Keep-Well Agreement
KEEP-WELL AGREEMENT
THIS KEEP-WELL AGREEMENT (this "Agreement"), dated as of February 26, 1998
is made by LONDON CLUBS INTERNATIONAL PLC, a company registered in England and
Wales under company number 2862479 ("LCI"), ALADDIN BAZAAR HOLDINGS, LLC, a
Nevada limited liability company ("ABH") and ALADDIN HOLDINGS, LLC, a Delaware
limited liability company ("AHL"; AHL, ABH and LCI are individually called a
"Sponsor" and collectively called the "Sponsors"), in favor of each of the
Administrative Agent and the Lenders and their respective successors,
transferees and assigns.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of even date herewith
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "Credit Agreement"), among Aladdin Gaming, LLC, a
Nevada limited liability company (the "Borrower"), the various lending
institutions (individually a "Lender" and collectively the "Lenders") as are, or
may from time to time become, parties thereto and The Bank of Nova Scotia as
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for the Lenders, Merrill Lynch Capital Corporation
as the syndication agent (together with any successor thereto in such capacity,
the "Syndication Agent") and CIBC Oppenheimer Corp. as the documentation agent
(together with any successor thereto in such capacity, the "Documentation
Agent") the Lenders have extended Commitments to make Loans to the Borrower and
to issue Letters of Credit for the account of the Borrower; and
WHEREAS, as a condition precedent to the effectiveness of the Credit
Agreement, the Sponsors are required to execute and deliver this Agreement and
certain subsidiaries of LCI (the "Subsidiary Guarantors") have agreed to fully
and unconditionally guarantee the payment of LCI's obligations under this
Agreement pursuant to a guaranty agreement of even date herewith (the
"Subsidiary Guaranty"); and
WHEREAS, the Sponsors have duly authorized the execution, delivery and
performance of this Agreement and the Subsidiary Guarantors have duly authorized
the execution, delivery and performance of the Subsidiary Guaranty; and
WHEREAS, it is in the best interests of the Sponsors to execute this
Agreement and the Subsidiary Guarantors to execute the Subsidiary Guaranty
inasmuch as the Sponsors and the Subsidiary Guarantors will derive substantial
direct and indirect benefits from the Loans made to the Borrower by the Lenders
pursuant to the Credit Agreement and the Letters of Credit issued for the
account of the Borrower under the Credit Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Loans to the
Borrower and to issue Letters of Credit for the account of the Borrower pursuant
to the Credit Agreement, the Sponsors agree, for the benefit of the
Administrative Agent, the Syndication Agent and each Lender, as follows:
1. Definitions. Terms defined in the Credit Agreement and not otherwise
defined in this Agreement shall have the meanings ascribed to them in the
Credit Agreement. For the purposes of Section 12(g) and Section 13 hereof,
the terms set forth on Schedule 2 hereto shall have the meanings ascribed
thereto on such Schedule. As used in this Agreement, the following terms
shall have the meanings respectively set forth after each:
"Accelerated Payment Amount" shall mean, as of any date, an amount equal
to the sum of (a) the product of (i) $7,500,000 times (ii) the number of
scheduled quarterly amortization payments remaining under the Credit
Agreement (which have not been paid by or on behalf of the Borrower) plus
(b) any accrued and unpaid amounts owed by the Sponsors under the
provisions of Sections 2 and 3 hereof; provided that at no time shall the
Accelerated Payment Amount exceed the lesser of (x) the outstanding
Obligations at such time of the Borrower under the Credit Agreement and
(y) $150,000,000 plus amounts owed under clause (b) above minus the
product of (A) $7,500,000 times (B) the number of complete calendar
quarters that have elapsed since the Keep-Well Reduction Date.
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"Bankruptcy Code" shall mean Title 11 of the United States Code as amended
from time to time.
"Cash Equity Contributions" shall mean cash contributions by the Sponsors
to the Borrower in exchange for preferred interests of Holdings.
"Consolidated Intangibles": at a particular date, all assets of a Sponsor
and its consolidated Subsidiaries, determined on a consolidated basis,
that would, in conformity with GAAP, be classified as intangible assets,
including, without limitation, unamortized debt discount and expense,
unamortized organization and reorganization expense, costs in excess of
the fair market value of acquired companies, patents, trade or service
marks, franchises, trade names, goodwill and, from and after June 30,
1997, the amount of all write-ups in the book value of assets resulting
from any revaluation thereof.
