EXHIBIT 10.19
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
DIAMOND JO, LLC
AND
THE OLD EVANGELINE DOWNS, L.L.C.
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
WELLS FARGO FOOTHILL, INC.
AS THE ARRANGER AND AGENT
DATED AS OF JUNE 16, 2004
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION..............................................1
1.1 Definitions......................................................1
1.2 Accounting Terms................................................36
1.3 Code............................................................36
1.4 Construction....................................................36
1.5 Schedules and Exhibits..........................................36
2. LOAN AND TERMS OF PAYMENT................................................36
2.1 Advances........................................................36
2.2 Term Loan.......................................................37
2.3 Borrowing Procedures and Settlements............................37
2.4 Payments........................................................44
2.5 Overadvances....................................................46
2.6 Interest: Rates, Payments, and Calculations....................47
2.7 [Intentionally Omitted].........................................48
2.8 Crediting Payments..............................................48
2.9 Designated Account..............................................48
2.10 Maintenance of Loan Account; Statements of Obligations..........49
2.11 Fees............................................................49
2.12 Letters of Credit...............................................50
2.13 Registered Notes................................................52
2.14 Capital Requirements............................................53
2.15 Joint and Several Liability of Borrowers........................53
2.16 LIBOR Option....................................................56
3. CONDITIONS; TERM OF AGREEMENT............................................58
3.1 Conditions Precedent to Initial Extension of Credit.............58
3.2 Conditions Subsequent to Initial Extension of Credit............61
3.3 Conditions Precedent to all Extensions of Credit................61
3.4 Term............................................................62
3.5 Effect of Termination...........................................62
3.6 Early Termination by Borrowers..................................62
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4. CREATION OF SECURITY INTEREST............................................63
4.1 Grant of Security Interest......................................63
4.2 Negotiable Collateral...........................................63
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral...........................................64
4.4 Delivery of Additional Documentation Required...................64
4.5 Power of Attorney...............................................65
4.6 Right to Inspect................................................66
4.7 Control Agreements..............................................66
4.8 FF&E Letter of Credit...........................................66
5. REPRESENTATIONS AND WARRANTIES...........................................66
5.1 No Encumbrances.................................................67
5.2 [Intentionally Omitted].........................................67
5.3 [Intentionally Omitted].........................................67
5.4 Equipment.......................................................67
5.5 Location of Inventory and Equipment.............................67
5.6 Inventory Records...............................................67
5.7 State of Incorporation; Location of Chief Executive Office;
FEIN; Organizational ID Number; Commercial Tort Claims..........67
5.8 Due Organization and Qualification; Subsidiaries................67
5.9 Due Authorization; No Conflict..................................68
5.10 Litigation......................................................69
5.11 No Material Adverse Change......................................69
5.12 Fraudulent Transfer.............................................69
5.13 Employee Benefits...............................................69
5.14 Environmental Condition.........................................69
5.15 Brokerage Fees..................................................70
5.16 Intellectual Property...........................................70
5.17 Leases..........................................................70
5.18 Deposit Accounts................................................70
5.19 Complete Disclosure.............................................70
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5.20 Indebtedness....................................................71
5.21 Licenses and Permits............................................71
5.22 Senior Debt.....................................................71
6. AFFIRMATIVE COVENANTS....................................................71
6.1 Accounting System...............................................71
6.2 Reporting.......................................................72
6.3 Financial Statements, Reports, Certificates.....................72
6.4 [Intentionally Omitted].........................................75
6.5 [Intentionally Omitted].........................................75
6.6 Maintenance of Properties.......................................75
6.7 Taxes...........................................................75
6.8 Insurance.......................................................76
6.9 Location of Inventory and Equipment.............................77
6.10 Compliance with Laws............................................78
6.11 Leases..........................................................78
6.12 Brokerage Commissions...........................................78
6.13 Existence.......................................................78
6.14 Environmental...................................................78
6.15 Disclosure Updates..............................................78
6.16 Government Authorization........................................79
6.17 License Renewals................................................79
6.18 Licenses and Permits............................................79
6.19 Subsidiary Guarantees...........................................79
6.20 Collateral for FF&E Obligations.................................80
7. NEGATIVE COVENANTS.......................................................80
7.1 Indebtedness....................................................80
7.2 Liens...........................................................82
7.3 Restrictions on Fundamental Changes.............................82
7.4 Disposal of Assets..............................................82
7.5 Change Name.....................................................84
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7.6 Guarantee.......................................................84
7.7 Nature of Business..............................................84
7.8 Prepayments and Amendments......................................84
7.9 Change of Control...............................................85
7.10 Operation of Diamond Jo Vessels.................................85
7.11 Restricted Payments.............................................85
7.12 Accounting Methods..............................................87
7.13 Investments.....................................................88
7.14 Transactions with Affiliates....................................88
7.15 Suspension......................................................89
7.16 Compensation....................................................89
7.17 Use of Proceeds.................................................89
7.18 Change in Location of Chief Executive Office; Inventory
and Equipment with Bailees......................................89
7.19 Securities Accounts.............................................89
7.20 Financial Covenants.............................................90
7.21 Management Agreements...........................................91
8. EVENTS OF DEFAULT........................................................91
9. AGENT'S RIGHTS AND REMEDIES..............................................94
9.1 Rights and Remedies.............................................94
9.2 Remedies Cumulative.............................................99
10. TAXES AND EXPENSES.......................................................99
11. WAIVERS; INDEMNIFICATION................................................100
11.1 Demand; Protest................................................100
11.2 The Lender Group's Liability for Collateral....................100
11.3 Indemnification................................................100
12. NOTICES.................................................................100
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................102
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................103
14.1 Assignments and Participations.................................103
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14.2 Successors.....................................................106
15. AMENDMENTS; WAIVERS.....................................................106
15.1 Amendments and Waivers.........................................106
15.2 Replacement of Holdout Lender..................................107
15.3 No Waivers; Cumulative Remedies................................108
16. AGENT; THE LENDER GROUP.................................................108
16.1 Appointment and Authorization of Agent.........................108
16.2 Delegation of Duties...........................................109
16.3 Liability of Agent.............................................109
16.4 Reliance by Agent..............................................109
16.5 Notice of Default or Event of Default..........................109
16.6 Credit Decision................................................110
16.7 Costs and Expenses; Indemnification............................110
16.8 Agent in Individual Capacity...................................111
16.9 Successor Agent................................................111
16.10 Lender in Individual Capacity..................................111
16.11 Withholding Taxes..............................................112
16.12 Collateral Matters.............................................114
16.13 Restrictions on Actions by the Lenders; Sharing of Payments....114
16.14 Agency for Perfection..........................................115
16.15 Payments by Agent to the Lenders...............................115
16.16 Concerning the Collateral and Related Loan Documents...........115
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by the Lenders; Other Reports and Information......115
16.18 Several Obligations; No Liability..............................117
17. GENERAL PROVISIONS......................................................117
17.1 Effectiveness..................................................117
17.2 Section Headings...............................................117
17.3 Interpretation.................................................117
17.4 Severability of Provisions.....................................117
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17.5 Amendments in Writing..........................................117
17.6 Counterparts; Telefacsimile Execution..........................117
17.7 Revival and Reinstatement of Obligations.......................118
17.8 Integration....................................................118
17.9 Combined Administration........................................118
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule P-1 Permitted Liens
Schedule P-2 Existing Investments
Schedule R-1 Real Property Collateral
Schedule 2.12 Existing Letters of Credit
Schedule 5.5 Locations of Equipment
Schedule 5.7 Jurisdiction; Chief Executive Office; FEIN; State
Organizational No.; Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.8(e) Restricted Subsidiaries; Unrestricted Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Existing Indebtedness
Schedule 5.21 Licenses and Permits
Schedule 7.14 Affiliate Transactions
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
June 16, 2004, by and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), WELLS FARGO FOOTHILL, INC., a
California corporation, as the arranger and agent for the Lenders ("Agent"),
and, on the other hand, DIAMOND JO, LLC (formerly known as Peninsula Gaming
Company, LLC), a Delaware limited liability company ("DJL"), and THE OLD
EVANGELINE DOWNS, L.L.C., a Louisiana limited liability company ("OED", together
with DJL, referred to hereinafter each individually as a "Borrower", and
individually and collectively, jointly and severally, as "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:
"Account" means an "account" (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Acquired Debt" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person is merged with or into either
Borrower or a Restricted Subsidiary, becomes a Restricted Subsidiary or
Indebtedness assumed in connection with the acquisition of assets from such
Person other than Indebtedness incurred in connection with, or in contemplation
of, such Person merging with or into either Borrower or a Restricted Subsidiary
or becoming a Restricted Subsidiary or such acquisition of assets.
"Additional Documents" has the meaning set forth in Section
4.4(b)(i).
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Capital Stock, by
contract, or otherwise.
"Affiliate Transaction" has the meaning set forth in Section 7.14.
"Agent" means Wells Fargo Foothill, solely in its capacity as agent
for the Lenders hereunder, and any successor thereto.
"Agent's Account" means the account identified on Schedule A-1.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers or Guarantors
to Agent for the benefit of the Lender Group under this Agreement or the other
Loan Documents.
"Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Annualized Quarterly Combined EBITDA" means, as of any date of
determination (which date of determination shall be as of the last day of any
month and need not be the end of a fiscal quarter), the product of Borrowers'
Combined EBITDA for the period of 3 months then ending times 4.
"Applicable Capital Gain Tax Rate" means a rate equal to the sum of:
(a) the highest marginal Federal income tax rate applicable to net
capital gain of an individual who is a citizen of the United States, plus
(b) (i) the greatest of (x) an amount equal to the sum of the
highest marginal state and local income tax rates applicable to net capital gain
of an individual who is a resident of the State of California, (y) an amount
equal to the sum of the highest marginal state and local income tax rates
applicable to net capital gain of an individual who is a resident of the State
of Louisiana, and (z) an amount equal to the sum of the highest marginal state
and local income tax rates applicable to net capital gain of an individual who
is a resident of the State of Iowa, multiplied by (ii) a factor equal to 1 minus
the highest marginal Federal income tax rate described in clause (a) above.
"Applicable Income Tax Rate" means a rate equal to the sum of:
(a) the highest marginal Federal ordinary income tax rate applicable
to an individual who is a citizen of the United States, plus
(b) (i) the greatest of (x) an amount equal to the sum of the
highest marginal state and local ordinary income tax rates applicable to an
individual who is a resident of the State of California, (y) an amount equal to
the sum of the highest marginal state and local ordinary income tax rates
applicable to an individual who is a resident of the State of Louisiana, and (z)
an amount equal to the sum of the highest marginal state and local ordinary
income tax rates applicable to an individual who is a resident of the State of
Iowa, multiplied by (ii) a factor equal to 1 minus the highest marginal Federal
income tax rate described in clause (a) above.
"Applicable Gaming Laws" has the meaning set forth in Section 9.1.
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"Applicable Margin" means as of any date of determination, the
applicable percentage indicated below that corresponds to Combined EBITDA for
the 12-month period ended immediately prior to the date of determination:
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Pricing Combined Applicable Applicable Applicable
Level EBITDA as of Margin for Margin for Margin for
the end of Advances that Advances that Letter of
each fiscal are Base Rate are LIBOR Credit Fee
quarter Loans Rate Loans
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Level I Less than 1.00% 3.50% 3.00%
$25,000,000
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Level II Greater than or 0.75% 3.25% 2.75%
equal to
$25,000,000, but
less than
$35,000,000
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Level III Greater than or 0.50% 3.00% 2.50%
equal to
$35,000,000
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The Applicable Margin for each Advance and the Letter of Credit Fee shall be
determined as of the end of each fiscal quarter by reference to Combined EBITDA
for the 12-month period then ending; provided, however, that (a) no change in
the Applicable Margin shall be effective until 3 Business Days after the date on
which Agent receives financial statements pursuant to Section 6.3(a), and a
certificate of the chief financial officer of Parent demonstrating such amount,
attaching thereto a schedule in form reasonably satisfactory to Agent of the
computations used by Parent in determining such Combined EBITDA for such
preceding 12 month period ending as of the end of the most recently ended fiscal
quarter, and (b) the Applicable Margin shall be the interest rate margin set
forth for Level I above with respect to the applicable Advances and Letter of
Credit Fee, respectively, (i) from the Closing Date through and including the
second Business Day after Agent receives the information required by clause (a)
of this proviso for the fiscal quarter ending September 30, 2004, (ii) if Parent
has not submitted to Agent the information described in clause (a) of this
proviso as and when required under Section 6.3(a), for so long as such
information has not been received by Agent, and (iii) at the election of Agent
or the Required Lenders, upon the occurrence and during the continuation of any
Event of Default (whether or not the Default Rate of interest shall then be in
effect).
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, $1,400,000, (b) during the period of
time from and including the date that is the first anniversary of the Closing
Date up to the date that is the second anniversary of the Closing Date,
$1,050,000, (c) during the period of time from and including the date that is
the second anniversary of the Closing Date up to the third anniversary of the
Closing Date, $700,000, and (d) during the period of time from and including the
date that is the third anniversary of the Closing Date up to the Maturity Date,
$350,000.
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"Asset Sale" means:
(a) any direct or indirect sale, assignment, transfer, lease,
conveyance, or other disposition (including, without limitation, by way of
merger or consolidation) (collectively, a "transfer") of any assets of Borrowers
or any Restricted Subsidiary; or
(b) any direct or indirect issuance or sale of any Equity Interests
of any Borrower or any Restricted Subsidiary (other than directors' qualifying
shares), in each case to any Person (other than Borrowers or a Restricted
Subsidiary).
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance in
the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of any
Borrower.
"Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under Section 2.1
(after giving effect to all then outstanding Obligations and all sublimits and
reserves applicable hereunder).
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as
a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.
"Base Rate" means, the rate of interest announced within Wells Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.
"Base Rate Loan" means the portion of the Advances or the Term Loan
that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Term Loan Margin" means 2.50%.
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"Beneficial Owner" or "beneficial owner" has the meaning attributed
to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the
Closing Date) whether or not otherwise applicable.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past 6 years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Books" means all of Borrowers' and their respective Subsidiaries'
now owned or hereafter acquired books and records (including all of their
Records indicating, summarizing, or evidencing their assets (including the
Collateral) or liabilities, all of Borrowers' and their respective Subsidiaries'
Records relating to their business operations or financial condition, and all of
their goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrower Collateral" means all of each Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims described on Schedule 5.7,
(d) all of its Deposit Accounts;
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property,
(i) all of its judgments,
(j) all of its Negotiable Collateral,
(k) all of its Real Property Collateral,
(l) all money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of Agent, and
(m) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all
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Accounts, Books, Equipment, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, Real Property, money, deposit accounts, or other tangible
or intangible property resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and the proceeds thereof.
Notwithstanding the foregoing, "Borrower Collateral" shall not include any
of the Excluded Assets.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loan) made on the same day by the Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance, in each case, to a Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close in New
York, New York or Los Angeles, California, except that, if a determination of a
Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also
shall exclude any day on which banks are closed for dealings in Dollar deposits
in the London interbank market.
"Capital Expenditure Carry Forward Amount" shall mean, to the extent
positive, for any fiscal year, a carry forward amount equal to (a) for fiscal
year 2005, $7,000,000 less the aggregate amount of capital expenditures made
pursuant to Section 7.20(b)(i) in fiscal year 2004 and (b) for fiscal year 2006
and each fiscal year thereafter, $6,000,000 less the aggregate amount of capital
expenditures made pursuant to Section 7.20(b)(i) in the immediately preceding
fiscal year.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"Capital Stock" means, (a) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (b) with respect to a
limited liability company, any and all membership interests, and (c) with
respect to any other Person, any and all partnership or other equity interests
of such Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (b) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof
by Moody's and in each case maturing within
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one year after the date of acquisition, (c) investments in money market funds
substantially all of whose assets comprise securities of the type described in
clauses (a) and (b) above and (d) repurchase obligations for underlying
securities of the types and with the maturities described above.
"CFC" means a controlled foreign corporation (as that term is
defined in the IRC).
"Change of Control" means the occurrence of any of the following:
(a) during any period of 2 consecutive calendar years, individuals who at the
beginning of such period constituted the Managers of Parent (together with any
new Managers whose election as a Manager or whose nominations for election by
Parent's members or stockholders, was approved by a majority of Managers then
still in office who were either Managers at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of such Managers then in office; provided,
however, that there shall be no Change of Control pursuant to this clause (a) if
during such 2-year period any of the Excluded Persons continue to (i) own,
directly or indirectly, a majority of the Voting Stock of Parent or (ii) control
or manage, directly or indirectly, the day-to-day operations of Parent; (b) any
Person (other than an Excluded Person) is or becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the aggregate voting power of the
Voting Stock of Parent, or conversely, any Person that beneficially owns,
directly or indirectly, a majority of the aggregate voting power of the Voting
Stock of Parent on the Closing Date becomes the Beneficial Owner, directly or
indirectly, of less than a majority of the voting power of the Voting Stock of
Parent; (c) any Borrower adopts a plan of liquidation; (d) the direct or
indirect sale, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the properties or assets of any Borrower and its Restricted
Subsidiaries, in each case, taken as a whole, to any Person other than a
Borrower or a Restricted Subsidiary; or (e) the first day on which Parent fails
to own 100% of the issued and outstanding Capital Stock of Borrowers. As used in
this definition, "Person" (including any group that is deemed to be a "Person")
has the meaning given by Section 13(d) of the Exchange Act, whether or not
applicable.
"Closing Date" means June ___, 2004.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the period from the Closing Date to December 31, 2004 (on a month
by month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by each Borrower, its Subsidiaries or
each Guarantor in or upon which a Lien is granted under any of the Loan
Documents. Notwithstanding the foregoing, "Collateral" shall not include any of
the Excluded Assets.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person
7
in possession of, having a Lien upon, or having rights or interests in the
Books, Equipment or Inventory, in each case, in form and substance satisfactory
to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds and proceeds of cash sales, rent
and tax refunds).
"Combined EBITDA" means, with respect to Borrowers for any fiscal
period, the sum of Combined Net Income for such period, without duplication;
plus (a) consolidated income tax expense of Borrowers and the
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period
and the amount of Permitted Tax Distributions subtracted from Net Income in the
determination of the Combined Net Income of such Person for such period;
plus (b) Combined Interest Expense, to the extent that such Combined
Interest Expense was deducted in computing such Combined Net Income;
plus (c) Combined Non-Cash Charges, to the extent deducted in
computing such Combined Net Income;
plus (d) reasonable costs and expenses (other than costs and
expenses incurred in connection with the acquisition, construction or renovation
of any Gaming Property) directly relating to the opening of any Gaming Property
that was, or is under, construction, to the extent deducted in computing such
Combined Net Income;
minus (e) (i) non-cash gains increasing such Combined Net Income and
(ii) the amount of all cash payments made by Borrowers or any of the Restricted
Subsidiaries during such period to the extent such payments relate to non-cash
charges that were added back in determining Combined EBITDA for such period or
any prior period;
provided, however, that in determining Combined EBITDA with respect to OED for
any period ending on or about: (x) March 31, 2004, Combined EBITDA of OED for
such period shall be deemed to be equal to the product of (i) Combined EBITDA of
OED for the period from January 1, 2004 to the last day of such period and (ii)
4; (y) June 30, 2004, Combined EBITDA of OED for such period shall be deemed to
be equal to the product of (i) Combined EBITDA of OED for the period from
January 1, 2004 to the last day of such period and (ii) 2; and (z) September 30,
2004, Combined EBITDA of OED for such period shall be deemed to be equal to the
product of (i) Combined EBITDA of OED for the period from January 1, 2004 to the
last day of such period and (ii) 1.333.
"Combined Interest Expense" means, with respect to Borrowers for any
period, the result of (a) the consolidated interest expense of Borrowers and
their Restricted Subsidiaries for such period, whether paid or accrued
(including amortization of original issue discount, noncash interest payment,
and the interest component of Capitalized Lease Obligations), to the extent such
expense was deducted in computing Combined Net Income for such period, minus (b)
amortization expense, write-off of deferred financing costs and any charge
related to any premium or penalty paid, in each case, accrued during such period
in connection with redeeming or retiring any Indebtedness before its stated
maturity, as determined in accordance with GAAP, to the extent such expense,
cost, or charge was included in the calculation made pursuant to
8
clause (a) above; provided that any premiums, fees and expenses (including the
amortization thereof) payable in connection with the initial offering of the
Notes and the application of the net proceeds therefrom and the refinancing of
the obligations under that certain Loan and Security Agreement between DJL and
Wells Fargo Foothill, dated as of February 23, 2001, that certain Loan and
Security Agreement among OED, OED Capital and Wells Fargo Foothill, dated as of
June 24, 2003, in each case as amended through the Closing Date and the
Equipment Loan Agreement, and all documents executed in connection with any of
the foregoing, shall be excluded from this definition.
"Combined Net Income" means, with respect to Borrowers for any
period, the aggregate of the Net Income of Borrowers and their Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP excluding (to the extent included in calculating such net income) (a)
any gain or loss, together with any related taxes paid or accrued on such gain
or loss, realized in connection with any Asset Sales and dispositions pursuant
to sale-leaseback transactions and (b) any extraordinary gain or loss, together
with any taxes paid or accrued on such gain or loss; provided, that (a) the Net
Income of any other Person (other than a Restricted Subsidiary of a Borrower)
shall be included only to the extent of the amount of dividends or distributions
paid to a Borrower or a Wholly Owned Subsidiary of a Borrower, and (b) the Net
Income of any Restricted Subsidiary shall not be included to the extent that
declarations of dividends or similar distributions by such Restricted Subsidiary
are not at the time permitted, directly or indirectly, by operation of the terms
of its organizational documents or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Restricted
Subsidiary or its owners.
"Combined Non-Cash Charges" means, with respect to Borrowers for any
period, (a) the aggregate depreciation and amortization expense for Borrowers
and their Restricted Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP and (b) all other non-cash charges of Borrowers
and their Restricted Subsidiaries for such period, in each case, determined on a
consolidated basis in accordance with GAAP, including, without limitation,
non-cash charges related to (i) the Management Agreements or the pricing or
repricing or issuances of Equity Interests of Borrowers or PGP to employees of
Borrowers (whether accruing at or subsequent to the time of such repricing or
issuance), (ii) impairment of goodwill, intangibles or fixed assets, (iii)
purchase accounting adjustments, and (iv) restructuring charges, non-capitalized
transaction costs and other non-cash charges incurred in connection with actual
or proposed financings, acquisitions or divestitures (including, without
limitation, the initial issuance of the Notes) of Borrowers and their Restricted
Subsidiaries for such period; but, in each case, excluding (x) any such charges
constituting an extraordinary item or loss, and (y) any such charge which
requires an accrual of or a reserve for cash charges for any future period.
"Commercial Tort Claim/Judgment Assignment" has the meaning set
forth in Section 4.4(e).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of
9
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Contractor" means W.G. Yates & Sons Construction Company.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities intermediary with respect to a Securities Account
or the applicable bank with respect to a Deposit Account.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter,
the interest rate then applicable to Advances (inclusive of the Base Rate Margin
applicable thereto).
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means, with respect to each Borrower, that
certain Deposit Account of such Borrower identified on Schedule D-1.
"Designated Account Bank" means American Trust and Savings Bank, 895
Main Street, Dubuque, Iowa 52001.
"Diamond Jo" means DJL's riverboat casino which is documented under
the laws and flag of the United States with Official Number 973800, and which
has as its hailing port Dubuque, Iowa.
"Diamond Jo II" means DJL's riverboat casino which is documented
under the laws and flag of the United States with Official Number 973801, and
which has as its hailing port Dubuque, Iowa.
10
"Diamond Jo Ship Mortgage" means that Preferred Ship Mortgage dated
as of the date hereof and executed by DJL in favor of Agent, encumbering the
Diamond Jo Vessels and their related personal property, in form and substance
satisfactory to Agent.
"Diamond Jo Vessels" means those certain riverboat casinos owned and
operated by DJL as of the Closing Date, which are known as Diamond Jo and
Diamond Jo II.
"Disbursement Letter" means an instructional letter executed and
delivered by Borrowers to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is satisfactory to Agent.
"Disqualified Capital Stock" means any Equity interest that (a)
either by its terms (or the terms of any security into which it is convertible
or for which it is exchangeable) is or upon the happening of any event would be
required to be redeemed or repurchased prior to the Maturity Date or is
redeemable at the option of the holder thereof at any time prior to the Maturity
Date, or (b) is convertible or exchangeable at the option of the issuer thereof
or any other Person for debt securities that are pari passu or subordinate in
respect of payment to the Obligations. Notwithstanding the foregoing, any Equity
Interests that would constitute Disqualified Capital Stock solely because such
Equity Interests mature or become mandatorily redeemable, or give the holders
thereof the right to require Borrowers to repurchase such Equity Interests, in
each case, upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Capital Stock if the terms of such Equity Interests
provide that the applicable Borrower may not repurchase or redeem any such
Equity Interests pursuant to the provisions of this Agreement.
"DJL" has the meaning set forth in the preamble to this Agreement.
