PHC combined, and the Promus
experience shall be retained by Harrah's Entertainment if this results in the
lowest aggregate unemployment tax costs for Harrah's Entertainment and PHC
combined.
Section 3.08 Employees on Leave of Absence. After the
Distribution Date, PHC shall assume responsibility, if any, as employer for all
Employees returning from an approved leave of absence who prior to the
Distribution Date were employed in a Transferred Business. After the
Distribution Date, Harrah's Entertainment shall assume responsibility, if any,
as employer for all Employees returning from an approved leave of absence who
prior to the Distribution Date were not employed in a Transferred Business.
Section 3.09 No Third Party Beneficiary Rights.
(a) Neither this Agreement nor any other intercompany
agreement between PHC and Harrah's Entertainment is intended to nor does it
create any third party contractual or other common law rights. No person shall
be deemed a third-party beneficiary of the agreements between PHC and Harrah's
Entertainment.
(b) Nothing contained in this Agreement shall confer upon
any Employee any right with respect to continuance of employment by either
Party, nor shall anything herein interfere with the right of either party to
terminate the employment of any Employee at any time, with or without cause, or
restrict a Party in the exercise of its independent business judgment in
modifying any of the terms and conditions of the employment of an Employee,
except as provided by applicable law.
(c) No provision of this Agreement shall create any third
party beneficiary rights in any Employee, any beneficiary or dependent thereof,
or any collective bargaining representative thereof, with respect to the
compensation, terms and conditions of employment and benefits that may be
provided to any Employee by either Party or under any benefit plan which a Party
may maintain.
Section 3.10 Attorney-Client Privilege. The provisions herein
requiring either Party to this Agreement to cooperate shall not be deemed to be
a waiver of the attorney/client privilege for either Party nor shall it require
either Party to waive its attorney/client privilege.
ARTICLE IV
DEFAULT
Section 4.01 Default. If either Party materially defaults
hereunder, the non-defaulting Party shall be entitled to all remedies provided
by law or equity (including reasonable attorneys' fees and costs of suit
incurred).
Section 4.02 Force Majeure. PHC and Harrah's Entertainment
shall incur no liability to each other due to a default under the terms and
conditions of this Agreement resulting from fire, flood, war, strike, lock-out,
work stoppage or slow-down, labor disturbances, power failure, major
equipment breakdowns, construction delays, accident, riots, acts of God, acts of
United States' enemies, laws, orders or at the insistence or result of any
governmental authority or any other delay beyond each other's reasonable
control.
ARTICLE V
MISCELLANEOUS
Section 5.01 Relationship of Parties. Nothing in this
Agreement shall be deemed or construed by the Parties or any third party as
creating the relationship of principal and agent, partnership or joint venture
between the Parties, it being understood and agreed that no provision contained
herein, and no act of the Parties, shall be deemed to create any relationship
between the Parties other than the relationship set forth herein.
Section 5.02 Access to Information; Cooperation. Harrah's
Entertainment and PHC and their authorized agents shall be given reasonable
access to and may take copies of all information relating to the subjects of
this Agreement (to the extent permitted by federal and state confidentiality
laws) in the custody of the other Party, including any agent, contractor,
subcontractor, agent or any other person or entity under the contract of such
Party. The Parties shall provide one another with such information within the
scope of this Agreement as is reasonably necessary to administer each Party's
Plans. The Parties shall cooperate with each other to minimize the disruption
caused by any such access and providing of information.
Section 5.03 Assignment. Neither Party shall, without the
prior written consent of the other, have the right to assign any rights or
delegate any obligations under this Agreement.
Section 5.04 Headings. The headings used in this Agreement are
inserted only for the purpose of convenience and reference, and in no way define
or limit the scope or intent of any provision or part hereof.
Section 5.05 Severability of Provisions. Neither Harrah's
Entertainment nor PHC intend to violate statutory or common law by executing
this Agreement. If any section, sentence, paragraph, clause or combination of
provisions in this Agreement is in violation of any law, such sections,
sentences, paragraphs, clauses or combinations shall be inoperative and the
remainder of this Agreement shall remain in full force and effect and shall be
binding upon the Parties.
Section 5.06 Parties Bound. This Agreement shall inure to the
benefit of and be binding upon the Parties hereto and their respective
successors and permitted assigns. Nothing herein, expressed or implied, shall
be construed to give any other person any legal or equitable rights hereunder.
Section 5.07 Notices. All notices, consents, approvals and
other communications given or made pursuant hereto shall be in writing and shall
be deemed to have been duly given when delivered personally or by overnight
courier or three days after being mailed by registered or certified mail
(postage prepaid, return receipt requested) to the named representatives of the
Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice, except that notices of changes of address
shall be effective upon receipt):
(a) if to Harrah's Entertainment:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
(b) if to PHC:
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138
Attention: General Counsel
PHC and Harrah's Entertainment agree that, upon the request of either Party, the
requested Party will give copies of all of its notices, consents, approvals and
other communications hereunder to any lender to the requesting Party or other
person specified by such requesting Party.
Section 5.08 Further Action. PHC and Harrah's Entertainment
each shall cooperate in good faith and take such steps and execute such papers
as may be reasonably requested by the other Party to implement the terms and
provisions of this Agreement.
Section 5.09 Waiver. PHC and Harrah's Entertainment each agree
that the waiver of any default under any term or condition of this Agreement
shall not constitute a waiver of any subsequent default or nullify the
effectiveness of that term or condition.
Section 5.10 Governing Law. All controversies and disputes
arising out of or under this Agreement shall be determined pursuant to the laws
of the State of Tennessee, regardless of the laws that might be applied under
applicable principles of conflicts of laws.
Section 5.11 Consent to Jurisdiction. The Parties irrevocably
submit to the exclusive jurisdiction of (a) the Courts of the State of
Tennessee, Shelby County, or (b) any federal district court where there is
federal jurisdiction for the purpose of any suit, action or other Court
proceeding arising out of this Agreement.
Section 5.12 Entire Agreement. This Agreement and the
Distribution Agreement constitute the entire understanding between the Parties
hereto, and supersede all prior written or oral communications, relating to the
subject matter covered by said agreements. To the extent that the terms of this
Agreement and similar terms of the Distribution Agreement are in conflict, the
interpretation given to the conflicting terms of the Distribution Agreement
shall govern the interpretation and performance of this Agreement. No
amendment, modification, extension or failure to enforce any condition of this
Agreement by either Party shall be deemed a waiver of any of its rights herein.
This Agreement shall not be amended except by a writing executed by the Parties.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date first above written.
THE PROMUS COMPANIES INCORPORATED, a
Delaware corporation
By: CHARLES A. LEDSINGER, JR.
---------------------------------
Name: Charles A. Ledsinger, Jr.
Title: Senior Vice President
PROMUS HOTEL CORPORATION, a
Delaware corporation
By: DONALD H. DEMPSEY
---------------------------------
Name: Donald H. Dempsey
Title: SVP-CFO
EXHIBIT 10(11)
RISK MANAGEMENT ALLOCATION AGREEMENT
AGREEMENT between The Promus Companies Incorporated, a Delaware corporation
("Promus"), to be known as Harrah's Entertainment, Inc. after the Distribution
(as hereinafter defined), and Promus Hotel Corporation, a Delaware corporation
and an indirect wholly-owned subsidiary of Promus ("PRH").
RECITALS
WHEREAS, subject to certain conditions, Promus intends to spin off its
hotel business by distributing all of the outstanding shares of common stock of
PRH to the holders of Promus common stock (the "Distribution");
WHEREAS, in connection with the Distribution, Promus and PRH have entered
into a Distribution Agreement (the "Distribution Agreement") setting forth the
principal corporate transactions required to effect the Distribution and setting
forth the agreements that will govern certain matters following the
Distribution; and
WHEREAS, pursuant to the aforesaid Distribution Agreement, Promus and PRH
have agreed to enter into an agreement allocating responsibilities with respect
to risk management matters pursuant to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. General. As used in this Agreement, the following terms
shall have the following meanings:
Claim: Any demand for payment with respect to an injury, loss, liability,
damage or expense arising out of insured or insurable occurrences or events
under one or more of the Policies, the Excess Policies or Self Insurance
Programs, including any IBNR Losses for which a demand for payment is
subsequently made.
Claims Administration: The processing of Claims including the reporting of
Claims to the insurance carrier, management and defense of Claims and providing
for appropriate releases upon settlement of Claims.
Distribution Date: The date determined by the Promus Board as the date on
which the Distribution shall be effected.
Excess Policies: The insurance policies described in Section 3.03 of this
Agreement.
IBNR Losses: "Incurred but not reported" losses for which reserves are
routinely established.
Insurance Administration: With respect to each Policy (including Self
Insurance Programs) and Excess Policy, the accounting for premiums,
retrospectively rated premiums, defense costs, adjuster's fees, indemnity
payments, deductibles and retentions as appropriate under the terms and
conditions of each of the Policies; and the reporting to excess insurance
carriers of any losses or claims in accordance with Policy provisions, and the
distribution of Insurance Proceeds as contemplated by this Agreement.
Insurance Proceeds: Those moneys (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of the insured,
in either case net of any applicable premium adjustment, retrospectively-rated
premium, deductible, retention, cost or reserve paid or held by or for the
benefit of such insured.
Policies: Insurance policies and insurance contracts of any kind relating
to the PRH Business or the Retained Business as conducted prior to the
Distribution Date, including without limitation primary and excess policies,
comprehensive general liability policies, automobile, aircraft and workers'
compensation insurance policies, state workers' compensation funds in Ohio and
Washington, and self-insurance and captive insurance company arrangements,
including any "fronted policies" with respect to Self Insurance Programs,
together with the rights, benefits and privileges thereunder.
Post-Distribution Claims: Claims asserted against the PRH Group or the
Promus Group with respect to any injury, loss, liability, damage or expense
incurred after the Distribution Date.
PRH Claims: Claims arising in or in connection with the PRH Business.
PRH Policies: All Policies, current or past, which are owned by or on
behalf of Promus or any of its Affiliates or predecessors, which relate to the
PRH Business but do not relate to the Casino Business, and which Policies are
either maintained by PRH or assignable to PRH.
PRH Reserve: The reserve described in Section 3.01 of this Agreement.
Promus Claims: Claims arising in or in connection with the Retained
Business.
Self Insurance Programs: Those self-insured programs administered by
Promus for the benefit of its employees, properties and operating businesses
covering Claims arising prior to the Distribution Date, including without
limitation prospective funding of (a) workers' compensation claims with the
approval of state self-insurance departments, (b) claims within the deductible
of an insurance policy (including property, workers' compensation, general
liability, automobile liability policies), and (c) reinsurance of an insurance
company insuring Promus for property, workers' compensation, general liability,
or automobile liability.
Shared Policies: All Policies, current or past, which are owned or
maintained by or on behalf of Promus or any of its Subsidiaries or their
respective predecessors which relate to both the Casino Business and the PRH
Business, and all other Policies not constituting PRH Policies or Retained
Policies.
Section 1.02. Other Terms. Any capitalized terms used herein but not
defined herein shall have the meaning set forth in the Distribution Agreement.
ARTICLE II
THE DISTRIBUTION
Section 2.01. Effective Date. This Agreement shall be effective on the
Distribution Date and shall expire five (5) years thereafter, unless sooner
terminated as provided herein.
Section 2.02. Post-Distribution Claims. Effective at 12:01 a.m. on the
day following the Distribution Date, Promus and PRH will have separate risk
management programs for the negotiation and execution of insurance contracts,
risk identification and treatment, risk control, claims management, and risk
retention and financing. With the exception of Claims under the Excess
Policies, which will be handled as described in Section 3.03 of this Agreement,
Promus shall be solely responsible for the administration and payment of Post-
Distribution Claims relating to the Retained Business, and PRH shall be solely
responsible for the administration and payment of Post-Distribution Claims
relating to the PRH Business.
Section 2.03. Pre-Distribution Claims. The PRH Liabilities as defined in
the Distribution Agreement shall include any and all PRH Claims asserted
against the PRH Group or the Promus Group and which were incurred or claimed to
have been incurred on or prior to the Distribution Date. The Retained
Liabilities as defined in the Distribution Agreement shall include any and all
Promus Claims asserted against the PRH Group or the Promus Group and which were
incurred or claimed to have been incurred on or prior to the Distribution Date.
ARTICLE III
INSURANCE POLICIES AND RESERVES
Section 3.01. Reserves.
(a) PRH shall be entitled to reserves recorded by Promus or its
captive insurance company, Aster Insurance Ltd., with respect to the PRH Claims
(the "PRH Reserve") in accordance with the terms and conditions of this
Agreement. The amount of the PRH Reserve shall be determined by allocating a
portion of Promus's reserve for insured losses (including losses insured under
Self Insurance Programs) in the following manner: As soon as is reasonably
practicable after the Distribution Date, PRH Claims which were incurred or
claimed to be incurred prior to the Distribution Date (including an estimate of
PRH Claims incurred but not reported) shall be valued by Becher + Carlson,
Promus's actuary, as of the Distribution Date. The parties will instruct Becher
Carlson to value the PRH Claims using the same or similar methods used in
previous valuations of the Claims and without regard to the value of the Promus
Claims. PRH Claims shall be paid from the PRH Reserve in the manner provided in
this Agreement. Promus's liability for PRH Claims shall be limited to the
amount of the PRH Reserve.
(b) Promus shall be entitled to any reserves established by Promus or
any of its Subsidiaries with respect to the Retained Liabilities, or the benefit
of reserves held by any insurance carrier with respect to the PRH Liabilities or
the Retained Liabilities, subject to the rights of PRH to the PRH Reserve as
provided herein.
Section 3.02. Insurance Policies and Rights Included Within the PRH
Assets. The PRH Assets as defined in the Distribution Agreement shall include
(a) any and all rights of an insured party under each of the Shared Policies,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer, with respect to all injuries, losses, liabilities,
damages and expenses incurred or claimed to have been incurred on
or prior to the Distribution Date by any party in or in connection with the
conduct of the PRH Business or, to the extent any claim is made against PRH or
any of its Subsidiaries, the Retained Business, and which injuries, losses,
liabilities, damages and expenses may arise out of insured or insurable
occurrences or events under one or more of the Shared Policies; provided,
however, that nothing in this clause shall be deemed to constitute (or to
reflect) the assignment of the Shared Policies, or any of them, to PRH and
provided, further, that the foregoing shall not limit the generality of the
definition of the PRH Assets set forth in Section 1.01 of the Distribution
Agreement or the effect of Section 2.02 thereof; and (b) the PRH Policies.
Section 3.03. Excess Liability Policies.
(a) After the Distribution, Promus shall provide continued coverage
for PRH Claims under the following excess liability insurance policies (the
"Excess Policies") until the expiration of the Excess Policies on June 1, 1997,
or such later date as may be agreed by the parties:
- The X. L. Insurance Company Ltd. policy number UMB01565, with a
limit of liability of $50 million per occurrence, $100 million
annual aggregate, and attaching at $100 million.
- The ACE Limited policy number PRMU750/4, with a limit of
liability of $150 million and attaching at $150 million.
Forty-seven percent (47%) of the additional premiums, if any, for such coverage
shall be reimbursed by PRH within 10 business days of the Distribution Date or
any policy renewal date.
(b) In the event either party hereto makes a Claim which results in a
reduction of the policy limits of one or both of the Excess Policies, the party
making such Claim shall be required to reinstate the original policy limit of
any affected Excess Policy at its sole cost, unless otherwise agreed by the
other party. Each party agrees to be reasonable if requested to waive the
foregoing requirement, taking into account the remaining term of the affected
Excess Policy, the cost of reinstatement and the availability of alternative
insurance coverage.
Section 3.04. Treatment of Claims Against PRH Reserve.
(a) If any person, corporation, firm or entity shall assert a claim against
PRH or any PRH Subsidiary with respect to any injury, loss, liability, damage or
expense incurred or claimed to have been incurred on or prior to the
Distribution Date in or in connection with the conduct of the PRH Business or,
to the extent any claim is made against PRH or any of its Subsidiaries, the
Retained Business, and which injury, loss, liability, damage or expense may
arise out of insured or insurable occurrences or events under a Self Insurance
Program or otherwise be chargeable to the PRH Reserve, PRH shall be entitled to
payment of such Claim and related expenses from the PRH Reserve in the manner
described in this Section 3.04. Promus shall make available an imprest bank
account for use by PRH or its agent (including, without limitation, its third
party administrator) in paying PRH Claims. PRH or its agent shall submit
documentation to Promus on a monthly basis detailing payments made from the
imprest bank account during the preceding month for PRH Claims and requesting
replenishment of the account in like amount. The requests for replenishment
shall be accompanied by reasonable supporting documentation. Promus shall
replenish the imprest bank account in accordance with procedures and
requirements contained in existing contractual arrangements among Promus,
Promus's third party administrator (which is also PRH's third party
administrator) and Old Republic Insurance Company, or in such other manner as
the parties may from time to time agree. The amount of the PRH Reserve shall be
reduced by the amount of any payment made by Promus of the PRH Claims, whether
by funding the imprest bank account or otherwise. The obligation of Promus to
fund the imprest bank account or to otherwise pay PRH Claims at any time shall
be limited to the balance remaining in the PRH Reserve after reductions to such
reserve as provided herein.
(b) Upon the expiration or earlier termination of this Agreement, Promus
will pay to PRH the cash equivalent of the balance, if any, then remaining in
the PRH Reserve.
Section 3.05. Treatment of Claims Under the Shared Polices and the Excess
Policies. If any person, corporation, firm or entity shall assert a claim
against PRH or any PRH Subsidiary with respect to any injury, loss, liability,
damage or expense incurred or claimed to have been incurred on or prior to the
Distribution Date in or in connection with the conduct of the PRH Business or,
to the extent any claim is made against PRH or any of its Subsidiaries, the
Retained Business, and which injury, loss, liability, damage or expense may
arise out of insured or insurable occurrences or events under one or more of the
Shared Policies or the Excess Policies, Promus shall at the time such claim is
asserted be deemed to assign, without need of further documentation, to PRH any
and all rights of an insured party under the applicable Shared Policy or Excess
Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer; provided, however, that nothing in this sentence
shall be deemed to constitute (or to reflect) the assignment of the Shared
Policies or the Excess Policies, or any of them, to PRH.
ARTICLE IV
ADMINISTRATION
Section 4.01. Administration. Notwithstanding the provisions of Article
III of the Distribution Agreement, but subject to any contrary provisions of
this Agreement, from and after the Distribution Date: (a) Promus shall be
responsible for (i) the Insurance Administration of the Shared Policies and the
Excess Policies and (ii) Claims Administration with respect to the Promus
Claims; provided, that the administration of the Shared Policies and the Excess
Policies by Promus is in no way intended to limit, inhibit, or preclude any
right to insurance coverage for any Claim of a named insured under the Shared
Policies and the Excess Policies, including but not limited to PRH and any of
its operations, subsidiaries and Affiliates; and (b) PRH shall be responsible
for (i) the Insurance Administration of the PRH Policies, and (ii) Claims
Administration with respect to the PRH Claims.
Section 4.02 Insurance Premiums. Except as otherwise provided in this
Agreement, (a) PRH shall pay that portion of the premiums (retrospectively-rated
or otherwise) with respect to Shared Policies and the Excess Policies as are
attributable to the PRH Liabilities, and (b) Promus shall pay that portion of
the premiums (retrospectively-rated or otherwise) with respect to Shared
Policies and the Excess Policies as are attributable to the PRH Liabilities.
Each party shall have the right but not the obligation to pay the entire premium
required under the terms and conditions of any of the respective Policies to the
extent the other party does not pay its proportionate share thereof and to be
reimbursed by the non-paying party for the portion of the premium attributable
to the Liabilities of such party.