"Consolidated Tangible Assets": at a particular date, the amount equal to
(a) the amount which would be included as assets on the consolidated
balance sheet of a Sponsor and its consolidated Subsidiaries as at such
date in accordance with GAAP minus (b) Consolidated Intangibles.
"Dormant Subsidiary" means any Subsidiary of a Sponsor which has no
operating assets or property and conducts no business.
"Environmental Laws" means any and all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or the release
of any materials into the environment, including but not limited to those
related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
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"Existing Senior Debt" shall mean all principal, premium (if any),
interest and other amounts owing from time to time under (i) the Note
Agreements and (ii) the Facilities Agreement, in either case as amended,
supplemented or refinanced, from time to time, provided that the aggregate
principal amount of the Note Agreements and the Facilities Agreement shall
not be greater than the sum of (A) the maximum aggregate principal amount
which could be outstanding under the Facilities Agreement and the Note
Agreements in accordance with their terms as at the date hereof plus (B)
25% of Consolidated Net Assets of LCI; provided further, that the
aggregate principal amount of the Existing Senior Debt in excess of the
maximum aggregate principal amount which could be outstanding under the
Facilities Agreement and the Note Agreements in accordance with their
terms as at the date hereof shall be excluded from the parenthetical
phrase of Section 14(b) hereof.
"Facilities Agreement" shall mean that certain (pound)65,000,000
Facilities Agreement (originally dated 24th May 1994 as amended and
restated) among, inter alia, LCI, various banks and National Westminster
PLC (the predecessor-in-interest to The Bank of Nova Scotia) as arranger
and agent, as in effect on the date hereof and as the same may be modified
by amendments that would not, in the aggregate, have the effect of making
LCI's obligations thereunder materially more onerous (it being understood
and agreed that any amendment, supplement or modification (i) that
increases the amount of the obligations of LCI thereunder, (ii) that would
permit the lenders thereunder to declare a default if LCI made any Cash
Equity Contribution required of the Sponsors hereunder or (iii) that would
permit the lenders thereunder to declare a default if LCI made net
payments (net of all reimbursements from the other Sponsors) of not more
than 25% of any Accelerated Payment Amount required of the Sponsors
hereunder, shall be deemed material).
"GAAP" shall mean the generally accepted accounting principles as in
effect from time to time in the United Kingdom with respect to LCI and in
the United States with respect to the other Sponsors, as the case may be.
"Insolvency Proceeding" shall mean any case or proceeding, voluntary or
involuntary, under the Bankruptcy Code, or any similar existing or future
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law of any jurisdiction, foreign, state or federal, relating to
bankruptcy, insolvency, reorganization or relief of debtors.
"Keep-Well Reduction Date" shall mean the date which is six calendar
quarters after the Conversion Date.
"Keep-Well Termination Date" shall mean the earliest of (i) the day on
which full and indefeasible payment of the Obligations of the Borrower
under the Credit Agreement has been made to reduce the Commitments of the
Lenders thereunder to $145,000,000 or less, (ii) the last day of the
period of six consecutive fiscal quarters from and after the Conversion
Date during which the Borrower shall have satisfied each of the financial
covenants set forth in the Credit Agreement (without giving effect to any
payments to or investments by the Sponsors in or for the benefit of the
Borrower), (iii) the date on which both of the following shall have been
satisfied: (a) construction of the Aladdin Hotel and Casino and renovation
of the Theatre has been completed in accordance with all terms of the
Credit Agreement and (b) the Commitments and the aggregate outstanding
principal amount of the Obligations under the Credit Agreement shall have
been reduced to an amount not in excess of the amount specified for such
date on Schedule 1 hereto, (iv) the date on which the Sponsors shall have
made full payment of the Accelerated Payment Amount described under
Section 4 below or (v) in the case of LCI only, the date on which it shall
have made full payment of the Accelerated Payment Amount described under
Section 13 below.
"LSE" means the London Stock Exchange Limited.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of a
Sponsor and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial conditions, assets or properties
of a Sponsor and its Subsidiaries taken as a whole, or (b) the ability of
a Sponsor to perform its obligations under this Agreement or (c) the
validity or enforceability of this Agreement.