"Dollars" or "$" means United States dollars.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrowers,
and (f) during the continuation of an Event of Default, any other Person
approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower, any Subsidiary of a Borrower or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any
11
facilities which received Hazardous Materials generated by any Borrower, any
Subsidiary of a Borrower or any of their predecessors in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on any Borrower or any
Subsidiary of a Borrower, relating to the environment, employee health and
safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 USC ss. 1251 et seq.; the Toxic Substances Control
Act, 15 USC, ss. 2601 et seq.; the Clean Air Act, 42 USC ss. 7401 et seq.; the
Safe Drinking Water Act, 42 USC. ss. 3803 et seq.; the Oil Pollution Act of
1990, 33 USC. ss. 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC ss. 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC. ss.651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the Code),
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), computer hardware, tools, parts and goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"Equipment Loan Agreement" means that certain Loan and Security
Agreement, dated as of September 22, 2003, by and among OED, OED Capital, the
lenders party thereto, and Wells Fargo Foothill, as the arranger and
administrative agent, and the other parties party thereto from time to time.
"Equity Holder" means (a) with respect to a corporation, each holder
of Capital Stock of such corporation, (b) with respect to a limited liability
company or similar entity, each member of such limited liability company or
similar entity, (c) with respect to a partnership, each partner of such
partnership, (d) with respect to any entity described in clause (a)(iv) of the
definition of "Flow Through Entity", the owner of such entity, and (e) with
respect to a trust described in clause (a)(v) of the definition of "Flow Through
Entity", the persons treated for Federal income tax purposes as the owners of
the trust property.
12
"Equity Interests" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower or a Subsidiary of a Borrower under IRC Section 414(b), (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower or a Subsidiary of a Borrower under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Borrower or a Subsidiary of a Borrower is a member
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Borrower or a Subsidiary of a Borrower and whose employees
are aggregated with the employees of a Borrower or a Subsidiary of a Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Event of Loss" means, with respect to any property or asset, any
(a) loss, destruction or damage of such property or asset or (b) any
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers and their Subsidiaries aged
in excess of their historical levels with respect thereto and all book
overdrafts of Borrowers and their Subsidiaries in excess of their historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.
"Excess Cash Distribution Amount for Taxes" means the excess of (a)
the aggregate actual cash distributions received by any Borrower or a Restricted
Subsidiary from all Flow Through Entities that are not Restricted Subsidiaries
during the period commencing with the Closing Date and continuing to and
including the date on which a proposed Permitted Tax Distribution is to be made
under clause 3 of the second paragraph of Section 7.11 over (b) the aggregate
amount of such cash distributions described in the immediately preceding clause
(a) that have already been taken into account for purposes of making (i)
Permitted Tax Distributions previously made and which were attributable to a
Flow Through Entity that was not a Restricted Subsidiary at the time such
Permitted Tax Distribution was made plus (ii) Restricted Payments permitted by
clause (c)(i) of Section 7.11 (treating such cash distributions in this clause
(b)(ii) as used to make a Restricted Payment during such period only to the
extent that in such period, the total amount of Restricted Payments during such
period exceeded the excess of (1) the total amount of Restricted Payments
permitted to be made in such period over (2) the amount of such cash
distributions described in the immediately preceding clause (a) that were
actually received by Borrowers or a Restricted Subsidiary during such period and
that were not previously used to make a Permitted Tax Distribution.
13
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Excluded Assets" means (a) the lease for the off track betting
parlor operated by Parent in New Iberia, Louisiana; (b) cash, other than cash
deposited in Deposit Accounts; (c) assets securing Purchase Money Obligations or
Capitalized Lease Obligations permitted to be incurred under this Agreement to
the extent a second Lien would not be permitted under the documents evidencing
such obligations; and (d) any agreements, permits, licenses (including Gaming
Licenses), or the like (including any parcels of the Warner Land that are
subject to the mortgage granted by OED to the seller of such land) solely in the
event and to the extent that: (i) such agreements, permits, licenses, or the
like (including any parcels of the Warner Land that are subject to the mortgage
granted by OED to the seller of such land) cannot be subjected to a consensual
security interest in favor of Agent without the consent of the licensor or other
party to such agreement, permit, license, or the like; (ii) any such restriction
is effective and enforceable under applicable law; and (iii) such consent is not
obtainable by any Borrower; provided, that each Borrower agrees to use all
commercially reasonable efforts (which shall not require the payment of cash to,
or the reimbursement of fees and expenses of the consenting party or the making
of any material concessions under any such agreement, permit, license (including
a Gaming License) or the like (including any parcels of the Warner Land that are
subject to the mortgage granted by OED to the seller of such land) to obtain all
requisite consents to enable such Borrower to provide a security interest in
such agreement, permit, license (including Gaming Licenses) or the like;
provided, further, however, that (i) Excluded Assets shall not include (and,
accordingly, the Collateral shall include) any and all proceeds of any of the
assets described in clause (d) above and any and all proceeds of any of the
assets described in clauses (b) and (c) above or of any other Collateral to the
extent such proceeds do not constitute Excluded Assets, and (ii) any agreement,
permit, license, or the like qualifying as an Excluded Asset under clause (d)
above no longer shall constitute an Excluded Asset (and instead shall constitute
Collateral) immediately from and after such time as the licensor or other party
to such agreement, permit, license, or the like consents to the grant of a
security interest in favor of Agent in such agreement, permit, license, or the
like or the prohibition against granting a security interest therein in favor of
Agent shall cease to be effective.
"Excluded Person" means (a) Parent, (b) PGP; (c) PGP Investors; (d)
M. Brent Stevens, Michael S. Luzich and any Affiliate or Manager of PGP, DJL,
PGP Investors, M. Brent Stevens or Michael S. Luzich (collectively, the
"Existing Holders"), (e) any trust, corporation, partnership or other entity (i)
controlled by the Existing Holders and members of the immediate family of the
Existing Holders or (ii) 80% of the beneficiaries, stockholders, partners or
owners of which consist solely of the Existing Holders and members of the
immediate family of the Existing Holders or (f) any partnership, the sole
general partners of which consist solely of the Existing Holders and members of
the immediate family of the Existing Holders.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
14
"FF&E" means furniture, fixtures and equipment (including Gaming
Equipment) acquired by Borrowers and the Restricted Subsidiaries in the ordinary
course of business for use in the construction and business operations of
Borrowers and the Restricted Subsidiaries.
"FF&E Collateral" means all of OED's now owned or hereafter acquired
right, title and interest in and to (a) any and all Gaming Equipment or other
Equipment, the purchase of which was financed or refinanced, in full or in part,
with proceeds of the Term Loan or proceeds of loans made under the Equipment
Loan Agreement, and (b) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance coverage of
any and all of the foregoing.
"FF&E Letter of Credit" means that certain letter of credit issued
in favor of Agent by Wells Fargo in the face amount of $3,200,000.00, and in
form and substance acceptable to the Lender Group.
"FF&E Obligations" means the principal and interest owing by OED to
the Lender Group in connection with the Term Loan.
"Fixed Construction Costs" means, in connection with the Racino
Project to the extent actually incurred by or on behalf of OED, the sum of all:
(a) costs incurred in connection with the purchase of real property (including
the land on which the Racino Project is to be located, all adjacent tracts and
any other real property purchased by Borrowers related to the Racino Project)
and off-site improvements such as easements, access roads, drainage systems, as
evidenced by invoices, sales contracts and the like with respect to same, plus
(b) construction costs incurred to date in connection with the completion of the
Racino Project as detailed in the Fixed Price Contract as evidenced by invoices
with respect to same, plus (c) costs incurred in connection with architectural
plans, drawings and specifications with respect to any of the foregoing clauses
(a) and (b), plus (d) costs of acquiring furniture, fixtures and Equipment, to
the extent such furniture, fixtures and Equipment constitute Collateral
hereunder, in connection with the construction of the Racino Project.
"Fixed Price Contract" means that certain Agreement, dated as of
February 25, 2003, between OED and Contractor, as amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
hereunder.
"Flow Through Entity" means an entity that (a) for federal income
tax purposes constitutes (i) an "S corporation" (as defined in Section 1361(a)
of the IRC), (ii) a "qualified subchapter S subsidiary" (as defined in Section
1361(b)(3)(B) of the IRC), (iii) a "partnership" (within the meaning of Section
7701(a)(2) of the IRC) other than a "publicly traded partnership" (as defined in
Section 7704 of the IRC), (iv) a business entity that is disregarded as an
entity separate from its owners under the IRC, the Treasury regulations, or any
published administrative guidance of the Internal Revenue Service or (v) a trust
to the extent its income is includible in the taxable income of the grantor or
another person under Sections 671 through 679 of the IRC (each of the entities
described in the preceding clauses (i), (ii), (iii), (iv) and (v), a "Federal
Flow Through Entity"), and (b) for state and local jurisdictions is subject to
treatment on a basis under applicable state or local income tax law
substantially similar to a Federal Flow Through Entity.
15
"Four Quarter Reference Period" has the meaning set forth in Section
7.1(l).
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.16(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America or foreign government (including Native American
governments), any state, province or city or other political subdivision
thereof, whether now or hereafter existing, or any officer or official thereof,
including the Louisiana Regulatory Authorities and the Iowa Regulatory
Authorities, and any other agency with authority to regulate any gaming or
racing operation (or proposed gaming or racing operation) owned, managed or
operated by any Borrower or any of its Subsidiaries.
"Gaming Equipment" means all Equipment composed of slot machines,
video poker machines, and all other gaming equipment and related signage,
accessories and peripheral equipment.
"Gaming License" means any material license, franchise,
registration, qualification, findings of suitability or other approval or
authorization required to own, lease, operate or otherwise conduct or manage
riverboat, dockside or land-based gaming activities, including racing facilities
and activities, in any state or jurisdiction in which any Borrower or any of its
Subsidiaries conduct business or propose to conduct business (including, without
limitation, all such licenses granted by the Louisiana Regulatory Authorities
and granted by the Iowa Regulatory Authorities under Chapter 99F of the Iowa
Code), and all applicable liquor licenses.
"Gaming Property" or "Gaming Properties" means one or more of the
foregoing: (a) the Diamond Jo Vessels; (b) the Racino Project, in each case, so
long as it is owned by Borrowers or a Restricted Subsidiary; and (c) any other
gaming facility or gaming operation owned and controlled or to be owned and
controlled after the Closing Date by Borrowers or a Restricted Subsidiary and
that contains, or that based upon a plan approved by the applicable Borrower's
Managers will contain upon the completion of the construction or development
thereof, an aggregate of at least 500 slot machines or other gaming devices,
provided, in each case, that the property and assets (other than Excluded
Assets) of such Gaming Property constitute Collateral.
"Gaming Property Financing" means a financing, in whole or in part,
of (a) the acquisition of any Gaming Property, (b) the construction of any
Gaming Property (but only to the extent that the proceeds of such Indebtedness
are used to acquire land, furniture, fixtures and equipment, prepare the site or
construct improvements thereon) or (c) an investment in any Gaming Property.
"Gaming Vessel" means a riverboat casino (a) which is substantially
similar in size and space to the Diamond Jo Vessels, (b) with at least the same
overall qualities and
16
amenities as the Diamond Jo Vessels, and (c) that is developed, constructed and
equipped to be in compliance with all federal, state and local laws, including,
without limitation, the cruising requirements of Chapter 99F of the Iowa Code.
In the event the laws of the State of Iowa change to permit the development and
operation of additional land-based casinos, the term "Gaming Vessel" shall be
deemed to include a land-based casino meeting the requirements of clauses (a),
(b) and (c) herein.
"General Intangibles" means general intangibles (as that term is
defined in the Code), including payment intangibles, contract rights, rights to
payment, rights to gaming permits, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill, patents, trade names, trade
secrets, trademarks, servicemarks, copyrights, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, software (including software imbedded in goods),
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims), and any and all supporting obligations in respect thereof, and
any other personal property other than goods, Accounts, Investment Property,
Deposit Accounts and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor Security Agreement" means one or more security agreements
executed and delivered by each Guarantor in favor of Agent, in each case in form
and substance satisfactory to Agent.
"Guarantors" means Parent, OED Capital, the Restricted Subsidiaries
and all other Persons executing a Guaranty of the Obligations in favor of Agent.
"Guaranty" means one or more guaranties executed and delivered by
each Guarantor in favor of Agent, for the benefit of the Lender Group, in form
and substance satisfactory to Agent, including, without limitation, the
Subsidiary Guaranty.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that
17
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements, interest rate exchange agreements and interest rate collar
agreements and (b) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates, including any arrangement
whereby, directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or floating rate of interest on the
same notional amount, provided that, in any such case, such agreement or
arrangement shall have been entered into for risk management purposes and not
for speculative purposes.
"Holdout Lender" has the meaning set forth in Section 15.2.
"Ice Harbor Facility" means the Diamond Jo Vessels (or either of
them), the Real Property relating thereto and the Lease.
"Ice Harbor Parking Agreement" means that certain Revised Ice Harbor
Parking Agreement for Ice Harbor Urban Renewal District dated May 23, 2000, by
and among the City of Dubuque, Dubuque Racing Association, Ltd., the Dubuque
County Historical Society, DJL and Spirit of Dubuque, Inc. regarding the parking
rights of the parties relating to the real property described therein.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any payment obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" means that certain Indenture dated as of April 16, 2004,
among Parent, OED Capital, the "Subsidiary Guarantors" (as defined therein) and
the Indenture Trustee as in effect on such date.
"Indenture Trustee" means (a) U.S. Bank National Association, a
National Association, in its capacity as trustee under the Indenture, or (b) any
successor trustee under the Indenture from time to time.
18
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers, the Restricted Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.
"Intercreditor Agreement" means that certain Intercreditor Agreement
between Wells Fargo Foothill and the Indenture Trustee, dated as of April 16,
2004, in form and substance satisfactory to Agent.
"Interest Coverage Ratio" means with respect to Borrowers for any
period, the ratio of (a) Combined EBITDA, to (b) Combined Interest Expense, in
each case, for such period. In calculating Interest Coverage Ratio for any
period, (i) pro forma effect shall be given to the incurrence, repayment or
retirement by any Borrower or any of its Restricted Subsidiaries of any
Indebtedness (other than Indebtedness incurred in the ordinary course of
business for general corporate purposes pursuant to working capital facilities)
subsequent to the commencement of the period for which the Interest Coverage
Ratio is being calculated, as if the same had occurred at the beginning of the
applicable period; and (ii) acquisitions that have been made by any Borrower or
any of the Restricted Subsidiaries, including all mergers and consolidations,
subsequent to the commencement of such period shall be calculated on a pro forma
basis, assuming that all such acquisitions, mergers and consolidations had
occurred on the first day of such period. Without limiting the foregoing, the
financial information of Borrowers with respect to any portion of such period
that falls before the Closing Date shall be adjusted to give pro forma effect to
the issuance of the Notes and the application of the proceeds therefrom as if
they had occurred at the beginning of such period.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3 or 6 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, 3 or 6 months after the date on which the
19
Interest Period began, as applicable, and (e) Borrowers may not elect an
Interest Period which will end after the Maturity Date.
"Inventory" means inventory (as that term is defined in the Code).
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Capital Stock, and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.
"Investment Property" means "investment property" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"Iowa Code" means the Code of Iowa (1999), as amended from time to
time.
"Iowa Regulatory Authorities" means the Iowa Racing and Gaming
Commission, or any successor Gaming Authority in Iowa.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by Agent pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lease" means that certain Lease Agreement dated as of February 28,
1990, between the City of Dubuque, Iowa, a municipal corporation, as lessor, and
Dubuque Racing Association, Ltd., an Iowa nonprofit corporation, as lessee, as
amended from time to time, together with any subleases relating thereto,
including (a) that certain Sublease Agreement dated as of October 18, 1993,
between Dubuque Racing Association, Ltd., as lessor, and Greater Dubuque
Riverboat Entertainment Company, L.C., an Iowa limited liability company, as
lessee, as amended by that certain First Amendment to Sublease Agreement entered
into effective as of July 15, 1999, by and between Dubuque Racing Association,
Ltd., as lessor, and Greater Dubuque Riverboat Entertainment Company, L.C., an
Iowa limited liability company, as lessee, and (b) that certain Sublease
Assignment entered into as of July 15, 1999, by and between Greater Dubuque
Riverboat Entertainment Company, L.C., an Iowa limited liability company, as
assignor, and DJL, as assignee.
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Group" means, individually and collectively, each of the
Lenders and Agent.
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"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower, its
Subsidiaries or a Guarantor under any of the Loan Documents that are paid,
advanced or incurred by the Lender Group, (b) the actual fees or charges paid or
incurred by Agent in connection with the Lender Group's transactions with
Borrowers, their Subsidiaries or the Guarantors, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and Uniform Commercial Code
searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic Collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Agent in the disbursement of funds to or for the account of
Borrowers or other members of the Lender Group (by wire transfer or otherwise),
(d) charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) audit fees and
expenses of Agent related to audit examinations of the Books to the extent of
the fees and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with any Borrower or any Guarantor
of the Obligations, (h) Agent's reasonable fees and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, or amending the Loan Documents, and (i) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in terminating,
enforcing (including attorneys fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning any
Borrower or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender or any of such Lender's Affiliates.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn face amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.16(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.16(a).
21
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Control Agreements, the
Diamond Jo Ship Mortgage, the FF&E Letter of Credit, the Disbursement Letter,
the Fee Letter, the Guaranties, the Intercompany Subordination Agreement, the
Intercreditor Agreement, the Letters of Credit, the Mortgages, the Management
Fees Subordination Agreement, the Guarantor Security Agreement, the Officers'
Certificate, the Trademark Security Agreement, the Pledge Agreement, the
Subordination of Preferred Fleet Mortgage, the Subordinations of Mortgage, any
Commercial Tort Claim/Judgment Assignments, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower or any Guarantor in favor of Agent or the Lender Group in connection
with this Agreement.
"Louisiana Regulatory Authorities" means, collectively, the
Louisiana Gaming Control Board and the Louisiana State Racing Commission, or any
successor Gaming Authority in Louisiana.
"Management Agreements" means, collectively, profits interests
grants or similar equity interest arrangements, employment agreements,
consulting agreements, management agreements and other similar arrangements
entered into from time to time by any Borrower, any Guarantor or any of their
Affiliates and any manager, officer, member or employee thereof or consultant
thereto and such or similar agreements, as amended, modified, supplemented or
restated from time to time consistent with industry practice to the extent
permitted by Section 7.8(b).
"Management Fees Subordination Agreement" means that certain
Management Fees Subordination Agreement, dated as of the Closing Date, among
Parent, Borrowers, Agent,
22
and PGP, and each supplement thereto executed by any Person entitled to receive
management or similar fees from any Borrower, the form and substance of which is
satisfactory to Agent.
"Manager" means, with respect to any Person (a) if such Person is a
limited liability company, the members of the board of managers, or members of
such other body performing similar functions for such Person, manager or
managers, as appointed pursuant to the operating agreement of such Person as
then in effect, or in the event that there are no managers or board of managers
or similar governing body, the sole member or (b) otherwise, the members of the
board of directors (if such Person is a corporation) or other governing body of
such Person.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers and their Subsidiaries taken as
a whole, (b) a material impairment of a Borrower's or a Subsidiary of a
Borrower's ability to perform its obligations under the Loan Documents to which
it is a party or of the Lender Group's ability to enforce the Obligations or
realize upon the Collateral or the FF&E Letter of Credit, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Borrower or a Subsidiary of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $35,000,000.
"Monthly Financial Report" has the meaning set forth in Section
6.3(a).
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
"Mortgage Policy" has the meaning set forth in Section 3.1(o).
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower or a Guarantor in favor of Agent, in form and substance satisfactory to
Agent, that encumber the Real Property Collateral and the related improvements
thereto.
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
"Net Income" means, with respect to any Person for any period, (a)
the net income (or loss) of such Person for such period, determined in
accordance with GAAP, reduced by (b) the maximum amount of Permitted Tax
Distributions attributable to such net income for such period.
"Net Proceeds" means the aggregate proceeds received in the form of
cash or Cash Equivalents in respect of any Asset Sale (including insurance or
other payments in an Event of Loss and payments in respect of deferred payment
obligations and any cash or Cash
23
Equivalents received upon the sale or disposition of any non-cash consideration
received in any Asset Sale, in each case when received), net of:
(a) the reasonable and customary direct out-of-pocket costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), other than any such costs
payable to an Affiliate of Borrowers,
(b) taxes required to be paid by Borrowers, any of their Restricted
Subsidiaries, or any Equity Holder of Borrowers (or, in the case of any Equity
Holder of Borrowers that is a Flow Through Entity, the Upper Tier Equity Holder
of such Flow Through Entity) in connection with such Asset Sale in the taxable
year that such sale is consummated or in the immediately succeeding taxable
year, the computation of which shall take into account the reduction in tax
liability resulting from any available operating losses and net operating loss
carryovers, tax credits and tax credit carryforwards, and similar tax
attributes,
(c) amounts required to be applied to the permanent repayment of
Indebtedness in connection with such Asset Sale, and
(d) appropriate amounts provided as a reserve by the applicable
Borrower or any Restricted Subsidiary, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the applicable
Borrower or such Restricted Subsidiary, as the case may be, after such Asset
Sale (including, without limitation, as applicable, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations arising from such
Asset Sale).
"Note" and "Notes" shall have the meanings ascribed thereto in the
Indenture.
"Obligations" means all loans (including the Term Loan), Advances,
debts, principal, interest (including any interest that, but for the provisions
of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums (including
the Applicable Prepayment Premium), liabilities (including all amounts charged
to Borrowers' Loan Account pursuant hereto), obligations, fees (including the
fees provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that, but for the provisions of the Bankruptcy
Code, would have accrued), lease payments, guaranties, covenants, and duties of
any kind and description owing by Borrowers to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Borrowers are required to pay or reimburse by
the Loan Documents or by law. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"OED EBITDA" means, with respect to any fiscal period, OED's and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains and
interest income, plus interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP; provided,
however, that in determining EBITDA for any
24
period ending on or about: (a) March 31, 2004, EBITDA for such period shall be
deemed to be equal to the product of (x) EBITDA for the period from January 1,
2004 to the last day of such period and (y) 4, (b) June 30, 2004, EBITDA for
such period shall be deemed to be equal to the product of (x) EBITDA for the
period from January 1, 2004 to the last day of such period and (y) 2, and (c)
September 30, 2004, EBITDA for such period shall be deemed to be equal to the
product of (x) EBITDA for the period from January 1, 2004 to the last day of
such period and (y) 1.333.
"OED Capital" means The Old Evangeline Downs Capital Corp., a
Delaware corporation.
"OED Indenture" means that certain Indenture dated as of February
25, 2003, among OED, OED Capital, the "Guarantors" (as defined therein) and U.S.
Bank National Association, as trustee.
"OED Note Documents" means, collectively, the OED Indenture, the
Notes (as defined in the OED Indenture), and the Collateral Documents (as
defined in the OED Indenture), in each case as such document may be amended,
restated, supplements or modified from time to time with the consent of Agent.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to each Borrower, together with such Borrower's
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" means Peninsula Gaming, LLC, a Delaware limited liability
company.
"Participant" has the meaning set forth in Section 14.1(e).
"Participant Register" has the meaning set forth in Section 14.1(i).
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
any Borrower or any Guarantor of FF&E Collateral (other than assets that compose
the Ice Harbor Facility and the Racino Project) that is substantially worn,
damaged, or obsolete in the ordinary course of business; provided, however,
Agent shall have received 10 days' prior written notice of such sale or
disposition, and upon the consummation of such sale of disposition, OED shall
repay the Term Loan in an amount equal to the Net Proceeds for such Collateral
(which repayment shall be applied against the installments due under Section 2.2
in the inverse order of maturity), (b) sales or other dispositions by any
Borrower or any Guarantor of Equipment (other than (i) assets that compose the
Ice Harbor Facility and the Racino Project and (ii) FF&E Collateral) that is
substantially worn, damaged, or obsolete in the ordinary course of business;
provided, however, Agent shall have received 10 days' prior written notice of
such sale or disposition, and upon the consummation of such sale of disposition,
such Borrower shall repay Advances, as applicable, in
25
an amount equal to the Net Proceeds for such Collateral, (c) sales by any
Borrower or any Guarantor of Inventory to buyers in the ordinary course of
business, (d) the use or transfer of money or Cash Equivalents by any Borrower,
any Restricted Subsidiary or any Guarantor in a manner that is not prohibited by
the terms of this Agreement or the other Loan Documents, (e) the licensing by
any Borrower, any Restricted Subsidiary or any Guarantor, on a non-exclusive
basis, of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business, (f) transfers of assets by a Borrower
or a Restricted Subsidiary to another Borrower or another Restricted Subsidiary,
(g) any exchange of Equipment for replacement Equipment in the ordinary course
of business, so long as such replacement Equipment is of equal fair market value
to the Equipment so replaced and (h) so long as no Event of Default has occurred
and is then continuing, dispositions of assets (other than FF&E Collateral) with
an aggregate fair market value not to exceed $1,000,000 during the term of this
Agreement.