Section 4.03 Allocation of Insurance Proceeds. Insurance Proceeds
received with respect to claims, costs and expenses under the Policies shall be
paid to PRH with respect to the PRH Liabilities and to Promus with respect to
the Retained Liabilities. Payment of the allocable portions of indemnity costs
of Insurance Proceeds resulting from the liability policies will be made to the
appropriate party upon receipt from the insurance carrier. In the event that
the aggregate limits on any Shared Policies or Excess Policies are
exceeded, the parties agree to provide an equitable allocation of Insurance
Proceeds received after the Distribution Date based upon their respective bona
fide claims. The parties agree to use their best efforts to cooperate with
respect to insurance matters.
Section 4.04. Agreement for Waiver of Conflict and Shared Defense. In the
event that Claims of both PRH and Promus exist relating to the same occurrence,
PRH and Promus agree to jointly defend and to waive any conflict of interest
necessary to the conduct of that joint defense. Nothing in this paragraph shall
be construed to limit or otherwise alter in any way the indemnity obligations of
the parties to this Agreement, including those created by this Agreement, the
Distribution Agreement, by operation of law or otherwise.
Section 4.05. Surety Bonds and Letters of Credit. Promus or its
Subsidiaries have posted surety bonds to secure obligations for self-insured
workers' compensation losses as required by various state insurance departments
(the "Surety Bonds") and the letters of credit to insurance companies that front
Promus's workers' compensation, general and automobile liability insurance
("LOCs"). PRH shall replace all Surety Bonds and LOC's relating to the PRH
Business within three (3) months after the Distribution Date. Promus shall keep
any such Surety Bonds and LOCs in place after the Distribution to secure
obligations relating to periods preceding the Distribution Date until their
replacement by PRH or until three (3) months after the Distribution Date,
whichever first occurs, provided, that PRH shall be responsible for payment of
all obligations secured by the Surety Bonds and LOCs constituting PRH
Liabilities (and shall reimburse Promus for any payment made directly by Promus
with respect to such PRH Liabilities), and Promus shall be responsible for all
such obligations constituting Retained Liabilities (and shall reimburse PRH for
any payments made directly by PRH on behalf of such Retained Liabilities),
consistent with the allocations of PRH Liabilities and Retained Liabilities set
forth in the Distribution Agreement. PRH will be responsible for the cost of
any Surety Bonds and LOCs outstanding after the Distribution Date that relate to
the PRH Business.
Section 4.06. Expenses. Except as otherwise provided herein, each party
will bear the cost of its performance of this Agreement. In the event that
Promus should incur any material cost or expense in connection with the PRH
Claims or any of them or as a result of providing services hereunder relating to
the PRH Claims, which cost or expense was not contemplated at the
time this Agreement was executed, PRH agrees to reimburse Promus for the
reasonable amount of such cost or expense upon presentation of appropriate
supporting documentation. Promus and PRH each agree to negotiate in good faith
to resolve any disagreement concerning whether a cost or expense is reimbursable
under this Section 4.06 or whether the amount thereof is reasonable.
Section 4.07. Third Party Administrator. PRH has retained Alexsis, Inc.
to serve as its third party administrator with respect to the PRH Claims and the
Post-Distribution Claims relating to the PRH Business. PRH agrees not to change
third party administrators without the prior written consent of Promus, which
consent shall not be unreasonably withheld.
ARTICLE V
INDEMNIFICATION
Section 5.01. Indemnification of Promus. Except as otherwise expressly
set forth herein, Promus shall indemnify, defend and hold harmless PRH and each
of the PRH Subsidiaries, and each of their respective directors, officers,
employees, agents and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (the "PRH Indemnitees") from and against the
Promus Claims and any and all losses, Liabilities and damages, including,
without limitation, the costs and expenses of any and all Actions, threatened
Actions, demands, assessments, judgments, settlements and compromises relating
thereto and attorneys' fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened Actions ("Indemnifiable Losses") of the PRH Indemnitees arising out
of or due to the failure or alleged failure of Promus or any of its Affiliates
to pay, perform or otherwise discharge in due course any of the Promus Claims.
Section 5.02. Indemnification by PRH. Except as otherwise expressly set
forth herein, PRH shall indemnify, defend and hold harmless Promus and each of
the Retained Subsidiaries, and each of their directors, officers, employees,
agents and Affiliates and each of the heirs, executors, successors and assigns
of any of the foregoing (the "Promus Indemnitees") from and against the PRH
Claims and any and all losses, Liabilities, damages, including, without
limitation, the costs and expenses of any and all Actions, threatened Actions,
demands, assessments, judgments, settlements and compromises relating thereto
and attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigation, preparing or defending against any such Actions or threatened
Actions ("Indemnifiable Losses") of the Promus Indemnitees arising out of or due
to the failure or alleged failure of PRH or any of its Affiliates to pay,
perform or otherwise discharge in due course any of the PRH Claims.
Section 5.03. Insurance Proceeds. The amount which any party (an
"Indemnifying Party") is or may be required to pay to any other Person (an
"Indemnitee") pursuant to Section 5.01 or Section 5.02 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in reduction
of the related Indemnifiable Loss. If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds,
or other amounts in respect of such Indemnifiable Loss as specified above, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
of such Insurance Proceeds or other amounts actually received.
Section 5.04. Procedure for Indemnification. The procedure for
indemnification under this Agreement shall be the same as that set forth in the
Distribution Agreement.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. It shall be an Event of Default
hereunder if either party:
(a) fails to perform any covenant, warranty or agreement under this
Agreement, and such breach continues for more than 30 days after receipt of
written notice thereof; or
(b) (i) either party generally fails to pay its debts as they become due;
(ii) either party becomes insolvent or makes an assignment for the benefit of
creditors; (iii) a receiver, trust conservator or liquidator of either party, or
of all or any substantial part of its assets, is appointed with or without the
application or consent of the other party and is not contested or, if contested,
not dismissed with 90 days; or (iv) a petition is filed by or against either
party requesting the entry of an order for relief under the Bankruptcy Code or
any amendment thereto, or under any other state
or federal insolvency law or laws providing for the relief of debtors and is
acquiesced to or, if contested, is not dismissed within 90 days.
Section 6.02. Remedies.
(a) If any Event of Default shall occur with respect to Promus, PRH shall
have the right, in addition to all other rights and remedies available to it, to
terminate this Agreement with respect to future rights and obligations without
any liability to PRH for such termination, and Promus shall pay to PRH the then-
remaining balance in the PRH Reserve.
(b) If any Event of Default shall occur with respect to PRH, Promus shall
have the right, in addition to all other rights and remedies available to it, to
terminate this Agreement with respect to future rights and obligations without
any liability to Promus for such termination, except for the obligation of
Promus to pay to PRH the then-remaining balance in the PRH Reserve as provided
in Section 3.04(b) of this Agreement.
(c) Neither party shall be liable to the other for consequential
damages.
(d) Except as expressly set forth herein, nothing shall limit the
rights and remedies of the parties hereto at law or in equity.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Relationship of Parties. Nothing in this Agreement shall be
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship set forth herein.
Section 7.02. Access to Information; Cooperation. Promus and PRH and
their authorized agents will be given reasonable access to and may take copies
of all information relating to the subjects of this Agreement (to the extent
permitted by federal and state confidentiality laws) in the custody of the other
party, including any agent, contractor, subcontractor, agent or any other person
or entity under the contract of such party, including the risk management
information system ("RMIS"), claims management system of any third party
administrator. and any other information relating to PRH Claims. The parties
will cooperate with each other to minimize the disruption caused by any such
access and providing of information.
Section 7.03. Arbitration of Disputes.
(a) Any controversy or claim arising out of this Agreement, or any breach
of this Agreement, shall be settled by arbitration in accordance with the Rules
of the American Arbitration Association then in effect, as modified by this
Section 7.03 or by the further agreement of the parties.
(b) Such arbitration shall be conducted in Memphis, Tennessee.
(c) Any judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrators shall not,
under any circumstances, have any authority to award punitive, exemplary or
similar damages, and may not, in any event, make any ruling, finding or award
that does not conform to the terms and conditions of this Agreement.
(d) Nothing contained in this Section 7.03 shall limit or restrict in
any way the right or power of a party at any time to seek injunctive relief in
any court and to 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 7.03. The parties
agree that any legal remedy available to a party with respect to a breach of
this Section 7.03 will not be adequate and that, in addition to all other legal
remedies, each party is entitled to an order specifically enforcing this Section
7.03.
(e) The parties hereby consent to the jurisdiction of the federal
courts located in Memphis, Tennessee for all purposes.
(f) Neither party nor the arbitrators may disclose the existence or
results of any arbitration under this Agreement or any evidence presented during
the course of the arbitration without the prior written consent of both parties,
except as required to fulfill applicable disclosure and reporting obligations,
or as otherwise required by law.
(g) Each party shall bear its own costs incurred in the arbitration.
If either party refuses to submit to arbitration any dispute required to be
submitted to arbitration pursuant to this Section 7.03, and instead commences
any other proceeding, including, without limitation, litigation, then the party
who seeks enforcement of the obligation to arbitrate shall be entitled to its
attorneys' fees and costs incurred in any such proceeding.
Section 7.04. Assignment. Neither party shall, without the prior written
consent of the other, have the right to assign any rights or delegate any
obligations under this Agreement.
Section 7.05. Parties Bound. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing herein, expressed or implied, shall be construed to
give any other person any legal or equitable rights hereunder.
Section 7.06. Notices. All notices, consents, approvals and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given when delivered personally or by overnight courier
or three days after being mailed by registered or certified mail (postage
prepaid, return receipt requested) to the named representatives of the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
(a) if to Promus
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: Corporate Secretary
(b) if to PRH
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138
Attention: Corporate Secretary
Section 7.07. Further Action. PRH and Promus each shall cooperate in good
faith and take such steps and execute such papers as may be reasonably requested
by the other party to implement the terms and provisions of this Agreement.
Section 7.08. Waiver. PRH and Promus each agree that the waiver of any
default under any term or condition of this Agreement shall not constitute a
waiver of any subsequent default or nullify the effectiveness of that term or
condition.
Section 7.09. Governing Law. All controversies and disputes arising out
of or under this Agreement shall be determined pursuant to the laws of the State
of Tennessee.
Section 7.10. Entire Agreement. This Agreement and the Distribution
Agreement constitute the entire understanding between the parties hereto, and
supersede all prior written or oral communications, relating to the subject
matter covered by said agreements. No amendment, modification, extension or
failure to enforce any condition of this Agreement by either party shall be
deemed a waiver of any of its rights herein. This Agreement shall not be
amended except by a writing executed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
30th day of June, 1995.
THE PROMUS COMPANIES INCORPORATED,
a Delaware corporation
By: CHARLES A. LEDSINGER, JR.
------------------------------
Name: Charles A. Ledsinger, Jr.
Title: Senior Vice President
PROMUS HOTEL CORPORATION, a
Delaware corporation
By: DONALD H. DEMPSEY
------------------------------
Name: Donald H. Dempsey
Title: SVP-CFO
EXHIBIT 10(12)
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT, dated as of June 30, 1995, among The Promus
Companies, Incorporated, a Delaware corporation ("Promus") to be renamed
Harrah's Entertainment, Inc. ("HEI"), Promus Hotel Corporation, a Delaware
corporation ("PHC"), and their respective direct and indirect subsidiaries.
References herein to a "party" (or "parties") to this Agreement, shall refer to
Promus, PHC, and where appropriate and the context so requires, HEI.
WHEREAS, Promus and its subsidiaries have joined in filing
consolidated Federal Income Tax Returns and certain consolidated, combined or
unitary state Income Tax Returns;
WHEREAS, Promus and PHC have entered into that certain Plan of
Reorganization and Distribution Agreement, dated as of the date hereof (the
"Distribution Agreement"), pursuant to which Promus will distribute all of the
outstanding common stock in PHC (such stock to be received by Promus immediately
before in a Code Section 355 distribution from Embassy Suites, Inc. ("Embassy"),
a wholly-owned subsidiary of Promus) to its stockholders in a transaction
intended to qualify for tax-free treatment under Code Section 355 (the "Spin-
off");
WHEREAS, pursuant to the Spin-off, (i) PHC and its subsidiaries will
leave the Promus Group and (ii) Promus will change its name to Harrah's
Entertainment, Inc.; and
WHEREAS, the parties hereto wish to provide for (i) allocations of,
and indemnifications against, certain liabilities for Taxes, (ii) the
preparation and filing of Tax Returns on a basis consistent with prior practice
and the payment of Taxes with respect thereto, and (iii) certain related
matters;
NOW THEREFORE, in consideration of their mutual promises, the parties
hereby agree as follows:
1. Definitions.
When used herein the following terms shall have the following
meanings:
"Affiliate" -- with respect to any corporation (the "given
corporation"), each person, corporation, partnership or other entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the given corporation. For
purposes of this definition, "control" means the possession, directly or
indirectly, of 50% or more of the voting power or value of outstanding voting
interests.
"Affiliated Group" -- an affiliated group of corporations within the
meaning of Code Section 1504(a) for the Taxable Period or, for purposes of any
state income tax matters, any consolidated, combined or unitary group of
corporations within the meaning of the corresponding provisions of tax law for
the state in question.
"After-Tax Basis" -- any indemnity payment made hereunder shall give
effect to, and be reduced by the value of, any and all applicable deductions,
losses, credits, offsets or other tax items for Federal, state or other Tax
purposes attributable to the payment of the indemnified liability, which value
shall be determined on an assumed basis by (a) multiplying the amount of such
deductions, losses, offsets or other tax items (such amount determined as if
such deductions, losses, offsets or other tax items will generate an immediate
deduction for the full amount ultimately available) by (i) 39% or (ii) if no
state income tax benefit shall result therefrom, 35% (such percentages to
increase or decrease on a percentage-for-percentage basis with any subsequent
increases or decreases in the current 35% highest marginal income tax rate for
corporations) and (b) valuing any credits or other direct reduction of Tax on a
dollar-for-dollar basis. For example, if a deductible interest payment of $100
is indemnified hereunder, the indemnification payment with respect thereto shall
be reduced by $39 to $61.
"Closing" -- the time when the Spin-off shall become effective on the
Closing Date.
"Closing Date" -- the date on which the Spin-off is effected by HEI.
"Code" -- the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the Taxable Year in question.
"Combined Jurisdiction" -- for any Taxable Period, any state, local or
foreign jurisdiction in which Promus or a Promus Affiliate is included in a
consolidated, combined, unitary or similar return with Promus or any Promus
Affiliate for state, local or foreign Income Tax purposes.
"Distribution Agreement" -- as defined in the preamble to this
Agreement.
"Embassy" -- as defined in the preamble to this Agreement.
"Embassy Location-Specific Tax and Information Returns" -- as defined
in Section 2(a)(i)(D) of this Agreement.
"Final Determination" -- (i) a decision, judgment, decree, or other
order by a court of competent jurisdiction, which has become final and
unappealable; (ii) a closing agreement or accepted offer in compromise under
Code Sections 7121 or 7122, or comparable agreements under the laws of other
jurisdictions; or (iii) any other final settlement with the IRS or other Taxing
Authority, or (iv) the expiration of an applicable statute of limitations.
"HEI"-- as defined in the preamble to this Agreement.
"HEI Group" -- HEI and each corporation that joins with HEI in filing
a consolidated federal income tax return for any Post-Closing Taxable Period.
For purposes of this Agreement, the HEI Group shall exist from the beginning of
the day immediately after the Closing Date. To the extent applicable, to any
state income tax matters, the "HEI Group" shall include all corporations joining
in the filing of a consolidated, combined or unitary income tax return for the
state and period in question.
"HEI Member" -- a corporation that was immediately before the Spin-off
a Promus Member and becomes a member of the HEI Group at the beginning of the
day immediately after the Closing Date.
"Income Tax(es)" -- with respect to any corporation or group of
corporations, any and all Taxes based upon or measured by net income (regardless
of whether denominated as an "income tax," a "franchise tax" or otherwise),
imposed by any Taxing Authority, together with any related interest, penalties
or other additions thereto.
"Indemnified Party" -- as defined in Section 3(e) of this Agreement.
"Indemnifying Party" -- as defined in Section 3(e) of this Agreement.
"Information Return(s)" -- with respect to any corporation or
Affiliated Group, any and all reports, returns, declarations or other filings
(other than Tax Returns) required to be supplied to any Tax Authority.
"IRS" -- the United States Internal Revenue Service.
"Other Tax(es)" -- with respect to any corporation or Affiliated
Group, any and all Taxes, other than Income Taxes, together with any related
interest, penalties or other additions thereto.
"Overdue Rate" -- a rate of interest per annum that fluctuates with
the Federal short-term rate established from time to time pursuant to Code
Section 6621.
"PHC"-- as defined in the preamble to this Agreement.
"PHC Group" -- PHC and each corporation that joins with PHC in filing
a consolidated federal income tax return for any Post-Closing Taxable Period.
For purposes of this Agreement, the PHC Group shall exist from the beginning of
the day immediately after the Closing Date. To the extent applicable to any
state income tax matters, the "PHC Group" shall include all corporations joining
in the filing of a consolidated, combined or unitary income tax return for the
state and period in question.
"PHC Member" -- a corporation that was a Promus Member and becomes a
member of the PHC Group at the beginning of the day immediately after the
Closing Date.
"Post-Closing Straddle Period" -- with respect to any Straddle Period,
the period beginning on the day after the Closing Date and ending on the last
day of such Taxable Year.
"Post-Closing Taxable Period" -- a Taxable Year that begins on the day
immediately after the Closing Date, including any Post-Closing Straddle Period.
"Pre-Closing Straddle Period" -- with respect to any Straddle Period,
the period beginning on the first day of such Taxable Year and ending on the
close of business on the Closing Date.
"Pre-Closing Taxable Period" -- a Taxable Year that ends at or before
the close of business on the Closing Date, including any Pre-Closing Straddle
Period.
"Promus" -- as defined in the Preamble to this Agreement.
"Promus Group" -- HEI and each corporation that joined with HEI in
filing a consolidated federal income tax return for any Pre-Closing Taxable
Period. For purposes of this Agreement, the Promus Group shall terminate at the
close of business on the Closing Date. To the extent applicable to any state
income tax matters, the "Promus Group" shall include all corporations joining in
the filing of a consolidated, combined or unitary income tax return for the
state and period in question.
"Promus Member" -- a corporation that was a member of the Promus
Group at the close of business on the Closing Date.
"Representative" -- with respect to any person or entity, any of such
person's or entity's directors, officers, employees, agents, consultants,
accountants, attorneys and other advisors.
"Spin-off" -- as defined in the Preamble to this Agreement.
"Straddle Period" -- any Taxable Year beginning before and ending
after the close of business on the Closing Date.
"Tax(es)" -- any net income, gross income, gross receipts, sales, use,
excise, franchise, transfer, payroll, premium, property or windfall profits tax,
alternative or add-on minimum tax, or other tax, fee or assessment, together
with any interest and any penalty, addition to tax or additional amount imposed
by any Taxing Authority, whether any such tax is imposed directly or through
withholding.
"Taxable Period" -- either a Pre-Closing Taxable Period or a Post-
Closing Taxable Period.
"Taxable Year" -- a taxable year (which may be shorter than a full
calendar or fiscal year), year of assessment or similar period with respect to
which any Tax may be imposed.
"Tax Benefit(s)" -- (i) in the case of an Income Tax for which a
consolidated Federal, or a consolidated, combined or unitary state or other, Tax
Return is filed, the amount by which the Tax liability of the Affiliated Group
or other relevant group of corporations is actually reduced on a "with and
without" basis (by deduction, entitlement to refund, credit, offset or
otherwise, whether available in the current Taxable Year, as an adjustment to
taxable income in any other Taxable Year or as a carryforward or carryback, and
including the effect on other Income or Other Taxes of such reduction), plus any
interest received with respect to any related Tax refund, and (ii) in the case
of any Other Tax, the amount by which the Tax liability of a corporation is
actually reduced on a "with and without" basis (by deduction, entitlement to
refund, credit, offset or otherwise, whether available in the current Taxable
Year, as an adjustment to taxable income in any other Taxable Year or as a
carryforward or carryback, and including the effect on other Income or Other
Taxes of such reduction), plus any interest received with respect to any related
Tax refund.