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"Material Subsidiary" shall mean each of the Subsidiaries of LCI that are
party to that certain Subsidiary Guaranty dated as of June 30, 1997
guaranteeing the obligations of LCI under the Note Agreements. Each
Material Subsidiary of LCI as of the date hereof is listed on Schedule 3
hereof.
"Minimum Fixed Charge Coverage Ratio" shall have the meaning ascribed
thereto in the Credit Agreement.
"Note Agreements" shall mean the several identical Note Purchase
Agreements dated as of June 30, 1997 among LCI and the purchasers named
therein relating to LCI's $50,000,000 aggregate principal amount of 7.74%
Guaranteed Senior Notes due 2004 and as the same may be modified by
amendments that would not, in the aggregate, have the effect of making
LCI's obligations thereunder materially more onerous (it being understood
and agreed that any amendment, supplement or modification (i) that
increases the amount of the obligations of LCI thereunder, (ii) that would
permit the lenders thereunder to declare a default if LCI made any Cash
Equity Contribution required of the Sponsors hereunder or (iii) that would
permit the lenders thereunder to declare a default if LCI made net
payments (net of all reimbursements from the other Sponsors) of not more
than 25% of any Accelerated Payment Amount required of the Sponsors
hereunder, shall be deemed material).
"Wholly-Owned Subsidiary"shall mean, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or
more of the Sponsors and such Sponsor's Wholly-Owned Subsidiaries at such
time.
2. Keep-Well Agreement. From and after the Conversion Date through, but
terminating on, the Keep-Well Termination Date, whether before or after
the commencement of any Insolvency Proceeding, if the Borrower fails to
comply with the Minimum Fixed Charge Coverage Ratio specified therefor in
Section 7.2.4(e) of the Credit Agreement as of the end of any fiscal
quarter, the Sponsors shall make or cause to be made Cash Equity
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Contributions to the Borrower in an amount which, when added to the
Borrower's EBITDA for the four quarter period ending on the last day of
such fiscal quarter, will result in the Borrower being in compliance with
the Minimum Fixed Charge Coverage Ratio. The Sponsors shall make the Cash
Equity Contributions required hereby not later than ten (10) Business Days
following the earlier of the date on which the Borrower delivers the
quarterly financial statements of the Borrower and its Subsidiaries to the
Administrative Agent pursuant to Section 7.1.1 of the Credit Agreement or
the date such statements are required to be delivered pursuant to said
Section.
Notwithstanding the foregoing provisions of this Section 2, in no event
shall the aggregate Cash Equity Contributions required to be made by the
Sponsors under this Section 2 in any fiscal year of the Borrower exceed
$30,000,000. The $30,000,000 annual limitation on Cash Equity Contributions
shall not apply to, or in any way limit, any obligation of the Sponsors to pay
the Accelerated Payment Amount.
Cash Equity Contributions made under the Completion Guaranty will not
count for purposes of this Agreement, and vice versa.
The obligations of the Sponsors under this Section 2 and under Sections 3
and 4 below are joint and several.
3. Payment Provisions. All payments required to be made by the Sponsors
pursuant to Section 2 shall be made subject to the following terms:
(a) The Sponsors shall make cash payments in the amounts calculated
under Section 2 into an interest-bearing deposit account designated
and controlled exclusively by the Administrative Agent (the "Deposit
Account") in which the Administrative Agent is hereby granted a
security interest for the benefit of the Lenders. The Deposit
Account is intended to be a "deposit account" for the purposes of
Nevada Revised Statutes ("NRS") 40.430.4(g) and Section 9301(g) of
the California Uniform Commercial Code. Such funds shall be held in
the Deposit Account as additional collateral for the Obligations
under the
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Credit Agreement and the other Loan Documents; provided that, if
requested by the Borrower, such funds (i) shall be applied to
payment of the Obligations and/or (ii) shall be applied, with the
approval of the Required Lenders (which shall not be unreasonably
withheld), to the payment of such other obligations of the Borrower
incurred in the ordinary course for the acquisition of goods or
services which have enhanced or maintained the value of the
collateral covered by the Loan Documents.