"Permitted Investments" means:
(a) Investments in Borrowers or in any Restricted Subsidiary;
(b) Investments in Cash Equivalents;
(c) Investments in a Person, if, as a result of such Investment,
such Person (i) becomes a Wholly Owned Subsidiary, or (ii) is, subject to the
terms of Section 7.3, merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
Borrowers or a Wholly Owned Subsidiary;
(d) Hedging Obligations;
(e) Investments as a result of consideration received in connection
with an Asset Sale made in compliance Section 7.4;
(f) Investments existing on the Closing Date and set forth on
Schedule P-2 attached hereto;
(g) Investments paid for solely with Capital Stock (other than
Disqualified Capital Stock) of Parent;
(h) credit extensions to gaming customers in the ordinary course of
business, consistent with industry practice;
(i) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Borrowers (i) in
satisfaction of judgments or (ii) pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of trade creditors or
customers;
(j) loans or other advances to employees of Borrowers and the
Restricted Subsidiaries made in the ordinary course of business in an aggregate
amount not to exceed $500,000 at any one time outstanding;
(k) intercompany Indebtedness incurred pursuant to clause (f) of
Section 7.1;
26
(l) Investments in the Notes or any additional Notes; and
(m) Investments not otherwise permitted by clauses (a) through (l)
above, not to exceed $10,000,000.
"Permitted Lien" means:
(a) Liens in favor of Agent securing the Obligations;
(b) Liens arising by reason of any judgment, decree or order of any
court for an amount and for a period not resulting in an Event of Default with
respect thereto, so long as such Lien is being contested in good faith and is
adequately bonded, and any appropriate legal proceedings that may have been duly
initiated for the review of such judgment, decree or order shall not have been
finally adversely terminated or the period within which such proceedings may be
initiated shall not have expired;
(c) security for the performance of bids, tenders, trade, contracts
(other than contracts for the payment of borrowed money) or leases, surety and
appeal bonds, performance and return-of-money bonds and other obligations of a
like nature incurred in the ordinary course of business, consistent with
industry practice and not in connection with the borrowing of money;
(d) Liens for taxes, assessments or other governmental charges that
do not cause an Event of Default hereunder and are either (i) not yet delinquent
or (ii) the subject of a Permitted Protest;
(e) Liens of carriers, warehousemen, mechanics, landlords, material
men, suppliers, repairmen or other like Liens, in each case arising by operation
of law in the ordinary course of business consistent with industry practices
(other than Liens arising under ERISA) and not in connection with the borrowing
of money if (i) the underlying obligations are not overdue for a period of more
than 30 days or (ii) such Liens are the subject of a Permitted Protest;
(f) easements, rights of way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course of
business, and that, in the aggregate, do not materially detract from the value
of the property subject thereto (as such property is used by Borrowers or a
Restricted Subsidiary) or materially interfere with the ordinary conduct of the
business of Borrowers or any of the Restricted Subsidiaries;
(g) Liens arising from deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security legislation or otherwise arising from statutory
or regulatory requirements of Borrowers or any of the Restricted Subsidiaries;
(h) Liens securing Refinancing Indebtedness incurred in compliance
with the terms hereof to refinance Indebtedness secured by Permitted Liens;
provided, (i) such Liens do not extend to any additional property or assets;
(ii) if the Liens securing the Indebtedness being refinanced were subordinated
to or pari passu with the Obligations, such new Liens are subordinated to or
pari passu with such Liens to the same extent, and any related subordination or
intercreditor agreement is confirmed on terms reasonably satisfactory to Agent;
and (iii) such
27
Liens are no more adverse to the interests of the Lenders than the Liens
replaced or extended thereby;
(i) Liens that secure Acquired Debt or Liens on property acquired by
a Borrower or any Restricted Subsidiary in the ordinary course of business or in
connection with a Permitted Investment; provided, that such Liens do not extend
to or cover any other property or assets and were not put in place in
anticipation of such acquisition;
(j) any interest or title of a lessor under any operating lease;
provided that such Liens do not extend to any property or assets which are not
leased property subject to such operating lease;
(k) Liens that secure Purchase Money Obligations and Capitalized
Lease Obligations permitted to be incurred under this Agreement; provided that
such Liens do not extend to or cover any property or assets other than those
being acquired, leased or developed and property and assets which, immediately
prior to the incurrence of such Purchase Money Obligations or Capitalized Lease
Obligations, secured other Indebtedness of a Borrower and the Restricted
Subsidiaries (to the extent such other Indebtedness and the Liens securing such
other Indebtedness are permitted under this Agreement) to the lender of such
Purchase Money Obligations or Capitalized Lease Obligations;
(l) Liens in favor of the Indenture Trustee securing the Senior Note
Documents; provided such Liens are subject to the Intercreditor Agreement at all
times;
(m) with respect to any vessel included in the Collateral, certain
maritime liens, including liens for crew's wages and salvage;
(n) Liens on deposit accounts or Cash Equivalents incurred in the
ordinary course of business securing Hedging Obligations, which Hedging
Obligations are otherwise permitted under this Agreement;
(o) Liens existing on the Closing Date to the extent and in the
manner such Liens are in effect on the Closing Date;
(p) Liens on the Capital Stock of any Unrestricted Subsidiary
securing any Indebtedness of such Unrestricted Subsidiary;
(q) leases or subleases of Real Property (other than the Racino
Project and the Ice Harbor Facility) granted to others that do not interfere in
any material respect with the business of Borrowers or any of the Restricted
Subsidiaries or materially detract from the value of the relative assets of
Borrowers or any Restricted Subsidiary;
(r) Liens securing reimbursement obligations with respect to
commercial letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof; and
(s) Liens with respect to the Real Property Collateral that are
exceptions to the commitments for title insurance issued in connection with the
Mortgages, as accepted by Agent.
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"Permitted Protest" means the right of any Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by such Borrower or any of its Subsidiaries,
as applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
"Permitted Tax Distribution" in respect of Borrowers, means, with
respect to any taxable year or portion thereof in which a Borrower is a Flow
Through Entity, the sum of: (i) the product of (a) the excess of (1) all items
of taxable income or gain (other than capital gain) of such Borrower for such
year or portion thereof over (2) all items of taxable deduction or loss (other
than capital loss) of such Borrower for such year or portion thereof, multiplied
by (b) the Applicable Income Tax Rate, plus (ii) the product of (a) the net
capital gain (i.e., net long-term capital gain over net short-term capital
loss), if any, of such Borrower for such year or portion thereof, multiplied by
(b) the Applicable Capital Gain Tax Rate, plus (iii) the product of (a) the net
short-term capital gain (i.e., net short-term capital gain in excess of net
long-term capital loss), if any, of such Borrower for such year or portion
thereof, multiplied by (b) the Applicable Income Tax Rate, minus (iv) the
aggregate Tax Loss Benefit Amount for such Borrower for such year or portion
thereof; provided, that in no event shall the Applicable Income Tax Rate or the
Applicable Capital Gain Tax Rate exceed the greater of (i) the greater of (a)
the highest aggregate applicable effective marginal rate of Federal, state, and
local income tax to which a corporation doing business in the State of
California and (b) the highest aggregate applicable effective marginal rate of
Federal, state, and local income tax to which a corporation doing business in
the state of Louisiana, would be subject to in the relevant year of
determination (as certified to Agent by a nationally recognized tax accounting
firm) plus 5% and (ii) 60%. For purposes of calculating the amount of the
Permitted Tax Distributions the items of taxable income, gain, deduction or loss
(including capital gain or loss) of any Flow Through Entity of which such
Borrower is treated for Federal income tax purposes as a member (but only for
periods for which such Flow Through Entity is treated as a Flow Through Entity),
which items of income, gain, deduction or loss are allocated to or otherwise
treated as items of income, gain, deduction or loss of such Borrower for Federal
income tax purposes, shall be included in determining the taxable income, gain,
deduction or loss (including capital gain or loss) of such Borrower.
Estimated tax distributions may be made within 30 days following
March 15, May 15, August 15, and December 15 based upon an estimate of the
excess of (x) the tax distributions that would be payable for the period
beginning on January 1 of such year and ending on March 31, May 31, August 31,
and December 31 if such period were a taxable year (computed as provided above)
over (y) distributions attributable to all prior periods during such taxable
year.
The amount of the Permitted Tax Distribution for a taxable year
shall be re-computed promptly after (i) the filing by the applicable Borrower
and each Subsidiary of such Borrower that is treated as a Flow Through Entity of
their respective annual income tax returns and (ii) an appropriate Federal or
state taxing authority finally determines that the amount of the items of
taxable income, gain, deduction, or loss of such Borrower or any such Subsidiary
that is
29
treated as a Flow Through Entity for such taxable year or the aggregate Tax Loss
Benefit Amount carried forward to such taxable year should be adjusted (each of
clauses (i) and (ii) a "Tax Calculation Event"). To the extent that the
Permitted Tax Distributions previously distributed in respect of any taxable
year are either greater than (a "Tax Distribution Overage") or less than (a "Tax
Distribution Shortfall") the Permitted Tax Distributions with respect to such
taxable year, as determined by reference to the computation of the amount of the
items of income, gain, deduction, or loss of such Borrower and each such
Subsidiary in connection with a Tax Calculation Event, the amount of the
estimated Permitted Tax Distributions that may be made on the estimated tax
distribution date immediately following such Tax Calculation Event shall be
reduced or increased as appropriate to the extent of the Tax Distribution
Overage or the Tax Distribution Shortfall. To the extent that a Tax Distribution
Overage remains after the estimated tax distribution date immediately following
such Tax Calculation Event, the amount of the estimated Permitted Tax
Distribution that may be made on the subsequent estimated tax distribution date
shall be reduced to the extent of such Tax Distribution Overage.
Prior to making any Permitted Tax Distributions, the applicable
Borrower shall require each Equity Holder to agree that promptly after the
second estimated tax distribution date following a Tax Calculation Event, such
Equity Holder shall reimburse the applicable Borrower to the extent of its pro
rata share (based on the portion of Permitted Tax Distributions distributed to
such Equity Holder for the taxable year) of any remaining Tax Distribution
Overage.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Borrower Collateral other
than Real Property Collateral and the proceeds thereof constituting Real
Property.
"PGC Indenture" means that certain Indenture, dated as of July 15,
1999, among DJL, Peninsula Gaming Corporation, a Delaware corporation, and U.S.
Bank National Association, as trustee.
"PGP" means Peninsula Gaming Partners, LLC, a Delaware limited
liability company, the direct parent and sole manager of Parent.
"PGP Investors" means PGP Investors, LLC, a Delaware limited
liability company.
"Pledge Agreement" means a stock pledge agreement executed and
delivered by (a) Parent in respect of the Capital Stock of Borrowers and OED
Capital, and (b) Borrowers in respect of the Capital Stock of the Restricted
Subsidiaries, in form and substance satisfactory to Agent.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing
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(y) such Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments
of all Lenders, and (ii) from and after the time that the Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by dividing (y)
the aggregate outstanding principal amount of such Lender's Advances by (z) the
aggregate outstanding principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse Agent, and to receive payments of fees with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitments have been terminated or reduced to
zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Lender's Advances by (z) the aggregate outstanding
principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term Loan and
receive payments of interest, fees, and principal with respect thereto, (i)
prior to the making of the Term Loan, the percentage obtained by dividing (y)
such Lender's Term Loan Commitment, by (z) the aggregate amount of all Lenders'
Term Loan Commitments, and (ii) from and after the making of the Term Loan, the
percentage obtained by dividing (y) the principal amount of such Lender's
portion of the Term Loan by (z) the principal amount of the Term Loan, and
(d) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment plus the
outstanding principal amount of such Lender's portion of the Term Loan, by (ii)
the aggregate amount of Revolver Commitments of all Lenders plus the outstanding
principal amount of the Term Loan; provided, however, that in the event the
Revolver Commitments have been terminated or reduced to zero, Pro Rata Share
under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Advances plus such Lender's
ratable portion of the Risk Participation Liability with respect to outstanding
Letters of Credit plus the outstanding principal amount of such Lender's portion
of the Term Loan, by (B) the outstanding principal amount of all Advances plus
the aggregate amount of the Risk Participation Liability with respect to
outstanding Letters of Credit plus the outstanding principal amount of the Term
Loan.
"Projections" means Borrowers' forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Borrowers' historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Obligations" means Indebtedness the proceeds of
which are used solely by Borrowers and the Restricted Subsidiaries (and
concurrently with the incurrence of such Indebtedness) to acquire or lease or
improve, respectively, FF&E; provided, that (a) the principal amount of such
Indebtedness does not exceed the costs (including sales and excise taxes,
installation and delivery charges, capitalized interest and other direct fees,
costs and expenses) of the FF&E purchased or leased with proceeds thereof and
(b) such Indebtedness is secured only by the assets so financed and assets
which, immediately prior to the incurrence of such Indebtedness, secured other
Indebtedness of Borrowers and the Restricted Subsidiaries (to
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the extent such other Indebtedness and the Liens securing such other
Indebtedness are permitted under this Agreement) to the lender of such
Indebtedness.
"Racino Project" means the project to design, develop, construct,
equip and operate that certain casino and race track to be located in Opelousas,
St. Landry Parish, Louisiana.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower, any Subsidiary of a Borrower or any
Guarantor and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1, and any Real Property hereafter acquired by
any Borrower or any Guarantor.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Refinance" has the meaning set forth in Section 7.1(k).
"Refinancing Indebtedness" has the meaning set forth in Section
7.1(k).
"Register" has the meaning set forth in Section 14.1(h).
"Registered Loan" has the meaning set forth in Section 2.13.
"Registered Note" has the meaning set forth in Section 2.13.
"Related Business" means the gaming, entertainment and hotel
businesses conducted (or proposed to be conducted) by Borrowers and their
Restricted Subsidiaries as of the Closing Date and any and all other businesses
that in the good faith judgment of the Managers of Borrowers are materially
related or incidental businesses (including, without limitation, food and
beverage distribution operations).
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Replacement Lender" has the meaning set forth in Section 15.2.
"Report" has the meaning set forth in Section 16.17(a).
"Required Lenders" means, at any time, (a) Agent, and (b) the
Lenders whose Pro Rata Shares aggregate 51% of the Commitments, or if the
Commitments have been terminated, 51% of the Obligations outstanding.
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"Reserve Percentage" means on any day, for Agent, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of Agent, but so long as
Agent is not required or directed under applicable regulations to maintain such
reserves, the Reserve Percentage shall be zero.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payment" means:
(a) any dividend or other distribution declared or paid on account
of any Equity Interests of a Borrower or any of the Subsidiaries, any payment of
any management fees to any Person, or any other payment to any Affiliate of a
Borrower or any Excluded Person or Affiliate thereof (other than, in each case,
(i) dividends or distributions payable in Equity Interests (other than
Disqualified Capital Stock) of such Borrower or (ii) amounts payable to the
applicable Borrower or any Restricted Subsidiary);
(b) any payment to purchase, redeem or otherwise acquire or retire
for value any Equity Interest of a Borrower, any Subsidiary or any other
Affiliate of such Borrower (other than any such Equity Interest owned by the
applicable Borrower or any Restricted Subsidiary); or
(c) any Restricted Investment.
"Restricted Subsidiaries" means any Subsidiary which at the time of
determination is not an Unrestricted Subsidiary.
"Return from Unrestricted Subsidiaries" has the meaning set forth in
the Indenture.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Revolving Lender" means a Lender with a Revolver Commitment.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to Agent with respect to an L/C
Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by Agent to
the Underlying Issuer to the extent not reimbursed by
33
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"S&P" means Standard & Poor's Rating Service, a division of The
McGraw-Hill Companies, Inc., a New York corporation, and its successors.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Seller Preferred" means the $4,000,000 face amount of DJL's
redeemable preferred membership interests issued on July 15, 1999.
"Senior Note Documents" means, collectively, the Indenture, the
Notes, and the Security Agreements (as such term is defined in the Indenture),
in each case as such document may be amended, restated, supplemented or modified
from time to time with the consent of Agent.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Subordination of Mortgage" means those certain subordination
agreements relating to the Mortgages (as such term is defined in the Indenture)
dated as of even date herewith and executed by Indenture Trustee in favor of
Agent, in form and substance satisfactory to Agent.
"Subordination of Preferred Fleet Mortgage" means that Subordination
of Preferred Fleet Mortgage in respect of the Diamond Jo Vessels dated as of the
date hereof and executed by the Indenture Trustee in favor of Agent, in form and
substance satisfactory to Agent.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Capital Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Subsidiary Guaranty" means each guaranty, in form and substance
satisfactory to Agent, executed by the Restricted Subsidiaries in favor of
Agent.
"Swing Lender" means Wells Fargo Foothill or any other Revolving
Lender that, at the request of a Borrower and with the consent of Agent agrees,
in such Revolving Lender's sole discretion, to become the Swing Lender under
Section 2.3(d).
34
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11(e).
"Tax Loss Benefit Amount" means with respect to any taxable year,
the amount by which the Permitted Tax Distributions would be reduced were a net
operating loss or net capital loss from a prior taxable year of such Borrower
ending subsequent to the Closing Date available to be carried forward to the
applicable taxable year; provided that for such purpose the amount of any such
net operating loss or net capital loss shall be used only once and in each case
shall be carried forward to the next succeeding taxable year until so used. For
purposes of calculating the Tax Loss Benefit Amount, the proportionate part of
the items of taxable income, gain, deduction, or loss (including capital gain or
loss) of any Subsidiary that is a Flow Through Entity for a taxable year of such
Subsidiary ending subsequent to the Closing Date shall be included in
determining the amount of net operating loss or net capital loss of the
applicable Borrower.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means $14,666,666.68.
"Term Loan Commitment" means, with respect to each Lender, its Term
Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 14.1.
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by Borrowers and Agent, the form and substance of which
is satisfactory to Agent.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Agent for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Unrestricted Subsidiary" means any Subsidiary of a Borrower that,
at or prior to the time of determination, shall have been designated by the
Managers of Borrowers as an Unrestricted Subsidiary and each subsidiary of such
Subsidiary; provided, that such Subsidiary or any of its subsidiaries does not
hold any Indebtedness or Capital Stock of, or any Lien on any assets of,
Borrowers or any Restricted Subsidiary. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Agreement and any Indebtedness of
35
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of
such date. The Managers of Borrowers may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (a) such Indebtedness is permitted under the Interest
Coverage Ratio test set forth in Section 7.1 hereof calculated on a pro forma
basis as if such designation had occurred at the beginning of the 4-quarter
reference period, and (b) no Default or Event of Default would be in existence
following such designation. Borrowers shall be deemed to make an Investment in
each Subsidiary designated as an Unrestricted Subsidiary immediately following
such designation in an amount equal to the Investment in such Subsidiary and its
subsidiaries immediately prior to such designation. Any such designation by the
Managers of Borrowers shall be evidenced to Agent by filing with Agent a
certified copy of the resolution of the Managers giving effect to such
designation and an officers' certificate certifying that such designation
complies with the foregoing conditions and is permitted by Section 7.1 hereof.
"Upper Tier Equity Holder" means, in the case of any Flow Through
Entity, the Equity Holder of which is, in turn, a Flow Through Entity, the
Person that is ultimately subject to tax on a net income basis on the items of
taxable income, gain, deduction, and loss of Borrowers and the Subsidiaries that
are Flow Through Entities.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Voting Stock" means Stock of any Person which at the time are
entitled to vote in the election of, as applicable, directors, Managers, members
or partners generally of such Person.
"Warner Land" means the 93 acres of land adjacent to the Racino
Project acquired by OED from Bart C. Warner pursuant to the Sale with Mortgage,
dated October 24, 2003.
"Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.
"Wells Fargo Foothill" means Wells Fargo Foothill, Inc., a
California corporation, and its successors and assigns.
"Wholly Owned Subsidiary" means, with respect to any Person, a
Subsidiary of such Person all the Capital Stock of which (other than directors'
qualifying shares) is owned directly or indirectly by such Person; provided,
that with respect to Borrowers, the term Wholly Owned Subsidiary shall exclude
Unrestricted Subsidiaries.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Parent" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
36
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender, severally and not jointly, in
accordance with such Lender's Revolver Commitment, agrees to make advances
("Advances") to Borrowers in an amount at any one time outstanding not to exceed
an amount equal to the lesser of (i) the Maximum Revolver Amount, less the
Letter of Credit Usage or (ii) the Borrowing Base less the Letter of Credit
Usage. For purposes of this Agreement, "Borrowing Base", as of any date of
determination, shall mean the result of (y) the lesser of (i) the product of
Borrowers' Combined EBITDA for the 12 month period ending as of the last day of
the most recent month for which the Monthly Financial Report has been delivered
pursuant to Section 6.3(a) times 150%, or (ii) the product of Borrowers'
Annualized Quarterly Combined EBITDA as of the last day of the most recent month
for which the Monthly Financial Report has been delivered pursuant to Section
6.3(a) times 150%, minus (z) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers or their Subsidiaries to any Person to the extent secured by a Lien
on, or trust over, any of the Collateral (other than any existing Permitted Lien
37
set forth on Schedule P-1 which is specifically identified thereon as entitled
to have priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, (including, without limitation, any Liens in favor of mechanics or
subcontractors arising in connection with the Racino Project), materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral.
(c) The Lenders with Revolver Commitments shall not have any
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan Commitment agrees, severally and
not jointly, in accordance with such Lender's Term Loan Commitment, to make term
loans (collectively, the "Term Loan") to OED in an amount equal to such Lender's
Pro Rata Share of the Term Loan Amount. The proceeds of the Term Loan shall be
used to refinance all outstanding obligations of OED and OED Capital under the
Equipment Loan Agreement. The Term Loan shall be repayable in equal monthly
installments of principal each in the amount of $333,333.33, commencing on July
1, 2004, and continuing on the first day of each month thereafter until the
unpaid balance of the Term Loan is paid in full. The outstanding principal
balance and all accrued and unpaid interest under the Term Loan shall also be
due and payable in full upon the Maturity Date or any earlier termination of
this Agreement, whether by its terms, by prepayment, by acceleration, or
otherwise.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing (other than the funding
of the Term Loan on the Closing Date) shall be made by a written request by an
Authorized Person delivered to Agent (which notice must be received by Agent no
later than 10:00 a.m. (California time) 5 Business Days prior to the date that
is the requested Funding Date specifying (i) the amount of such Borrowing and
(ii) the requested Funding Date, which shall be a Business Day; provided,
however, that in the case of a request for Swing Loan in an amount of
$1,000,000, or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date). At Agent's election, in lieu of delivering the
above-described request in writing, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to
38
make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the
terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF LOANS.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in
Section 2.3(b), then, promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a) (other than the funding of the
Term Loan on the Closing Date), Agent shall notify the Lenders, not
later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent's Account, not later
than 10:00 a.m. (California time) on the Funding Date applicable
thereto. After Agent's receipt of the proceeds of such Advances (or
the Term Loan, as applicable), upon satisfaction of the applicable
conditions precedent set forth in Section 3 hereof, Agent shall make
the proceeds thereof available to Borrowers on the applicable
Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to the applicable Borrower's
Designated Account; provided, however, that, subject to the
provisions of Section 2.3(i), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance
(or its portion of the Term Loan, as applicable) if Agent shall have
actual knowledge that one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such
condition has been waived.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least 1 Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that
Lender's Pro Rata Share of the Borrowing, Agent may assume that each
Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and
to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that
Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's Advance (or portion of the Term Loan, as applicable)
on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to Agent on the Business Day following
the Funding Date, Agent will notify Borrowers of such failure to
fund and, upon demand by Agent, Borrowers
39
shall pay such amount to Agent for Agent's account, together with
interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable
at the time to the Advances (or portion of the Term Loan, as
applicable) composing such Borrowing. The failure of any Lender to
make any Advance (or portion of the Term Loan, as applicable) on any
Funding Date shall not relieve any other Lender of any obligation
hereunder to make an Advance (or portion of the Term Loan, as
applicable) on such Funding Date, but no Lender shall be responsible
for the failure of any other Lender to make the Advance (or portion
of the Term Loan, as applicable) to be made by such other Lender on
any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by any Borrower and if no Default
or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend
to Borrowers for the account of such Defaulting Lender the amount of
all such payments received and retained by Agent for the account of
such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such
Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall
have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Borrowers shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its
Pro Rata Share of the applicable Advance and pays to Agent all
amounts owing by Defaulting Lender in respect thereof. The operation
of this Section shall not be construed to increase or otherwise
affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder
to Agent or to the Lenders other than such Defaulting Lender. Any
such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and
shall entitle Borrowers at their option, upon written notice to
Agent, to arrange for a substitute Lender to assume the Commitment
of such Defaulting Lender, such substitute Lender to be acceptable
to Agent. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed
form of Assignment and Acceptance in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered
such document if it fails to do so) subject only to being repaid its
share of the outstanding Obligations (including an assumption of
40
its Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever without any premium or
penalty of any kind whatsoever; provided further, however, that any
such assumption of the Commitment of such Defaulting Lender shall
not be deemed to constitute a waiver of any of the Lender Group's or
Borrowers' rights or remedies against any such Defaulting Lender
arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply
to a requested Borrowing as described in Section 2.3(b), Swing
Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan"
and such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to the applicable
Borrower's Designated Account; provided that, notwithstanding
anything to the contrary contained in this Section 2.3(d), the
aggregate principal amount of Swing Loans outstanding at any one
time shall not exceed $5,000,000. Each Swing Loan shall be deemed to
be an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that no such Swing
Loan shall be eligible to be a LIBOR Rate Loan and all payments on
any Swing Loan shall be payable to Swing Lender as a Lender solely
for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan). Subject to
the provisions of Section 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender shall not
make, any Swing Loan if Agent has actual knowledge that one or more
of the applicable conditions precedent set forth in Section 3 will
not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived. Swing Lender as a
Lender shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Section 3 have been
satisfied on the Funding Date applicable thereto prior to making, in
its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been satisfied,
to make Advances to Borrowers on behalf of the Lenders that Agent,
in its Permitted Discretion deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Obligations, or (C) to
pay any other amount chargeable to Borrowers
41
pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10
(any of the Advances described in this Section 2.3(e) shall be
referred to as "Agent Advances"); provided, that notwithstanding
anything to the contrary contained in this Section 2.3(e), the
aggregate principal amount of Agent Advances outstanding at any one
time shall not exceed $2,000,000. Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments thereon shall
be payable to Agent solely for its own account (and for the account
of the holder of any participation interest with respect to such
Agent Advance).