"Taxing Authority" -- the IRS and any other domestic or foreign
governmental authority responsible for the administration of any Tax.
"Tax Practices" -- the most recently applied policies, procedures and
practices employed by the Promus Group in the preparation and filing of, and
positions taken on, any Tax Returns of Promus or any Promus Member or Promus
Affiliate for any Pre-Closing Taxable Period.
"Tax Return(s)" -- with respect to any corporation or Affiliated
Group, all returns, reports, estimates, information statements, declarations and
other filings relating to, or required to be filed in connection with, the
payments or refund of any Tax.
"Tax Treatment" -- as defined in Section 3(c) hereto.
2. Obligations, Responsibilities and Rights of HEI and PHC.
(a) Preparation and Filing of Tax Returns.
(i) By HEI. HEI shall prepare and timely file (or cause to
be prepared and timely filed):
(A) all Tax and Information Returns for Income Taxes
of the Promus Group and any Promus Member for any Pre-Closing Taxable Period
other than a Pre-Closing Straddle Period;
(B) all Tax and Information Returns for Income Taxes
of the Promus Group, the HEI Group, any Promus Member and any HEI Member (other
than such Returns solely for any PHC Member or any group of PHC Members) for all
Straddle Periods;
(C) all Tax and Information Returns for Income Taxes
of the HEI Group and any HEI Member for all Post-Closing Taxable Periods;
(D) all Tax and Information Returns for Other Taxes
for all Taxable Periods relating to (i) all Promus Members (except for PHC
Members), the HEI Group, and the HEI Members (but not including any hotel
location-specific or hotel activity-specific Tax and Information Returns filed
by Embassy or Harrah's Operating Company, Inc. ("Embassy Location-Specific Tax
and Information Returns")), and (ii) any New York City or State of New York real
property transfer Taxes relating to the transfer or deemed transfer of any real
property owned or leased by any Promus Member during any Pre-Closing Taxable
Period (including, without limitation, any such Taxes resulting from the Spin-
off);
(E) all Information Returns required to be filed by
the Promus Group or any Promus Member at or before the close of business on the
Closing Date and by any HEI Member after the close of business on the Closing
Date, as well as any Information Returns required from the Promus Group or any
Promus Member with respect to the formation of the PHC Group or the Spin-off;
and
(F) all Tax and Information Returns not otherwise
required to be filed by HEI or PHC pursuant to this Section 2(a)(i) and Section
2(a)(ii).
(ii) By PHC. PHC shall prepare and timely file (or cause to
be prepared and timely filed);
(A) all Information Returns for Income Taxes of any
PHC Member;
(B) all Tax and Information Returns for Income Taxes
of any PHC Member or any group of PHC Members (other than such Returns for the
Promus Group or any Promus Member) for all Straddle Periods;
(C) all Tax and Information Returns for Income Taxes
of the PHC Group and any PHC Member for all Post-Closing Taxable Periods;
(D) to the extent not filed by the close of business
on the Closing Date, all Tax Returns for Other Taxes for all Taxable Periods
relating to (i) all PHC Members, and (ii) Embassy Location-Specific Tax and
Information Returns; and
(E) all Information Returns required to be filed by
the PHC Group or any PHC Member after the close of business on the Closing Date.
(b) Provision of Filing Information. HEI (or PHC, as the case
may be) shall cooperate and assist PHC (or HEI) in the preparation and filing of
all Tax and Information Returns subject to Section 2(a) and submit to PHC (or
HEI) (i) all necessary filing information in a manner consistent with past Tax
Practices and (ii) all other information reasonably requested by PHC (HEI) in
connection with the preparation of such Tax and Information Returns promptly
after such request. It is expressly understood and agreed that PHC s (or HEI's)
ability to discharge its Tax and Information Return preparation and filing
responsibilities is contingent upon HEI (or PHC) providing PHC (or HEI) with all
cooperation, assistance and information reasonably necessary or requested for
the filing of such Tax and Information Returns and that HEI (or PHC) shall
indemnify PHC (or HEI), and PHC's (or HEI's) indemnification obligations of
Section 3 shall not apply, if, and to the extent that, penalties, interest or
other additions to Taxes are incurred as a result of material inaccuracies in
such information or of failures, material in nature, to provide such information
and assistance.
(c) Taxable Year. PHC and HEI agree that, for Income Tax
purposes, (i) the PHC Members shall be included in the consolidated Federal
Income Tax Return of the Promus Group for the Taxable Year that ends at the
close of business on the Closing Date (and in all corresponding consolidated,
combined or unitary state or other Income Tax Returns of the Promus Group) and
(ii) the PHC Group and each PHC Member shall begin a new Taxable Year for
purposes of such Federal and, to the extent permitted by law, state Income Taxes
on the day after the Closing Date. The parties further agree that, to the
extent permitted by applicable law, all Federal, state or other Income Tax
Returns shall be filed consistently with this position.
(d) Advance Review of Tax Returns. At least fifteen (15) days
prior to the filing of any Federal Income Tax Return (including amendments
thereto) that includes a PHC Member, and at least ten (10) days prior to the
filing of any Tax Return other than any Federal Income Tax Return (including
amendments thereto) that includes a PHC Member, HEI shall provide PHC with the
portion of such Tax Return related to any PHC Member. In the case of each Tax
Return subject to the conformity requirements of Section 2(e) and filed pursuant
to Section 2(a), PHC shall provide HEI with copies of any such Tax Return at
least fifteen (15) days prior to the filing thereof (including amendments
thereto). PHC and its Representatives (or HEI and its Representatives, as the
case may be) shall have the right to review all workpapers related to such
portions of such Tax Returns prior to the filing of any such Tax Return. HEI
(or PHC, as the case may be) shall consult with PHC (or HEI) regarding its
comments with respect to such Tax Returns and shall in good faith (A) consult
with PHC (or HEI) in an effort to resolve any differences with respect to the
preparation and accuracy of such Tax Returns and their consistency with past Tax
Practices and (B) consider PHC's (or HEI's) recommendations for alternative
positions with respect to items reflected on such Tax Returns; provided,
however, that HEI (or PHC) shall not be required to consider any such
recommendation if the result thereof would adversely affect the Taxes of the HEI
Group or any HEI Member (or the PHC Group or any PHC Member) for any Post-
Closing Taxable Period and may condition the acceptance of any such
recommendation upon the receipt of appropriate indemnification from PHC (HEI)
for any increases in Taxes that may result from the adoption of the relevant
alternative position.
(e) Consistent Positions on Tax Returns. HEI (or PHC, as the
case may be) shall prepare all Tax Returns filed pursuant to Section 2(a) for
all Taxable Years ended on or before December 31, 1996 in a manner consistent
with past Tax Practices except as otherwise required by changes in applicable
law or material underlying facts. Whether by original or amended Tax Returns or
otherwise, (i) HEI shall not (A) voluntarily accelerate or shift deductions and
other similar items into a Pre-Closing Taxable Period or (B) voluntarily defer
or shift income and other similar items into a Post-Closing Taxable Period, and
(ii) PHC shall not (A) voluntarily defer or shift deductions and other similar
items into a Post-Closing Taxable Period or (B) voluntarily accelerate or shift
income and other similar items into a Pre-Closing Taxable Period; provided,
however, that this Section 2(e) shall not preclude the correction of
mathematical or material factual errors or other adjustments necessary to
conform any such Tax Return to applicable law or past Tax Practices.
(f) Allocation of Straddle Period Taxes. For purposes of this
Agreement, Taxes shall be allocated between the Pre- and Post-Closing Straddle
Periods, in HEI s reasonable judgment after consulting with appropriate PHC
personnel, in the following manner:
(i) To the extent not impractical, Income Taxes shall be
allocated on the basis of the actual taxable income for each such period,
determined by closing the books of the Promus Group at the close of business on
the Closing Date.
(ii) To the extent that such an allocation based on a
closing of the books is impractical, HEI shall be authorized to use any
reasonable method, including allocations based on (x) allocations of taxable
income, loss, gain, deduction and credits made for Federal Income Tax purposes,
(y) rounding to the next nearest month-end, or (z) the actual number of days in
the Pre- and Post-Closing Straddle Periods in proportion to the number of days
in the entire Straddle Period.
(g) Payment of Taxes. HEI shall pay all Taxes shown to be due
and payable on all Tax Returns filed by HEI pursuant to Section 2(a)(i) hereof
and, subject to Section 3(b), all Taxes that shall thereafter become due and
payable with respect to such Tax Returns as a result of a Final Determination.
PHC shall pay all Taxes shown to be due and payable on all Tax Returns filed by
PHC pursuant to Section 2(a)(ii) hereof and, subject to Section 3(a), all Taxes
that shall thereafter become due and payable with respect to any such Tax
Returns as a result of a Final Determination.
(h) Amendments to Tax Returns. HEI (or PHC, as the case may be)
shall be entitled to amend Tax Returns filed by HEI (or PHC) pursuant to Section
2(a); provided, however, that PHC shall not amend for any reason whatsoever any
Tax Return of HEI or any HEI Member for Pre-Closing Taxable Periods or Pre-
Closing Straddle Periods, except (A) after written notice to HEI, pursuant to a
change in accounting method granted by a Taxing Authority pursuant to a request
made prior to the Closing Date, or (B) with HEI's written consent (which consent
may be withheld at HEI's sole discretion). PHC shall not amend any Tax Return
of the PHC Group or any PHC Member for any Post-Closing Taxable Period ended on
or before December 31, 1996, or any Pre-Closing Straddle Period, except (A)
pursuant to the settlement or other resolution of a contest subject to Section 6
or (B) with HEI's written consent (which consent shall not be unreasonably
withheld); provided, however, that such prohibition shall not extend to the
correction of mathematical or material factual errors or other adjustments
necessary to conform such Tax Returns to applicable law or past Tax Practices.
(i) Refunds of Taxes.
(i) HEI shall be entitled to any refund (including for
purposes of this Section 2(i), any Tax Benefits realized by the PHC Group or any
PHC Member in lieu of any refund) of (x) any and all Taxes of the Promus Group
or any Promus Member (excluding PHC and the PHC Members) for all Pre-Closing
Taxable Periods and all Pre-Closing Straddle Periods, and (y) any and all Taxes
of the HEI Group or any HEI Member for all Post-Closing Taxable Periods (except
for Taxes in connection with Embassy Location-Specific Tax and Information
Returns). PHC shall be entitled to any refund (including for purposes of this
Section 2(i), any Tax Benefits realized by the Promus Group or any Promus Member
(excluding PHC and the PHC Members) or the HEI Group or any HEI Member in lieu
of any refund) of (x) any and all Taxes of the PHC Group or any PHC Member for
all Taxable Periods, and (y) any and all Taxes in connection with Embassy
Location-Specific Tax and Information Returns. Any such refunds attributable to
a Straddle Period shall be allocated between the Pre-Closing Straddle Period and
Post-Closing Straddle Period on a basis consistent with the method used to
allocate the Tax liability for such Straddle Period.
(ii) Except as otherwise provided in this Agreement, if HEI
or any HEI Member (or PHC or any PHC Member, as the case may be) receives a Tax
refund or Tax Benefit to which PHC or any PHC Member (or HEI or any HEI Member)
is entitled pursuant to this Agreement, HEI (or PHC) shall pay
(in accordance with Section 4) the amount of such Tax refund or Tax Benefit
(including any interest received thereon) to PHC (or HEI) promptly after receipt
thereof.
(iii) The realization of, and procedural requirements
with respect to, any Tax Benefit under this Section 2(i) shall be governed by
Section 3(e).
(j) Carrybacks. PHC shall not file any carryback claim for
federal Income Taxes or state, local or foreign Income Taxes in a Combined
Jurisdiction for the PHC Group or any PHC Member into a Pre-Closing Taxable
Period without the prior written consent of HEI, which consent shall not be
unreasonably withheld.
(k) NOL, ITC and AMT Credit Benefits. The Tax Returns of the
Promus Group for Taxable Years prior to and including the Taxable Year that
includes the Closing Date may reflect that certain PHC Members have attributable
to them, under applicable Federal and state Income Tax law, certain net
operating loss carryforwards, investment tax credit carryforwards and
alternative minimum tax credit carryforwards (the "Carryforwards"). The parties
hereto agree that the PHC Group and the PHC Members shall be exclusively
entitled to use and benefit from the Carryforwards without compensation to the
Promus Group or any Promus Member. PHC hereby acknowledges and agrees (on its
behalf and on behalf of all PHC Members) that the exact amount of the
Carryforwards is not presently known and may not be definitively determined
until a Final Determination has been reached for all Pre-Closing Taxable Periods
of the Promus Group and each Promus Member. PHC further agrees that it shall
have no recourse against the Promus Group, any Promus Member, HEI Group or any
HEI Member regardless of (a) what amount of such Carryforwards will ultimately
be available to the PHC Group and the PHC Members in Post-Closing Taxable Years
and (b) whether the Carryforwards shall be subject to any limitation imposed as
a result of the application of Code Sections 382 and 383, the Treasury
regulations thereunder or other applicable law. HEI hereby agrees to take any
action or make any election reasonably required to permit PHC and the PHC
Members to utilize the Carryforwards; provided, however, that no such action or
election shall be required if it would adversely affect in any way the Income
Tax liabilities of the HEI Group or any HEI Member for any Taxable Year. The
parties also hereby agree that the provisions of this Section 2(k) shall apply
with respect to any similar carryforwards available under applicable state,
local or foreign Income Tax law.
(l) Tax Reserves. The Tax reserves of the Promus Group, as
reported on the financial statements dated as of the Closing Date, shall be
apportioned between the HEI Group and the PHC Group based on the allocation of
the related Tax liabilities as provided in this Section 2.
3. Indemnification.
(a) By HEI.
(i) Taxes. Subject to Sections 2(b) and 3(b), HEI shall
indemnify and hold PHC and PHC Members harmless (on an After-Tax Basis) against
any and all (A) federal, state, local and foreign Income Taxes of (x) the
predecessor group of the Promus Group for all Pre-Closing Taxable Periods
ending on or prior to February 7, 1990 and (y) the Promus Group for all Pre-
Closing Taxable Periods beginning after February 7, 1990 (but excluding Income
Taxes solely attributable to the operations of any PHC Member), (B) state, local
and foreign Income Taxes of any Promus Members (excluding PHC Members) or HEI
Members for all Taxable Periods and (C) federal, state, local and foreign Other
Taxes (except for Other Taxes paid in connection with Embassy Location-Specific
Tax and Information Returns) of any Promus Members or HEI Members for all
Taxable Periods.
(ii) Member Liability. Subject to Sections 2(b) and 3(b),
HEI shall indemnify and hold PHC and the PHC Members harmless (on an After-Tax
Basis) against each and every liability for Taxes of the Promus Group under
Treasury Regulation Section 1.1502-6 or any similar law, rule or regulation
administered by any Taxing Authority, together with any related interest,
penalties and other additions.
(iii) Pre-existing Indemnification Obligations. HEI
shall indemnify and hold PHC and the PHC Members harmless (on an After-Tax
Basis) against any liability for Taxes of any person other than PHC or a PHC
Member for any Taxable Year; provided, however, that such liability shall only
be indemnified hereunder if it shall arise from, or be imposed under or pursuant
to, a contract, agreement, indemnity or other arrangement that (A) is legally
binding upon PHC or such a PHC Member, and was in full force and effect, both
(x) at the close of business on the Closing Date and (y) at the time such
liability arises and is imposed against PHC or the PHC Member and (B) has not
been amended, modified, changed, altered, restored, reinstated, extended or
otherwise affected by any action, inaction or other event occurring after the
close of business on the Closing Date. With respect to any claim for
indemnification under this Section 3(a)(iii), HEI shall be entitled to enforce
all rights and defenses available to PHC or any PHC Member with respect to any
contest of the underlying Taxes of such other person and any available rights or
defenses with respect to the imposition of such liability against PHC or the PHC
Member in a manner consistent with Section 6 as if such underlying Taxes or such
liability were an indemnified "Tax" for purposes of such Section.
(iv) Bass Litigation. HEI shall indemnify and hold PHC
harmless (on an After-Tax Basis) against any liability for Taxes arising from
the Settlement Agreement, dated March 17, 1995, which effected the settlement of
the litigation styled as Bass Public Limited Company, Bass International
Holdings N.V., (U.S.A.) Incorporated, Holiday Corporation and Holiday Inns, Inc.
v. The Promus Companies Incorporated, formerly pending in the United States
District Court for the Southern District of New York (92 Civ. 0969).
(b) By PHC.
(i) Taxes. Subject to Sections 3(a)(ii), (iii) and (iv),
PHC shall indemnify and hold HEI and HEI Members harmless (on an After-Tax
Basis) against any and all (A) federal, state, local and foreign Income Taxes of
the Promus Group for all Pre-Closing Taxable Periods beginning after February 7,
1990 to the extent solely attributable to the operations of any PHC Member, (B)
federal, state, local and foreign Income Taxes of the PHC Group and any PHC
Members for all Post-Closing Taxable Periods and (C) federal, state, local and
foreign Other Taxes of PHC Members and Other Taxes paid in connection with
Embassy Location-Specific Tax and Information Returns for all Taxable Periods.
(ii) Post-Closing Transactions. Notwithstanding any
contrary provision in this Agreement or in the Distribution Agreement, PHC shall
indemnify and hold the HEI Group and the HEI Members harmless (on an After-Tax
Basis) against any Taxes imposed on or against the Promus Group (including
Promus Members) or the HEI Group (including the HEI Members) that are
attributable to, or arise from, transactions or events outside the ordinary
course of business of PHC and the PHC Members occurring on the Closing Date
after the Closing.
(c) Assumed Tax Treatments. The parties expressly agree for all
purposes to treat the Spin-off as a tax-free transaction under Code Sections 355
and 368 (the "Tax Treatment"). Each party hereto also expressly agrees not to
take (and to cause each of its Affiliates not to take) any action inconsistent
with the treatment of the Spin-off and all related transactions in accordance
with the Tax Treatment and to take (and to cause each of its affiliates to take)
any and all actions reasonably available to such party (or affiliate) to support
and defend such treatment. Notwithstanding anything to the contrary in Sections
3(a) or 3(b), if, solely as a result of any action by a party hereto (or an
Affiliate thereof other than the other party hereto) or its shareholders (in
their capacities as shareholders of such party) occurring after the Closing Date
(such party being the "acting party" for purposes of this Section 3(c)), a Final
Determination results in the Tax Treatment being incorrect and as a result
thereof additional Taxes are incurred, or any Tax Benefit is eliminated in a
Pre-Closing Taxable Period, the acting party shall indemnify and hold harmless
the other party hereto for all such additional Taxes or lost Tax Benefits. If
both Promus and PHC shall be "acting parties" for purposes of the preceding
sentence, then (a) if it can be clearly determined which such party (or
Affiliate or shareholders thereof) took the first action that irrevocably
created the basis for the Tax Treatment being incorrect, such party shall
indemnify and hold harmless the other party for all such additional Taxes or
lost Tax Benefits, or (b) if it cannot be so determined, the parties shall each
bear (and indemnify the other party against) 50% of such additional Taxes or
lost Tax Benefits. Any such claim for indemnification shall otherwise be
handled in the manner specified under this Section 3, but shall not affect in
any manner the provisions of Sections 5 and 6 with respect to cooperation and
control of contests and audits.