(b) The cash payments into the Deposit Account and the funds therein
shall be free and clear of any third party claims thereto, including
any claims by the Borrower as a third party beneficiary under this
Agreement. The Sponsors and the Administrative Agent on behalf of
the Lenders specifically agree that the Borrower is not an intended
third party beneficiary to this Agreement and that the Borrower nor
any other Person which is not party to this Agreement (other than
successors and assigns of the Lenders, the Administrative Agent, the
Documentation Agent and the Syndication Agent) has no rights under
this Agreement.
(c) If, notwithstanding Section 3(a) or 3(b) above, the Borrower asserts
(in an Insolvency Proceeding or otherwise) that it holds the right
under this Agreement to have Cash Equity Contributions made to it
directly or that funds in the Deposit Account deposited pursuant to
Section 3(a) are not collateral solely for the Obligations under the
Credit Agreement, then this Agreement shall automatically become a
continuing unconditional guaranty by the Sponsors of the full and
timely payment when due of the Obligations under the Credit
Agreement to the extent and in the amount of the (i) Cash Equity
Contributions that the Borrower asserts should have been or should
be paid to it directly or (ii) funds in the Deposit Account to the
extent that the Borrower asserts that such funds are not collateral
solely for the Obligations under the Credit Agreement, as the case
may be.
4. Payment Provisions in the Event of Acceleration. In the event that the
Obligations of the Borrower under the Credit Agreement shall be
accelerated
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pursuant to the provisions of Section 8.2 or 8.3 thereof, the Sponsors
guarantee and agree to pay the Accelerated Payment Amount to the
Administrative Agent for the benefit of the Lenders not later than forty
(40) days following the date of such acceleration. Subject to the
provisions of Section 10 hereof, upon the receipt by the Administrative
Agent of full and indefeasible payment of the Accelerated Payment Amount,
the obligations of the Sponsors under this Agreement shall terminate. The
Accelerated Payment Amount shall be applied by the Administrative Agent to
the payment of the Borrower's Obligations under the Credit Agreement.
5. Proof of Damages. If the Sponsors shall at any time or from time to time
fail to perform or comply with any of their obligations contained herein
and if for any reason the Lenders have failed to receive when due and
payable (whether at stated maturity, by acceleration, or otherwise) the
payment of all or any part of principal or interest or any other amount
payable by the Borrower under the Credit Agreement, then in each such case
(i) it shall be assumed conclusively without necessity of proof that such
failure by the Sponsors was the sole and direct cause of the Lenders
failing to receive such payment when due ( to the extent of the failure of
the Sponsors to perform their obligations contained herein) irrespective
of any other contributing or intervening cause whatsoever, and (ii) the
Sponsors further irrevocably waive to the fullest extent permitted by law
any right or defense the Sponsors may have to cause the Lenders to prove
the cause or amount of such damages or to mitigate the same.
6. Rights of the Administrative Agent. Each Sponsor authorizes the
Administrative Agent on behalf of the Lenders to perform any or all of the
following acts at any time in their sole discretion, all without notice to
the Sponsors and without affecting the Sponsors' obligations under this
Agreement:
(a) The Administrative Agent and the Lenders may alter any terms of the
Loan Documents to which the Sponsors are not a party, including
renewing, compromising, extending, enforcing or accelerating, or
otherwise changing the time for payment of, or increasing or
decreasing the rate of interest on, the Loans or any part of them or
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increasing or decreasing the amount of the Loans or any other fees
payable under the Loan Documents.
(b) The Administrative Agent and the Lenders may take and hold security
for the Loans, the Letters of Credit and the Borrower's other
obligations under the Credit Agreement, the Guarantors' obligations
under the Completion Guaranty and this Agreement, accept additional
or substituted security for either, and subordinate, exchange,
enforce, waive, release, compromise, fail to perfect and sell or
otherwise dispose of any such security.
(c) The Administrative Agent and the Lenders may direct the order and
manner of any sale of all or any part of any security now or later
to be held for the Loans, the Letters of Credit, this Agreement or
any of the other Loan Documents, and may also bid at any such sale.
(d) The Administrative Agent and the Lenders may apply any payments or
recoveries from the Borrower, any Sponsor, any Guarantor or any
other source, and any proceeds of any security, to the Borrower's
obligations under the Loan Documents and/or the Guarantors'
obligations under the Completion Guaranty in such manner, order and
priority as they may elect, whether or not those obligations are
supported by this Agreement or secured at the time of the
application.