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Revolving Lenders to equal, at all times, such
Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the Revolving Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement ("Settlement") with the
Revolving Lenders on a weekly basis, or on a more frequent basis if
so determined by Agent, (1) on behalf of Swing Lender, with respect
to the outstanding Swing Loans, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections of Borrowers or
their Subsidiaries received, as to each by notifying the Revolving
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 1:00 p.m.
(California time) on the Business Day immediately prior to the date
of such requested Settlement (the date of such requested Settlement
being the "Settlement Date"). Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.3(c)(iii)): (y) if a Revolving Lender's
balance of the Advances (including Swing Loans and Agent Advances)
exceeds such Revolving Lender's Pro Rata Share of the Advances
(including Swing Loans and Agent Advances) as of a Settlement Date,
then Agent shall, by no later than 12:00 p.m. (California time) on
the Settlement Date, transfer in immediately available funds to the
account of such Revolving Lender as such Revolving Lender may
designate, an amount such that each such Revolving Lender shall,
upon receipt of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances (including Swing Loans and Agent
Advances), and (z) if a Revolving Lender's balance of the Advances
(including Swing Loans and Agent Advances) is less than such
Revolving Lender's Pro Rata Share of the Advances (including Swing
Loans and Agent Advances) as of a Settlement Date, such Revolving
Lender shall no later than
42
12:00 p.m. (California time) on the Settlement Date transfer in
immediately available funds to the Agent's Account, an amount such
that each such Revolving Lender shall, upon transfer of such amount,
have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Agent Advances). Such amounts made
available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable
Swing Loans or Agent Advances and, together with the portion of such
Swing Loans or Agent Advances representing Swing Lender's Pro Rata
Share thereof, shall constitute Advances of such Revolving Lenders.
If any such amount is not made available to Agent by any Revolving
Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Revolving Lender
together with interest thereon at the Defaulting Revolving Lender
Rate.
(ii) In determining whether a Revolving Lender's balance of
the Advances, Swing Loans and Agent Advances is less than, equal to,
or greater than such Revolving Lender's Pro Rata Share of the
Advances, Swing Loans and Agent Advances as of a Settlement Date,
Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by
Agent with respect to principal, interest, fees payable by Borrowers
and allocable to the Revolving Lenders hereunder, and proceeds of
Collateral. To the extent that a net amount is owed to any such
Revolving Lender after such application, such net amount shall be
distributed by Agent to that Revolving Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that, in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections of Borrowers or
their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share
of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts
of the Revolving Lenders, and Agent shall pay to the Revolving
Lenders, to be applied to the outstanding Advances of such Revolving
Lenders, an amount such that each Revolving Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the Advances. During the period between Settlement
Dates, Swing Lender with respect to Swing Loans, Agent with respect
to Agent Advances, and each Revolving Lender (subject to the effect
of letter agreements between Agent and individual Revolving Lenders)
with respect to the Advances other than Swing Loans and Agent
Advances, shall be entitled to interest at the applicable rate or
rates payable under this Agreement on the daily amount of funds
employed by Swing Lender, Agent, or the Revolving Lenders, as
applicable.
(g) NOTATION. Agent shall record on its books the principal amount
of the Advances (or portion of the Term Loan, as applicable) owing to each
Lender, including the
43
Swing Loans owing to Swing Lender, and Agent Advances owing to Agent, and the
interests therein of each Lender, from time to time, such records constituting
conclusive evidence, absent manifest error, of the accuracy of the information
contained therein. In addition, each Lender is authorized, at such Lender's
option, to note the date and amount of each payment or prepayment of principal
of such Lender's Advances or portion of the Term Loan in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Agent Advances) and the Term Loan shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or the Term Loan or other extension
of credit) hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances, the outstanding
Revolver Usage does not exceed the Borrowing Base by more than the lesser of (A)
10% of the Borrowing Base and (B) $2,000,000, (ii) after giving effect to such
Advances, the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (iii) at the time of the making of
any such Advance, Agent does not believe, in good faith, that the Overadvance
created by such Advance will be outstanding for more than 90 days. The foregoing
provisions are for the exclusive benefit of Agent, Swing Lender, and the Lenders
and are not intended to benefit Borrowers in any way. The Advances and Swing
Loans, as applicable, that are made pursuant to this Section 2.3(i) shall be
subject to the same terms and conditions as any other Advance or Swing Loan, as
applicable, except that they shall not be eligible for the LIBOR Option and the
rate of interest applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify the Lenders as soon as practicable (and prior to
making any (or any additional) intentional Overadvances (except for
and excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its
value), and the Revolving Lenders thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall be
implemented with Borrowers intended to reduce, within a reasonable
time, the outstanding principal amount of the Advances to Borrowers
to an amount permitted by the preceding paragraph. In the event
Agent or any Lender disagrees over the terms of reduction or
repayment
44
of any Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the Required
Lenders.
(ii) Each Revolving Lender shall be obligated to settle with
Agent as provided in Section 2.3(f) for the amount of such Revolving
Lender's Pro Rata Share of any unintentional Overadvances by Agent
reported to such Revolving Lender, any intentional Overadvances made
as permitted under this Section 2.3(i), and any Overadvances
resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the
date specified herein. Any payment received by Agent later than
11:00 a.m. (California time), shall be deemed to have been received
on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from any Borrower prior to
the date on which any payment is due to the Lenders that Borrowers
will not make such payment in full as and when required, Agent may
assume that Borrowers have made (or will make) such payment in full
to Agent on such date in immediately available funds and Agent may
(but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrowers do not
make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender
Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
(b) APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents (and
letter agreements between Agent and individual Lenders), aggregate
principal and interest payments shall be apportioned ratably among
the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender, after
giving effect to any letter agreements between Agent and individual
Lenders) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account), shall be
apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates.
All payments shall be remitted to Agent and all such payments (other
than payments received while no Default or Event of Default has
occurred and is continuing and which relate to the payment of
principal or interest
45
of specific Obligations or which relate to the payment of specific
fees), and, subject to the last sentence of this Section 2.4(b)(i),
all proceeds of Collateral or the FF&E Letter of Credit received by
Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full, (B)
second, to pay any Lender Group Expenses then due to the
Lenders under the Loan Documents, on a ratable basis, until
paid in full,
(C) third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter
agreements between Agent and individual Lenders)under the Loan
Documents until paid in full,
(D) fourth, to pay any fees then due to any or all of
the Lenders (after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
(F) sixth, ratably to pay interest due in respect of the
Advances (other than Agent Advances), the Swing Loans, and the
Term Loan until paid in full,
(G) seventh, to pay the principal of all Agent Advances
until paid in full,
(H) eighth, ratably to pay all principal amounts then
due and payable (other than as a result of an acceleration
thereof) with respect to the Term Loan until paid in full,
(I) ninth, to pay the principal of all Swing Loans until
paid in full,
(J) tenth, so long as no Event of Default has occurred
and is continuing, to pay principal of all Advances until paid
in full,
(K) eleventh, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances
until paid in full, (ii) to pay the outstanding principal
balance of the Term Loan (in the inverse order of the maturity
of the installments due thereunder) until the Term Loan is
paid in full and (iii) to Agent, to be held by Agent, for the
ratable benefit of Agent and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the
then extant Letter of Credit Usage until paid in full,
(L) twelfth, if an Event of Default has occurred and is
continuing, to pay any other Obligations, and
46
(M) thirteenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
Notwithstanding the foregoing, (x) proceeds of FF&E Collateral
and the FF&E Letter of Credit shall be applied first to repay the FF&E
Obligations and then to repay the principal of or interest on any Advances or
any Letter of Credit reimbursement obligations, and (y) proceeds of Collateral
(other than the FF&E Collateral and the FF&E Letter of Credit) shall not be used
to repay principal of or interest on the Term Loan.
(ii) In each instance, so long as no Default or Event of
Default has occurred and is continuing, this Section 2.4(b) shall
not be deemed to apply to any payment by Borrowers specified by
Borrowers to be for the payment of specific Obligations then due and
payable (or prepayable) under any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not the
same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
(iv) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than the FF&E Obligations) owed by Borrowers to the Lender
Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Sections 2.1 or 2.12 (an "Overadvance"),
Borrowers immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations (other than the
FF&E Obligations) in accordance with the priorities set forth in Section 2.4(b).
In addition, (a) Borrowers hereby promise to pay the Obligations (including
principal, interest, fees, costs, and expenses, but excluding the FF&E
Obligations) in Dollars in full to Agent as and when due and payable under the
terms of this Agreement and the other Loan Documents and (b) OED hereby promises
to pay the FF&E Obligations in Dollars in full to Agent as and when due and
payable under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST: RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof, at Borrower's option in
47
accordance with Section 2.16 below, as follows: (i) if the relevant Obligation
is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the Applicable Margin, (ii) if the relevant Obligation is the Term
Loan, at a per annum rate equal to the Base Rate plus the Base Rate Term Loan
Margin and (iii) otherwise, at a per annum rate equal to the Base Rate plus the
Applicable Margin. The foregoing notwithstanding, at no time shall (x) any
portion of the Obligations (other than the Term Loan) bear interest on the Daily
Balance thereof at a per annum rate less than 4% and (y) the Term Loan bear
interest on the Daily Balance thereof at a per annum rate less than 6%. To the
extent that interest accrued hereunder at the rate set forth herein would be
less than the foregoing minimum applicable daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to the
minimum rate.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the ratable
benefit of the Revolving Lenders, subject to any letter agreement between Agent
and individual Lenders) a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to the Applicable Margin with respect to Letters of Credit times
the Daily Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders), (i)
all Obligations (except for undrawn Letters of Credit) that have been charged to
the Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 2 percentage points above the per
annum rate otherwise applicable hereunder, and the Letter of Credit fee provided
for above shall be increased to 2 percentage points above the per annum rate
otherwise applicable hereunder.
(d) PAYMENT. Interest on Base Rate Loans, Letter of Credit fees, and
all other fees payable hereunder shall be due and payable, in arrears, on the
first day of each month at any time that Obligations or obligation to extend
credit hereunder are outstanding. Interest on LIBOR Rate Loans shall be due and
payable, in arrears, on the last day of each Interest Period therefor; provided
that, if the Interest Period for such Advance is greater than 3 months, then
interest thereon shall be due and payable on each 3 month anniversary of such
Advance. Borrowers hereby authorize Agent, from time to time, without prior
notice to Borrowers, to charge such interest and fees, all Lender Group Expenses
(as and when incurred), the charges, commissions, fees and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loan) to Borrowers' Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
48
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 [INTENTIONALLY OMITTED].
2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent shall not
be considered a payment on account unless such payment item is a wire transfer
of immediately available federal funds made to the Agent's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Agent's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the immediately
following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and Agent
is authorized to issue the Letters of Credit under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to Section 2.6(d). Each
Borrower agrees to establish and maintain the Designated Account of such
Borrower with the Designated Account Bank for the purpose of receiving the
proceeds of the Advances requested by such Borrower and made by Agent or the
Lenders hereunder. A Borrower may add or replace the Designated Account Bank or
the Designated Account on 30 days' prior written notice to Agent; provided,
however, that (i) such prospective Designated Account Bank shall be satisfactory
to Agent and Agent shall have consented in writing in advance to the opening of
such Designated Account with the prospective Designated Account Bank, and (ii)
prior to the time of the opening of such Designated Account, Borrowers and such
prospective Designated Account Bank shall have executed and delivered to Agent a
Control Agreement. Unless otherwise agreed by Agent and Borrowers, any Advance,
Agent Advance or Swing Loan requested by Borrowers and made by Agent or the
Lenders hereunder shall be made to the applicable Borrower's Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which OED will be charged with the Term Loan and Borrowers will be charged
with all Advances (including Agent Advances and Swing Loans) made by Agent,
Swing Lender or the Lenders to Borrowers or for Borrowers' account, the Letters
of Credit issued by Agent for Borrowers' account, and with all other payment
Obligations hereunder or under the other Loan Documents, including,
49
accrued interest, fees and expenses, and Lender Group Expenses. In accordance
with Section 2.8, the Loan Account will be credited with all payments received
by Agent from Borrowers or for Borrowers' account. Agent shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Borrowers, a Borrower
shall deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter):
(a) FEE LETTER FEES. As and when due and payable under the terms of
the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter,
(b) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows,
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent, (ii) a
fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iii)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits of Borrowers, to
appraise the Collateral, or any portion thereof, or to assess a Borrower's
business valuation, provided that so long as no Event of Default has occurred in
any 12 consecutive month period, Borrowers shall not be obligated to reimburse
Agent for the costs and expenses of more than 16 audit days in any such 12
consecutive month period, and
(c) UNUSED LINE FEE. On the first day of each quarter during the
term of this Agreement, an unused line fee (for the account of the Revolving
Lenders in accordance with their Pro Rata Shares of the Revolver Commitment) in
an amount equal to (i) for any preceding quarter in which the average Revolver
Usage during such quarter was less than $12,500,000, 0.625% per annum, (ii) for
any preceding quarter in which the average Revolver Usage during such quarter
was equal to or greater than $12,500,000 but less than $25,000,000, 0.500% per
annum and (iii) for any preceding quarter in which the average Revolver Usage
during such quarter was equal to or greater than $25,000,000, 0.375% per annum,
in each case, times the result of (x) the Maximum Revolver Amount, less (y) the
sum of (1) the average Daily Balance of Advances that were outstanding during
the immediately preceding quarter, plus (2) the average Daily Balance of the
Letter of Credit Usage during the immediately preceding quarter.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, Agent
agrees to issue letters of credit for the account of Borrowers (each, an "L/C")
or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension
50
of an outstanding L/C or L/C Undertaking), a Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by Agent) to Agent and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by Agent, Borrowers also shall
be an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C Undertaking. Agent shall have no
obligation to issue a Letter of Credit if any of the following would result
after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $10,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrowers and Agent acknowledge and agree that certain Underlying Letters
of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to Agent
(in the exercise of its Permitted Discretion), including the requirement that
the amounts payable thereunder must be payable in Dollars. If Agent is obligated
to advance funds under a Letter of Credit, Borrowers shall immediately reimburse
such L/C Disbursement to Agent by paying to Agent an amount equal to such L/C
Disbursement not later than 11:00 a.m., California time, on the date that such
L/C Disbursement is made, if any Borrower shall have received written or
telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time,
on such date, or, if such notice has not been received by any Borrower prior to
such time on such date, then not later than 11:00 a.m., California time, on the
(i) Business Day that any Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, and, in
the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under Section 2.6. To the
extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Revolving Lender agrees to fund its Pro Rata
Share of any Advance deemed made pursuant to the foregoing subsection on the
same terms and conditions as if Borrowers had requested such Advance and Agent
shall promptly pay to Agent the amounts so received by it from the Revolving
Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of Agent or the Lenders with Revolver Commitment, Agent shall be deemed to have
granted to each Revolving Lender, and each Revolving Lender shall be deemed to
have
51
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of Agent, such Lender's
Pro Rata Share of any payments made by Agent under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Revolving Lender hereby
absolutely and unconditionally agrees to pay to Agent, for the account of Agent,
such Lender's Pro Rata Share of each L/C Disbursement made by Agent and not
reimbursed by Borrowers on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrowers
for any reason. Each Revolving Lender acknowledges and agrees that its
obligation to deliver to Agent, for the account of Agent, an amount equal to its
respective Pro Rata Share of each L/C Disbursement made by Agent pursuant to
this Section 2.12(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of each L/C Disbursement made by Agent in respect of
such Letter of Credit as provided in this Section, such Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of Agent) shall be entitled
to recover such amount on demand from such Lender together with interest thereon
at the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold
Agent harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by Agent arising out of or in connection with any Letter
of Credit; provided, however, that no Borrower shall be obligated hereunder to
indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of Agent. Each Borrower agrees to be bound by
the Underlying Issuer's regulations and interpretations of any Underlying Letter
of Credit or by Agent's interpretations of any L/C issued by Agent to or for
such Borrower's account, even though this interpretation may be different from
such Borrower's own, and each Borrower understands and agrees that Agent shall
not be liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrowers' instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto. Each
Borrower understands that the L/C Undertakings may require Agent to indemnify
the Underlying Issuer for certain costs or liabilities arising out of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby agrees to
indemnify, save, defend, and hold Agent harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by Agent
under any L/C Undertaking as a result of Agent's indemnification of any
Underlying Issuer; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of Agent.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to Agent all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon Agent's instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.
(e) Any and all charges, commissions, fees, and costs incurred by
Agent relating to Underlying Letters of Credit shall be Agent Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrowers to
Agent for the account of Agent; it being
52
acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .850% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
Agent with any direction, request, or requirement (irrespective of whether
having the force of law) of any Governmental Authority or monetary authority:
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or Agent
any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to Agent of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Agent, then, and in any
such case, Agent may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify any
Borrower, and Borrowers shall pay on demand such amounts as Agent may specify to
be necessary to compensate Agent for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Advances that are Base Rate Loans
hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
(g) The letters of credit described on Schedule 2.12 hereto shall be
deemed Letters of Credit issued pursuant to this Section 2.12.
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2.13 REGISTERED NOTES. Agent agrees to record each Advance on the Register
referenced in Section 14.1(h). Each Advance recorded on the Register (each a
"Registered Loan") may not be evidenced by promissory notes other than
Registered Notes (as defined below). Upon the registration of any Advance,
Borrowers agree at the request of any Lender, to execute and deliver to such
Lender a promissory note, in conformity with the terms of this Agreement, in
registered form to evidence such Registered Loan, in form and substance
reasonably satisfactory to such Lender, and registered as provided in Section
14.1(h) (a "Registered Note"), payable to the order of such Lender and otherwise
duly completed, provided that any Registered Note issued to evidence Advances
shall be issued in the principal amount of the applicable Lender's Commitment.
Once recorded on the Register, each Advance may not be removed from the Register
so long as it remains outstanding, and a Registered Note may not be exchanged
for a promissory note that it is not a Registered Note.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrowers and Agent thereof. Following receipt of such notice,
Borrowers agree to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents (other than with respect to the FF&E
Obligations) in consideration of the financial accommodations to be provided by
Agent and the Lenders under this Agreement, for the mutual benefit, directly and
indirectly, of each Borrower and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the Obligations (other
than the FF&E Obligations).
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (other than the FF&E Obligations)
(including, without limitation, any Obligations arising under this Section
2.15), it being the intention of the parties hereto that all the Obligations
(other than
54
the FF&E Obligations) shall be the joint and several obligations of each Person
composing Borrowers without preferences or distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations (other than the FF&E
Obligations) as and when due or to perform any of the Obligations (other than
the FF&E Obligations) in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or the Lenders under or in respect
of any of the Obligations, any requirement of diligence or to mitigate damages
and, generally, to the extent permitted by applicable law, all demands, notices
and other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or the Lenders at any time or
times in respect of any default by any Person composing Borrowers in the
performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by Agent or the Lenders
in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Person composing Borrowers. Without limiting the generality of the
foregoing, each Borrower assents to any other action or delay in acting or
failure to act on the part of Agent or the Lenders with respect to the failure
by any Person composing Borrowers to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any Person
composing Borrowers, in whole or in part, from any of its Obligations under this
Section 2.15, it being the intention of each Person composing Borrowers that, so
long as any of the Obligations hereunder remain unsatisfied, the Obligations of
such Person composing Borrowers under this Section 2.15 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing Borrowers or any Agent or the Lenders. The joint and
several liability of the Persons composing Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger, amalgamation or
any other change whatsoever in the
55
name, constitution or place of formation of any of the Persons composing
Borrowers or any Agent or the Lenders.
(f) Each Person composing Borrowers represents and warrants to Agent
and the Lenders that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations
(other than the FF&E Obligations). Each Person composing Borrowers further
represents and warrants to Agent and the Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Person
composing Borrowers hereby covenants that such Borrower will continue to keep
informed of Borrowers' financial condition, the financial condition of other
guarantors, if any, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Obligations (other than the FF&E
Obligations).
(g) The provisions of this Section 2.15 are made for the benefit of
Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, the Lenders, successor, or assign
first to marshal any of its or their claims or to exercise any of its or their
rights against any of the other Persons composing Borrowers or to exhaust any
remedies available to it or them against any of the other Persons composing
Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations (other than the FF&E Obligations) hereunder or to elect any
other remedy. The provisions of this Section 2.15 shall remain in effect until
all of the Obligations (other than the FF&E Obligations) shall have been paid in
full or otherwise fully satisfied. If at any time, any payment, or any part
thereof, made in respect of any of the Obligations (other than the FF&E
Obligations), is rescinded or must otherwise be restored or returned by any
Agent or the Lenders upon the insolvency, bankruptcy or reorganization of any of
the Persons composing Borrowers, or otherwise, the provisions of this Section
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.
(h) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
Agent or the Lenders with respect to any of the Obligations or any collateral
security therefor until such time as all of the Obligations have been paid in
full in cash. Any claim which any Borrower may have against any other Borrower
with respect to any payments to any Agent or the Lenders hereunder or under any
other Loan Documents are hereby expressly made subordinate and junior in right
of payment, without limitation as to any increases in the Obligations arising
hereunder or thereunder, to the prior payment in full in cash of the Obligations
and, in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to any Borrower, its debts or its assets, whether voluntary or
involuntary, all such Obligations shall be paid in full in cash before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is
56
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for Agent, and such
Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b).
2.16 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances be
charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which Agent has elected to accelerate the maturity of the
Obligations, (iii) termination of this Agreement pursuant to the terms hereof,
or (iv) as set forth in Section 2.6(d). On the last day of each applicable
Interest Period, unless any Borrower properly has exercised the LIBOR Option
with respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrowers no longer shall have the option to request
that Advances bear interest at the LIBOR Rate and Agent shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder. OED shall not have the option to
request that any portion of the Term Loan bear interest at the LIBOR Rate.
(b) LIBOR ELECTION.
(i) The requesting Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00
a.m. (California time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of such Borrower's election of the LIBOR Option for a
permitted portion of the Advances and an Interest Period pursuant to
this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice
received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 5:00
p.m. (California time) on the same day).