(d) Certain Reimbursements. PHC (or HEI, as the case may be)
shall notify HEI (or PHC) of any Taxes paid by the PHC Group or any PHC Member
(or the HEI Group or any HEI Member) which are subject to indemnification under
this Section 3. To the extent not otherwise provided in this Section 3, any
other notification contemplated by this Section 3(d) shall include a detailed
calculation (including, if applicable, separate allocations of such Taxes
between Pre- and Post-Closing Taxable Periods and Pre- and Post-Closing Straddle
Periods and supporting work papers) and a brief explanation of the basis for
indemnification hereunder. Whenever a notification described in this Section
3(d) is given, the notified party shall pay the amount requested in such notice
to the notifying party in accordance with Section 4, but only to the extent that
the notified party agrees with such request. To the extent the notified party
disagrees with such request, it shall, within 20 days, so notify the notifying
party, whereupon the parties shall use their best efforts to resolve any such
disagreement. To the extent not otherwise provided for in this Section 3 or in
Section 4, any payment made after such 20-day period shall include interest at
the Overdue Rate from the date such payment would have been made under Section 4
based upon the original notice given by the notifying party.
(e) Tax Benefits Arising from Timing Adjustments. If and to the
extent that any Tax liability is indemnified under this Section 3 as a result of
a deferral, delay, acceleration or other timing adjustment with respect to the
accrual, recognition or utilization of any item of loss, deduction, credit,
income or gain of the party indemnified (the "Indemnified Party") (and not as a
result of the outright elimination or denial of such item), the Indemnified
Party shall (i) make, file or report in a proper and timely manner, at the
earliest time permitted by law, a claim for or with respect to, such item, (ii)
provide an annual notice to the party providing such indemnification (the
"Indemnifying Party") of the Indemnified Party's realization of any Tax Benefit
in other Taxable Periods as a result of any such item, and (iii) pay to the
Indemnifying Party the amount of any Tax Benefit that it may thereafter obtain
as a result of its use of such item; provided, however, that clauses (ii) and
(iii) hereof shall apply only after an indemnification payment under this
Section 3 has been received; and provided, further, that the provisions of this
Section 3(e) shall not apply if, and to the extent that, any such item has been
taken into account for purposes of determining the After-Tax Basis for the
related indemnification payment. The notices contemplated by clauses (iii)
above shall be accompanied by (1) appropriate supporting Tax Returns (for past,
current and, when available, future Taxable Years), documentation, schedules and
workpapers, and (2) such other Tax Returns (for past, current and, when
available, future Taxable Years), documentation and information as the
Indemnifying Party shall reasonably request, to enable the Indemnifying Party to
monitor the effect of such loss, credit, savings or Tax Benefit on the actual
Tax liabilities, payments and refunds of the Indemnified Party. For purposes of
this Agreement: (A) a Tax Benefit related to an overpayment or refund of Taxes
shall be deemed to have been realized at the time (x) an actual cash refund or
payment is received or (y) such overpayment is applied against other Taxes due;
(B) where a party has other losses, deductions, credits or similar items
available to it, any losses, deductions, credits or items for which the other
party would be entitled to a payment under this Agreement shall be treated as
the last items utilized to produce a Tax Benefit; and (C) in determining the
amount of the Tax Benefit realized, the amount by which the tax liability of a
corporation (or an Affiliated Group) for a Taxable Period is reduced because of
such an item shall be equal to the excess of (I) such corporation's Tax
liability for such Taxable Period if such item had not been taken into account,
over (II) the corporation's actual Tax liability for such Taxable Period. Each
of HEI and PHC shall take, and shall cause the members of their respective
Affiliated Groups to take, as promptly as practicable, all reasonable steps to
ensure that all available Tax Benefits are realized at the earliest possible
time.
(f) Loss of Deductions or Tax Benefits. Appropriate payments
shall be made between the parties to take account of subsequent losses of, or
changes in (i) any deductions, losses, credits, offsets or other tax items taken
into account for purposes of determining the After-Tax Basis of any
indemnification payment or (ii) any Tax Benefit that has been claimed and paid
for by the Indemnified Party under Section 3(e)(iii) above.
4. Method, Timing and Character of Payments Required by This
Agreement.
(a) Payment Procedures. HEI and PHC hereby agree to the
following monthly reporting and payment system with respect to all amounts that
shall become due and payable hereunder between the parties: (1) HEI (or
PHC, as the case may be) shall prepare and deliver to PHC (or HEI), on or before
the 5th calendar day of the following month (or, if such day is not a business
day, the next business day thereafter), a comprehensive monthly report of all
amounts that have become due hereunder to HEI (or PHC) or HEI's (or PHC's)
subsidiaries; and (2) the net amount due between HEI and its subsidiaries on the
one hand and PHC and its subsidiaries on the other hand as of such month-end
(including any amounts remaining unpaid, plus interest thereon, from prior
months) shall become due and payable on the 10th calendar day of the following
month (or, if such day is not a business day, the next business day thereafter).
The parties hereby agree to consult with each other in good faith to resolve any
differences with respect to such monthly reports and payments. HEI's (or PHC's)
failure to prepare or distribute any such monthly report shall not relieve or
defer its obligation to pay any amounts it may owe to PHC (or HEI) hereunder.
(b) Payment in Immediately Available Funds; Interest. All
payments made pursuant to this Agreement shall be made in immediately available
funds. Except as otherwise provided herein, any payment not made when due and
payable under Section 4(a) shall thereafter bear interest at the Overdue Rate.
(c) Characterization of Payments. Any payment (other than
interest thereon) made hereunder by HEI to PHC or by PHC to HEI shall be treated
by all parties for Tax purposes to the extent permitted by law, and for
accounting purposes to the extent permitted by generally accepted accounting
principles, as non-taxable dividend distributions or capital contributions made
prior to the close of business on the Closing Date.
5. Tax Returns; Cooperation; Document Retention; Confidentiality.
(a) Tax Returns. Promptly upon reasonable request, each party
shall deliver to the other party a copy of all filed Income Tax Returns for all
Post-Closing Taxable Periods ending prior to January 1, 2000 and make available
to the other party for inspection a copy of all filed Income Tax Returns for all
Post-Closing Taxable Periods ending after December 31, 1999 and prior to January
1, 2010.
(b) Provision of Cooperation, Documents and Other Information.
Upon the reasonable request of any party to this Agreement, HEI and PHC shall
provide (and shall cause the members of their respective Affiliated Groups to
provide) the requesting party, promptly upon request, with such cooperation and
assistance, documents, and other information, without charge, as may reasonably
be requested by such party in connection with (i) the preparation and filing of
any original or amended Tax Return, (ii) the conduct of any audit or other
examination or any judicial or administrative proceeding involving to any extent
Taxes or Tax Returns within the scope of this Agreement, or (iii) the
verification by a party of an amount payable hereunder to, or receivable
hereunder from, another party. Such cooperation and assistance shall include,
without limitation: (i) the provision on demand of books, records, Tax Returns,
documentation or other information relating to any relevant Tax Return; (ii) the
execution of any document that may be necessary or reasonably helpful in
connection with the filing of any Tax Return by the Promus Group, a Promus
Member, the HEI Group, a HEI Member, the PHC Group or a PHC Member, or in
connection with any audit,
proceeding, suit or action of the type generally referred to in the preceding
sentence, including, without limitation, the execution of powers of attorney and
extensions of applicable statutes of limitations, with respect to Tax Returns
which HEI may be obligated to file on behalf of PHC Members pursuant to Section
2(a); (iii) the prompt and timely filing of appropriate claims for refund; and
(iv) the use of reasonable best efforts to obtain any documentation from a
governmental authority or a third party that may be necessary or helpful in
connection with the foregoing. Each party shall make its employees and
facilities available on a mutually convenient basis to facilitate such
cooperation.
(c) Retention of Books and Records. HEI, each HEI Member, PHC
and each PHC Member shall retain or cause to be retained all Tax Returns, and
all books, records, schedules, workpapers, and other documents relating thereto,
until the expiration of the later of (i) all applicable statutes of limitations
(including any waivers or extensions thereof), and (ii) any retention period
required by law or pursuant to any record retention agreement. The parties
hereto shall notify each other in writing of any waivers, extensions or
expirations of applicable statutes of limitations. The parties shall provide
written notice of any intended destruction of the documents referred to in this
subsection. A party giving such a notification shall not dispose of any of the
foregoing materials without first offering to transfer possession thereof to all
notified parties.
(d) Status and Other Information Regarding Audits and
Litigation. HEI (or PHC, as the case may be) shall use reasonable best efforts
to keep PHC (or HEI) advised, as to the status of Tax audits and litigation
involving any issue relating to any Taxes, Tax Returns or Tax Benefits subject
to indemnification under this Agreement. To the extent relating to any such
issue, HEI (or PHC) shall promptly furnish PHC (or HEI) copies of any inquiries
or requests for information from any Taxing Authority or any other
administrative, judicial or other governmental authority, as well as copies of
any revenue agent's report or similar report, notice of proposed adjustment or
notice of deficiency.
(e) Confidentiality of Documents and Information. Except as
required by law or with the prior written consent of the other party, all Tax
Returns, documents, schedules, work papers and similar items and all information
contained therein, which Tax Returns and other materials are within the scope of
this Agreement, shall be kept confidential by the parties hereto and their
Representatives, shall not be disclosed to any other person or entity and shall
be used only for the purposes provided herein.
6. Contests and Audits.
(a) Notification of Audits or Disputes. Upon the receipt by HEI
or any HEI Member (or PHC or any PHC Member, as the case may be) of notice of
any pending or threatened Tax audit or assessment which may affect the liability
for Taxes that are subject to indemnification hereunder, HEI (or PHC) shall
promptly notify the other in writing of the receipt of such notice.
(b) Control and Settlement. HEI shall have the right to
control, and to represent the interests of all affected taxpayers in, any Tax
audit or administrative, judicial or other proceeding relating, in whole or in
part, to any Pre-Closing Taxable Period or any other Taxable Period for which
HEI is responsible, in whole or in part, for Taxes under Sections 2(g) and (3),
and to employ counsel of its choice at its expense; provided, however, that,
with respect to such issues that may impact PHC or any PHC Member for any
Post-Closing Taxable Period, HEI shall (i) afford PHC full opportunity to
participate in any such proceedings in a reasonable manner at PHC's expense and
to review any submissions related to such issues, (ii) in good faith, consult
with PHC regarding its comments with respect to such proceedings and submissions
in an effort to resolve any differences with respect to HEI's positions with
regard to such issues, consider PHC's recommendations for alternative positions
with respect to such issues and advise PHC of the reasons for rejecting any such
alternative position, (iii) in good faith consult with PHC as to strategy and
settlement decisions with respect to such proceedings and submissions and (iv)
use its best efforts to arrive at a settlement of such proceedings that reflects
the ultimate merits of the issues rather than the respective indemnification
obligations of the parties pursuant to Section 3. In the event of any
disagreement regarding the proceedings, HEI shall have the ultimate control of
the contest and any settlement or other resolution thereof. PHC shall have the
right to control, and to represent the interests of all affected taxpayers in,
any Tax audit or administrative, judicial or other proceeding relating, in whole
or in part, to any Post-Closing Taxable Period of the PHC Group, or relating to
any other Taxable Period for which PHC is solely responsible, for Taxes under
Section 2(g) and (3), and to employ counsel of its choice at its expense;
provided, however, that PHC shall (i) afford HEI full opportunity to participate
in any such proceedings in a reasonable manner at HEI's expense and to review
any submissions related thereto and (ii) not agree to settle any such proceeding
in a manner that could reasonably have a material and adverse effect on (A) any
indemnification obligation of HEI hereunder, (B) any Tax liability of the Promus
Group or any Promus Member for any Pre-Closing Taxable Period or (C) any Tax
liability of the HEI Group or any HEI Member for any Post-Closing Taxable
Period, without the prior written consent of HEI, which consent shall not be
unreasonably withheld.
(c) Delivery of Powers of Attorney and Other Documents. PHC (or
HEI, as the case may be) shall execute and deliver to HEI (or PHC), promptly
upon request, powers of attorney authorizing HEI (or PHC) to extend statutes of
limitations, receive refunds, negotiate settlements and take such other actions
that HEI or PHC reasonably considers to be appropriate in exercising its control
rights pursuant to Section 6(b), and any other documents reasonably necessary to
effect the exercising of such control rights.
7. Miscellaneous.
(a) Effectiveness. This Agreement shall be effective from and
after the Closing Date and shall survive until the expiration of any applicable
statute of limitations; provided, however, that this Agreement shall terminate
immediately upon a termination of the Distribution Agreement in accordance with
the terms of Section 9.07 thereof and thereafter this Agreement shall be of no
further force and effect.
(b) Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement terminates and supersedes, on a prospective basis only, any and
all other sharing or allocation agreements with respect to Taxes in effect at
the time between the Promus Group and the PHC Members, but shall not affect any
such agreement to the extent applicable only among HEI Members.
(c) Guarantees of Performance. HEI and PHC hereby guarantee the
complete and prompt performance by the members of their respective Affiliated
Groups of all of their obligations and undertakings pursuant to this Agreement.
If, subsequent to the close of business on the Closing Date, either HEI or PHC
shall be acquired by another entity such that 50% or more of its common stock is
in common control, such acquirer shall, by making such acquisition,
simultaneously agree to jointly and severally guarantee the complete and prompt
performance by the acquired corporation and any Affiliate of the acquired
corporation of all of their obligations and undertakings pursuant to this
Agreement.
(d) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable, the
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions hereof without including any of such
which may hereafter be declared invalid, void or unenforceable. In the event
that any such term, provision, covenant or restriction is hereafter held to be
invalid, void or unenforceable, the parties hereto agree to use their best
efforts to find and employ an alternate means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction.
(e) Indulgences, etc. Neither the failure nor any delay on the
part of any party hereto to exercise any right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude any other or further exercise of the same or any other right, nor
shall any waiver of any right with respect to any occurrence be construed as a
waiver of such right with respect to any other occurrence.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
regard to the conflict of law principles thereof, except with respect to matters
of law concerning the internal corporate affairs of any corporate entity which
is a party to or subject of this Agreement, and as to those matters the law of
the jurisdiction under which the respective entity derives its powers shall
govern.
(g) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement that are routine in
nature shall be made in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the designated
representative of the tax department of each party and confirmed by a copy
thereof directed to the general counsel of each party, while all notices,
requests, demands and other communications of material importance shall be made
in the manner provided in Section 9.04 of the Distribution Agreement and
confirmed by a copy thereof directed to the designated representative of the tax
department of each party.
(h) Modification or Amendment. This Agreement may be amended at
any time by written agreement executed and delivered by duly authorized officers
of PHC and HEI.
(i) Successors and Assigns. A party's rights and obligations
under this Agreement may not be assigned without the prior written consent of
the other party. All of the provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns, and shall survive any acquisition, disposition or other
corporate restructuring or transaction involving either party.
(j) No Third-Party Beneficiaries. This Agreement is solely for
the benefit of the parties to this Agreement and their respective Affiliates and
should not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without this Agreement.
(k) Other. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all of such counterparts shall together constitute one and the same
instrument. The section numbers and captions herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
(l) Predecessors and Successors. To the extent necessary to
give effect to the purposes of this Agreement, any reference to any corporation,
Affiliated Group or member of an Affiliated Group shall also include any
predecessors or successors thereto, by operation of law or otherwise.
(m) Tax Elections. Nothing in this Agreement is intended to
change or otherwise affect any previous tax election made by or on behalf of the
Promus Group (including the election with respect to the calculation of earnings
and profits under Code Section 1552 and the regulations thereunder). HEI, as
common parent of the HEI Group, shall continue to have sole discretion to make
any and all elections with respect to all members of the Promus Group for all
Pre-Closing Taxable Periods for which it is obligated to file Tax or Information
Returns under Section 2(a)(i).
(n) Injunctions. The parties acknowledge that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. The parties hereto shall be entitled to an injunction of injunctions
to prevent breaches hereto and to enforce specifically the terms and provisions
hereof in any court having jurisdiction; such remedy shall be in addition to any
other remedy available at law or in equity.
(o) Further Assurances. Subject to the provisions hereof, the
parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each
party shall, in connection with entering into this Agreement, performing its
obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or similar
authority and promptly provide the other party with all such information as it
may reasonably request in order to be able to comply with the provisions of this
sentence.
(p) Setoff. Except as provided in Section 4(a), all payments to
be made by any party under this Agreement shall be made without setoff,
counterclaim or withholding, all of which are expressly waived.
(q) Costs and Expenses. Unless otherwise specifically provided
herein, each party agrees to pay its own costs and expenses resulting from the
fulfillment of its respective obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
or have caused this Agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
above written.
THE PROMUS COMPANIES,
INCORPORATED AND SUBSIDIARIES
By: DEE A. WALLACE
---------------------------
Name: Dee A. Wallace
Title: Vice President, Tax
The Promus Companies, Incorporated
PROMUS HOTEL CORPORATION AND
SUBSIDIARIES
By: DONALD H. DEMPSEY
---------------------------
Name: Donald H. Dempsey
Title: SVP-CFO
Promus Hotel Corporation
EXHIBIT 10(16)
THE PROMUS COMPANIES INCORPORATED
June 30, 1995
Bradford W. Morgan
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
Re: Severance Agreement
-------------------
Dear Brad:
The Promus Companies Incorporated (the "Company") considers it essential to
the best interest of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreements set forth in Subsection 2(b) hereof, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("this Agreement") in the event your employment with the
Company terminates subsequent to a "Change in Control of the Company" (as
defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on June 30, 1995 and
shall continue in effect through December 31, 1995; provided, however, that
commencing on January 1, 1996 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company shall have given
notice that it does not wish to extend this Agreement; provided, further, if a
Change in Control of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall automatically continue in
effect for a period of twenty-four months beyond the month in which such Change
in Control occurred.
2. Change in Control.
(a) No benefit shall be payable to you hereunder unless there shall have
been a Change in Control of the Company, as set forth below. For purposes of
this Agreement, a "Change in Control of the Company" shall be deemed to have
occurred, subject to subparagraph (iv) hereof, if any of the events in
subparagraphs (i), (ii) or (iii) occur:
(i) Any "person" (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than an employee benefit plan of the Company, or a trustee or other
fiduciary holding securities under an employee benefit plan of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 25% or more of the Company's then
outstanding voting securities carrying the right to vote in elections of
persons to the Board, regardless of comparative voting power of such voting
securities, and regardless of whether or not the Board shall have approved
such Change in Control; or
(ii) During any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in clauses (i)
or (iii) of this Subsection) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof; or
(iii) The holders of securities of the Company entitled to vote
thereon approve the following:
(A) A merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company, other
than a merger or consolidation which would result in the voting
securities of the Company carrying the right to vote in elections of
persons to the Board outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the
Company's then outstanding voting securities carrying the right to
vote in elections of persons to the Board, or such securities of such
surviving entity outstanding immediately after such merger or
consolidation, or
(B) A plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(iv) Notwithstanding the definition of a "Change in Control" of the
Company as set forth in this Section 2(a), the Human Resources Committee of
the Board (the "Committee") shall have full and final authority, which
shall be exercised in its discretion, to determine conclusively whether a
Change in Control of the Company has occurred,
and the date of the occurrence of such Change in Control and any incidental
matters relating thereto, with respect to a transaction or series of
transactions which have resulted or will result in a substantial portion of
the assets or business of the Company (as determined immediately prior to
the transaction or series of transactions by the Committee in its sole
discretion which determination shall be final and conclusive) being held by
a corporation at least 80% of whose voting securities are held, immediately
following such transaction or series of transactions, by holders of the
voting securities of the Company (determined immediately prior to such
transaction or series of transactions). The Committee may exercise such
discretionary authority without regard to whether one or more of the
transactions in such series of transactions would otherwise constitute a
Change in Control of the Company under the definition set forth in this
Section 2(a).
(b) For purposes of this Agreement, a "Potential Change in Control of the
Company" shall be deemed to have occurred if the following occur:
(i) The Company enters into an agreement or letter of intent, the
consummation of which would result in the occurrence of a Change in Control
of the Company;
(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Company;
(iii) Any person, other than an employee benefit plan of the
Company, or a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing
9.5% or more of the Company's then outstanding voting securities carrying
the right to vote in elections of persons to the Board increases his
beneficial ownership of such securities by 5% or more over the percentage
so owned by such person on the date hereof; or
(iv) The Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control of the Company has occurred.