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall jointly and severally indemnify, defend, and hold Agent and
the Revolving Lenders harmless against any loss, cost, or expense
incurred by Agent or the Revolving Lenders as a result of (a) the
payment of any principal of any LIBOR Rate Loan other than on the
last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any LIBOR Rate
Loan other than on the last day of the Interest Period applicable
thereto, or
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(c) the failure to borrow, convert, continue or prepay any LIBOR
Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"Funding Losses"). Funding Losses shall be deemed to equal the
amount determined by Agent to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount
of such LIBOR Rate Loan had such event not occurred, at the LIBOR
Rate that would have been applicable thereto, for the period from
the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert, or
continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate which
Agent would be offered were it to be offered, at the commencement of
such period, Dollar deposits of a comparable amount and period in
the London interbank market. A certificate of any Revolving Lender
delivered to any Borrower setting forth any amount or amounts that
such Revolving Lender is entitled to receive pursuant to this
Section shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 7 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections of Borrowers or their
Subsidiaries in accordance with Section 2.4(b) or for any other reason,
including early termination of the term of this Agreement or acceleration of the
Obligations pursuant to the terms hereof, Borrowers shall indemnify, defend, and
hold Agent, the Revolving Lenders and any Revolving Lender's Participants
harmless against any and all Funding Losses in accordance with clause (b)(ii)
above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent on a prospective
basis to take into account any additional or increased costs to the
Revolving Lenders of maintaining or obtaining any eurodollar
deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable
Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the
cost of funding loans bearing interest at the LIBOR Rate. In any
such event, Agent shall give Borrowers notice of such a
determination and adjustment and, upon its receipt of the notice
from Agents, Borrowers may, by notice to Agent (y) require Agent to
furnish to Borrowers a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount
of such adjustment, or (z) repay the LIBOR Rate
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Loans with respect to which such adjustment is made (together with
any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time after
the date hereof, in the reasonable opinion of Agent, make it
unlawful or impractical for the Revolving Lenders to fund or
maintain LIBOR Advances or to continue such funding or maintaining,
or to determine or charge interest rates at the LIBOR Rate, Agent
shall give notice of such changed circumstances to Borrowers and (y)
in the case of any LIBOR Rate Loans that are outstanding, the date
specified in Agent's notice shall be deemed to be the last day of
the Interest Period of such LIBOR Rate Loans, and interest upon the
LIBOR Rate Loans thereafter shall accrue interest at the rate then
applicable to Base Rate Loans, and (z) Borrowers shall not be
entitled to elect the LIBOR Option until Agent determines that it
would no longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, none of Agent, any Revolving Lender, nor any
Revolving Lender's Participants, is required actually to acquire eurodollar
deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate. The provisions of this Section shall apply as if
Agent, the Revolving Lenders or their Participants had match funded any
Obligation as to which interest is accruing at the LIBOR Rate by acquiring
eurodollar deposits for each Interest Period in the amount of the LIBOR Rate
Loans.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. In addition to
satisfying each of the conditions precedent set forth in Section 3.3, the
obligation of the Lender Group (or any member thereof) to make the initial
Advance and the Term Loan (or otherwise extend any credit hereunder) is subject
to the prior fulfillment, to the satisfaction of Lender Group, of each of the
conditions set forth below:
(a) the Closing Date shall occur on or before June ___, 2004;
(b) Agent shall have received all financing statements required by
Agent, and Agent shall have received searches reflecting the filing of all such
financing statements;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
(i) the Control Agreements,
(ii) the Diamond Jo Ship Mortgage,
(iii) the Disbursement Letter,
(iv) the Fee Letter,
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(v) the Guaranties executed by Parent and OED Capital and the
Guarantor Security Agreement,
(vi) the Intercompany Subordination Agreement,
(vii) the Intercreditor Agreement and the Subordinations of
Mortgage for Iowa and Louisiana,
(viii) the Management Fees Subordination Agreement,
(ix) the Mortgages, together with any consents required for
such Mortgages,
(x) the Officers' Certificate,
(xi) a solvency certificate with respect to Borrowers and
Guarantors,
(xii) the Pledge Agreement, together with all certificates
representing the shares of Capital Stock pledged thereunder, as well
as Capital Stock powers with respect thereto endorsed in blank, and
(xiii) the Subordination of Preferred Fleet Mortgage, and
(xiv) the Trademark Security Agreement;
(d) Agent shall have received a certificate from the Secretary of
each Borrower and Guarantor attesting to the resolutions of such Person's board
of directors (or comparable manager) authorizing its execution, delivery, and
performance of this Agreement and the other Loan Documents to which such Person
is a party and authorizing specific officers of such Person to execute the same;
(e) Agent shall have received copies of each Borrower's and
Guarantor's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Borrower or Guarantor, as
applicable,
(f) Agent shall have received a certificate of status with respect
to each Borrower and Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower or Guarantor, as applicable, which certificate
shall indicate that such Borrower or Guarantor, as applicable, is in good
standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
each Borrower and Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower or Guarantor, as
applicable) in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate that
such Borrower or Guarantor, as applicable, is in good standing in such
jurisdictions;
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(h) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;
(i) Agent shall have received Collateral Access Agreements with
respect to OED's New Iberia, Louisiana, leased property;
(j) Agent shall have received opinions of Borrowers' and Guarantors'
counsel (including, without limitation, admiralty counsel, real estate counsel
and regulatory counsel) in form and substance satisfactory to Agent;
(k) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers have been timely filed and all taxes upon
Borrowers or their properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of Permitted Protests;
(l) Agent shall have completed its business, legal, and collateral
due diligence, including a collateral audit and review of Borrowers' Books and
verification of Borrowers' representations and warranties to the Lender Group,
the results of which shall be satisfactory to Agent;
(m) Agent shall have received and reviewed the Closing Date Business
Plan and its detailed budget on remaining construction costs at the Racino
Project in form and substance satisfactory to Agent;
(n) Borrowers shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(o) Agent shall have received mortgagee title insurance policies (or
marked commitments to issue the same) for the Real Property Collateral issued by
a title insurance company satisfactory to Agent (each a "Mortgage Policy" and,
collectively, the "Mortgage Policies") in amounts satisfactory to Agent assuring
Agent that the Mortgages on such Real Property Collateral are valid and
enforceable first priority mortgage Liens on such Real Property Collateral free
and clear of all defects and encumbrances except Permitted Liens, and the
Mortgage Policies otherwise shall be in form and substance satisfactory to
Agent;
(p) Agent shall have received copies of each of the following
documents, together with a certificate of the Secretary of Parent certifying
each document as being true, correct, and complete: (i) the Management
Agreements, (ii) the Senior Note Documents, (iii) the Lease, (iv) the Ice Harbor
Parking Agreement, and (v) the Fixed Price Contract;
(q) Agent shall have received the Senior Note Documents and evidence
of Borrowers receipt of net proceeds from the Notes of not less than
$220,000,000;
(r) Borrowers shall have received all licenses (including the Gaming
Licenses), approvals or evidence of other actions required by any Governmental
Authority, including the Louisiana Regulatory Authorities and the Iowa Gaming
Authorities, in connection
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with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(s) Agent shall have received evidence that the aggregate amount of
Excess Availability plus cash and Cash Equivalents subject to satisfactory
Control Agreements, after giving effect to the initial Advances, is not less
than $10,000,000;
(t) Agent shall have received evidence that, upon making of initial
Advance hereunder, the outstanding obligations under (i) that certain Loan and
Security Agreement between DJL and Wells Fargo Foothill, dated as of February
23, 2001, (ii) that certain Loan and Security Agreement, among OED, OED Capital
and Wells Fargo Foothill, dated as of June 24, 2003, in each case as amended
through the Closing Date, (iii) the Equipment Loan Agreement and (iv) the PGC
Indenture, shall be repaid in full and such agreements shall be terminated and
all liens thereunder shall be automatically released;
(u) Agent shall have received evidence that the outstanding
obligations under the OED Indenture shall have been reduced to $6,910,000 and
that all liens under the OED Loan Documents shall have been released;
(v) the Diamond Jo Ship Mortgage shall have been recorded in the
applicable filing office of the United States Coast Guard and such other
governmental agency as shall be necessary, and Agent shall have received
confirmation, satisfactory to Agent, of such recordation; and
(w) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender Group.
Notwithstanding the foregoing, the Lenders are under no obligation
to make the initial Advance or the Term Loan (or otherwise to extend any credit
provided for hereunder) unless and until all of the conditions set forth in
Section 3.3 below are satisfied to the satisfaction of Agent.
3.2 CONDITIONS SUBSEQUENT TO INITIAL EXTENSION OF CREDIT. The obligation
of the Lender Group (or any member thereof) to continue to make Advances (or
otherwise extend credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of each of the conditions subsequent set forth
below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 180 days of the Closing Date, deliver to Agent certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.8, the form and substance of which shall be
satisfactory to Agent and its counsel.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make any Advances or issue any
Letter of Credit (or to extend any other credit hereunder) shall be subject to
the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of
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such extension of credit, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an earlier
date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on June 15, 2008 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit) immediately shall become due
and payable without notice or demand (including either (a) providing cash
collateral to be held by Agent for the benefit of the Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (b) causing the original Letters of Credit to be returned to Agent). No
termination of this Agreement, however, shall relieve or discharge Borrowers or
the Guarantors of their duties, Obligations, or covenants hereunder and the
Agent's Liens in the Collateral shall remain in effect until all Obligations
have been fully and finally paid in full and the Lender Group's obligations to
provide additional credit hereunder have been terminated. When this Agreement
has been terminated and all of the Obligations have been fully and finally paid
in full and the Lender Group's obligations to provide additional credit under
the Loan Documents have been terminated irrevocably, Agent will, at Borrowers'
sole expense, execute and deliver any Uniform Commercial Code termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Agent's Liens and all notices of security
interests and liens previously filed by Agent with respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any time
upon 90 days' prior written notice by Borrowers to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including either (a) providing cash collateral to be held by Agent
for the benefit of the Lenders with a Revolver Commitment in an amount equal to
105% of the then extant Letter of Credit Usage, or (b) causing the original
Letters of Credit to be returned to Agent), in full, together with (unless the
Obligations are being refinanced with financing provided by or arranged by Wells
Fargo or any of its Affiliates) the Applicable Prepayment Premium; provided,
however, that such Applicable Prepayment Premium shall be reduced by 50% if the
Obligations are repaid in full and this
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Agreement is terminated as a direct result of the consummation of an initial
public offering of Parent's or Borrowers' Capital Stock, a private placement of
Parent's or Borrowers' stock or subordinated debt, or a sale (other than a sale
that takes place as a consequence of a judicial or nonjudicial foreclosure
proceeding or an Insolvency Proceeding) in of all or substantially all the
Capital Stock or assets of Parent or Borrowers. If Borrowers have sent a notice
of termination pursuant to the provisions of this Section, then the Lenders'
obligations to extend credit hereunder shall terminate and Borrowers shall be
obligated to repay the Obligations (including either (a) providing cash
collateral to be held by Agent for the benefit of the Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (b) causing the original Letters of Credit to be returned to Agent), in full,
together with the Applicable Prepayment Premium, on the date set forth as the
date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (A) termination upon the
election of Agent or the Lenders to terminate after the occurrence and during
the continuance of an Event of Default, (B) foreclosure and sale of Collateral,
(C) sale of the Collateral in any Insolvency Proceeding, or (D) restructure,
reorganization or compromise of the Obligations by the confirmation of a plan of
reorganization, or any other plan of compromise, restructure, or arrangement in
any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to Agent and the Lenders
or profits lost by Agent or the Lenders as a result of such early termination,
and by mutual agreement of the parties as to a reasonable estimation and
calculation of the lost profits or damages of Agent or the Lenders, Borrowers
shall pay the Applicable Prepayment Premium to Agent for the pro rata benefit of
the Lenders, measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST.
(a) Each Borrower hereby grants to Agent, for the benefit of the
Lender Group, a continuing security interest in all of its right, title, and
interest in all currently existing and hereafter acquired or arising Personal
Property Collateral in order to secure prompt repayment of any and all of the
Obligations (other than the FF&E Obligations) in accordance with the terms and
conditions of the Loan Documents and in order to secure prompt performance by
Borrowers of each of their covenants and duties under the Loan Documents. The
Agent's Liens in and to the Personal Property Collateral shall attach to all
Personal Property Collateral without further act on the part of Agent or
Borrowers.
(b) OED hereby grants to Agent, for the benefit of the Lender Group,
a continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising FF&E Collateral in order to
secure prompt repayment of any and all of the FF&E Obligations in accordance
with the terms and conditions of the Loan Documents. The Agent's Liens in and to
the FF&E Collateral shall attach to all FF&E Collateral without further act on
the part of Agent or OED.
(c) Anything contained in this Agreement or any other Loan Document
to the contrary notwithstanding, except as permitted by Section 7.4, Borrowers
have no authority, express or implied, to dispose of any item or portion of the
Personal Property Collateral.
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4.2 NEGOTIABLE COLLATERAL.
(a) In the event that any Personal Property Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, the applicable
Borrower shall immediately notify Agent and, and if and to the extent that
perfection of priority of Agent's security interest is dependent on or enhanced
by possession, such Borrower, immediately upon the request of Agent, shall
endorse and deliver physical possession of such Negotiable Collateral to Agent.
(b) Upon request by Agent, the applicable Borrower shall take all
steps reasonably necessary to grant Agent control of all electronic chattel
paper in accordance with the Code and all "transferable records" as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures in
Global and National Commerce Act; and
(c) In the event a Borrower retains possession of any chattel paper
or instruments otherwise required to be endorsed and delivered to Agent pursuant
to Section 4.2(a), all of such chattel paper and instruments shall be marked
with the following legend: "This writing and the obligations evidenced or
secured thereby are subject to the security interest of Wells Fargo Foothill,
Inc., as Agent".
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for Agent, as Agent's trustee, any of its or its
Subsidiaries' Collections that it receives and immediately will deliver said
Collections to Agent in their original form as received by the applicable
Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
(a) Each Borrower authorizes Agent to file, transmit, or
communicate, as applicable, Uniform Commercial Code financing statements,
original financing statements in-lieu of continuation statements and amendments
describing the Collateral as "all personal property of debtor" or "all assets of
debtor" or words of similar effect in order to perfect Agent's security interest
in the Collateral without such Borrower's signature, to the extent permitted by
applicable law; provided, however, that Agent shall clearly identify Excluded
Assets as excepted items, as applicable.
(b) At any time upon the request of Agent, Borrowers shall execute
and deliver, or cause other Persons (including, without limitation, those in
possession of any Collateral) to execute and deliver, all further instruments
and documents, and take all further action, (i) to perfect and continue
perfection of Agent's security interest in the Collateral (whether now owned or
hereafter arising or acquired or tangible or intangible), (ii) to create,
perfect and insure Liens in favor of Agent in any Real Property acquired after
the Closing Date, (iii) in order to consummate fully all of the transactions
contemplated hereby and under the other Loan Documents and (iv) to enable Agent
to exercise and enforce its rights and remedies
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hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Borrower shall:
(i) execute and deliver, or cause other Persons (including,
without limitation, those in possession of any Collateral) to
execute and deliver, any and all financing statements, original
financing statements in lieu of continuation statements, fixture
filings, security agreements, pledges, real property security
instruments, assignments, Collateral Access Agreements, instruments,
powers of attorney, endorsements of certificates of title, and all
other documents (collectively, the "Additional Documents") that
Agent may request in its Permitted Discretion, in form and substance
reasonably satisfactory to Agent;
(ii) at any reasonable time, upon request by Agent, exhibit
the Collateral for, and allow inspection of the Collateral by,
Agent, or persons designated by Agent; and
(iii) at Agent's reasonable request, appear in and defend any
action or proceeding that may affect Agent's security interest in
all or any part of the Collateral.
(c) To the maximum extent permitted by applicable law, each Borrower
authorizes Agent to execute any such Additional Documents in the applicable
Borrower's name and authorizes Agent to file such executed Additional Documents
in any appropriate filing office. Each Borrower also hereby ratifies its
authorization for Agent to have filed in any jurisdiction any financing
statements or amendments thereto filed prior to the date hereof. No Borrower
shall terminate, amend or file a correction statement with respect to any
Uniform Commercial Code financing statement filed pursuant to this Section 4
without Agent's prior written consent, which consent shall not be unreasonably
withheld.
(d) In addition, on such periodic basis as Agent shall require, each
Borrower shall (i) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by such Borrower
during the prior period, (ii) cause all patents, copyrights, and trademarks
acquired or generated by such Borrower that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of such Borrower's ownership
thereof and (iii) cause to be prepared, executed, and delivered to Agent
supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
(e) In addition, if any Borrower acquires any commercial tort claim
or judgment after the date hereof, such Borrower shall promptly (but in any
event within 3 Business Days after such acquisition) deliver to Agent a written
description of such commercial tort claim or judgment, as applicable, and shall
deliver a written agreement, in form and substance satisfactory to Agent,
pursuant to which such Borrower shall grant a perfected security interest in all
of its right, title and interest in and to such commercial tort claim or
judgment, as applicable, to Agent, as security for the Obligations (other than
the FF&E Obligations) (each, a "Commercial Tort Claim/Judgment Assignment").
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(f) In addition, each Borrower shall furnish to Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.
4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to, from time to time in its discretion, take any action and to execute
any instrument that it may deem reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, the following:
(a) if such Borrower refuses to, or fails timely to execute and deliver any of
the documents described in Section 4.4, sign the name of such Borrower on any of
the documents described in Section 4.4, (b) at any time that an Event of Default
has occurred and is continuing, sign such Borrower's name on any invoice or bill
of lading relating to the Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) at any time that an Event of Default has occurred and is
continuing, send requests for verification of Accounts, (d) at any time that an
Event of Default has occurred and is continuing, endorse such Borrower's name on
any Collection item that may come into Agent's possession, (e) at any time that
an Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Borrower's policies of insurance and make all determinations
and decisions with respect to such policies of insurance, and (f) at any time
that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, General Intangibles,
Real Property or other Collateral directly with Account Debtors or other
applicable third parties, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as each
Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully and finally repaid and performed and the Lender Group's obligations to
extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time and during normal business hours hereafter, to inspect the Books and to
check, test, and appraise the Collateral, operations and assets of Borrowers in
order to verify Borrowers' financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
4.7 CONTROL AGREEMENTS. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by Borrowers without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event of Default,
Agent may notify any securities intermediary to liquidate the applicable
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent's Account.
4.8 FF&E LETTER OF CREDIT. As additional credit enhancement for the
repayment of the FF&E Obligations to the Lenders, OED has caused the FF&E Letter
of Credit to be issued and delivered to Agent. Agent shall have the right to
draw upon the FF&E Letter of Credit in accordance with its terms, in full or in
part (and to apply the proceeds thereof to the FF&E
67
Obligations or hold as cash collateral, at the option of Agent); provided,
however, that, upon written request of OED, so long as (i) no Default or Event
of Default shall then exist, and (ii) the aggregate amount of scheduled
principal payments (without giving effect to any prepayments required hereunder)
made to Agent with respect to the Term Loan equals or exceeds $3,200,000, Agent
agrees to promptly deliver and release to OED the FF&E Letter of Credit.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
each Borrower makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Borrower and its Subsidiaries has good and
indefeasible title to their personal property assets and good and marketable
title to their Real Property, including the Diamond Jo Vessels and the Real
Property, in each case free and clear of Liens except for Permitted Liens and
except for defects in title that do not interfere in any material respect with
its ability to conduct its business or to utilize such property for its intended
purpose.
5.2 [INTENTIONALLY OMITTED].
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment (other than any that may have become
obsolete or worn-out) is used or held for use in Borrowers' business and is fit
for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment are
not stored with a bailee, warehouseman, or similar party and are located only at
the locations identified on Schedule 5.5.
5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN;
ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of each Borrower and each of
its Subsidiaries is set forth on Schedule 5.7.
(b) The chief executive office of each Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 5.7.
68
(c) Each Borrower's and each of its Subsidiaries' FEIN and
organizational identification number, if any, are identified on Schedule 5.7.
(d) As of the Closing Date, Borrowers and their Subsidiaries do not
hold any commercial tort claims, except as set forth on Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized Capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's Capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its Capital Stock or any security convertible into or
exchangeable for any of its Capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization; (ii) the number of shares of each class of common and
preferred Capital Stock authorized for each of such Subsidiaries; and (iii) the
number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
Capital Stock of each such Subsidiary has been validly issued and is fully paid
and (if applicable) non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' Capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' Capital Stock or any security convertible into or
exchangeable for any such Capital Stock.
(e) Set forth on Schedule 5.8(e), is a complete and accurate list of
each Borrower's Restricted Subsidiaries and Unrestricted Subsidiaries as of the
Closing Date.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the other Loan Documents to which it is a
party have been duly authorized by all necessary action on the part of such
Borrower.
(b) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the other Loan Documents to which it is a
party do not and will not (i) violate any provision of federal, state, or local
law or regulation applicable to any
69
Borrower, the Governing Documents of any Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on any Borrower,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
any Borrower (including any of the Senior Note Documents), (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of any Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's members or shareholders or any approval
or consent of any Person under any material contractual obligation of any
Borrower.
(c) The execution, delivery, and performance by such Borrower of
this Agreement and the Loan Documents to which such Borrower is a party and the
exercise by Agent of any rights or remedies in respect of any Collateral
(whether specifically granted or created hereunder or created or provided for by
applicable law) do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority or other Person, other than (i) the filing of financing statements,
the Diamond Jo Ship Mortgage, fixture filings, and Mortgages and the execution
and delivery by the applicable securities intermediary or bank of each Control
Agreement, (ii) any consent or approval that has been obtained and remains in
full force and effect and (iii) with respect to the exercise by Agent of any
rights or remedies in respect of any Collateral, to the extent authorizations,
consents or approvals are required by the applicable Gaming Authority or under
any intellectual property license, contract or agreement and to the extent any
actions are required to be performed by Agent.
(d) As to each Borrower, this Agreement and the other Loan Documents
to which such Borrower is a party, and all other documents contemplated hereby
and thereby, when executed and delivered by such Borrower, will be the legally
valid and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers and the Guarantors that have been delivered by Borrowers to the Lender
Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrowers' and Guarantors' financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrowers or Guarantors since the date of the
latest financial statements submitted to the Lender Group on or before the
Closing Date.
70
5.12 FRAUDULENT TRANSFER.
(a) Borrowers and their Subsidiaries, on a consolidated basis, are
Solvent.
(b) No transfer of property is being made by any Borrower or any
Subsidiary of a Borrower and no obligation is being incurred by any Borrower or
any Subsidiary of a Borrower in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrowers or their Subsidiaries.
5.13 EMPLOYEE BENEFITS. None of Borrowers, any of their Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to
Borrowers' knowledge, none of Borrowers' or their Subsidiaries' properties or
assets has ever been used by Borrowers, their Subsidiaries or by previous owners
or operators in the disposal of, or to produce, store, handle, treat, release,
or transport, any Hazardous Materials, where such production, storage, handling,
treatment, release or transport was in violation, in any material respect, of
applicable Environmental Law, (b) to Borrowers' knowledge, none of Borrowers'
nor their Subsidiaries' properties or assets has ever been designated or
identified in any manner pursuant to any Environmental Law as a Hazardous
Materials disposal site, (c) none of Borrowers nor any of their Subsidiaries
have received notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by Borrowers
or their Subsidiaries, and (d) none of Borrowers nor any of their Subsidiaries
have received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by any Borrower or any Subsidiary of a Borrower resulting
in the releasing or disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Borrowers and their Subsidiaries have not utilized
the services of any broker or finder in connection with Borrowers' obtaining
financing from the Lender Group under this Agreement and no brokerage commission
or finders fee is payable by Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Borrower and each Subsidiary of a
Borrower owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business as currently conducted. Attached hereto as Schedule 5.16 is a true,
correct, and complete listing of all material patents, patent applications,
trademarks, trademark applications, copyrights, and copyright registrations as
to which each Borrower or one of its Subsidiaries is the owner or is an
exclusive licensee.
5.17 LEASES. Borrowers and their Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating. All of such leases are valid
and subsisting and no material default (after giving effect to any applicable
notice and cure periods) by Borrowers or their Subsidiaries exists under any of
them.
71
5.18 DEPOSIT ACCOUNTS. Set forth on Schedule 5.18 are all of the Deposit
Accounts of each Borrower and each of its Subsidiaries, including, with respect
to each depository (i) the name and address of such depository, and (ii) the
account numbers of the accounts maintained with such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan 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 Borrowers or their Subsidiaries in writing to Agent or any
Lender will be, true and accurate, in all material respects, on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided. On the Closing Date, the Closing Date
Projections represent, and as of the date on which any other Projections are
delivered to Agent, such additional Projections represent Borrowers' good faith
best estimate of their and their Subsidiaries' its future performance for the
periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower and each Subsidiary of a Borrower
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and the principal terms thereof.
5.21 LICENSES AND PERMITS.
(a) (i) All material licenses (including all necessary Gaming
Licenses), permits, and consents and similar rights required from any federal,
state, or local governmental body (including the Gaming Authorities), for the
ownership, use, or operation of the businesses or properties now owned or
operated by each Borrower and each Subsidiary of a Borrower, have been validly
issued and are in full force and effect; (ii) each Borrower and each Subsidiary
of a Borrower is in compliance, in all material respects, with all of the
provisions thereof applicable to it; and (iii) none of such licenses, permits,
or consents is the subject of any pending or, to any Borrower's knowledge,
threatened proceeding for the revocation, cancellation, suspension, or
non-renewal thereof. As of the Closing Date (and as of each subsequent date on
which a Borrower delivers to Agent an updated schedule pursuant to Section 6.17
below), set forth on Schedule 5.21 is a complete and accurate list of all such
licenses, permits, and consents that are necessary and appropriate for the
operation of the businesses of each Borrower and each Subsidiary of a Borrower
and such schedule identifies the date by which an application for the renewal of
such license, permit, or consent must be filed and describes the status of each
such pending application.
(b) Each Borrower and each Subsidiary of a Borrower has obtained (i)
all material licenses, permits, and consents necessary or appropriate to conduct
its business and operations and (ii) as of the Closing Date, all required
approvals from the Gaming Authorities of the transactions contemplated hereby
and by the other Loan Documents.
72
(c) Each Borrower and each Subsidiary of a Borrower owns or
possesses all patents, trademarks, trade names, copyrights, and other similar
rights necessary for the conduct of business as now carried on or proposed to be
conducted, without any known conflict of the rights of others.
5.22 SENIOR DEBT. (a) This Agreement is the New Revolving Agreement (as
defined in the Intercreditor Agreement), (b) the Term Loan is a refinancing of
the obligations under the FF&E Credit Agreement (as defined in the Intercreditor
Agreement) and (c) all Obligations constitute Credit Facility Indebtedness (as
defined in the Intercreditor Agreement).
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers shall and shall cause each of their respective
Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Borrower Collateral that contain information as from
time to time reasonably may be requested by Agent.