You agree that, subject to the terms and conditions of this Agreement, in
the event of a Potential Change in Control of the Company, you will remain in
the employ of the Company (or the subsidiary thereof by which you are employed
at the date such Potential Change in Control occurs) until the earliest of (x) a
date which is six months from the occurrence of such Potential Change in Control
of the Company, (y) the termination by you of your employment by reasons of
Disability or Retirement (at your normal retirement age), as defined in
Subsection 3(i), or (z) the occurrence of a Change in Control of the Company.
(c) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of the Company of any of the following circumstances unless, in the case
of paragraphs (i), (v), (vi), (vii) or (viii), such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as defined in Subsections 3(e) and 3(d), respectively, given in
respect thereof:
(i) The assignment to you of any duties inconsistent with your status
as an executive officer of the Company or a substantial adverse alteration
in the nature or status of your responsibilities from those in effect
immediately prior to the Change in Control of the Company;
(ii) A reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary reductions similarly affecting all
executives of the Company and all executives of any person in control of
the Company;
(iii) The relocation of the Company's principal executive offices
where you are working immediately prior to the Change in Control of the
Company to a location more than 50 miles from the location of such offices
immediately prior to the Change in Control of the Company or the Company's
requiring you to be based anywhere other than the location of the Company's
principal executive offices where you were working immediately prior to the
Change in Control of the Company except for required travel on the
Company's business to an extent substantially consistent with your present
business travel obligations;
(iv) The failure by the Company, without your consent, to pay to you
any portion of your current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all executives
of the Company and all executives of any person in control of the Company,
or to pay to you any portion of an installment of deferred compensation
under any deferred compensation program of the Company, within thirty days
of the date such compensation is due;
(v) The failure by the Company to continue in effect any compensation
plan in which you are participating immediately prior to the Change in
Control of the Company which is material to your total compensation,
including but not limited to, the Company's Bonus Plan, Executive Deferred
Compensation Plan, Restricted Stock Plan, or any substitute plans adopted
prior to the Change in Control, unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue your participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control of the Company;
(vi) The failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's pension, savings and retirement plan, life insurance, medical,
health and accident, or disability plans in which you were participating at
the time of the Change in Control of the Company, the taking of any action
by the Company which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit enjoyed by you
at the time of the Change in Control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to which you
are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the time
of the Change in Control of the Company;
(vii) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement,
as contemplated in Section 5 hereof; or
(viii) Any purported termination of your employment by the Company
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection 3(d) hereof and the requirements of Subsection
3(b) above; for purposes of this Agreement, no such purported termination
shall be effective.
Your right to terminate your employment pursuant to this Agreement for Good
Reason shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason hereunder.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(a) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(c) hereof upon the subsequent termination of your employment if
such termination is (y) by the Company other than for Cause, Retirement or
Disability, or (z) by you for Good Reason.
(a) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six consecutive months, and
within thirty days after written notice of termination is given you shall not
have returned to the full-time performance of your duties, your employment may
be terminated for "Disability". Termination by the Company or you of your
employment based on "Retirement" shall mean termination at age 65 (or later)
with ten years of service or retirement in accordance with any retirement
contract between the Company and you.
(b) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon your engaging in willful and continued misconduct,
or your willful and continued failure to substantially perform your duties with
the Company (other than due to physical or mental illness), if such failure or
misconduct is materially damaging or materially detrimental to the business and
operations of the Company, provided that you shall have received written notice
of such failure or misconduct and shall have continued to engage in such failure
or misconduct after 30 days following receipt of such notice from the Board,
which notice specifically identifies the manner in which the Board believes that
you have engaged in such failure or misconduct. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of failure
to substantially perform your duties or of misconduct in accordance with the
first sentence of this Subsection, and of
continuing such failure to substantially perform your duties or misconduct as
aforesaid after notice from the Board, and specifying the particulars thereof in
detail.
(c) Voluntary Resignation. After a Change in Control of the Company and
for purposes of receiving the benefits provided in Subsection 4(c) hereof, you
shall be entitled to terminate your employment by voluntary resignation given at
any time during the two years following the occurrence of a Change in Control of
the Company hereunder, provided such resignation is by you for Good Reason.
Such resignation shall not be deemed a breach of any employment contract between
you and the Company.
(d) Notice of Termination. Any purported termination of your employment
by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(e) Date of Termination, Etc. "Date of Termination" shall mean:
(i) If your employment is terminated for Disability, thirty days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty day
period), and
(ii) If your employment is terminated pursuant to Subsection (b) or
(c) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection (b) above shall not be less than thirty days, and in
the case of a termination pursuant to Subsection (c) above shall not be
less than fifteen nor more than sixty days, respectively, from the date
such Notice of Termination is given);
provided that if within fifteen days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined without regard to
this provision), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all compensation,
bonus, benefit and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this
Subsection. Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability Following a Change
of Control. Following a Change in Control of the Company, as defined in
Subsection 2(a), upon termination of your employment or during a period of
Disability, you shall be entitled to the following benefits:
(a) During any period that you fail to perform your full-time duties with
the Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Company's Bonus Plan, Restricted Stock Plan, and other incentive
compensation plans during such period, until this Agreement is terminated
pursuant to Section 3(a) hereof. Thereafter, or in the event your employment
shall be terminated for Retirement, or by reason of your death, your benefits
shall be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs, subject to Subsection 4(e) hereof.
(b) If your employment shall be terminated by the Company for Cause, the
Company shall pay you your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(c) If your employment by the Company shall be terminated (y) by the
Company other than for Cause, Retirement or Disability or (z) by you for Good
Reason, then you shall be entitled to the benefits provided below:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation or benefit plan of the Company, at the time such payments are
due;
(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you a lump sum severance payment (the "Severance Payment") equal to
2.99 times the average of the Annual Compensation (as defined below) which
was payable to you by the Company (including, for periods prior to February
7, 1990, Holiday Corporation or its affiliates) or any corporation
affiliated with the Company within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code"), for the five
calendar years preceding the calendar year in which the Change in Control
occurred. Such average shall be determined in accordance with proposed,
temporary or final regulations promulgated under Section 280G(d) of the
Code, or, in the absence of such regulations, if you were not employed by
the Company (including for this purpose Holiday Corporation or its
affiliates for periods prior to February 7, 1990) or its affiliates during
the entire five calendar years preceding the calendar year in which the
Change in Control occurred, then such average shall be an average of your
Annual
Compensation for the complete calendar years (if any) and partial calendar
year (if any) during which you were so employed provided that the amount
for any such partial calendar year shall be an annualized amount based on
the amount of Annual Compensation paid to you during the partial calendar
year. If you were not employed by the Company or its affiliates or, for
periods prior to February 7, 1990, Holiday Corporation or its affiliates
during such preceding calendar year, then such average shall be an
annualized amount based on the amount of Annual Compensation paid to you
during the calendar year in which the Change of Control occurred. Annual
Compensation is your base salary and your annual bonus under the Annual
Management Bonus Plan of the Company that was payable to you by the Company
or any of its affiliates (including for this purpose base salary and bonus
payable to you by Holiday Corporation or its affiliates for periods prior
to February 7, 1990) that was payable to you during a calendar year
determined without any reduction for any deferrals of such salary or such
bonus under any deferred compensation plan (qualified or unqualified) and
without any reduction for any salary reductions used for making
contributions to any group insurance plan of the Company (including for
this purpose Holiday Corporation or its affiliates for periods prior to
February 7, 1990) or its affiliates.
(iii) The Company shall also pay to you the amounts of any
compensation or awards payable to you or due to you in respect of any
period preceding the Date of Termination under any incentive compensation
plan of the Company (including, without limitation, the Company's
Restricted Stock Plan and Stock Option Plan (the "Option Plan") and under
any agreements with you in connection therewith, and shall make any other
payments and take any other actions provided for in such plans and
agreements.
(iv) In lieu of shares of common stock of the Company ("Company
Shares") issuable upon exercise of outstanding options, if any ("Options")
granted to you under the Option Plan (which Options shall be cancelled upon
the making of the payment referred to below), you shall receive an amount
in cash equal to the product of (y) the excess of, the higher of the
closing price of Company Shares as reported on the New York Stock Exchange
on or nearest the Date of Termination (or, if not listed on such exchange,
on a nationally recognized exchange or quotation system on which trading
volume in Company Shares is highest) or the highest per share price for
Company Shares actually paid in connection with any change in control of
the Company, over the per share exercise price of each Option held by you
(whether or not then fully exercisable), times (z) the number of Company
Shares covered by each such option.
(v) The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of
the Code to any payment or benefit provided hereunder).
(vi) In the event that you become entitled to the payments (the
"Severance Payments") provided under paragraphs (ii), (iii), and (iv),
above (and Subsections (d) and (e), below), and if any of the Severance
Payments will be subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code, the Company shall pay to you at the time specified in
paragraph (vii), below, an additional amount (the "Gross-Up Payment") such
that the net amount retained by you, after deduction of any Excise Tax on
the Severance Payments and any federal (and state and local) income tax and
Excise Tax upon the payment provided for by this paragraph, shall be equal
to the amount of the Severance Payments less any Excise Tax attributable to
Severance Payments in respect of those shares of restricted stock granted
to you in 1990 in connection with the merger of Holiday Corporation with
and into a subsidiary of Bass plc and which were issued in substitution of
shares of Holiday Corporation restricted stock granted to you on or after
November 11, 1986 in connection with the 1987 recapitalization of Holiday
Corporation (the "Excluded Severance Payments"). For purposes of
determining whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax the following will apply:
(A) Any other payments or benefits received or to be received by
you in connection with a Change in Control of the Company or your
termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Change in Control of the
Company or any person affiliated with the Company or such person)
shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to you such other
payments or benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the Code, or
are otherwise not subject to the Excise Tax;
(B) The amount of the Severance Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (y) the
total amount of the Severance Payments or (z) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (A), above); and
(C) The value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Company's independent auditors
in accordance with proposed, temporary or final regulations under
Sections 280G(d)(3) and (4) of the Code or, in the absence of such
regulations, in accordance with the principles of Section 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay Federal income taxes at
the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and
locality of your residence on the Date of Termination, net of the
maximum reduction in Federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the amount
of Excise Tax attributable to Severance Payments other than the
Excluded Severance Payment is subsequently determined to be less than
the amount taken into account hereunder at the time of termination of
your employment, you shall repay to the Company at the time that the
amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus
the portion of the Gross-Up Payment attributable to the Excise Tax and
Federal (and state and local) income tax imposed on the Gross-Up
Payment being repaid by you if such repayment results in a reduction
in Excise Tax and/or a Federal (and state and local) income tax
deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax attributable to Severance Payments other than the Excluded
Severance Payment is determined to exceed the amount taken into
account hereunder at the time of the termination of your employment
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional gross-up payment in respect of such excess
(plus any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
(vii) The payments provided for in paragraphs (ii), (iii), (iv)
and (vi) above, shall be made not later than the fifth day following the
Date of Termination, provided, however, that if the amounts of such
payments cannot be finally determined on or before such day, the Company
shall pay to you on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to you payable on the fifth day
after demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(d) If your employment shall be terminated (y) by the Company other than
for Cause, Retirement or Disability or (z) by you voluntarily for Good Reason,
then for a twenty-four month period after such termination, the Company shall
arrange to provide you with life, disability, accident and health insurance
benefits substantially similar to those which you are receiving immediately
prior to the Notice of Termination. Benefits otherwise receivable by you
pursuant to this Subsection 4(d) shall be reduced to the extent comparable
benefits are actually received by you during the twenty-four month period
following your termination, and any such benefits actually received by you shall
be reported to the Company.
(e) In the event a Change in Control of the Company occurs after you and
the Company have entered into any retirement agreement including an agreement
providing for early retirement, then the present value, computed
using a discount rate of 8% per annum, of the total amount of all unpaid
deferred payments as payable to you in accordance with the payment schedule that
you elected when the deferral was agreed to and using the plan interest rate
applicable to your situation, or other payments payable or to become payable to
you or your estate or beneficiary under such retirement agreement (other than
payments payable pursuant to a plan qualified under Section 401(a) of the
Internal Revenue Code) including, without limitation, any unpaid deferred
payments under the Company's Executive Deferred Compensation Plan and the
Company's other deferred compensation plans shall be paid to you (or your estate
or beneficiary if applicable) in cash within five business days after the
occurrence of the Change in Control of the Company. If you and the Company or
its affiliates have executed a retirement agreement and if the Change in Control
of the Company occurs before the effective date of your retirement, then you
shall receive the Severance Payment payable under Subsection 4(c)(ii) herein in
addition to the present value of your unpaid deferred retirement payments and
other payments under the retirement agreement as aforesaid. All other benefits
to which you or your estate or any beneficiary are entitled under such
retirement agreement shall continue in effect notwithstanding the Change in
Control of the Company. This Subsection 4(e) shall survive your retirement.
(f) Notwithstanding that a Change in Control shall not have yet occurred,
if you so elect, by written notice to the Company given at any time after the
date hereof and prior to the time such amounts are otherwise payable to you:
(i) The Company shall deposit with an escrow agent, pursuant to an
escrow agreement between the Company and such escrow agent, a sum of money,
or other property permitted by such escrow agreement, sufficient in the
opinion of the Company's management to fund payment of the following
amounts to you, as such amounts become payable:
(A) Amounts payable, or to become payable, to you or to your
beneficiaries or your estate under the Company's Executive Deferred
Compensation Plan and under any agreements related thereto in
existence at the time of your election to make the deposit into
escrow.
(B) Amounts payable, or to become payable, to you or to your
beneficiaries or your estate by reason of your deferral of payments
payable to you prior to the date of your election to make the deposit
into escrow under any other deferred compensation agreements between
you and the Company in existence at the time of your election to make
the deposit into escrow, including but not limited to deferred
compensation agreements relating to the deferral of salary or bonuses.
(C) Amounts payable, or to become payable, to you or to your
beneficiaries or your estate under any agreement relating to your
retirement from the Company (including payments described under
Subsection 4(e) above) which agreement is in existence at the time of
your election to make the deposit into escrow, other than amounts
payable by a plan qualified under Section 401(a) of the Code.
(D) Subject to the approval of the Committee, amounts then due
and payable to you, but not yet paid, under any other benefit plan or
incentive compensation plan of the Company (whether such amounts are
stock or cash) other than amounts payable to you under a plan
qualified under Section 401(a) of the Code.
(ii) Upon the occurrence of a Potential Change of Control, the Company
shall deposit with an escrow agent (which shall be the same escrow agent,
if one exists, acting pursuant to clause (i) of this Subsection 4(f)),
pursuant to an escrow agreement between the Company and such escrow agent,
a sum of money, or other property permitted by such escrow agreement,
sufficient in the opinion of Company management to fund the payment to you
of the amounts specified in Subsection 4(c) of this Agreement.
(iii) It is intended that any amounts deposited in escrow pursuant
to the provisions of clause (i) or (ii) of this Subsection 4(f), be subject
to the claims of the Company's creditors, as set forth in the form of such
escrow agreement.
(g) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise (except as specifically provided in
this Section 4).
(h) In addition to all other amounts payable to you under this Section 4,
you shall be entitled to receive all benefits payable to you under any benefit
plan of the Company in which you participate to the extent such benefits are not
paid under this Agreement.
5. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminate your employment voluntarily for
Good Reason following a Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law.
The obligations of the Company under Section 4 shall survive the expiration of
the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Memphis, Tennessee in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. Similar Provisions in Other Agreement. The Severance Payment under
this Agreement supersedes and replaces any other severance payment to which you
may be entitled under any previous agreement between you and the Company
(including for this purpose Holiday Corporation or its affiliates) or its
affiliates.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our binding agreement on this subject.
Very truly yours,
THE PROMUS COMPANIES INCORPORATED
BY: E. O. ROBINSON, JR.
------------------------
Agreed:
BRADFORD W. MORGAN
------------------------
Bradford W. Morgan
EXHIBIT 10(17)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 30, 1995 between Harrah's Entertainment,
Inc., a Delaware corporation, with its executive offices at 1023 Cherry Road,
Memphis, Tennessee (the "Company"), and Michael D. Rose (the "Executive"). This
Agreement amends and restates the Employment Agreement dated February 24, 1994
between the Company and Executive.
The Company and the Executive agree as follows:
1. Introductory Statement.
The Company desires the services of the Executive as Chairman ("Chairman")
of the Board of Directors (the "Board") and the Executive is willing to execute
this Agreement with respect to his employment. This Agreement is effective on
April 29, 1994, and shall expire December 31, 1998, subject to the terms and
conditions herein. On the effective date of this Agreement, the Agreement dated
August 1, 1987, as amended January 31, 1990, between the Company and the
Executive shall be cancelled and shall be of no further force or effect.
2. Agreement of Employment.
The Company agrees to, and hereby does, employ the Executive, and the
Executive agrees to, and hereby does accept, employment by the Company, in the
capacity as Chairman, pursuant to the provisions of this Agreement and of the
bylaws of the Company and subject to the control of the Board of Directors.
Commencing June 30, 1995, and continuing therefrom through April 30, 1996 (the
"First Period"), Executive shall devote at least sixty percent (60%) of his time
to the performance of his duties as Chairman. Commencing May 1, 1996 and
continuing therefrom through December 31, 1998 (the "Second
Period", and together with the First Period the "Term of This Agreement"),
Executive shall devote approximately thirty to fifty percent (30% - 50%) of his
time to the performance of his duties as Chairman. It is understood that
Executive's position of Chairman is subject to his election as a director by the
Company's stockholders and yearly re-election as Chairman by the Board of
Directors in the exercise of its judgment. Paragraph 8 herein governs
Executive's rights if Executive fails to be elected a director or is not re-
elected as Chairman during the term of this Agreement.
3. Executive's Obligations.
During the Term of This Agreement, the Executive shall serve
faithfully and to the best of his ability as Chairman and perform such other
duties as directed by the Board. In addition, for the Term of This Agreement,
the Executive shall serve as the Company's external spokesman and, during the
First Period, shall be responsible for development. The Executive may take up
to six weeks vacation each year with pay.
4. Compensation.
During the First Period the Company shall pay to the Executive a
salary at the rate of $350,000 per year, in equal bi-weekly installments; and
during the Second Period, the Company shall pay to the Executive for his service
under this Agreement a salary at the rate of $250,000 per year, in equal bi-
weekly installments; provided, however, in each case, that the Human Resources
Committee of the Board (the "HRC") shall in good faith review the salary of the
Executive, on an annual basis, with a view to consideration of appropriate merit
increases in such salary. In addition, except as otherwise provided in this
Agreement, during the Term of This Agreement the Executive shall be entitled to
participate in incentive compensation programs and to receive employee benefits
and perquisites at least as favorable to the
Executive as those presently provided to Executive by the Company, and as may be
enhanced for all senior officers. Such benefits include, but are not limited
to, the rabbi trust (provided pursuant to the escrow agreement dated February 6,
1990 as amended (the "Escrow Agreement")) and his Severance Agreement dated May
1, 1992, attached hereto as Exhibit A (the "Severance Agreement") both of which
will continue in force subject to their terms and conditions including the
termination and amendment provisions thereof. There will be no diminution of
the above compensation, perquisites, or benefits except as provided in this
Agreement.
Notwithstanding the terms of any plan in which Executive would be otherwise
eligible to participate, for periods after April 30, 1996, the Executive will
not be eligible for: (i) bonuses under the Company's bonus plan then in effect,
unless the Board, in its discretion, approves Executive's participation in the
bonus plan upon recommendation of the Chief Executive Officer; or (ii) executive
stock awards granted pursuant to any stock-based compensation plan of the
Company in effect. The Executive will remain eligible for a bonus for the 1996
plan year, with the bonus amount prorated for the period January 1, 1996 through
April 30, 1996 (i.e he will receive four twelfths (4/12) of the total annual
bonus approved by the HRC for the 1996 plan year for his grade level).
During the First Period, the Executive will continue to use the Company's
aircraft for security purposes for himself and his family (with standard charges
for family members and for non-Company business usage) and the Executive's
current household security arrangements will continue in force. Commencing with
the start of the Second Period, the Executive will be afforded use of the
Company's aircraft, on an available basis, for security and personal purposes
for himself and his family (with standard charges for
Executive's family members and for any personal or non-Company business usage),
and the Company will pay a reduced share of the Executive's then-current
household security expenses, corresponding to his reduction in salary from the
First Period to the Second Period. If the Executive dies, retires pursuant to
paragraph 7 hereof, or resigns pursuant to this Agreement or pursuant to any
other agreement between the Company and the Executive providing for such
resignation during the period of this Agreement, service for any part of the
month in which any such event occurs shall be considered service for the entire
month.
5. Service After April 30, 1996.
5.1(a) Notwithstanding the provisions of paragraph 2 above, the Board may,
at its discretion or following Executive's request, further modify his
responsibilities at any time after April 30, 1996, to (i) remain as
Chairman through December 31, 1998 (subject to his election as a director),
with such duties as may be assigned by the Board; or (ii) assume a more
limited role through December 31, 1998, as determined by the Board, with a
commensurate salary as approved by the HRC.
(b) Should Executive's responsibilities be modified as contemplated
in paragraph 5.1(a) above, he will continue to be an employee and to have
the perquisites and benefits as described in paragraph 4 above.
5.2 Whether or not Executive's responsibilities are modified as
contemplated in paragraph 5.1(a) above, his last day of employment will be
December 31, 1998, unless this Agreement is extended as provided in paragraph
5.3 below and except as otherwise provided herein.
5.3 At the option of the Board and with Executive's consent, this
Agreement may be extended on a year to year basis after December 31, 1998, with
each party having the right to terminate at the end of each renewal year.
6. Termination From Employment on December 31, 1998.
6.1 Except as otherwise provided in this Agreement and except if this
Agreement is extended under paragraph 5.3, the date of Executive's termination
from employment shall be December 31, 1998 and, on that date, all of his stock
options and restricted stock awards not yet vested will become 100% vested
(fully exercisable in the case of stock options). Such date will be Executive's
retirement date for purposes of the Company's benefit plans including, without
limitation, the Company's Savings and Retirement Plan ("S&RP"), Executive
Deferred Compensation Plan ("EDCP"), Deferred Compensation Plan ("DCP"), Stock
Option Plan and Restricted Stock Plan and all other benefit plans of the Company
(subject to paragraph 7.2, below).
6.2 Executive's stock options (including options that become vested on the
date of termination) will be exercisable after the date of such termination of
employment in accordance with the terms of the Stock Option Plan then in effect
applicable to retired employees.
6.3 After the date of Executive's termination from employment at any time
(including termination, retirement or resignation prior to December 31, 1998, if
that should occur), he will be entitled to participate for his lifetime in the
Company's group health insurance plans applicable to corporate executives,
including family coverage as applicable (medical, dental and vision coverage).
His group health insurance benefits after any termination of employment will not
be less than those offered to corporate officers of the Company and he will be
entitled to any later enhancements in such benefits. His benefits will be the
same as normally provided to other retired management directors pursuant to the
policy adopted by the HRC on October 26, 1990 (except to the extent he
voluntarily elects not to participate in any plan). It is understood that if
the fundamental value of the benefits provided to
Executive is materially decreased due to tax law changes or plan amendments,
then the benefits provided to him will be appropriately modified to prevent this
material loss of fundamental benefits.
6.4 It is understood that Executive is currently vested at the retirement
rate under the EDCP and this rate applies to Executive's EDCP account. After
the date of Executive's termination, retirement or resignation from employment,
his EDCP account and any other deferred compensation balances, as such balances
are determined after giving effect to any agreements allocating all or a
percentage such balances among plans maintained by different employers, will
continue to be protected by the Escrow Agreement if it is then in force subject
to the terms and conditions of the Escrow Agreement including its termination
and amendment provisions.
7. Retirement.
7.1 Executive may voluntarily retire, effective at any time on or after
April 30, 1996, by giving the Company three months' prior written notice of the
effective date of such retirement. On the effective date of such retirement as
specified in the aforesaid written notice, and notwithstanding the terms of any
Plan to the contrary, all of Executive's unvested stock options will vest and
become fully exercisable and any unvested restricted stock will also vest. The
effective date of such retirement will be Executive's retirement date for
purposes of salary and all benefits including, without limitation, the EDCP,
DCP, S&RP and the Stock Option Plan (subject to paragraph 7.2, below).
Executive's stock options will be exercisable after the effective date of his
retirement in accordance with the provisions of the Stock Option Plan then in
effect applicable to retired employees and for this purpose Executive will be
deemed to have satisfied the requirements of retirement for age under the Plan.
After the effective date of such
retirement, Executive will be entitled to the lifetime group insurance benefits
described in paragraph 6.3.
7.2 If a Change in Control (as defined in the Severance Agreement) occurs
during Executive's employment pursuant to this Agreement, and if Executive's
Severance Agreement is in force upon such Change in Control, Executive's
retirement pursuant to the terms of this Agreement within two (2) years after
the Change in Control will be deemed a voluntary resignation, rather than
"Retirement" as defined under Section 3(a) of the Severance Agreement, for
purposes of Executive's entitlement to the Severance Payments (as defined in the
Severance Agreement), notwithstanding any provisions of the Severance Agreement
to the contrary and the Severance Agreement is hereby amended for this purpose.
In the event of such retirement or voluntary resignation after a Change in
Control, paragraph 7.1 will not apply and Executive will be entitled to the
payments, rights and benefits as provided in paragraph 12 below.
8. Termination Without Cause or Resignation for Good Reason.
8.1 The Board reserves the right to terminate Executive from his then
current position without cause at any time upon at least three months' prior
written notice. The failure of the stockholders to elect Executive as a
director during the annual election of directors or the failure of the Board to
elect Executive as Chairman during the annual election of officers shall also be
deemed termination without cause for purposes of this Agreement unless, before
any such annual election, the Board has sent the written notice initiating
termination for Cause as provided in paragraph 13.1 and Executive is thereafter
terminated for Cause. Executive reserves the right to resign his position for
Good Reason (as defined in paragraph 13.2 herein) by giving the Company 30 days'
written notice which states the reason for his
resignation. For purposes of this Agreement, Good Reason does not include
changes in Executive's duties, position, salary, perquisites or benefits that
are provided by this Agreement.
8.2 Upon the effective date of Executive's termination without cause or
resignation from his position with Good Reason as described in paragraph 8.1
above:
(a) All of his unvested stock options will vest on the effective date of
such termination without cause or resignation with Good Reason, and
any unvested restricted stock held by Executive will also vest at that
time.
(b) Executive will continue in employee status as a consultant-employee
beginning on the effective date of such termination without cause or
resignation with Good Reason and continuing (a) until the expiration
of two years, or (b) until December 31, 1998, whichever first occurs
(the "Transition Period"). His stock options will be exercisable
after the expiration of the Transition Period in accordance with the
terms of the Stock Option Plan then in effect applicable to employees
who retire for age, and for this purpose Executive will be deemed to
have satisfied the requirements of retirement for age under the Plan.
The expiration of employee status at the end of the Transition
Period shall be deemed Executive's retirement date under the Stock
Option Plan and all other benefit plans (subject to paragraph 7.2).
(c) During the Transition Period, Executive will continue to receive his
then-current salary rate and benefits but will no longer be eligible
for bonus, stock option or restricted stock grants or any
other long term incentive awards then in effect, and will be
responsible for the cost of his household security.
(d) After the expiration of the Transition Period, Executive shall be
entitled to the lifetime group insurance benefits described in
paragraph 6.3.
9. Termination For Cause or Voluntary Resignation Without Good Reason.
9.1 The Board will have the right to terminate Executive at any time from
his then-current position for Cause (as defined in paragraph 13.1 herein).
9.2 If Executive is terminated for Cause or if, prior to April 30, 1996,
he resigns his position without Good Reason, then (a) all of his rights and
benefits under this Agreement shall thereupon terminate and his employment shall
be deemed terminated on the date of such termination or resignation, (b) he
shall be entitled to all accrued rights, payments and benefits vested or paid on
or before such date under the Company's plans and programs, including his EDCP
payments at the retirement rate, but unvested stock options and unvested shares
of restricted stock, if any, will be forfeited, (c) his right to exercise vested
stock options will expire at 12:00 p.m. midnight on the date of such termination
or resignation and all stock options not so exercised will be forfeited, (d) his
Indemnification Agreement will continue in force, (e) the Escrow Agreement, if
then in force, will continue in force, unless such Agreement is thereafter
amended or terminated pursuant to its terms, (f) he will be entitled to the
lifetime group insurance benefits under paragraph 6.3 above, and (g) his
Severance Agreement and all rights thereunder will terminate as of such
termination or resignation date unless a Change in Control or Potential Change
in Control (as such terms are defined in the Severance Agreement) has occurred
prior to such termination or resignation date.
If Executive's Severance Agreement is in force upon a Change in Control (as
defined in the Severance Agreement), the provisions of this paragraph 9.2 will
not be applicable if he retires or resigns (with or without Good Reason) within
two (2) years after the Change in Control, and in the event of such retirement
or resignation after a Change in Control he will be entitled to the payments,
rights and benefits as provided in paragraph 12 below.
10. Death.
In the event of Executive's death during his employment under this
Agreement, his salary and all rights and benefits under this Agreement will
terminate, and his estate and beneficiary(ies) will receive the benefits they
are entitled to under the terms of the Company's benefit plans and programs by
reason of a participant's death during active employment including the death
benefits provided by the EDCP and the applicable rights and benefits of the
Company's stock plans. The Escrow Agreement if then in force will continue in
force (subject to its amendment or termination in accordance with its terms) for
the benefit of Executive's estate and beneficiaries until his deferred
compensation accounts are paid in full, and Executive's indemnification
agreement will continue in force for the benefit of his estate.
11. Disability.
In the event of Executive's disability (as determined by reference to the
definition of "disability" contained in the Company's Long Term Disability Plan
then in effect) during his employment hereunder, he will be entitled to apply at
his option for the benefits under the Company's Long Term Disability Plan. If
he is accepted for such benefits, then the terms and provisions of the Company's
benefit plans and programs (including the EDCP and the Company's Stock Option
and Restricted Stock Plans) that are applicable in the event of such disability
of an employee shall apply in lieu of the salary and benefits
under this Agreement, except that (a) the Escrow Agreement (if then in force)
and his indemnification agreement will continue in force (the Escrow Agreement
will be subject to amendment or termination in accordance with its terms), (b)
he will be entitled to the lifetime group insurance benefits described in
paragraph 6.3 and (c) all of his unvested stock options will vest on the date he
is determined to be disabled under the Long Term Disability Plan, and such
options together with options previously vested will be exercisable after the
determination of disability in accordance with the terms of the Stock Option
Plan then in effect applicable to disabled employees. If Executive is disabled
so that he cannot perform his duties (as determined by the HRC) and if he does
not apply for long term disability benefits or is not accepted for such
benefits, then the Board may terminate his duties under this Agreement and, in
such event, the Company will be obligated to pay Executive his then-current
salary thereafter through December 31, 1998 (or to a later date if the Agreement
has been extended pursuant to paragraph 5.3), and to provide the other benefits
and rights described herein including, without limitation, the vesting of all
unvested stock options on December 31, 1998, except that during the period of
Executive's salary continuation due to disability, Executive will not be
eligible to participate in the Company's annual bonus plan or to receive stock
option or restricted stock grants or any other long term incentive awards except
to the extent approved by the HRC. If the Board terminates Executive's duties
pursuant to the preceding sentence, this Agreement will continue in full force
and effect until December 31, 1998 (or its later expiration date if this
Agreement has been extended pursuant to paragraph 5.3), which will be the date
of Executive's termination from employment and shall be considered his
retirement date under the provisions of all the Company's benefit plans
including the Stock Option Plan.
12. Change in Control.
12.1 If a Change in Control (as defined in Executive's Severance
Agreement) occurs prior to Executive's termination of employment, resignation or
retirement and if the Severance Agreement is in force when the Change in Control
occurs, then, upon his termination of employment including voluntary or
involuntary resignation or retirement within two years after the Change in
Control (including termination on December 31, 1998, due to expiration of this
Agreement), except if his termination of employment is due to "Disability" or
"Cause" as set forth under the Severance Agreement, he will be entitled to all
the rights, payments and benefits provided under his Severance Agreement
including the Severance Payments thereunder and the benefits that the Severance
Agreement provides with respect to the benefit plans and programs of the Company
in lieu of the rights and benefits that would otherwise apply under this
Agreement, provided that (a) the Escrow Agreement (if then in force) and his
indemnification agreement will continue in force (the Escrow Agreement will be
subject to amendment or termination in accordance with its terms) and (b) he
will be entitled to the lifetime group insurance benefits described in paragraph
6.3.
12.2 If, at any time after Executive's retirement or resignation or the
termination of Executive's employment, there is a Change in Control (as defined
in the Severance Agreement) and if the Severance Agreement is in force on the
day immediately prior to the effective date of his retirement, resignation or
termination of employment, then this Agreement will be deemed a "retirement
agreement" for purposes of subsection 4(e) of the Severance Agreement, provided
that Executive will have a one time right (to be exercised by written notice
given to the Company at least 60 days before the Change in Control occurs) to
elect to be paid his EDCP account in accordance with the
terms and provisions of his EDCP elections (subject to EDCP plan provisions) at
the retirement rate. If he does not make such election, his EDCP account (based
on the retirement rate) will be accelerated and the then present value thereof
will be paid to Executive in full, as provided by and computed in accordance
with paragraph 4(e) of the Severance Agreement, after the Change in Control
occurs.
13. Definitions of Cause and Good Reason.
13.1 Cause. Termination by the Company of this Agreement for "Cause"
shall mean termination upon the Executive's engaging in willful and continued
misconduct, or the Executive's willful and continued failure to substantially
perform his duties with the Company (other than due to physical or mental
illness), if such failure or misconduct is materially damaging or materially
detrimental to the business and operations of the Company; provided that
Executive shall have received written notice of such failure or misconduct and
shall have continued to engage in such failure or misconduct after 30 days
following receipt of such notice from the Board, which notice specifically
identifies the manner in which the Board believes that Executive has engaged in
such failure or misconduct. For purposes of this paragraph, no act, or failure
to act, on the Executive's part shall be deemed "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purposes (after reasonable notice to the
Executive and an opportunity for him, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board the Executive was guilty of failure to substantially
perform his duties or of misconduct in accordance with the first sentence of
this paragraph, and of continuing such failure to substantially perform his
duties or misconduct as aforesaid after notice from the Board, and specifying
the particulars thereof in detail.
13.2 Good Reason. "Good Reason" shall mean, without Executive's express
written consent, the occurrence of any of the following circumstances unless, in
the case of paragraphs (a), (e), (f) or (g), such circumstances are fully
corrected prior to the date of termination specified in the written notice given
by Executive notifying the Company of his resignation for Good Reason:
(a) The assignment to Executive of any duties inconsistent with his
status as Chairman or an executive officer of the Company or a substantial
adverse alteration in the nature or status of his responsibilities except
as provided under this Agreement;
(b) Except as permitted under this Agreement, a reduction by the
Company in his annual base salary, as the same may be increased from time
to time pursuant to paragraph 4 hereof;
(c) The relocation of the Company's principal executive offices where
Executive is working, on the date of this Agreement, to a location more
than 50 miles from the location of such offices, or the Company's requiring
Executive to be based anywhere other than the location of the Company's
principal offices where Executive is working on the date of this Agreement
except for required travel on the Company's business to an extent
substantially consistent with Executive's present business travel
obligations;
(d) The failure by the Company, without Executive's consent, to pay
to him any portion of his current compensation except pursuant to a
compensation deferral elected by the Executive, or to pay to Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Company within thirty days of the date such
compensation is due;
(e) Except as permitted by this Agreement, the failure by the Company
to continue in effect any compensation plan in which Executive is
participating on the date of this Agreement which is material to
Executive's total compensation, including, but not limited to, the
Company's annual bonus plan, the EDCP (which may be modified or terminated
as to further deferrals after 1995), the Restricted Stock Plan, or the
Stock Option Plan or any substitute plans unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue Executive's
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of
benefits provided and the level of Executive's participation relative to
other participants at Executive's grade level;
(f) The failure by the Company to continue to provide Executive with
benefits substantially similar to those enjoyed by him under the S&RP and
the life insurance, medical, health and accident, and disability plans in
which Executive is participating on the date of this Agreement, the taking
of any action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive Executive of any material fringe
benefit enjoyed by Executive on the
date of this Agreement except as permitted by this Agreement, or the
failure by the Company to provide Executive with the number of paid
vacation days to which Executive is entitled; or
(g) The failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 16 hereof.
Executive's right to terminate his employment pursuant to this Agreement
for Good Reason shall not be affected by Executive's incapacity due to physical
or mental illness. Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.
14. Non-Competition Agreement.
14.1 For a period of two years after Executive's active employment (which,
for purposes of this paragraph 14.1, shall not include employee status as a
consultant-employee under paragraph 8.2(b)) with the Company (or with a direct
or indirect subsidiary of the Company) ends, he will not, directly or
indirectly, solicit or recruit any employee of the Company or of any of its
direct or indirect subsidiaries, and he will not engage (as an employee,
consultant, director, investor contractor, or otherwise) directly or indirectly
in any business in the United States, Canada or Mexico that is competitive with
any business that the Company or its direct or indirect subsidiaries are engaged
in (as owner, manager, consultant, licensor, partner, or otherwise) at the time
such employment ends, except with the prior specific approval of the Board.
14.2 If Executive breaches any of the above covenants in 14.1, then the
Board may terminate any of his rights under this Agreement upon thirty days'
written notice whereupon all of the Company's obligations under this Agreement
shall terminate (including, without limitation, the right to lifetime group
insurance) without further obligation to him except for obligations that have
been paid, accrued or are vested as of or prior to such termination date (this
includes his EDCP account which shall be deemed vested and all stock options
which vested on or before his termination, resignation or retirement). In
addition, the Company shall be entitled to enforce any such covenants including
obtaining monetary damages, specific performance and injunctive relief.
14.3 Executive's employment by Promus Hotel Corporation (and/or its
subsidiaries), including employment as Chairman of its Board of Directors, shall
not be considered a breach either of this Agreement or of this
paragraph 14.
15. Binding Arbitration.
Any and all claims, disputes or controversies arising out of or related to
this Agreement or the breach thereof shall be resolved by arbitration in
accordance with the rules of the American Arbitration Association (the "AAA")
then in existence, subject to this paragraph 15. Such arbitration shall be
conducted by a panel of three arbitrators. The Executive shall appoint one
arbitrator, the Company shall appoint one arbitrator, and the third shall be
appointed by the two arbitrators appointed by the parties. The third arbitrator
shall serve as chairman of the panel. The parties shall appoint their
arbitrators within 30 days after the demand for arbitration is served, failing
which the AAA promptly shall appoint a defaulting party's arbitrator, and the
two arbitrators shall select the third arbitrator within 15 days after their
appointment, or if they cannot agree or fail to so appoint, then the AAA
promptly shall appoint the third arbitrator. The arbitrators shall render their
decision in writing within 60 days after the close of evidence or other
termination of the proceedings by the panel. The determination or award
rendered in such arbitration shall be binding and conclusive upon the parties
and shall not be appealable, and judgment may be entered thereon in accordance
with applicable law in any court of competent jurisdiction. Any hearings in the
arbitration shall be held in Memphis, Tennessee, and shall be private and not
open to the public. Each party shall bear the fees and expenses of its
arbitrator, counsel and witnesses, and the fees and expenses of the third
arbitrator shall be shared equally by the parties. Other costs of the
arbitration, including the fees of AAA, shall be shared equally by the parties.