6.2 REPORTING. Provide Agent and each Lender with the following documents
at the following times in form satisfactory to the Required Lenders:
================================================================================
Monthly (not later than the (a) a detailed itemized report reflecting the
15th day of each month) prior months and year-to-date revenues from the
Vessels, racetrack, off-track betting parlors
(including video poker revenues) and out-of-state
satellite operations,
(b) a detailed itemized report reflecting tax
payments (including real estate, ad valorem and
gaming taxes) made during the prior month,
73
(c) a detailed itemized report showing actual and
estimated Fixed Construction Costs and a statement
reflecting the construction related costs incurred
or reasonably expected to be incurred by Borrowers
in connection with the Racino Project prior to or
through the construction completion date and any
variances thereof,
(d) a detailed itemized report showing the
following items by Gaming Property: (i) the
average daily dollar amount of winnings for all
Gaming Equipment for such month, (ii) the average
daily number of customers admitted into such
Gaming Property for such month, and (iii) the
average daily dollar amount of winnings per
customer admitted for such month,
- --------------------------------------------------------------------------------
Monthly (not later than (e) a Borrowing Base Certificate setting forth
the 30th day of each Combined EBITDA for each Borrower and Gaming
month) Property,
- --------------------------------------------------------------------------------
As prepared or received (f) copies of each report in respect of any
Borrower's business issued by a Gaming Authority
or made by Borrower to a Gaming Authority within
15 days of their respective issuance or filing
date, and
- --------------------------------------------------------------------------------
Upon request by Agent (g) such other reports as to the Collateral, or
the financial condition of Borrowers and their
Subsidiaries, as Agent may request.
================================================================================
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent and each
Lender:
(a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of one of the first 3 fiscal quarters in
a fiscal year or 90 days in the case of a month that is the end of the fiscal
year) after the end of each month during each of Parent's fiscal years (the
"Monthly Financial Report"),
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial
condition of Parent and its Subsidiaries,
(B) the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in
74
all material respects on and as of the date of such
certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate
solely to an earlier date),
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers
have taken, are taking, or propose to take with respect
thereto),
(D) each Borrower is in compliance with its obligations
(including, without limitation, rental payment obligations)
under each lease agreement relating to real property leased by
such Borrower (except for such defaults described as required
pursuant to Section 6.3(a)(ii)(C)), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.20,
(b) as soon as available, but in any event within 90 days after the
end of each of Parent's fiscal years,
(i) financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without
any qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and
the Lender stating that such accountants do not have knowledge of
the existence of any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event no later than 30 days
after the end of each of Parent's fiscal years, copies of Borrowers'
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming
fiscal year, month by month, certified by the chief financial officer of Parent
as being such officer's good faith best estimate of the financial performance of
Borrowers and their Subsidiaries during the period covered thereby,
(d) if and when filed by any Borrower,
(i) any filings or monthly reports submitted by any Borrower
to the Louisiana Regulatory Authorities, the Iowa Regulatory
Authorities or any other Gaming Authority other than such filings or
monthly reports submitted in the ordinary course of business,
75
(ii) any filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
shareholders in their capacities as shareholders generally,
(e) if and when filed by any Borrower or any Subsidiary of a
Borrower and as requested by Agent, satisfactory evidence of payment of
applicable excise taxes in each jurisdiction in which (i) any Borrower or any
Subsidiary of a Borrower conducts business or is required to pay any such excise
tax, (ii) where any Borrower's or any Subsidiary of a Borrower's failure to pay
any such applicable excise tax would result in a Lien on the properties or
assets of any Borrower or any Subsidiary of a Borrower, or (iii) where any
Borrower's or any Subsidiary of a Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto,
(g) as soon as any Borrower has knowledge that the construction of
the Racino Project cannot be completed by Contractor, or has knowledge that such
Borrower cannot meet its obligations under the Fixed Price Contract or any other
construction documents, notice thereof and a statement of the curative action
that Borrowers propose to take with respect thereto,
(h) as soon as any Borrower has knowledge thereof, notice of any
proposed legislation or administrative action specifically affecting any
Borrower's or any Subsidiary of a Borrower's gaming activities or the Racino
Project submitted to the floor for business before any Governmental Authority in
the state of Louisiana or Iowa (including the state legislature or any committee
thereof),
(i) promptly following the end of each fiscal quarter during which
any Restricted Payment was made pursuant to Section 7.11(3), Borrowers shall
deliver to Agent a certificate signed by the chief financial officer of each
Borrower stating that each such Restricted Payment was permitted and setting
forth the basis upon which the calculations required by Section 7.11 were
computed, which calculations may be based upon the Company's latest available
internal financial statements, and
(j) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrowers or their Subsidiaries.
In addition to the financial statements referred to above, Borrowers
agree (a) to deliver (i) financial statements for Borrowers and their
Subsidiaries prepared on both a consolidated and consolidating basis (except for
audited financial statements) and (ii) audited financial statements for
Borrowers and their Subsidiaries to the extent available and (b) that no
Borrower, or any Subsidiary of a Borrower, will have a fiscal year different
from that of Parent. Borrowers agree that their independent certified public
accountants are authorized to communicate with Agent and to release to Agent
whatever financial information concerning
76
Borrowers or their Subsidiaries that Agent reasonably may request. Each Borrower
waives the right to assert a confidential relationship, if any, it may have with
any accounting firm or service bureau in connection with any information
requested by Agent pursuant to or in accordance with this Agreement, and agree
that Agent may contact directly any such accounting firm or service bureau in
order to obtain such information.
6.4 [INTENTIONALLY OMITTED].
6.5 [INTENTIONALLY OMITTED].
6.6 MAINTENANCE OF PROPERTIES. Cause all material properties which are
owned or leased by Borrowers and their Subsidiaries and used in the conduct of
their business and the business of each of their Subsidiaries to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment and shall cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in their reasonable judgment may be necessary, so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section 6.6 shall prevent
Borrowers from discontinuing any operation or maintenance of any of such
properties, or disposing of any of them if such discontinuance or disposal is
(a) (i) in the judgment of the Managers of Borrowers, desirable in the conduct
of the business of such entity and (ii) would not have a material adverse effect
on the ability of Borrowers and their Subsidiaries to satisfy their obligations
under this Agreement and other Loan Documents, and, to the extent applicable,
(b) as otherwise permitted under Section 7.4 hereof.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers,
their Subsidiaries or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrowers will and will cause their Subsidiaries to make
timely payment or deposit of all tax payments and withholding taxes required of
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Agent with proof satisfactory to Agent indicating that the
applicable Borrower or Subsidiary of a Borrower has made such payments or
deposits. Borrowers shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which any Borrower is required to pay any
such excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting their and
their Subsidiaries assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Borrowers
also shall maintain business interruption and comprehensive general liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. In addition to the foregoing, Borrowers shall maintain the
following insurance with respect to the Real Property: (i) special causes of
loss insurance (formerly known as all-risk insurance), flood and sprinkler
leakage, if applicable, in an amount sufficient to prevent any Borrower or any
Subsidiary of a Borrower from being or becoming a co-insurer within the terms
77
of the policy or policies providing such insurance, and in any event for not
less than the full replacement value of the improvements and the fixtures to the
Real Property, as reasonably determined by Agent; (ii) business interruption
insurance for loss occasioned by the perils commonly insured in a special causes
of loss policy for a period ending no earlier than the Maturity Date and in an
aggregate amount not less than the real estate taxes, additional interest and
other assessments for the Real Property and all other continuing expenses of the
Real Property including, without limitation, all payments required to be made by
any Borrower or any Subsidiary of a Borrower under the Leases; (iii) worker's
compensation and employer's liability insurance, subject to statutory limits or
better, in respect of any work or other operations on, about or in connection
with the Real Property; and (iv) such other insurance with respect to the Real
Property in such amounts as Agent, from time to time, may reasonably request
against such other insurable hazards which are commonly insured against in
respect of property similar to the Real Property.
(b) All such policies of insurance shall be in such amounts and with
such insurance companies as are reasonably satisfactory to Agent. All such
policies of insurance relating to FF&E Collateral shall cover the full
replacement cost of such Equipment. The deductible under all insurance policies
covering FF&E Collateral shall not exceed $100,000 per occurrence in the case of
fire loss, and shall be the lowest commercially available and reasonably priced
deductible in case of all other losses. Borrowers shall deliver copies of all
such policies, any renewals thereof and evidence of payment of the premiums
therefor to Agent, together with a satisfactory lender's loss payable
endorsement naming Agent as loss payee as its interests may appear with respect
to property insurance or additional insured with respect to liability policies
and, if appropriate, a standard noncontributory endorsement in favor of Agent.
Each policy of insurance or endorsement shall contain a clause requiring the
insurer to give not less than 10 days' prior written notice to Agent in the
event of cancellation, material change or reduction in the coverage or amounts
of the policy for any reason whatsoever. In the event of any casualty loss of
assets of any Borrower constituting FF&E Collateral and assets not constituting
FF&E Collateral, Borrowers shall allocate any deductible for such loss to the
assets not constituting FF&E Collateral, to the extent practicable under the
circumstances.
(c) Borrowers shall give Agent prompt notice of the occurrence of
any loss covered by such insurance policies or of any loss relating to a
condemnation or taking by eminent domain. Borrowers and Agent agree that the
right to make any adjustment of any losses covered by insurance and the
distribution and application of monies received for such losses, condemnation or
eminent domain shall be as follows:
(i) In the absence of a Default or Event of Default, Agent
shall have the exclusive right to adjust any losses payable with
respect to the Collateral under any such insurance policies in
excess of $2,000,000 in the aggregate, without any liability to
Borrowers whatsoever in respect of such adjustments, and any monies
received as payment for any loss under any insurance policy
mentioned above with respect to the Collateral (other than liability
insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain with respect to the
Collateral, may be retained by the applicable Borrower for
application to the cost of repairs, replacements, or restorations.
Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to
the value of
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the items of property destroyed prior to such damage or destruction.
Borrowers shall consult with Agent in connection with adjusting any
losses payable with respect to the Collateral not in excess of
$2,000,000.
(ii) During the existence of a Default or Event of Default,
Agent shall have the exclusive right to adjust any losses payable
with respect to the Collateral under any such insurance policies in
excess of $150,000 without any liability to Borrower whatsoever in
respect of such adjustments, and any monies in excess of $150,000
received as payment for any loss under any insurance policy
mentioned above with respect to the Collateral (other than liability
insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain with respect to the
Collateral, shall be paid over to Agent to be applied at the
election of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Borrowers under staged payment
terms reasonably satisfactory to Agent for application to the cost
of repairs, replacements, or restorations.
(d) Borrowers shall not, and shall not suffer or permit their
Subsidiaries to, take out separate or additional insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.8, unless Agent is included thereon as named insured with the loss
payable to Agent under a lender's loss payable endorsement or its equivalent and
such insurance designates that such insurance is providing coverage secondary to
the insurance required to be carried hereunder. Nothing contained herein shall
prohibit any Borrower or any Subsidiary of a Borrower from holding or obtaining
an owner's policy of title insurance covering any Real Property. Borrowers
immediately shall notify Agent whenever such separate insurance is taken out,
specifying the insurer thereunder and full particulars as to the policies
evidencing the same, and copies of such policies promptly shall be provided to
Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Borrowers' and their
Subsidiaries' Inventory and Equipment only at the locations identified on
Schedule 5.5; provided, however, that Borrowers may amend Schedule 5.5 so long
as such amendment occurs by written notice to Agent not less than 30 days prior
to the date on which the Inventory or Equipment is moved to such new location,
so long as such new location is within the continental United States, and so
long as, at the time of such written notification, the applicable Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens on such assets and, if requested by
Required Lenders, also provides to Agent a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
leases to which any Borrower or any Subsidiary of a Borrower is a party or by
which any Borrower's or any Subsidiary of a Borrower's properties and assets are
bound, unless such payments are the subject of a Permitted Protest.
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6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and effect
each Borrower's and each Subsidiary of a Borrower's valid existence and good
standing and any rights and franchises material to their respective businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any Borrower or
any Subsidiary of a Borrower free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by any Borrower or any Subsidiary of a Borrower and take any Remedial
Actions required under any applicable Environmental Law to abate said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower or any Subsidiary of a
Borrower, (ii) commencement of any Environmental Action or notice that an
Environmental Action will be filed against any Borrower or any Subsidiary of a
Borrower, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 GOVERNMENT AUTHORIZATION. Deliver to Agent, as soon as practicable,
and in any event within 10 days after the receipt by such Borrower from any
Gaming Authority or other Governmental Authority having jurisdiction over the
operations of such Borrower or any Subsidiary of such Borrower or filing or
receipt thereof by such Borrower or any Subsidiary of such Borrower (a) copies
of any order or notice of such Gaming Authority or such other Governmental
Authority or court of competent jurisdiction which designates any Gaming License
or other material franchise, permit, or other governmental operating
authorization of such Borrower or any Subsidiary of such Borrower or any
application therefor, for a hearing or which refuses renewal or extension of, or
revokes or suspends the authority of such Borrower or any Subsidiary of such
Borrower to construct, own, manage, or operate its businesses, and (b) a
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copy of any competing application filed with respect to any such Gaming License
or other authorization, or application therefor, of such Borrower or any
Subsidiary of such Borrower, or any citation, notice of violation, or order to
show cause issued by any Gaming Authority or other governmental authority or any
complaint filed by any Gaming Authority or other governmental authority which is
available to such Borrower or any Subsidiary of such Borrower.
6.17 LICENSE RENEWALS. Commencing on the date 6 months following the
Closing Date and continuing every 6 months thereafter, deliver to Agent an
updated Schedule 5.21 reflecting thereon, as of the date of such delivery, the
information described in Section 5.21.
6.18 LICENSES AND PERMITS. (a) Ensure that all material licenses
(including all necessary Gaming Licenses), permits, and consents and similar
rights required from any federal, state, or local governmental body (including
the Gaming Authorities) for the ownership, use, or operation of the businesses
or properties now owned or operated by each Borrower and each Subsidiary of a
Borrower have been validly issued and are in full force and effect, and (b)
comply, in all material respects, with all of the provisions thereof applicable
to it.
6.19 SUBSIDIARY GUARANTEES. Cause (a) each Subsidiary of a Borrower that
is formed or acquired after the date hereof (other than any CFC) or is
determined to be a Restricted Subsidiary, concurrently therewith, to (i) become
a Guarantor hereunder and execute and deliver to Agent a supplement to the
Subsidiary Guaranty pursuant to which such Subsidiary shall unconditionally
guarantee all of the Obligations in form and substance acceptable to Agent and
(ii) execute a supplement to the Guarantor Security Agreement in form and
substance acceptable to Agent and such other agreements or documents necessary
or requested by Agent, including, without limitation, Mortgages with respect to
any Real Property of such Subsidiary, to grant Agent a valid, enforceable,
perfected Lien on the collateral described therein, subject only to Permitted
Liens; and (b) cause such Subsidiary to deliver to Agent an opinion of counsel,
in form reasonably satisfactory to Agent, that (i) such guaranty, security
agreement, and other agreements and documents have been duly authorized,
executed and delivered by such Subsidiary and (ii) such guaranty, security
agreement, and such other agreements and documents constitute a legal, valid,
binding and enforceable obligation of such Subsidiary, subject to customary
assumptions and exceptions, including for bankruptcy, fraudulent transfer and
equitable principles. Concurrently with such formation, acquisition or
determination, such Borrower will provide to Agent a pledge agreement and
appropriate certificates and powers or Uniform Commercial Code financing
statements, hypothecating all of the direct or beneficial ownership interest in
such Subsidiary, in form and substance satisfactory to Agent, and all other
documentation, in form and substance satisfactory to Agent, including one or
more opinions of counsel satisfactory to Agent, which in Agent's opinion is
appropriate with respect to the execution and delivery of the applicable
documentation referred to above. Any document, agreement, or instrument executed
or issued subject to this Section 6.19 shall be a Loan Document.
6.20 COLLATERAL FOR FF&E OBLIGATIONS. Use commercially reasonable efforts
to obtain the approval of the necessary Gaming Authorities, no later than
September 15, 2004, of (a) the guaranty by Guarantors and DJL of the FF&E
Obligations and (b) the grant by Guarantors and DJL of a security interest in
the Collateral to secure prompt repayment of the FF&E Obligations. In the event
Borrowers deliver, in form and substance satisfactory to Agent, (a) amendments
to this Agreement, the Guarantor Security Agreement, the Mortgages, the Diamond
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Jo Ship Mortgage and, as requested by Agent, any other Loan Documents, duly
executed by Borrowers and Guarantors, as applicable, providing for the guaranty
of the FF&E Obligations by Guarantors and DJL and the granting by Guarantors and
DJL of a security interest in the Collateral to secure prompt repayment of the
FF&E Obligations, and (b) opinions of counsel (including, without limitation,
admiralty counsel, real estate counsel and regulatory counsel) with respect to
such amendments, Agent and Required Lenders will enter into an amendment to this
Agreement deleting Section 7.20(c).
7. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not and will not permit any of their respective
Restricted Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Indebtedness represented by Capitalized Lease Obligations or
Purchase Money Obligations; provided, that (x) no Advances hereunder are
utilized for the purchase or lease of FF&E financed with such Indebtedness, and
(y) the aggregate principal amount of such Indebtedness outstanding at any time
does not exceed $7,500,000 for each Gaming Property;
(d) Indebtedness solely in respect of appeal bonds, surety bonds,
insurance obligations or bonds, and performance bonds, and similar bonds or
obligations, all incurred in the ordinary course of business (including, without
limitation, to maintain any license or permits) in accordance with customary
industry practices;
(e) Hedging Obligations incurred to fix or hedge interest rate risk
with respect to any fixed or variable rate Indebtedness otherwise permitted by
this Agreement; provided, that the notional principal amount of each such
Hedging Obligation does not exceed the principal amount of the Indebtedness to
which such Hedging Obligation relates;
(f) Indebtedness of any Borrower or any Restricted Subsidiary owed
to and held by a Borrower that is unsecured and subordinated in right of payment
to the Obligations; provided, that any subsequent issuance or transfer of any
Capital Stock that results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary, or any transfer of such Indebtedness (other than to a
Borrower) shall be deemed, in each case, to constitute the incurrence of such
Indebtedness by such Borrower or such Restricted Subsidiary, as the case may be;
(g) Indebtedness outstanding under (i) the Senior Note Documents in
an aggregate principal amount outstanding not to exceed $233,000,000 at anytime
and (ii) the OED Note Documents in an aggregate principal amount outstanding not
to exceed $6,910,000 at anytime;
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(h) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided such obligation shall not continue to
exist more than 2 Business Days after the date the applicable Borrower or
Subsidiary of a Borrower receives written notification;
(i) the accrual of interest, the accretion or amortization of
original issue discount and the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms;
(j) Indebtedness arising from agreements for indemnification,
adjustment of purchase price or similar obligations, in each case incurred in
connection with the disposition of any business or assets of Borrowers or any of
the Restricted Subsidiaries; provided that the maximum aggregate liability in
respect of all such Indebtedness shall at no time exceed the gross proceeds
actually received by Borrowers or the applicable Restricted Subsidiary in
connection with such disposition;
(k) Indebtedness issued in exchange for, or the proceeds of which
are substantially contemporaneously used to extend, repay, redeem, discharge,
refinance, renew, replace, or refund (collectively, "Refinance"), Indebtedness
incurred pursuant clause (b) or (g) above, clause (l) below or this clause (k)
(the "Refinancing Indebtedness"); provided, that (i) the principal amount of
such refinancing Indebtedness does not exceed the principal amount of
Indebtedness so Refinanced (plus any required premiums and out-of-pocket
expenses reasonably incurred in connection therewith), (ii) the Refinancing
Indebtedness has a final scheduled maturity that equals or exceeds the final
stated maturity, and a weighted average life to maturity that is equal to or
greater than the weighted average life to maturity, of the Indebtedness being
refinanced, (iii) the Refinancing Indebtedness ranks, in right of payment, no
more favorable to the Obligations or applicable Guaranty, as the case may be,
than the Indebtedness being Refinanced and any subordination terms of the
Refinancing Indebtedness must be at least as favorable to the Lenders as those
in the Indebtedness being refinanced, and (iv) the Refinancing Indebtedness is
not secured by a Lien on any asset that did not so secure the Indebtedness being
refinanced;
(l) Indebtedness (including, without limitation, Acquired Debt) to
acquire one or more Gaming Properties if: (i) no Default or Event of Default
shall have occurred and be continuing at the time of, or would occur after
giving effect on a pro forma basis to such incurrence; (ii) the Interest
Coverage Ratio for Borrowers' most recently ended 4 full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is to be incurred (the "Four Quarter
Reference Period") would have been greater than (x) 1.5 to 1.0 if the last
fiscal quarter in the Four Quarter Reference Period is either the first or
second fiscal quarter of 2004, (y) 1.75 to 1.0 if the last fiscal quarter in the
Four Quarter Reference Period is either in the third or fourth fiscal quarter of
2004 and (z) 2.0 to 1.0 otherwise, in each case determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as set forth
in the definition of Interest Coverage Ratio, as if such additional Indebtedness
had been incurred at the beginning of such 4-quarter period; and (iii) the final
stated maturity of such Indebtedness is after the Maturity Date (except for
Purchase Money Obligations, Capitalized Lease Obligations, or Acquired Debt);
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(m) unsecured Indebtedness not otherwise permitted by clauses (a)
through (l) above in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding pursuant to this clause (m), including all
Refinancing Indebtedness incurred to repay, redeem, discharge, retire, defease,
refund, refinance or replace any Indebtedness incurred pursuant to this clause
(m), not to exceed $10,000,000;
(n) Indebtedness permitted by Section 7.6; and
(o) Indebtedness incurred in connection with a Gaming Property
Financing in an aggregate principal amount not to exceed $15,000,000; provided
that (i) Agent consents in writing prior to the incurrence of such Indebtedness
and (ii) such $15,000,000 amount shall be reduced dollar-for-dollar by the
amount of Acquired Debt secured by the assets of any Gaming Property (unless
such Acquired Debt could have been incurred under, and reduces the amount
available under, clause (c) above).
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (for purposes of this Section, Permitted Liens shall
include Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is refinanced, renewed, or extended under Section 7.1(k)
and so long as the replacement Liens only encumber those assets that secured the
refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Capital Stock; or
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
Notwithstanding the foregoing, nothing in this Section 7.3 shall prohibit
(i) the ability of Restricted Subsidiaries to enter into any merger with another
Restricted Subsidiary, (ii) the ability of a Restricted Subsidiary to enter into
any merger with a Borrower, so long as (A) such Borrower shall survive any such
merger and (B) such Borrower shall assume, in a manner satisfactory to Agent,
the obligations of such Restricted Subsidiary under the Loan Documents to which
such Restricted Subsidiary was a party, (iii) the ability of a Borrower to enter
into any merger with another Borrower, so long as the surviving Borrower shall
assume, in a manner satisfactory to Agent, the obligations of such other
Borrower under the Loan Documents to which such other Borrower was a party and
(iv) the liquidation of Peninsula Gaming Capital Corporation.
7.4 DISPOSAL OF ASSETS.
(a) Make any sale, lease, exchange, or other disposition, in one or
a series of related transactions, of all or any portion of the assets of
Borrowers (other than the sale or other disposition of Equipment that is a
Permitted Disposition) that compose the Ice Harbor Facility or the Racino
Project;
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(b) Make any Asset Sale other than Permitted Dispositions, provided,
however, that an Asset Sale (other than Permitted Dispositions) may be made
(other than an Asset Sale comprised of any assets that compose the Ice Harbor
Facility or the Racino Project) if:
(i) no Default or Event of Default shall have occurred and be
continuing or would result therefrom (other than a Default or Event
of Default arising from an Asset Sale that is a consequence of an
Event of Loss);
(ii) such Borrower or such Restricted Subsidiary, as
applicable, receives consideration of not less than the fair market
value, as of the time of such Asset Sale (as determined by the
Manager of such Borrower or Restricted Subsidiary in good faith), of
the assets that are the subject of such Asset Sale (other than an
Asset Sale that is a consequence of an Event of Loss);
(iii) such Borrower or such Restricted Subsidiary, as
applicable, receives 75% of the consideration for such Asset Sale
(other than an Asset Sale that is a consequence of an Event of Loss)
in the form of either (A) cash or Cash Equivalents or the assumption
by the transferee of liabilities (other than liabilities that, by
their terms, are subordinated to the Obligations) of such Borrower
or such Restricted Subsidiary, as applicable (provided, that
following such Asset Sale there is no further recourse to such
Borrower or its Restricted Subsidiaries with respect to such
liabilities and provided, further, that the 75% limitation set forth
in this clause (b)(iii) of this paragraph shall not apply to any
proposed Asset Sale for which an independent certified accounting
firm has certified to the Managers of the applicable Borrower and
Agent that the after-tax cash portion of the consideration to be
received by such Borrower or such Restricted Subsidiary in such
proposed Asset Sale is equal to or greater than what the net
after-tax cash proceeds would have been had such proposed Asset Sale
complied with the 75% limitation set forth in this clause (b) of
this paragraph) or (B) assets of the type described in Section
7.4(b)(iv)(A);
(iv) within 360 days of such Asset Sale, the Net Proceeds
thereof are (A) invested in assets related to the business of such
Borrower or its Restricted Subsidiaries (which, in the case of a
sale of a Gaming Vessel (as that term is defined in the Indenture)
must be a Gaming Vessel having a fair market value, as determined by
an independent appraisal, at least equal to the fair market value of
the Gaming Vessel being replaced immediately preceding the Asset
Sale), (B) applied to repay Indebtedness under Purchase Money
Obligations secured by the assets sold, (C) applied to repay
Indebtedness under this Agreement and to permanently reduce the
Maximum Revolver Amount by the amount of Indebtedness so repaid, or
(D) any combination of clauses (A), (B), or (C); and
(v) the Net Proceeds of any Asset Sale involving an Event of
Loss are paid over to Agent in conformance with the requirements of
Section 6.8(c) hereof;
(c) Pending the final application of any Net Proceeds of any Asset
Sale in accordance with Section 7.4(b), Borrowers shall apply such Net Proceeds
to the outstanding
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Obligations or retain such Net Proceeds (including, without limitation, for the
purpose of investing such Net Proceeds in Cash Equivalents), in each case, in
accordance with the terms hereof.