16. Assumption of Agreement on Merger, Consolidation or Sale of Assets.
The Company agrees that until the termination of this Agreement as above
provided, it will not enter into any merger or consolidation with another
company in which the Company is not the surviving company, or sell or dispose of
all or substantially all of its assets, unless the company which is to survive
such merger or consolidation or the prospective purchaser of such assets first
makes a written agreement with the Executive either (1) assuming the Company's
financial obligations to the Executive under this Agreement, or (2) making such
other provision for the Executive as is satisfactory to the Executive and
approved by him in writing in lieu of assuming the Company's financial
obligations to him under this Agreement.
17. Assurances on Liquidation.
The Company agrees that until the termination of this Agreement as above
provided, it will not voluntarily liquidate or dissolve without first making a
full settlement or, at the discretion of the Executive, a written agreement with
the Executive satisfactory to, and approved, by him in writing, in fulfillment
of or in lieu of its obligations to him under this Agreement.
18. Amendments.
This Agreement may not be amended or modified orally, and no provision
hereof may be waived, except in a writing signed by the parties hereto.
19. Assignment.
19.1 Except as otherwise provided in paragraph 19.2, this Agreement cannot
be assigned by either party hereto except with the written consent of the other.
Any assignment of this Agreement by either party hereto shall not relieve such
party of its or his obligations hereunder.
19.2 The Company may elect to perform any or all of its obligations under
this Agreement through any of its wholly-owned subsidiaries, and if the Company
so elects, Executive will be an employee of such subsidiary. Notwithstanding
any such election, the Company's obligations to Executive under this Agreement
will continue in full force and effect as obligations of the Company, and the
Company shall retain primary liability for their fulfillment.
20. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
personal representatives and successors in interest of the Company.
21. Choice of Law.
This Agreement shall be governed by the law of the State of Tennessee as to
all matters, including, but not limited to, matters of validity, construction,
effect and performance.
22. Severability of Provisions.
In case any one or more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby and this Agreement shall be
interpreted as if such invalid, illegal or unenforceable provision was not
contained herein.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company
has caused this Agreement to be executed in its name and on its behalf and its
corporate seal to be hereunto affixed and attested by its corporate officers
thereunto duly authorized.
MICHAEL D. ROSE
------------------------
Michael D. Rose
HARRAH'S ENTERTAINMENT, INC.
By: E. O. ROBINSON, JR.
------------------------
Senior Vice President
ATTEST:
VINCENT G. DE YOUNG
------------------------
Assistant Secretary
EXHIBIT A
THE PROMUS COMPANIES INCORPORATED
May 1, 1992
Mr. Michael D. Rose
The Promus Companies Incorporated
1023 Cherry Road
Memphis, TN 38117
Re: Amended and Restated Severance Agreement
----------------------------------------
Dear Mr. Rose:
The Promus Companies Incorporated (the "Company") considers it essential to
the best interest of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreements set forth in Subsection 2(b) hereof, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("this Agreement") in the event your employment with the
Company terminates subsequent to a "Change in Control of the Company" (as
defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement. Pursuant to resolutions adopted by the Board on May
1, 1992, this Agreement amends and restates the agreement regarding Severance
Payments dated January 31, 1990. The term of this Agreement shall commence on
May 1, 1992 and shall continue in effect through December 31, 1992; provided,
however, that commencing on January 1, 1993 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company shall
have given notice that it does not wish to extend this Agreement; provided,
further, if a Change in Control of the Company shall have occurred during the
original or extended term of this Agreement, this Agreement shall automatically
continue in effect for a period of twenty-four months beyond the month in which
such Change in Control occurred.
2. Change in Control.
(a) No benefit shall be payable to you hereunder unless there shall have
been a Change in Control of the Company, as set forth below. For purposes of
this Agreement, a "Change in Control of the Company" shall be deemed to have
occurred, subject to subparagraph (iv) hereof, if any of the events in
subparagraphs (i), (ii) or (iii) occur:
(i) Any "person" (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than an employee benefit plan of the Company, or a trustee or other
fiduciary holding securities under an employee benefit plan of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 25% or more of the Company's then
outstanding voting securities carrying the right to vote in elections of
persons to the Board, regardless of comparative voting power of such voting
securities, and regardless of whether or not the Board shall have approved
such Change in Control; or
(ii) During any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in clauses (i)
or (iii) of this Subsection) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof; or
(iii) The holders of securities of the Company entitled to vote
thereon approve the following:
(A) A merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company, other
than a merger or consolidation which would result in the voting
securities of the Company carrying the right to vote in elections of
persons to the Board outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the
Company's then outstanding voting securities carrying the right to
vote in elections of persons to the Board, or such securities of such
surviving entity outstanding immediately after such merger or
consolidation, or
(B) A plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(iv) Notwithstanding the definition of a "Change in Control" of the
Company as set forth in this Section 2(a), the Human Resources Committee of
the Board (the "Committee") shall have full and final authority, which
shall be exercised in its discretion, to determine conclusively whether a
Change in Control of the Company has occurred,
and the date of the occurrence of such Change in Control and any incidental
matters relating thereto, with respect to a transaction or series of
transactions which have resulted or will result in a substantial portion of
the assets or business of the Company (as determined immediately prior to
the transaction or series of transactions by the Committee in its sole
discretion which determination shall be final and conclusive) being held by
a corporation at least 80% of whose voting securities are held, immediately
following such transaction or series of transactions, by holders of the
voting securities of the Company (determined immediately prior to such
transaction or series of transactions). The Committee may exercise such
discretionary authority without regard to whether one or more of the
transactions in such series of transactions would otherwise constitute a
Change in Control of the Company under the definition set forth in this
Section 2(a).
(b) For purposes of this Agreement, a "Potential Change in Control of the
Company" shall be deemed to have occurred if the following occur:
(i) The Company enters into an agreement or letter of intent, the
consummation of which would result in the occurrence of a Change in Control
of the Company;
(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Company;
(iii) Any person, other than an employee benefit plan of the Company,
or a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 9.5% or
more of the Company's then outstanding voting securities carrying the right
to vote in elections of persons to the Board increases his beneficial
ownership of such securities by 5% or more over the percentage so owned by
such person on the date hereof; or
(iv) The Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control of the Company has
occurred.
You agree that, subject to the terms and conditions of this Agreement, in the
event of a Potential Change in Control of the Company, you will remain in the
employ of the Company (or the subsidiary thereof by which you are employed at
the date such Potential Change in Control occurs) until the earliest of (x) a
date which is six months from the occurrence of such Potential Change in Control
of the Company, (y) the termination by you of your employment by reasons of
Disability or Retirement (at your normal retirement age), as defined in
Subsection 3(i), or (z) the occurrence of a Change in Control of the Company.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(a) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(c) hereof upon the subsequent termination of your employment
(whether or not such termination is voluntary) during the term of this Agreement
unless such termination is (y) because of your death, Disability or Retirement,
or (z) by the Company for Cause.
(a) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six consecutive months, and
within thirty days after written notice of termination is given you shall not
have returned to the full-time performance of your duties, your employment may
be terminated for "Disability". Termination by the Company or you of your
employment based on "Retirement" shall mean termination at age 65 (or later)
with ten years of service or retirement in accordance with any retirement
contract between the Company and you.
(b) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon your engaging in willful and continued misconduct,
or your willful and continued failure to substantially perform your duties with
the Company (other than due to physical or mental illness), if such failure or
misconduct is materially damaging or materially detrimental to the business and
operations of the Company, provided that you shall have received written notice
of such failure or misconduct and shall have continued to engage in such failure
or misconduct after 30 days following receipt of such notice from the Board,
which notice specifically identifies the manner in which the Board believes that
you have engaged in such failure or misconduct. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of failure
to substantially perform your duties or of misconduct in accordance with the
first sentence of this Subsection, and of continuing such failure to
substantially perform your duties or misconduct as aforesaid after notice from
the Board, and specifying the particulars thereof in detail.
(c) Voluntary Resignation. After a Change in Control of the Company and
for purposes of receiving the benefits provided in Subsection 4(c) hereof, you
shall be entitled to terminate your employment by voluntary resignation given at
any time during the two years following the occurrence of a Change in Control of
the Company hereunder. Such resignation shall not be deemed a breach of any
employment contract between you and the Company.
(d) Notice of Termination. Any purported termination of your employment
by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(e) Date of Termination, Etc. "Date of Termination" shall mean:
(i) If your employment is terminated for Disability, thirty days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty day
period), and
(ii) If your employment is terminated pursuant to Subsection (b) or
(c) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection (b) above shall not be less than thirty days, and in
the case of a termination pursuant to Subsection (c) above shall not be
less than fifteen nor more than sixty days, respectively, from the date
such Notice of Termination is given);
provided that if within fifteen days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined without regard to
this provision), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all compensation,
bonus, benefit and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid under this Subsection
are in addition to all other amounts due under this Agreement and shall not be
offset against or reduce any other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability Following a Change
of Control. Following a Change in Control of the Company, as defined in
Subsection 2(a), upon termination of your employment or during a period of
Disability, you shall be entitled to the following benefits:
(a) During any period that you fail to perform your full-time duties with
the Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Company's Bonus Plan, Restricted Stock Plan, and other incentive
compensation plans during such period, until this Agreement is terminated
pursuant to Section 3(a) hereof. Thereafter, or in the event your employment
shall be terminated for Retirement, or by reason of your death, your benefits
shall be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs, subject to Subsection 4(e) hereof.
(b) If your employment shall be terminated by the Company for Cause, the
Company shall pay you your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(c) If your employment by the Company shall be terminated (y) by the
Company other than for Cause, Retirement or Disability or (z) by you by
voluntary resignation, then you shall be entitled to the benefits provided
below:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation or benefit plan of the Company, at the time such payments are
due;
(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you a lump sum severance payment (the "Severance Payment") equal to
2.99 times the average of the Annual Compensation (as defined below) which
was payable to you by the Company (including for periods prior to February
7, 1990, Holiday Corporation or its affiliates), or any corporation
affiliated with the Company within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code"), for the five
calendar years preceding the calendar year in which the Change in Control
occurred. Such average shall be determined in accordance with proposed,
temporary or final regulations promulgated under Section 280G(d) of the
Code, or, in the absence of such regulations, if you were not employed by
the Company (including for this purpose Holiday Corporation or its
affiliates for the periods prior to February 7, 1990) or its affiliates
during the entire five calendar years preceding the calendar year in which
the Change in Control occurred, then such average shall be the average of
your Annual Compensation for the complete calendar years (if any) and
partial calendar year (if any) during which you were so employed provided
that the amount for any such partial calendar year shall be an annualized
amount based on the amount of Annual Compensation paid to you during the
partial calendar year. If you were not employed by the Company or its
affiliates during such preceding calendar year, then such average shall be
an annualized amount based on the amount of Annual Compensation paid to you
during the calendar year in which the Change of Control occurred. Annual
Compensation is your base salary and your annual bonus under the Annual
Management Bonus Plan of the Company that was payable to you by the Company
or any of its affiliates (including for this purpose base salary and bonus
payable to you by Holiday Corporation or its affiliates for periods prior
to February 7, 1990) that was payable to you during a calendar year
determined without any reduction for any deferrals of such salary or such
bonus under any deferred compensation plan (qualified or unqualified) and
without any reduction for any salary reductions used for making
contributions to any group insurance plan of the Company (including for
this purpose Holiday Corporation or its affiliates for periods prior to
February 7, 1990) or its affiliates.
(iii) The Company shall also pay to you the amounts of any
compensation or awards payable to you or due to you in respect of any
period preceding the Date of Termination under any incentive compensation
plan of the Company (including, without limitation, the Company's
Restricted Stock Plan and Stock Option Plan (the "Option Plan") and under
any agreements with you in connection therewith, and shall make any other
payments and take any other actions provided for in such plans and
agreements.
(iv) In lieu of shares of common stock of the Company ("Company
Shares") issuable upon exercise of outstanding options, if any ("Options")
granted to you under the Option Plan (which Options shall be cancelled upon
the making of the payment referred to below), you shall receive an amount
in cash equal to the product of (y) the excess of, the higher of the
closing price of Company Shares as reported on the New York Stock Exchange
on or nearest the Date of Termination (or, if not listed on such exchange,
on a nationally recognized exchange or quotation system on which trading
volume in Company Shares is highest) or the highest per share price for
Company Shares actually paid in connection with any change in control of
the Company, over the per share exercise price of each Option held by you
(whether or not then fully exercisable), times (z) the number of Company
Shares covered by each such option.
(v) The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder).
(vi) In the event that you become entitled to the payments (the
"Severance Payments") provided under paragraphs (ii), (iii), and (iv),
above (and Subsections (d) and (e), below), and if any of the Severance
Payments will be subject to the tax (the "Excise Tax") imposed by section
4999 of the Code, the Company shall pay to you at the time specified in
paragraph (vii), below, an additional amount (the "Gross-Up Payment") such
that the net amount retained by you, after deduction of any Excise Tax on
the Severance Payments and any federal (and state and local) income tax and
Excise Tax upon the payment provided for by this paragraph, shall be equal
to the amount of the Severance Payments less any Excise Tax attributable to
Severance Payments in respect of those shares of restricted stock granted
to you in 1990 in connection with the merger of Holiday Corporation with
and into a subsidiary of Bass plc and which were issued in substitution of
shares of Holiday Corporation restricted stock granted to you on or after
November 11, 1986 in connection with the 1987 recapitalization of Holiday
Corporation (the "Excluded Severance Payments"). For purposes of
determining whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax the following will apply:
(A) Any other payments or benefits received or to be received by
you in connection with a Change in Control of the Company or your
termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Change in Control of the
Company or any person affiliated with the Company or such person)
shall be treated as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to you such other
payments or benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4) of the Code in excess of the
base amount within the meaning of section 280G(b)(3) of the Code, or
are otherwise not subject to the Excise Tax;
(B) The amount of the Severance Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (y) the
total amount of the Severance Payments or (z) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after
applying clause (A), above); and
(C) The value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with proposed, temporary or final regulations under
Sections 280G(d)(3) and (4) of the Code or, in the absence of such
regulations, in accordance with the principles of Section 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay Federal income taxes at
the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and
locality of your residence on the Date of Termination, net of the
maximum reduction in Federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the amount
of Excise Tax attributable to Severance Payments other than the
Excluded Severance Payments is subsequently determined to be less than
the amount taken into account hereunder at the time of termination of
your employment, you shall repay to the Company at the time that the
amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus
the portion of the Gross-Up Payment attributable to the Excise Tax and
Federal (and state and local) income tax imposed on the Gross-Up
Payment being repaid by you if such repayment results in a reduction
in Excise Tax and/or a Federal (and state and local) income tax
deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax attributable to Severance Payments other than the Excluded
Severance Payments is determined to exceed the amount
taken into account hereunder at the time of the termination of your
employment (including by reason of any payment the existence or amount
of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect of
such excess (plus any interest payable with respect to such excess) at
the time that the amount of such excess is finally determined.
(vii) The payments provided for in paragraphs (ii), (iii), (iv) and
(vi) above, shall be made not later than the fifth day following the Date
of Termination, provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall pay
to you on such day an estimate, as determined in good faith by the Company,
of the minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to you payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(d) If your employment shall be terminated (y) by the Company other than
for Cause, Retirement or Disability or (z) by you voluntarily, then for a
twenty-four month period after such termination, the Company shall arrange to
provide you with life, disability, accident and health insurance benefits
substantially similar to those which you are receiving immediately prior to the
Notice of Termination. Benefits otherwise receivable by you pursuant to this
Subsection 4(d) shall be reduced to the extent comparable benefits are actually
received by you during the twenty-four month period following your termination,
and any such benefits actually received by you shall be reported to the Company.
(e) In the event a Change in Control of the Company occurs after you and
the Company have entered into any retirement agreement including an agreement
providing for early retirement, then the present value, computed using a
discount rate of 8% per annum, of the total amount of all unpaid deferred
payments as payable to you in accordance with the payment schedule that you
elected when the deferral was agreed to and using the plan interest rate
applicable to your situation, or other payments payable or to become payable to
you or your estate or beneficiary under such retirement agreement (other than
payments payable pursuant to a plan qualified under section 401(a) of the
Internal Revenue Code) including, without limitation, any unpaid deferred
payments under the Company's Executive Deferred Compensation Plan and the
Company's other deferred compensation plans shall be paid to you (or your estate
or beneficiary if applicable) in cash within five business days after the
occurrence of the Change in Control of the Company. If you and the Company or
its affiliates have executed a retirement agreement and if the Change in Control
of the Company occurs before the effective date of your retirement, then you
shall receive the Severance Payment payable under Subsection 4(c)(ii) herein in
addition to the present value of your unpaid deferred retirement payments and
other payments under the retirement agreement as aforesaid. All other benefits
to which you or your estate or any
beneficiary are entitled under such retirement agreement shall continue in
effect notwithstanding the Change in Control of the Company. This Subsection
4(e) shall survive your retirement.
(f) Notwithstanding that a Change in Control shall not have yet occurred,
if you so elect, by written notice to the Company given at any time after the
date hereof and prior to the time such amounts are otherwise payable to you:
(i) The Company shall deposit with an escrow agent, pursuant to an
escrow agreement between the Company and such escrow agent, a sum of money,
or other property permitted by such escrow agreement, sufficient in the
opinion of the Company's management to fund payment of the following
amounts to you, as such amounts become payable:
(A) Amounts payable, or to become payable, to you or to your
beneficiaries or your estate under the Company's Executive Deferred
Compensation Plan and under any agreements related thereto in
existence at the time of your election to make the deposit into
escrow.
(B) Amounts payable, or to become payable, to you or to your
beneficiaries or your estate by reason of your deferral of payments
payable to you prior to the date of your election to make the deposit
into escrow under any other deferred compensation agreements between
you and the Company in existence at the time of your election to make
the deposit into escrow, including but not limited to deferred
compensation agreements relating to the deferral of salary or bonuses.
(C) Amounts payable, or to become payable, to you or to your
beneficiaries or your estate under any agreement relating to your
retirement from the Company (including payments described under
Subsection 4(e) above) which agreement is in existence at the time of
your election to make the deposit into escrow, other than amounts
payable by a plan qualified under Section 401(a) of the Code.
(D) Subject to the approval of the Committee, amounts then due
and payable to you, but not yet paid, under any other benefit plan or
incentive compensation plan of the Company (whether such amounts are
stock or cash) other than amounts payable to you under a plan
qualified under section 401(a) of the Code.
(ii) Upon the occurrence of a Potential Change of Control, the
Company shall deposit with an escrow agent (which shall be the same escrow
agent, if one exists, acting pursuant to clause (i) of this subsection
4(f)), pursuant to an escrow agreement between the Company and such escrow
agent, a sum of money, or other property permitted by such escrow
agreement, sufficient in the opinion of Company management to fund the
payment to you of the amounts specified in Subsection 4(c) of this
Agreement.
(iii) It is intended that any amounts deposited in escrow pursuant to
the provisions of clause (i) or (ii) of this Subsection 4(f), be subject to
the claims of the Company's creditors, as set forth in the form of such
escrow agreement.
(g) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise (except as specifically provided in
this Section 4).
(h) In addition to all other amounts payable to you under this Section 4,
you shall be entitled to receive all benefits payable to you under any benefit
plan of the Company in which you participate to the extent such benefits are not
paid under this Agreement.
5. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminate your employment voluntarily
following a Change in Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law.
The obligations of the Company under Section 4 shall survive the expiration of
the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Memphis, Tennessee in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. Similar Provisions in Other Agreement. The Severance Payment under
this Agreement supersedes and replaces any other severance payment to which you
may be entitled under any previous agreement between you and the Company
(including for this purpose Holiday Corporation or its affiliates) or its
affiliates.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our binding agreement on this subject.
Very truly yours,
THE PROMUS COMPANIES
INCORPORATED
BY: CRAIG H. NORVILLE
------------------------
Craig H. Norville
Senior Vice President
and General Counsel
Agreed to as of this 1st day
of May, 1992.
MICHAEL D. ROSE
------------------------
Mr. Michael D. Rose
EXHIBIT 10(21)
THE PROMUS COMPANIES INCORPORATED
KEY EXECUTIVE OFFICER
ANNUAL INCENTIVE PLAN
Introduction and Purpose
- Key executive officers can have a major impact on the overall performance
of The Promus Companies Incorporated (the "Company"). The Key Executive
Officer Annual Incentive Plan (the "Plan") is designed to reward these
officers for achieving corporate performance objectives. The Plan provides
for uniform calculation procedures based on achieving specific objectives.
- The Plan is intended to provide an incentive for superior work and motivate
participating officers toward even higher achievement and business results,
to tie their goals and interests into those of the Company and its
stockholders, and to attract and retain key executive officers.
- An important purpose of the Plan is to insure the full deductibility of
compensation payable to the Company's Chief Executive Officer and the four
highest compensated executive officers whose compensation is required to be
reported in the Company's proxy statement.
- This document describes eligibility, performance objectives, the evaluation
process, the payment of bonus awards, and administrative matters.
Article I -- Eligibility and Participation
1.1 Only those executive officers who are at the corporate senior vice
president level or above may be eligible for the Plan. Prior to, or at the
time of, establishment of performance objectives (as provided in Article II
below) for a Plan year (which will be the calendar year), the Human
Resources Committee of the Board of Directors (the "Committee") will
approve the specific executive officers who will participate in the Plan
for that year.
Article II -- Performance Objectives
2.1 Prior to March 30 of each Plan year, the Committee will establish in
writing a performance goal including the specific target objective or
objectives.
2.2 Performance goals will be based on one or more of the following corporate
business criteria: Pre-tax income, operating income, cash flow, earnings
per share, return on equity, return on average invested capital, or a
division's operating income or opened units. These measurements will be
determined according to generally accepted
accounting principles ("GAAP") in existence on the date that the
performance goal is established and without regard to any changes in such
principles after such date and as may be determined by the Committee
pursuant to Article IV below.
Article III -- Individual Objectives
3.1 A participant may also be assigned personal performance goals or his or her
personal performance may be otherwise reviewed by the Committee. An
evaluation of personal performance may result in the decrease or
elimination of an award that is calculated pursuant to Article IV of the
Plan (if such decrease or elimination is approved by the Committee) but it
will not increase the award.
Article IV -- Determination of Awards
4.1 At or after the end of a Plan year, the Committee will certify the
achievement of the performance goal or goals including the specific target
objective or objectives and the satisfaction of any other material terms of
the award.
4.2 To assure that the incentive features of the Plan are maintained and to
avoid distortion in Plan operation, the Committee will not include (except
as provided in 4.3 below) minority interests and extraordinary events or
circumstances, determined in accordance with GAAP, that may occur during
the plan year in deciding performance goals and specific objectives or
calculating the achievement of the performance goals and the objectives.
Extraordinary events or circumstances will comprise the following:
extraordinary items, property transactions, changes in accounting
standards, and losses or gains arising from discontinued operations.
4.3 The Committee may for any plan year include property transactions and/or
discontinued operations (either specifically or generally or both) and may
further include or exclude any specified interest expense items, corporate
expense items, and/or development expense items when establishing the pre-
established performance goals and specific objectives. The actual results
or non-results of those property transactions and/or discontinued
operations that are included in the pre-established goals and specific
objectives will then be included, in accordance with the principles of
GAAP, in the calculation of the achievement of the goals and specific
objectives, provided that if the objective(s) approved by the Committee
include operations or businesses (including those being accounted for as
discontinued operations) that are subsequently disposed of or spun off
during the Plan year, the objective(s) and the results will be
appropriately adjusted in accordance with GAAP to exclude such operations
or businesses. Any items of interest expense, corporate expense and/or
development expense included or excluded in the pre-established goals and
specific objectives will also be included or excluded, as the case may be,
in the calculation of the achievement of the goals and specific objectives.
4.4 The actual award for a participant will be determined by multiplying the
participant's eligible earnings by the specific percentage adjacent to a
points column on tables or matrices approved by the Committee prior to
March 30 of the plan year. No award will exceed 200% of an individual's
eligible earnings. In addition, no award will exceed $1,000,000. The
Committee will have the discretion to pay an award that is lower than the
award calculated as provided herein.
4.5 Eligible earnings means a participant's annual base salary in effect on the
date the performance objectives are established by the Committee.
Article V -- Payment of Awards
5.1 Except as provided in Section 5.2(5), approved awards will be payable by
March 15 after the end of the Plan year; provided, however, that no amounts
shall be paid until the Committee has certified in writing pursuant to
Section 4.1 that the relevant performance goals were satisfied.
5.2 An award that would otherwise be payable to an employee who is not employed
on the award payment date will be prorated, or the individual will be
ineligible for an award, as follows:
(1) Terminated due to disability under Prorated based on active
long term disability plan service during plan year
(2) Retirement (at age 55 or older Prorated based on active
with ten years or more of service) service during plan year
(3) Voluntary or involuntary resignation No award
or termination prior to retirement
without mutual written agreement
(4) Resignation pursuant to mutual Prorated based on active
written agreement service during plan year
if agreed to by the
Company.
(5) Leave of absence Prorated based on active
service during plan
year.
(6) Death of participant Prorated based on active
service during plan
year; award paid to
participant's estate.
Article VI -- Other Conditions
6.1 Payment of awards under the Plan will not be made unless and until the
material terms (within the meaning of Section 162(m)(4)(c) of the Code) of
the Plan, including the business criteria described in Section 2.2 of the
Plan, are disclosed to the Company's stockholders and are approved by the
stockholders by a majority of votes cast in person or by proxy (including
abstentions to the extent abstentions are counted as voting under
applicable state law).
6.2 No person shall have any legal claim to be granted an award under the Plan
and there is no obligation for uniformity of treatment of eligible
participants. Awards may not be assigned, pledged, encumbered, or
transferred.
6.3 Neither the Plan nor any action taken under the Plan shall be construed as
giving any employee the right to be retained in the employ of the Company
or any subsidiary.
6.4 The Company or any of its subsidiaries may deduct from any award any
applicable withholding taxes or any amounts owed by the employee to the
Company or a subsidiary thereof.
Article VII -- Administration
7.1 The Committee shall have full power to administer and interpret the
provisions of the Plan and to establish substantive rules for its
administration, including taking action, as the Committee deems
appropriate, to insure the tax deductibility of payments under the Plan.
7.2 Except with respect to matters which under Section 162(m) of the Code are
required to be determined in the sole and absolute discretion of the
Committee, the Corporate Compensation Department of the Company will have
full power to administer and interpret the procedural aspects of the Plan,
subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues.
7.3 Except with respect to matters which under Section 162(m)(4)(c) of the Code
are required to be determined in the sole and absolute discretion of the
Committee, the Committee and the Corporate Compensation Department may rely
on opinions, reports or statements of officers or employees of the Company
or any subsidiary thereof and of Company counsel (inside or retained
counsel), public accountants and other professional or expert persons.
7.4 The Committee may terminate the Plan to be effective at such date as the
Committee may determine, and is further authorized to make changes to the
Plan that are not inconsistent with its purposes or that are necessary or
appropriate in light of governmental regulations or applicable laws.;
provided however, to the extent required by Section 162(m), such changes
shall be approved by a majority of the shareholders of the Company.
7.5 No member of the Committee and no employee of the Company or its
subsidiaries involved in administering the Plan or making decisions under
the Plan will have any personal liability to any person.
The undersigned certifies that this Plan was approved by the Human
Resources Committee of the Company's Board of Directors on February 24, 1995.
NEIL F. BARNHART
---------------------------
Signature
Vice President
---------------------------
Title
EXHIBIT 10(24)
TO: Mike Rose
FROM: Neil Barnhart
DATE: April 28, 1995
RE: Treatment of Your Stock Options In Spin-Off
-------------------------------------------
When the spin-off becomes effective, The Promus Companies Incorporated
(referred to in this memo as the Company or Promus) will change its name to
Harrah's Entertainment, Inc. You will remain an employee of Harrah's
Entertainment, Inc. and you will also be an employee of Promus Hotel
Corporation.
The Company has addressed the issue of how to treat the stock options of
employees in the context of the spin-off. After consideration of all factors,
the Company has decided employees going with Harrah's Entertainment, Inc. will
receive adjusted options of Harrah's Entertainment, Inc. and employees going
with Promus Hotel Corporation will receive adjusted options of Promus Hotel
Corporation.
Since you will be an employee with both companies, your options will be
allocated in proportion to the salary that will be initially paid to you by each
company. Harrah's Entertainment, Inc. will be paying 58.33% of your total
salary and Promus Hotel Corporation will be paying 41.67% of your total salary.
Accordingly, the following actions will be taken with respect to your options on
the effective date of the spin-off.
(1) In lieu of 41.67% of your options to purchase Promus stock, you will
receive substitute replacement options to purchase stock of Promus
Hotel Corporation. Your remaining options to purchase Promus stock
(58.33% of your options) will become options to purchase stock of
Harrah's Entertainment, Inc.
(2) The number and price of both the Promus Hotel Corporation options and
the Harrah's Entertainment, Inc. options you receive will be adjusted
so the approximate "spread value" of your existing Promus options is
carried over to the replacement options.
The formulas for these adjustments are as follows:
Harrah's Entertainment, Inc. Options
------------------------------------
# of Pre-Spin Promus Market Price New #
Promus X ---------------------------- = of Harrah's
Options Post-Spin Harrah's Market Price Ent. Options
Exercise Post-Spin Harrah's Market Price New Exercise
Price of X ------------------------------- = Price of
Promus Pre-Spin Promus Market Price Harrah's
Options Ent. Options
Promus Hotel Corporation Options
--------------------------------
# of Pre-Spin Promus Market Price New #
Promus X ---------------------------- = of Hotel
Options Post-Spin Hotel Market Price Options
Exercise Post-Spin Hotel Market Price New Exercise
Price of X ---------------------------- = Price
Promus Pre-Spin Promus Market Price of Hotel
Options Options
The Pre-Spin Promus Market Price will be the closing price of Promus
stock on the New York Stock Exchange on the date the Promus Hotel
Corporation stock dividend is distributed. This would be the final
market price of Promus stock before giving effect to the dividend.
The Post-Spin Harrah's Market Price will be the average closing price
of Harrah's Entertainment, Inc. stock on the New York Stock Exchange
for the ten trading days immediately after the date the Promus Hotel
Corporation stock dividend is distributed.
The Post-Spin Hotel Market Price will be the average closing price of
Promus Hotel Corporation stock on the New York Stock Exchange for the
ten trading days immediately after the date the Promus Hotel
Corporation stock dividend is distributed.
Please refer to the Attachment to this memo that illustrates how these
adjustments will work to preserve the approximate spread value of your
options.
(3) All other terms and conditions of your Promus options will carry over
to the Promus Hotel Corporation options. The vesting schedule for
your options will not change. The adjustments will apply to all of
your options (vested or unvested) that are outstanding and unexercised
as of the spin-off date.
The closing of the spin-off is subject to various conditions. If the
transaction does not close, your stock options will remain unchanged.
Please indicate your acceptance of this program by signing and returning
this memo. If you have any questions or would like more information, please
feel free to call me.
NFB/kmr
ACCEPTED:
MICHAEL D. ROSE
------------------------
Michael D. Rose
Attachment
Promus Stock Options Granted To
Michael D. Rose
Promus Options Promus Options
to be Adjusted for to be Adjusted for
Promus Options Harrah's Ent. Options Hotel Options
-------------- --------------------- -------------------
135,000/$9.00 x 58.33% = 78,745 x 41.67% = 56,255
105,000/$15.6667 x 58.33% = 61,246 x 41.67% = 43,754
49,000/$31.6875 x 58.33% = 28,582 x 41.67% = 20,418
30,000/$49.4375 x 58.33% = 17,499 x 41.67% = 12,501
Harrah's Entertainment Options -- Adjustment Example
----------------------------------------------------
Assume the "Pre-Spin Promus Market Price" is $35 per share. Assume the
"Post-Spin Harrah's Market Price is $25 per share.
35
# 78,745 options x -- = 110,243 Harrah's Entertainment Options
25
25
Price $9.00 x -- = $6.42 Exercise Price
35
Similar adjustments would be made to the other options.
Promus Hotel Corporation Options -- Adjustment Example
------------------------------------------------------
Assume the "Pre-Spin Promus Market Price" is $35 per share and the "Post-
Spin Hotel Market Price" is $20 per share.
35
# 56,255 options x -- = 98,446 Promus Hotel Options
20
20
Price $9.00 x -- = $5.14 Exercise Price
35
Similar adjustments would be made to the other options.
Note: Actual market prices could be different. This would in turn change the
----
outcome of the examples.
EXHIBIT 10(25)
TO: Mike Rose
FROM: Neil Barnhart
DATE: May 1, 1995
RE: Executive Deferred Compensation Plan ("EDCP")
---------------------------------------------
This memo describes the treatment of your EDCP account in connection with
the spin-off of the hotel business by The Promus Companies Incorporated
("Promus"). The Employee Benefits Allocation Agreement between Promus and
Promus Hotel Corporation will provide for this treatment.
Promus Hotel Corporation will continue to offer EDCP participation during
1995 under the Promus Hotel Corporation EDCP. The EDCP of Promus Hotel
Corporation as initially established will reflect substantially the same terms
as the current Promus EDCP. Promus Hotel Corporation also expects to offer a
similar plan in 1996. Information concerning the terms and provisions of the
Promus Hotel Corporation EDCP will be provided to you at a later date.
Harrah's Entertainment, Inc. will continue the EDCP in 1995, and it is also
expected a similar plan will be offered in 1996.
1. Proration of Account. On the effective date of the spin-off, your
Promus EDCP account balance as of such date will be prorated between Harrah's
Entertainment, Inc. and Promus Hotel Corporation in proportion to the percentage
of your total salary initially to be paid by each company, as follows:
58.33% of your EDCP balance will remain with Harrah's
Entertainment, Inc. (the "Harrah's Entertainment Balance")
41.67% of your EDCP balance will be transferred to the
Promus Hotel Corporation EDCP (the "Promus Hotel Balance").
The foregoing percentage allocation will be applied to each year of
deferral and its accrued interest as of the effective date of the spin-off.
You will remain vested in the retirement rate for all past and future EDCP
deferrals under the EDCP's of both companies.
2. 1995 Deferrals. With respect to compensation payable by Harrah's
Entertainment, Inc., any deferrals that you previously elected for the plan year
1995 will continue under the Harrah's Entertainment, Inc. EDCP after the Spin-
off. Any deferrals of compensation payable by Promus Hotel Corporation
for the plan year after the spin-off will continue under the Promus Hotel
Corporation EDCP in accordance with your previous deferral elections for 1995
under the Promus EDCP. The interest rates previously approved for 1995 will
remain the same for both plans.
3. Obligations Relating to Deferrals.
(a) After the spin-off of the hotel business, Harrah's Entertainment, Inc.
will remain obligated for your Harrah's Entertainment Balance including past and
future interest accruals and each of the deferral election agreement obligations
related to the Harrah's Entertainment Balance. Harrah's Entertainment, Inc.
will also be obligated for any future deferrals of your compensation payable by
Harrah's Entertainment, Inc. including interest accruals and deferral agreements
related to such compensation.
(b) On the effective date of the spin-off distribution (which is expected
to be June 30, 1995), Promus Hotel Corporation will assume all obligations for
your Promus Hotel Balance including past and future interest accruals and each
of the deferral election agreement payment obligations related to the Promus
Hotel Balance. Promus Hotel Corporation will also be obligated for any future
deferrals of your compensation payable by Promus Hotel Corporation including
interest accruals and deferral agreements related to such compensation.
(c) Promus (Harrah's Entertainment, Inc. after the name change) and its
subsidiaries after the spin-off will be released from all obligations regarding
your Promus Hotel Balance. The spin-off transaction will not be considered a
termination of employment for purposes of the EDCP employment termination
provisions. You will receive credit for your service with Promus, its
predecessors and subsidiaries prior to the spin-off.
4. Signing this Memo - Agreement and Release. In signing this memo, you
acknowledge that after the spin-off: (a) Harrah's Entertainment, Inc. (formerly
Promus) will remain liable for your Harrah's Entertainment Balance including
related payment obligations to you pursuant to the terms of your existing
deferral election agreements at the retirement rate, (b) Promus Hotel
Corporation will assume, and will be obligated to you for, your Promus Hotel
Balance including related payment obligations to you pursuant to the terms of
your existing deferral election agreements at the retirement rate, and (c)
Harrah's Entertainment, Inc. (formerly Promus) and its subsidiaries after the
spin-off will be released from any obligations to you regarding your Promus
Hotel Balance and the deferral agreement obligations that relate to such
Balance.
Please indicate your acceptance of the above by signing and returning this
memo by May 10, 1995. If you have any questions or would like more information,
please feel free to call me.
NFB/kmr
ACCEPTED:
MICHAEL D. ROSE
------------------------
Michael D. Rose
EX-11
HARRAH'S ENTERTAINMENT, INC.
COMPUTATION OF PER SHARE EARNINGS
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
Income from continuing operations $ 35,351,000 $ 29,669,000 $ 64,047,000 $ 51,754,000
Discontinued operations
Earnings from discontinued hotel
operations, net 11,626,000 10,207,000 21,230,000 16,338,000
Spin-off transaction expenses, net (5,996,000) - (21,194,000) -
Cumulative effect of change in accounting
policy, net - - - (7,932,000)
------------ ------------ ------------ ------------
Net income $ 40,981,000 $ 39,876,000 $ 64,083,000 $ 60,160,000
============ ============ ============ ============
Primary earnings per share
Weighted average number of common shares
outstanding 102,349,378 101,615,334 102,231,919 101,556,187
Common stock equivalents
Additional shares based on average
market price for period applicable to:
Restricted stock 77,943 432,838 151,525 448,017
Stock options 783,205 778,039 704,075 853,851
------------ ------------ ------------ ------------
Average number of primary common and
common equivalent shares outstanding 103,210,526 102,826,211 103,087,519 102,858,055
============ ============ ============ ============
Primary earnings per common and common
equivalent share
Income from continuing operations $ 0.35 $ 0.29 $ 0.62 $ 0.50
Discontinued operations
Discontinued hotel operations, net 0.11 0.10 0.21 0.16
Spin-off transaction expenses, net (0.06) - (0.21) -
Change in accounting policy, net - - - (0.08)
------ ------ ------ ------
Net income $ 0.40 $ 0.39 $ 0.62 $ 0.58
====== ====== ====== ======
Fully diluted earnings per share
Average number of primary common and
common equivalent shares outstanding 103,210,526 102,826,211 103,087,519 102,858,055
Additional shares based on period-
end price applicable to:
Restricted stock - 13,606 1,375 23,952
Stock options - - 29,879 -
------------ ------------ ------------ ------------
Average number of fully diluted common and
common equivalent shares outstanding 103,210,526 102,839,817 103,118,773 102,882,007
============ ============ ============ ============
Fully diluted earnings per common and
common equivalent share
Income from continuing operations $ 0.35 $ 0.29 $ 0.62 $ 0.50
Discontinued operations
Earnings from discontinued hotel
operations, net 0.11 0.10 0.21 0.16
Spin-off transaction expenses, net (0.06) - (0.21) -
Change in accounting policy, net - - - (0.08)
------ ------ ------ ------
Net income $ 0.40 $ 0.39 $ 0.62 $ 0.58
====== ====== ====== ======
5
1,000
6-MOS
DEC-31-1995
JUN-30-1995
73,057
0
46,123
10,763
11,636
163,703
1,638,572
502,934
1,582,123
203,346
730,068
10,253
0
0
547,071
1,582,123
0
745,818
0
572,657
14,181
2,799
45,629
113,398
43,596
64,047
36
0
0
64,083
0.62
0.62