7.5 CHANGE NAME. Change any Borrower's or any Subsidiary of a Borrower's
name, FEIN, corporate structure, or identity, or add any new fictitious name;
provided, however, that a Borrower or a Subsidiary of a Borrower may change its
name upon at least 30 days' prior written notice by such Borrower to Agent of
such change and so long as, at the time of such written notification, such
Borrower or such Subsidiary provides any financing statements or fixture filings
necessary to perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except (a) by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent, (b) guarantees constituting Investments
permitted under Section 7.13, (c) guarantees of obligations arising under the
Senior Note Documents by Borrowers and their Restricted Subsidiaries; provided
that (i) any such Restricted Subsidiary shall have guaranteed the Obligations in
accordance with Section 6.19; and (ii) any lien securing such guarantee of the
obligations under the Senior Note Documents shall be subordinate to any lien
securing such guarantee of the Obligations on the terms set forth in the
Intercreditor Agreement, (d) guarantees constituting Indebtedness permitted
under Section 7.1 and (e) guarantees of Subsidiaries of Indebtedness of a
Borrower or Restricted Subsidiary permitted under Section 7.1.
7.7 NATURE OF BUSINESS. Directly or indirectly engage to any material
extent in any line or lines of business activity other than that which, in the
reasonable good faith judgment of the Managers of Borrowers, is a Related
Business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by Section
7.1(k), make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value, any Indebtedness of a Borrower or a Subsidiary
prior to any scheduled principal payment, sinking fund payment or other payment
at the stated maturity thereof; other than (i) the Obligations, (ii) the
obligations secured by the mortgage granted by OED to the seller of the parcels
of Warner Land encumbering such parcels and (iii) the obligations of OED
evidenced by that certain note payable to International Game Technology in the
principal amount outstanding as of December 31, 2003, of $548,940, and
(b) (i) Directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any of the Senior Note Documents in any
manner that would (A) have the effect of (1) increasing principal, interest, fee
or other payment obligations thereunder, (2) adding additional collateral or
other guarantors (other than as contemplated as of the Closing Date), (3)
shortening the maturity or increasing the amortization of the obligations
thereunder, (4) making the covenants, defaults or other provisions thereof more
burdensome, or (5) altering the subordination provisions thereof or (B)
otherwise have a material adverse effect on the interests of the Lender Group or
(ii) directly or indirectly, amend, modify, alter, increase or change any of the
terms or conditions of the Management Agreements, the Fixed Price Contract, the
Lease, the Ice Harbor Parking Agreement or any Governing Documents of a Borrower
or its
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Subsidiary in any manner that would make the covenants, defaults or other
provisions thereof more burdensome on any Borrower or any Guarantor or otherwise
have a material adverse effect on the interests of the Lender Group.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 OPERATION OF DIAMOND JO VESSELS. At any time operate the Diamond Jo
Vessels outside the navigation limits of the insurance carried pursuant to the
Diamond Jo Ship Mortgage.
7.11 RESTRICTED PAYMENTS. Make any Restricted Payment unless:
(a) no Default or Event of Default has occurred and is continuing or
would occur as a consequence thereof, and
(b) immediately after giving effect to such Restricted Payment on a
pro forma basis, the Interest Coverage Ratio for the immediately preceding 4
fiscal quarter period for which internal financial statements have been
delivered to Agent would not have been less than 2.0:1.0, and
(c) such Restricted Payment (the value of any such payment, if other
than cash, being determined in good faith by the Managers of Borrowers and
evidenced by a resolution set forth in a certificate signed by the chief
financial officer of Borrowers delivered to Agent), together with the aggregate
of all other Restricted Payments made after the Closing Date, is less than the
sum of:
(i) 50% of the sum of Combined Net Income plus the Combined
Non-Cash Charges described in clauses (ii) and (iv) of the
definition of Combined Non-Cash Charges of Borrowers and their
Restricted Subsidiaries to the extent deducted in computed Net
Income of the applicable Borrower for the period (taken as one
accounting period) from the beginning of the first full fiscal
quarter immediately following the Closing Date to the end of such
Borrower's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Combined Net Income for such period is a
deficit, 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds (or of the net
cash proceeds received upon the conversion of non-cash proceeds into
cash) received by the applicable Borrower from (x) the issuance or
sale, other than to a Subsidiary, of Equity Interests of such
Borrower (other than Disqualified Capital Stock) and (y) any equity
contribution from a holder of such Borrower's Capital Stock (other
than a Subsidiary), in each case, after the Closing Date and on or
prior to the time of such Restricted Payment, plus
(iii) 100% of the aggregate net cash proceeds (or of the net
cash proceeds received upon the conversion of non-cash proceeds into
cash) received by the applicable Borrower from the issuance or sale,
other than to a Subsidiary, of any convertible or exchangeable debt
security of such Borrower that has been converted or exchanged into
Equity Interests of the applicable Borrower (other
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than Disqualified Capital Stock) pursuant to the terms thereof after
the Closing Date and on or prior to the time of such Restricted
Payment (including any additional net cash proceeds received by such
Borrower upon such conversion or exchange), plus
(iv) the aggregate Return from Unrestricted Subsidiaries after
the Closing Date and on or prior to the time of such Restricted
Payment.
Notwithstanding the foregoing, nothing in this Section will prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would not
have been prohibited by the provisions of this Agreement;
(2) the redemption, purchase, retirement or other acquisition of any
Equity Interests of any Borrower in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary) of,
other Equity Interests of such Borrower (other than Disqualified Capital
Stock);
(3) with respect to each tax year or portion thereof that a Borrower
qualifies as a Flow Through Entity and so long as clause (a) above is
satisfied, the payment of Permitted Tax Distributions (whether paid in
such tax year or portion thereof, or any subsequent tax year); provided,
that (A) prior to the first payment of Permitted Tax Distributions during
any particular calendar year such Borrower provides a certificate signed
by the chief financial officer of such Borrower and an Opinion of Counsel
to the effect that it and each other Flow Through Entity in respect of
which such distributions are being made qualify as Flow Through Entities
for Federal income tax purposes and for the states in respect of which
such distributions are being made for such tax year or portion thereof,
(B) at the time of such distribution, the most recent audited financial
statements of the applicable Borrower for periods including such tax year
or portion thereof provided to Agent provide that such Borrower and each
Subsidiary of the applicable Borrower in respect of which such
distributions are being made was treated as a Flow Through Entity for the
period of such financial statements, and (C) in the case of the portion,
if any, of any Permitted Tax Distribution that is proposed to be
distributed for a particular taxable period or portion thereof, which
portion of such Permitted Tax Distribution is attributable to a Flow
Through Entity that is not a Restricted Subsidiary, such portion of such
proposed Permitted Tax Distribution shall be limited to the Excess Cash
Distribution Amount for Taxes;
(4) distributions or payments to any Excluded Person for or in
respect of (i) tax preparation, accounting, licensure, legal and
administrative fees and expenses, including travel and similar reasonable
expenses, incurred on behalf of Borrowers or their respective Restricted
Subsidiaries or in connection with PGP's ownership of Borrowers or their
respective Restricted Subsidiaries, consistent with industry practice,
(ii) so long as clause (a) above is satisfied, distributions pursuant to,
and in accordance with, the Management Agreements as permitted by the
Management Fees Subordination Agreement, and (iii) so long as clause (a)
above is satisfied, the payment of reasonable and customary directors' or
managers' fees to, and indemnity provided on behalf of, the
88
Managers of PGP, Parent and Borrowers, and reimbursement of customary and
reasonable travel and similar expenses incurred on behalf of Parent or
Borrowers in the ordinary course of business; provided, that the aggregate
amount payable to PGP or any other Excluded Person or Affiliate, excluding
any payments permitted by Section 7.16, pursuant to the Management
Agreements or any employment, consulting or similar agreements or
arrangements for any fiscal year shall not exceed the lesser of (A) 4.00%
of Combined EBITDA for the immediately preceding fiscal year, or (B)
$4,000,000;
(5) so long as clause (a) above is satisfied, (i) the repurchase,
redemption or other retirement or acquisition of Equity Interests of
Borrowers or any Restricted Subsidiary from its employees, members or
managers (or their heirs or estates) or employees, members or managers (or
their heirs or estates) of the Restricted Subsidiaries or (ii) any
dividend, distribution or other payment to PGP to enable PGP to
repurchase, redeem, or otherwise retire or acquire Equity Interests of PGP
from any of its employees, members or managers (or their heirs or estates)
or employees, members or managers (or their heirs or estates) of any of
their respective subsidiaries, in the case of each of the preceding
clauses (i) and (ii) upon the death, disability or termination of
employment or pursuant to the terms of any subscription, stock option,
stockholder or other agreement or plan in effect on the Closing Date in an
aggregate amount pursuant to this clause (5) to all such employees,
members or managers (or their heirs or estates) not to exceed $750,000 in
any twelve month period on and after the Closing Date (provided, however,
that any amounts not used in any such twelve month period may be carried
forward to the next succeeding twelve month period until used);
(6) the redemption and repurchase of any Equity Interests of
Borrowers or any of the Restricted Subsidiaries to the extent required by
any Gaming Authority;
(7) so long as clause (a) above is satisfied, Borrower may redeem,
purchase, retire, or otherwise acquire for value up to $4,000,000 of its
Seller Preferred, plus interest accrued thereon;
(8) so long as clause (a) above is satisfied, any dividend,
distribution or other payment by any of the Restricted Subsidiaries on its
Equity Interests that is paid pro rata to all holders of such Equity
Interests; and
(9) so long as clause (a) above is satisfied and the aggregate
amount of Excess Availability plus cash and Cash Equivalents subject to
satisfactory Control Agreements, after giving effect to each such
Restricted Payment, is at least $10,000,000, Restricted Payments not
otherwise permitted by this Section 7.11 in an aggregate amount during
each fiscal year not to exceed for the fiscal year ending (i) 2004,
$7,500,000, (ii) 2005, $3,750,000 plus the unused portion of the amount
available under clause (9)(i), if any, (iii) 2006, $3,750,000 plus the
unused portion of the available under clause (9)(ii), if any, (iv) 2007,
the unused portion of the amount available under clause (9)(iii), if any,
and (v) 2008, the unused portion of the amount available under clause
(9)(iv), if any.
7.12 ACCOUNTING METHODS. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP) or enter
into, modify, or terminate any agreement currently existing, or at any time
hereafter entered into with any third
89
party accounting firm or service bureau for the preparation or storage of
Borrowers' or their Subsidiaries' accounting records without said accounting
firm or service bureau agreeing to provide Agent information regarding the
Collateral or Borrowers' and their Subsidiaries' financial condition.
7.13 INVESTMENTS. Except for Permitted Investments or for Securities
Accounts, directly or indirectly, make or acquire any Investment, or incur any
liabilities (including contingent obligations) for or in connection with any
Investment; provided, however, that Borrowers and their Restricted Subsidiaries
shall not have Permitted Investments in deposit accounts or Securities Accounts
in excess of $250,000 outstanding at any one time unless such Borrower or
Restricted Subsidiary, as applicable, and the applicable securities intermediary
or bank have entered into Control Agreements or similar arrangements governing
such Permitted Investments, as Agent shall determine in its Permitted
Discretion, to perfect (and further establish) the Agent's Liens in such
Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guaranty with, or for the benefit of, any
Affiliate of Borrowers or any of the Restricted Subsidiaries (each of the
foregoing, an "Affiliate Transaction"), except for:
(a) Except as provided in clause (d) below, Affiliate Transactions
entered into in the ordinary course of business that, together with all related
Affiliate Transactions, have an aggregate value of not more than $1,000,000;
provided, that such transactions are conducted in good faith and on terms that
are no less favorable to such Borrower or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction at such
time by such Borrower or such Restricted Subsidiary on an arm's-length basis
from a Person that is not an Affiliate of such Borrower or such Restricted
Subsidiary;
(b) Except as provided in clause (d) below, Affiliate Transactions
entered into in the ordinary course of business that, together with all related
Affiliate Transactions, have an aggregate value of not more than $5,000,000;
provided, that (i) a majority of the disinterested Managers of such Borrower or,
if none, a disinterested committee appointed by the Managers of such Borrower
for such purpose, determine that such transactions are conducted in good faith
and on terms that are no less favorable to such Borrower or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction at such time by such Borrower or such Restricted Subsidiary on an
arm's-length basis from a Person that is not an Affiliate of such Borrower or
such Restricted Subsidiary and (ii) prior to entering into such transaction the
applicable Borrower shall have delivered to Agent a certificate signed by the
chief financial officer of such Borrower certifying to such effect;
(c) Except as provided in clause (d) below, Affiliate Transactions
entered into in the ordinary course of business for which a Borrower delivers to
Agent an opinion issued by an accounting, appraisal or investment banking firm
of national standing (other than Jefferies & Company, Inc. or any of its
Affiliates) as to the fairness of such transaction to such Borrower or such
Restricted Subsidiary from a financial point of view; or
90
(d) Affiliate Transactions entered into with Jeffries & Co., Inc.;
provided, that (i) a majority of the Managers of such Borrower determine that
such transactions are conducted in good faith and on terms that are no less
favorable to such Borrower or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction at such time by such
Borrower or such Restricted Subsidiary on an arm's-length basis from a Person
that is not an Affiliate of such Borrower or such Restricted Subsidiary, (ii)
such terms are fully disclosed to Agent, and (iii) prior to entering into such
transaction the applicable Borrower shall have delivered to Agent a certificate
signed by the chief financial officer of such Borrower certifying to the
foregoing.
Notwithstanding the foregoing, the following will be deemed not to
be Affiliate Transactions: (i) transactions between or among Borrowers and/or
any or all of the Restricted Subsidiaries, (ii) Restricted Payments permitted by
Section 7.11, (iii) reasonable and customary compensation (including directors'
fees) paid to, and indemnity and customary employee benefit arrangements
(including directors' and officer's liability insurance) provided for the
benefit of, any director, officer, employee or consultant of Borrowers or any
Restricted Subsidiary, or Manager of PGP, in each case entered into in the
ordinary course of business and for services provided to Borrowers, such
Restricted Subsidiary or PGP, respectively, as determined in good faith by the
Managers of the applicable Borrower, (iv) any agreement or arrangement as in
effect on the Closing Date among Borrowers and/or one or more Restricted
Subsidiaries, on the one hand, and any officers or Managers thereof and/or any
Affiliates of such Borrower, on the other hand, as set forth on Schedule 7.14,
as amended, supplemented or otherwise modified with the prior written consent of
Agent, and any transactions contemplated thereby and (v) Permitted Investments.
7.15 SUSPENSION. Suspend or go out of a substantial portion of their
business.
7.16 COMPENSATION. Pay annual fees and meeting fees (a) to M. Brent
Stevens in excess of $175,000 in the aggregate for each Gaming Property in
fiscal year 2004 or increase any such fees paid during any fiscal year
thereafter by more than 15% over such fees paid in the preceding fiscal year and
(b) in any fiscal year to any other director in excess of $100,000 in the
aggregate or, once such fees paid to any such director equal $100,000 in the
aggregate for a fiscal year, increase any such fees paid to such director during
any fiscal year thereafter by more than 15% over such fees paid in the preceding
fiscal year.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term Loan
for any purpose other than (a) on the Closing Date, to (i) repay in full (w)
DJL's obligations under the Loan and Security Agreement dated February 23, 2001
between DJL and Wells Fargo Foothill, (x) OED's obligation under the Loan and
Security Agreement dated June 24, 2003, among OED, OED Capital and Wells Fargo
Foothill, (y) OED and OED Capital's obligations under the Equipment Loan
Agreement and (z) certain other Indebtedness of OED and DJL, and (ii) pay
transactional fees, costs, and expenses incurred in connection with this
Agreement and such refinancings, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, for working capital needs
and capital expenditures of Borrowers consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
WITH BAILEES. Relocate its chief executive office to a new location without such
Borrower
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providing to Agent (a) 5 days' prior written notification thereof and (b) upon
request of Agent, a Collateral Access Agreement with respect to such new
location. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Agent's prior
written consent.
7.19 SECURITIES ACCOUNTS. Except as otherwise permitted by Section 7.13,
establish or maintain any Securities Account unless Agent shall have received a
Control Agreement in respect of such Securities Account. Borrowers agree not to,
and shall not permit any of the Restricted Subsidiaries to, transfer assets out
of any Securities Account; provided, however, that, so long as no Event of
Default has occurred and is continuing or would result therefrom, Borrowers and
the Restricted Subsidiaries may use such assets (and the proceeds thereof) to
the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
(a) MINIMUM COMBINED EBITDA. Fail to maintain an aggregate amount of
Combined EBITDA plus, for the relevant period, the premiums paid in connection
with the April 2004 repurchase of a portion of the notes issued pursuant to the
OED Indenture and the April 2004 redemption of the notes issued pursuant to the
PGC Indenture, measured on a fiscal quarter-end basis, of at least the required
amount set forth in the following table for the period set forth opposite
thereto;
- --------------------------------------------------------------------------------
APPLICABLE AMOUNT PERIOD
================================================================================
$10,000,000 6 fiscal month period ended June 30, 2004
- --------------------------------------------------------------------------------
$20,000,000 9 fiscal month period ended September 30, 2004
- --------------------------------------------------------------------------------
$32,500,000 12 fiscal month period ended December 31, 2004
- --------------------------------------------------------------------------------
$35,000,000 12 fiscal month period ended March 31, 2005, and
each fiscal quarter ended thereafter
- --------------------------------------------------------------------------------
(b) CAPITAL EXPENDITURES. (i) Except as provided in Section
7.20(b)(ii), make capital expenditures (other than capital expenditures incurred
to complete construction of the Racino Project) in any fiscal year in excess of
the amount set forth in the following table for the period set forth opposite
thereto:
- --------------------------------------------------------------------------------
APPLICABLE AMOUNT PERIOD
================================================================================
$7,000,000 Fiscal year 2004
- --------------------------------------------------------------------------------
$6,000,000 plus the Capital Fiscal year 2005 and each fiscal year thereafter
Expenditure Carry Forward
Amount
- --------------------------------------------------------------------------------
(ii) However, in addition to the capital expenditures
permitted by Section 7.20(b)(i), so long as the aggregate amount of
Excess Availability plus cash and Cash Equivalents subject to
satisfactory Control Agreements, after
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giving effect to each such capital expenditure, is at least
$10,000,000, Borrowers may make capital expenditures in the amount
set forth below for the projects described with respect thereto:
(A) $3,000,000 to purchase the building adjacent to the
Ice Harbor Facility currently owned by a third party;
(B) $3,000,000 to develop a recreational vehicle park at
the Racino Project racetrack; and
(C) $7,000,000 to develop an outdoor event venue at the
Racino Project racetrack.
(c) OED EBITDA. OED shall fail to maintain an aggregate amount of
OED EBITDA plus, for the relevant period, the premium paid in connection with
the April 2004 repurchase of a portion of the notes issued pursuant to the OED
Indenture, measured on a fiscal quarter-end basis, of at least the required
amount set forth in the following table for the period set forth opposite
thereto:
- --------------------------------------------------------------------------------
APPLICABLE AMOUNT PERIOD
================================================================================
$4,168,000 4 fiscal month period ended June 30, 2004
- --------------------------------------------------------------------------------
$7,294,000 7 fiscal month period ended September 30, 2004
- --------------------------------------------------------------------------------
$12,504,000 10 fiscal month period ended December 31, 2004
- --------------------------------------------------------------------------------
$20,006,400 12 fiscal month period ended March 31, 2005
- --------------------------------------------------------------------------------
$20,044,800 12 fiscal month period ended June 30, 2005
- --------------------------------------------------------------------------------
$20,083,200 12 fiscal month period ended September 30, 2005
- --------------------------------------------------------------------------------
$20,121,600 12 fiscal month period ended December 31, 2005
- --------------------------------------------------------------------------------
$20,160,000 12 fiscal month period ended March 31, 2006
- --------------------------------------------------------------------------------
7.21 MANAGEMENT AGREEMENTS. Enter into any Management Agreement without
delivering to Agent (a) a subordination agreement, in form and substance
satisfactory to Agent, executed by the parties to such Management Agreement and
(b) a copy of such fully executed Management Agreement.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1. If Borrowers fail to pay (a) Obligations constituting principal when
due and payable, or when declared due and payable, or (b) any other portion of
the Obligations (including interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have
93
accrued on such amounts), fees and charges due the Lender Group, reimbursement
of Lender Group Expenses, or other amounts constituting Obligations) within 3
days of the date such Obligation described in this clause (b) is due and
payable, or when declared due and payable;
8.2. (a) If Borrowers fail or neglect to perform, keep, or observe any
term, provision, condition, covenant, or agreement: (i) contained in Sections
6.2 (Reporting), 6.3 (Financial Statements, Reports, Certificates), 6.7 (Taxes),
6.10 (Compliance with Laws), 6.11 (Leases), 6.12 (Brokerage Commissions), or
6.13 (Existence) of this Agreement and such failure continues for a period of 5
Business Days from the earlier of (A) notice by Agent to Borrowers or (B) the
date Borrowers knew or should have known of its occurrence; or (ii) contained in
Sections 6.1 (Accounting System), 6.6 (Maintenance of Properties), 6.9 (Location
of Inventory and Equipment), or 6.14 (exclusive of clause (d) thereof)
(Environmental) of this Agreement and such failure continues for a period of 15
Business Days from the earlier of (A) notice by Agent to Borrowers or (B) the
date Borrowers knew or should have known of its occurrence; or (b) if Borrowers
or their Subsidiaries or the Guarantors fail or neglect to perform, keep, or
observe any other term, provision, condition, covenant, or agreement contained
in this Agreement or any material term, provision, condition, covenant or
agreement contained in any of the other Loan Documents (giving effect to any
grace periods, cure periods, or required notices, if any, expressly provided for
in such other Loan Documents); in each case, other than any term, provision,
condition, covenant, or agreement that is the subject of another provision of
this Section 8, in which event such other provision of this Section 8 shall
govern;
8.3. If any material portion of any Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4. If an Insolvency Proceeding is commenced by Parent, any other
Guarantor, any Borrower or any of its Subsidiaries;
8.5. If an Insolvency Proceeding is commenced against Parent, any other
Guarantor, any Borrower, or any of its Subsidiaries, and any of the following
events occur: (a) Parent, the applicable Borrower or the Subsidiary consents to
the institution of the Insolvency Proceeding against it, (b) the petition
commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 60 days of
the date of the filing thereof; provided, however, that, during the pendency of
such period, Agent (including any successor agent) and each other member of the
Lender Group shall be relieved of their obligation to extend credit hereunder,
(d) an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Parent, any Borrower or any of its Subsidiaries, or
(e) an order for relief shall have been entered therein;
8.6. If any Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs for a period of 5 consecutive Business
Days;
8.7. If notices of Lien, levy, or assessment in an aggregate amount in
excess of $750,000 are filed of record with respect to any Borrower's or any of
its Subsidiaries' properties or assets by the United States, or any department,
agency, or instrumentality thereof, or by any
94
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien
exceeding the foregoing aggregate limitation, whether choate or otherwise, upon
any Borrower's or any of its Subsidiaries' properties or assets and the same is
not paid before the earlier of 30 days after the date it first arises or 15 days
prior to the date on which such asset is subject to being forfeited;
8.8. If a judgment or judgments for the payment of money (other than
judgments as to which a reputable insurance company has accepted full liability)
is or are entered by a court of competent jurisdiction against any Borrower or
any of its Subsidiaries and such judgment or judgments remain undischarged,
unbonded, or unstayed for a period of 60 days after entry; provided, that the
aggregate amount of all such judgments exceeds $1,000,000;
8.9. If there is a default under any Indebtedness of any Borrower or any
of its Subsidiaries in excess of $1,000,000 and such default (a) occurs at the
final maturity of the obligations thereunder, or (b) results in a right by the
other party thereto, irrespective of whether exercised, to accelerate the
maturity of the applicable Borrower's or its Subsidiaries' obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein;
8.10. If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11. If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
any Borrower, its Subsidiaries, or any officer, employee, agent, or director of
any Borrower or any of its Subsidiaries;
8.12. If the obligation of any Guarantor under any guaranty of the
Obligations or other third Person under any Loan Document is rendered or
declared unenforceable or terminated by operation of law or by such Guarantor or
third Person thereunder;
8.13. If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.14. Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower or any Subsidiary of a Borrower, or a proceeding
shall be commenced by any Borrower or any Subsidiary of a Borrower, or by any
Governmental Authority having jurisdiction over any Borrower or any Subsidiary
of a Borrower, seeking to establish the invalidity or unenforceability thereof,
or any Borrower shall deny that any Borrower or any Subsidiary of a Borrower has
any liability or obligation purported to be created under any Loan Document;
8.15. If there is an "Event of Default" under (and as defined in) the
Indenture; or if there is an event of default under any of the other Senior Note
Documents, the OED Note
95
Documents or any Management Agreement (other than as a result of a restriction
herein or under any other Loan Document);
8.16. If any Governmental Authority (including the Louisiana state
legislature) restricts the ability of any Borrower to operate, or restricts,
limits or prohibits any Borrower from operating, its gaming business as
conducted on the Closing Date or operating the Racino Project or the Ice Harbor
Facility in the manner contemplated on the Closing Date and such restriction
results in a Material Adverse Change;
8.17. If Agent fails to receive evidence of, on or prior to December 31,
2004, the completion of construction of the facility for the conduct of live
horse racing at the Racino Project location and the establishment of a schedule
of live race meetings at the Racino Project location;
8.18. If, for a period of 5 consecutive Business Days, any Borrower fails
to keep in full force and effect, suffers the termination, revocation,
forfeiture, nonrenewal or suspension of, or suffers a material adverse amendment
to, any material Gaming License, franchise, registration, qualification, finding
of suitability or other approval or authorization required to enable such
Borrower to own, operate, or otherwise conduct or manage its gaming businesses,
including the riverboat, dockside or land based gaming activities at Borrower's
Ice Harbor Facility or the gaming activities at the Racino Project, and any
other location where a Borrower conducts such gaming business (other than in
connection with a voluntary surrender of DJL's certificate of inspection to
cruise in exchange for a permit for permanently moored status of dockside
gaming);
8.19. If, for a period of 5 consecutive Business Days, any Governmental
Authority terminates, suspends, amends, revokes, repeals or fails to renew any
law, license, franchise, registration, qualification, finding of suitability or
other approval or authorization required to enable any Borrower or any of its
Subsidiaries to own, operate, or otherwise conduct or manage its gaming
businesses, including the riverboat, dockside or land based gaming activities at
Borrower's Ice Harbor Facility or the gaming activities at the Racino Project,
and any other location where a Borrower conducts such gaming business; or
8.20. If the FF&E Letter of Credit expires or is not renewed at least 30
days prior to its expiry date prior to release by Agent pursuant to Section 4.8
hereof.
9. AGENT'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES.
(a) Upon the occurrence, and during the continuation, of an Event of
Default, the Required Lenders (at their election but without notice of their
election and without demand) may authorize and instruct Agent to do any one or
more of the following on behalf of the Lender Group (and Agent, acting upon the
instructions of the Required Lenders, shall do the same on behalf of the Lender
Group), all of which are authorized by Borrowers:
(i) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
96
(ii) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the
Lender Group;
(iii) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender
Group, but without affecting any of the Agent's Liens in the
Collateral and without affecting the Obligations;
(iv) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Agent considers
advisable, and in such cases, Agent will credit the Loan Account
with only the net amounts received by Agent in payment of such
disputed Accounts after deducting all Lender Group Expenses incurred
or expended in connection therewith;
(v) Cause Borrowers to hold all returned Inventory in trust
for Agent, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said
returned Inventory as the property of Agent;
(vi) Without notice to or demand upon any Borrower, make such
payments and do such acts as Agent considers necessary or reasonable
to protect its security interests in the Collateral. Each Borrower
agrees to assemble the Personal Property Collateral if Agent so
requires, and to make the Personal Property Collateral available to
Agent at a place that Agent may designate which is reasonably
convenient to both parties. Each Borrower authorizes Agent to enter
the premises where the Personal Property Collateral is located, to
take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any
Lien that in Agent's determination appears to conflict with the
Agent's Liens and to pay all expenses incurred in connection
therewith and to charge Borrowers' Loan Account therefor. With
respect to any of Borrowers' owned or leased premises, each Borrower
hereby grants Agent a license to enter into possession of such
premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's rights or remedies provided
herein, at law, in equity, or otherwise;
(vii) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any
collateral in satisfaction of an obligation (within the meaning of
the Code), set off and apply to the Obligations any and all (i)
balances and deposits of any Borrower held by the Lender Group, or
(ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group;
(viii) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group to secure the full
and final repayment of all of the Obligations;
(ix) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Personal
97
Property Collateral. Each Borrower hereby grants to Agent a license
or other right to use, without charge, such Borrower's labels,
patents, copyrights, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature,
as it pertains to the Personal Property Collateral, in completing
production of, advertising for sale, and selling any Personal
Property Collateral and such Borrower's rights under all licenses
and all franchise agreements shall inure to the Lender Group's
benefit;
(x) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such
places (including Borrowers' premises) as Agent determines is
commercially reasonable. It is not necessary that the Personal
Property Collateral be present at any such sale;
(xi) Give notice of the disposition of the Personal Property
Collateral as follows:
(A) Agent shall give Borrowers (for the benefit of the
applicable Borrower) a notice in writing of the time and place
of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of
the Personal Property Collateral, then the time on or after
which the private sale or other disposition is to be made; and
(B) The notice shall be personally delivered or mailed,
postage prepaid, to Borrowers as provided in Section 12, at
least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral
that is perishable or threatens to decline speedily in value
or that is of a type customarily sold on a recognized market;
(xii) On behalf of the Lender Group, credit bid and purchase
at any public sale; and
(xiii) Seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior
notice or a hearing.
(b) The Lender Group shall have all other rights and remedies
available to it at law or in equity or pursuant to any other Loan Documents
(including the right to draw, in full or in part, under the FF&E Letter of
Credit).
(c) Borrowers hereby acknowledge and agree that the notice described
in Section 9.1(a)(xi)(B), when given, shall constitute a reasonable
"authenticated notification of disposition" within the meaning of Section 9-611
of the Uniform Commercial Code, as in effect from time to time in any applicable
jurisdiction.
(d) Agent or any other member of the Lender Group may be a purchaser
of any or all of the Collateral at any public or, to the extent permitted under
the Code, private sale
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in accordance with the Code and Agent, as secured party for and representative
of the Lender Group, shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the Code, to use and
apply any of the Obligations of such Borrower as a credit on account of the
purchase price for any Collateral payable by Agent at such sale. To the extent
provided under the Code or other applicable law, each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of any Borrower and Borrower hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted until payment in full of the Obligations. Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor and by notice to
the applicable Borrower, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Borrower hereby waives any
claims against Agent arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Agent accepts the first
offer received and does not offer such Collateral to more than one offeree. Each
Borrower further agrees that a breach of any of the covenants contained in this
Section 9.1 will cause irreparable injury to Agent, that Agent has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 9.1 shall be specifically enforceable
against such Borrower, and such Borrower hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no default has occurred giving rise to the Obligations
becoming due and payable prior to their stated maturities. Nothing in this
Section 9.1 shall in any way alter the rights of Agent under this Agreement.
(e) Agent may sell the Collateral following the occurrence and
during the continuance of an Event of Default without giving any warranties as
to the Collateral. Agent may specifically disclaim or modify, in its sole
discretion, any warranties of title or the like as to any Collateral. This
procedure will not be considered to adversely affect the commercial
reasonableness of any sale of any of the Collateral. Agent may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral. Leasing and licensing
of Collateral by Agent to third Persons are types of sales permitted hereunder.
(f) If Agent sells any of the Collateral of any Borrower on credit,
the Obligations of such Borrower will be credited only with payments actually
made by the purchaser and received by Agent and applied to the indebtedness of
the purchaser. In the event the purchaser fails to pay for the Collateral, Agent
may resell the Collateral.
(g) Agent shall have no obligation to marshal any of the Collateral.
(h) All amounts and proceeds (including checks and other
instruments) received by any Borrower in respect of amounts due to such Borrower
in respect of the Collateral or any portion thereof following the occurrence and
during the continuance of an Event of Default shall be received in trust for the
benefit of Agent hereunder, shall be segregated from other funds of such
Borrower and shall be forthwith paid over or delivered (subject to the
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Intercreditor Agreement to the extent then in effect) to Agent in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 2.4(b) following the occurrence and during
the continuance of an Event of Default. Upon demand from Agent following the
occurrence and during the continuance of an Event of Default, Borrowers shall
not adjust, settle or compromise the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.
(i) Each Borrower agrees that, upon the occurrence of and during the
continuance of an Event of Default and at Agent's request, such Borrower will,
and will cause each Restricted Subsidiary of such Borrower to (and, by its
execution and delivery of a Subsidiary Guaranty or a joinder thereto, each of
such Borrower's Restricted Subsidiaries agrees to), immediately file such
applications for approval and shall take all other and further actions required
by Agent to obtain such approvals or consents of regulatory authorities as are
necessary to transfer ownership and control to Agent, of the Gaming Licenses
held by it, or its interest in any Person holding any such Gaming License. To
enforce the provisions of this Section 9.1(i), Agent is empowered to request the
appointment of a receiver from any court of competent jurisdiction. Such
receiver shall be instructed to seek from the applicable Gaming Authority an
involuntary transfer of control of any Gaming License for the purpose of seeking
a bona fide purchaser to whom control will ultimately be transferred. Each
Borrower hereby agrees to authorize, and to cause each Restricted Subsidiary of
such Borrower to authorize (and, by its execution and delivery of a Subsidiary
Guaranty or a joinder thereto, each Restricted Subsidiary of such Borrower
agrees to authorize) such an involuntary transfer of control upon the request of
the receiver so appointed and, if any Borrower or any such Restricted Subsidiary
shall refuse to authorize the transfer, its approval may be required by the
court. Upon the occurrence and continuance of an Event of Default, each Borrower
shall further use its reasonable best efforts to assist in obtaining approval of
the applicable Gaming Authority, if required, for any action or transactions
contemplated by this Agreement or the Loan Documents, including, preparation,
execution, and filing with the applicable Gaming Authority of the assignor's or
transferor's portion of any application or applications for consent to the
assignment of any Gaming License or transfer of control necessary or appropriate
under the applicable Gaming Authority's rules and regulations for approval of
the transfer or assignment of any portion of the Collateral, together with any
Gaming License or other authorization. Each Borrower acknowledges that the
assignment or transfer of Gaming Licenses is integral to Agent's realization of
the value of the Collateral, that there is no adequate remedy at law for failure
by any Borrower to comply with the provisions of this Section 9.1(i) and that
such failure would not be adequately compensable in damages, and therefore
agrees that the agreements contained in this Section 9.1(i) may be specifically
enforced;
(j) Any deficiency in the payment of the Obligations that exists
after disposition of the Personal Property Collateral as provided above will be
paid immediately by Borrowers. Any deficiency in the payment of the FF&E
Obligations that exists after disposition of the FF&E Collateral as provided
above will be paid immediately by OED. Any excess that exists after disposition
of the Personal Property Collateral will be returned, without interest and
subject to the rights of third Persons, by Agent to Borrowers; and
(k) In the event Agent elects to commence foreclosure proceeding
under Louisiana law, Agent may cause such Personal Property Collateral, or any
part or parts thereof,
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to be immediately seized and sold, whether in term of court or in vacation,
under ordinary or executory process, in accordance with applicable Louisiana
law, to the highest bidder for cash, with or without appraisement, and without
the necessity of making additional demand upon or notifying Borrowers or any
Person or placing Borrowers or any Person in default, all of which are expressly
waived. For purposes of foreclosure under Louisiana executory process
procedures, each Borrower confesses judgment and acknowledges to be indebted
unto and in favor of Agent up to the full amount of the Obligations, in
principal, interest, costs, expenses, attorneys' fees and other fees and
charges. To the extent permitted under applicable Louisiana law, each Borrower
additionally waives: (a) the benefit of appraisal as provided in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws
with regard to appraisal upon judicial sale; (b) the demand and 3 days' delay as
provided under Articles 2639 and 2721 of the Louisiana Code of Civil Procedure;
(c) the notice of seizure as provided under Articles 2293 and 2721 of the
Louisiana Code of Civil Procedure; (d) the 3 days' delay provided under Articles
2331 and 2722 of the Louisiana Code of Civil Procedure; and (e) all other
benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code of
Civil Procedure and all other articles not specifically mentioned above. Should
it become necessary for Agent to foreclose under this Agreement, all
declarations of fact, which are made under an authentic act before a Notary
Public in the presence of 2 witnesses, by a Person declaring such facts to lie
within his or her knowledge, shall constitute authentic evidence for purposes of
executory process and also for purposes of La. R.S. 9:3509.1, La. R.S.
9:3504(D)(6) and La. R.S. 10:9-629, as applicable. In addition to the foregoing
rights and remedies, Agent may elect to effect the seizure and disposition of
the Personal Property Collateral pursuant to any procedures as may be authorized
by Louisiana law from time to time.
All rights, remedies, and powers provided in this Agreement relative
to the Collateral may be exercised only to the extent that the exercise thereof
does not violate any applicable mandatory provision of the applicable gaming
laws, rules, and regulations enacted by the applicable Gaming Authority (the
"Applicable Gaming Laws") and all provisions of this Agreement relative to the
Collateral are intended to be subject to all applicable mandatory provisions of
the Applicable Gaming Laws and to be limited solely to the extent necessary to
not render the provisions of this Agreement invalid or unenforceable, in whole
or in part. Agent will timely apply for and receive all required approvals of
the applicable Gaming Authority for the sale or other disposition of Gaming
Equipment regulated by Applicable Gaming Laws (including any such sale or
disposition of Gaming Equipment consisting of slot machines, gaming tables,
cards, dice, gaming chips, player tracking systems, and all other "gaming
devices" (as such term or words of like import referring thereto are defined in
the Applicable Gaming Laws), and "associated equipment" (as such term or words
of like import referring thereto are defined in the Applicable Gaming Laws).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
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10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing,
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collectively, the "Indemnified Liabilities"). The foregoing to the contrary
notwithstanding, Borrowers shall have no obligation to any Indemnified Person
under this Section 11.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as such Borrower or Agent, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrowers or to Agent, as the
case may be, at its address set forth below:
If to any Borrower: DIAMOND JO, LLC
c/o Peninsula Gaming Partners, LLC
400 E. Third Street, P.O. Box 1750
Dubuque, Iowa 52004
Attn: Natalie Schramm
Fax No. (563) 690-2190
and
THE OLD EVANGELINE DOWNS, L.L.C.
c/o Peninsula Gaming Partners, LLC
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Attn: M. Brent Stevens
Fax No. (310) 914-6476
with copies to: MAYER, BROWN, ROWE & MAW LLP
1675 Broadway
New York, New York 10019
Attn: Ron Brody, Esq.
Fax No. (212) 262-1910
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If to Agent: WELLS FARGO FOOTHILL, INC.
2450 Colorado Avenue, Suite 3000W
Santa Monica, California 90404
Attn: Business Finance Division Manager
Fax No. (310) 453-7413
with copies to: PAUL, HASTINGS, JANOFSKY &
WALKER, LLP
600 Peachtree Street, NE, Suite 2400
Atlanta, Georgia 30308-2222
Attn: Cindy J. K. Davis, Esq.
Fax No. (404) 815-2424
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK AND EACH SUCH PARTY HERETO HERBY SUBMITS TO THE
JURISDICTION OF EACH SUCH COURT, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
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APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent (provided that
no written consent of Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Transferee), and, so long as no Event
of Default then exists, Borrowers, assign and delegate to one or more assignees
(each an "Assignee") all, or any ratable part of all, of the Obligations, the
Commitments and the other rights and obligations of such Lender hereunder and
under the other Loan Documents, in a minimum amount of $5,000,000 (except that
such minimum amount shall not apply to an Affiliate of a Lender); provided,
however, that Borrowers' consent shall not be unreasonably withheld, conditioned
or delayed; and provided further that that Borrowers and Agent may continue to
deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Borrowers and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Borrowers and
Agent an Assignment and Acceptance in form and substance satisfactory to Agent,
and (iii) the assignor Lender or Assignee has paid to Agent for Agent's separate
account a processing fee in the amount of $5,000. Anything contained herein to
the contrary notwithstanding, the consent of Agent shall not be required and
payments of any fees shall not be required if (x) such assignment is in
connection with any merger, consolidation, sale, transfer, or other disposition
of all or any substantial portion of the business or loan portfolio of such
Lender or (y) the assignee is an Affiliate (other than individual(s)) of a
Lender. Anything contained herein to the contrary notwithstanding, Wells Fargo
Foothill agrees for the benefit of Borrowers that, so long as no Event of
Default has occurred and is continuing, Wells Fargo Foothill shall retain more
than fifty percent (50%) of the Obligations and commitment to make Advances
under Section 2.1 of this Agreement, provided, however, that, the minimum
retention of Obligations and commitment to make Advances shall not be applicable
if such assignment is in connection with any merger, consolidation, sale,
transfer, or other disposition of all or any substantial portion of the business
or loan portfolio of Wells Fargo Foothill.
105
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Borrowers) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall affect a novation between
Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitments allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of such Lender (a "Participant") participating interests in its
Obligations, the Commitments, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this
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Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral, the FF&E Letter of Credit or guaranties
(except to the extent expressly provided herein or in any of the Loan Documents)
supporting the Obligations hereunder in which such Participant is participating,
(D) postpone the payment of, or reduce the amount of, the interest or fees
payable to such Participant through such Lender, or (E) change the amount or due
dates of scheduled principal repayments or prepayments or premiums, and (v) all
amounts payable by Borrowers hereunder shall be determined as if such Lender had
not sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collateral, the FF&E Letter of Credit or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(h) Subject to the last sentence of this Section 14.1(h), Agent
shall maintain, or cause to be maintained, a register (the "Register") on which
it enters the name of a Lender as the registered owner of each Advance, as the
case may be, held by such Lender. A Registered Loan (and the Registered Note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Subject to the last sentence of this Section
14.1(h), any assignment
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or sale of all or part of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by registration of such assignment or
sale on the Register, together with the surrender of the Registered Note, if
any, evidencing the same duly endorsed by (or accompanied by a written
instrument of assignment or sale duly executed by) the holder of such Registered
Note, whereupon, at the request of the designated assignee(s) or transferee(s),
one or more new Registered Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s). Prior to the registration
of an assignment or sale of any Registered Loan (and the Registered Note, if
any, evidencing the same), Borrowers, Agent and the Lenders shall treat the
Person in whose name such Registered Loan (and the Registered Note, if any,
evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary. In the case of an assignment or delegation covered by
Section 14.1(a)(y), the assigning Lender shall maintain a register comparable to
the Register on behalf of Agent.
(i) In the event that a Lender sells participations in a Registered
Loan, such Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the "Participant Register"). A
Registered Loan (and the Registered Note, if any, evidencing the same) may be
participated in whole or in part only by registration of such participation on
the Participant Register (and each Registered Note shall expressly so provide).
Any participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
Notwithstanding the foregoing, to the extent required by applicable law,
(a) each Assignee or Participant shall be an "Institutional Lender" (as defined
in La. R.S. 27:3 (13)) or otherwise suitable to the Louisiana Regulatory
Authorities, and (b) each assignment or participation pursuant to this Section
14.1 shall be subject to the provisions of La. R.S. 42:2507 et seq., La. R.S.
27:27 and page 2 of the "Conditions for Approval" for OED set forth by the
Louisiana State Racing Commission on December 19, 2002, including, without
limitation, the notice requirements thereof.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. Each Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrowers and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or
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consent shall, unless in writing and signed by all the Lenders affected thereby
and Borrowers and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12 or
release the FF&E Letter of Credit other than as permitted by Section 4.8,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower from any obligation for the payment of
money, or
(j) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent or Swing Lender, affect the rights or
duties of Agent or Swing Lender, as applicable, under this Agreement or any
other Loan Document. The foregoing notwithstanding, any amendment, modification,
waiver, consent, termination, or release of, or with respect to, any provision
of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the
rights or obligations of Borrowers, shall not require consent by or the
agreement of Borrowers.
Notwithstanding the foregoing, to the extent required by applicable law,
amendments pursuant to this Section 15.1 shall be subject to the consent and/or
approval of the relevant Gaming Authorities.
15.2 REPLACEMENT OF HOLDOUT LENDER.
If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days' prior irrevocable notice
to the Holdout Lender, may permanently replace the Holdout Lender with one or
more substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender
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shall have not right to refuse to be replaced hereunder. Such notice to replace
the Holdout Lender shall specify an effective date for such replacement, which
date shall not be later than 15 Business Days after the date such notice is
given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
and appoints Wells Fargo Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Wells
Fargo Foothill is merely the representative of the Lenders, and only has the
contractual duties set forth herein. Except as expressly otherwise provided in
this Agreement,
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Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, the Lenders agree that Agent shall have
the right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrowers and their Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of the Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management accounts as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the FF&E Letter of Credit, the Collections of
Borrowers and their Subsidiaries or otherwise related to any of same as provided
in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by
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it to be genuine and correct and to have been signed, sent, or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to Borrowers or counsel to any Lender), independent
accountants and other experts selected by Agent. Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other Loan
Document unless Agent shall first receive such advice or concurrence of the
Lenders as it deems appropriate and until such instructions are received, Agent
shall act, or refrain from acting, as it deems advisable. If Agent so requests,
it shall first be indemnified to its reasonable satisfaction by the Lenders
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Lenders
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other
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condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or the
Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrowers and their Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to the Lenders. In the event Agent is not reimbursed for such costs and
expenses from the Collections of Borrowers and their Subsidiaries received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Wells Fargo Foothill and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrowers and
their Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though Wells Fargo Foothill were not Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Wells Fargo Foothill or its Affiliates may receive
information regarding Borrowers or their Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include Wells Fargo
Foothill in its individual capacity.
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16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days' notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Borrowers:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
or (III) a controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN,
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before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or any Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, a properly
completed IRS Form W-8BEN before the first payment of any interest
under this Agreement and at any other time reasonably requested by
Agent or any Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, 2 properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or any Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
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(e) All payments made by Borrowers hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
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 (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of Lender
participating in the transactions set forth herein) and all interest, penalties
or similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, each Borrower
agrees 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, including any amount paid pursuant to this Section 16.11 after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided, however, that Borrowers shall not be
required to increase any such amounts payable to Agent or any Lender (i) that is
not organized under the laws of the United States if such Person fails to comply
with the other requirements of this Section 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Borrowers will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by Borrowers.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if each Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which no Borrower or its Subsidiaries owned any interest at the time the
Agent's Lien was granted or at any time thereafter, or (iv) constituting
property leased to a Borrower or its Subsidiaries under a lease that has expired
or is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or any Borrower at any
time, the Lenders will confirm in writing Agent's authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of Borrowers in respect of)
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all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY THE LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's
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Liens in assets which, in accordance with Article 9 of the Code can be perfected
only by possession. Should any Lender obtain possession of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver such Collateral to Agent or in accordance with Agent's
instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY THE LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
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however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Borrowers of any request by any court,
governmental or administrative agency, or pursuant to any subpoena or other
legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Borrowers the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrowers, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrowers a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
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17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrowers, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Agent, any Lender or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or any Guarantor or the transfer to
Agent or any Lender of any property should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers and Guarantors automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
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17.8 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 COMBINED ADMINISTRATION. Each Borrower hereby irrevocably authorizes
Agent to rely on any notices, information or instructions given by any Borrower
hereunder purportedly on behalf of all Borrowers. It is understood that the
handling of the Loan Account and Collateral of Borrowers in a combined fashion,
as more fully set forth herein, is done solely as an accommodation to Borrowers
in order to utilize the collective borrowing powers of Borrowers in the most
efficient and economical manner and at their request, and that Lender Group
shall not incur liability to any Borrower as a result hereof. Each Borrower
expects to derive benefit, directly or indirectly, from the handling of the Loan
Account and the Collateral in a combined fashion since the successful operation
of each Borrower is dependent on the continued successful performance of the
integrated group. To induce the Lender Group to do so, and in consideration
thereof, each Borrower hereby jointly and severally agrees to indemnify each
member of the Lender Group and hold each member of the Lender Group harmless
against any and all liability, expense, loss or claim of damage or injury, made
against the Lender Group by any Borrower or by any third party whosoever,
arising from or incurred by reason of (a) the handling of the Loan Account and
Collateral of Borrowers as herein provided, (b) the Lender Group's relying on
any instructions of any Borrower, or (c) any other action taken by the Lender
Group hereunder or under the other Loan Documents, except that Borrowers will
have no liability to the relevant Agent Related Person or Lender-Related Person
under this Section 17.9 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
DIAMOND JO, LLC., a Delaware limited
liability company
By: /s/ Natalie A. Schramm
---------------------------------------
Title: Chief Financial Officer
THE OLD EVANGELINE DOWNS, L.L.C.,
a Louisiana limited liability company
By: /s/ Natalie A. Schramm
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Title: Chief Financial Officer
WELLS FARGO FOOTHILL, INC., a California
corporation, as Agent and as Lender
By: /s/ Todd R. Nakamoto
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Title: Vice President
HIGHBRIDGE/ZWIRN SPECIAL
OPPORTUNITIES FUND, L.P., as a Lender
By: Highbridge/Zwirn Partners, LLC, its
general partner
By: /s/ Perry A. Gruss
---------------------------------------
Title: Chief Financial Officer