(e) The Administrative Agent and the Lenders may release the Borrower of
its liability for the Obligations under the Credit Agreement or any
portion thereof.
(f) The Administrative Agent and the Lenders may substitute, add or
release any one or more Guarantors or endorsers.
(g) In addition to the Obligations under the Credit Agreement, the
Administrative Agent and the Lenders may extend other credit to the
Borrower, its Affiliates and any of the Sponsors or their respective
Affiliates and may take and hold security for the credit so
extended, all without affecting the Sponsors' liability under this
Agreement.
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(h) The Administrative Agent and the Lenders may change the terms or
conditions of disbursement of the Loans or the issuance of the
Letters of Credit.
(i) The Administrative Agent and the Lenders may advance additional
funds to the Borrower for any purpose.
7. Agreement to be Absolute. The Sponsors expressly agree that for as long as
the Credit Agreement remains in effect or any of the Obligations under the
Credit Agreement remain outstanding, the Sponsors shall not be released
from their obligations hereunder by or because of:
(a) Any act or event which might otherwise discharge, reduce, limit or
modify the Sponsors' obligations under this Agreement;
(b) Any waiver, extension, modification, forbearance, delay or other act
or omission of the Administrative Agent or the Lenders, or any
failure to proceed promptly or otherwise as against the Borrower,
any Sponsor, any Guarantor or any security;
(c) Any action, omission or circumstance which might increase the
likelihood that the Sponsors may be called upon to perform under
this Agreement or which might affect the rights or remedies of the
Sponsors as against the Borrower or any Guarantor; or
(d) Any dealings occurring at any time between the Borrower, the
Guarantors, the Administrative Agent, the Syndication Agent, the
Documentation Agent or any Lender, whether relating to the Loans,
the Letters of Credit or otherwise.
The Sponsors hereby expressly waive and surrender any defense to their
liability under this Agreement based upon any of the foregoing acts,
omissions, agreements, waivers or matters. It is the purpose and intent of
this Agreement that the obligations of the Sponsors under it shall be
absolute and unconditional under any and all circumstances.
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8. Sponsors' Waivers. The Sponsors waive:
(a) All statutes of limitations as a defense to any action or proceeding
brought against the Sponsors by the Administrative Agent or any
Lender, to the fullest extent permitted by law;
(b) Any right they may have to require the Administrative Agent or the
Lenders to proceed against the Borrower or any of the Guarantors,
proceed against or exhaust any security held from the Borrower or
any of the Guarantors, or pursue any other remedy in their power to
pursue;
(c) Any defense based on any claim that the Sponsors' obligations exceed
or are more burdensome than those of the Borrower;
(d) Any defense based on: (i) any legal disability of the Borrower, (ii)
any release, discharge, modification, impairment or limitation of
the liability of the Borrower and/or the Guarantors under the Loan
Documents from any cause, whether consented to by the Administrative
Agent or any Lender or arising by operation of law or from any
Insolvency Proceeding, (iii) any rejection or disaffirmance of the
Loans or any security held for the Loans, in any Insolvency
Proceeding and (iv) the Sponsors' rights under NRS 104.3605, the
Sponsors specifically agreeing that this clause (iv) shall
constitute a waiver of discharge under NRS 104.3605;
(e) Any defense based on any action taken or omitted (other than gross
negligence or willful misconduct) by the Administrative Agent or any
Lender in any Insolvency Proceeding involving the Borrower or any of
the Guarantors, including any election to have a claim allowed as
being secured, partially secured or unsecured, any extension of
credit by the Administrative Agent or any Lender to the Borrower in
any Insolvency Proceeding, and the taking and holding by the
Administrative Agent or any Lender of any security for any such
extension of credit;
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(f) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor,
notices of acceptance of this Agreement and of the existence,
creation, or incurring of new or additional indebtedness, and
demands and notices of every kind;
(g) Any defense based on or arising out of any defense that the Borrower
may have to the payment or performance of the Obligations under the
Credit Agreement or any portion of such Obligations; and
(h) Any defense or benefit based on NRS 40.430 and judicial decisions
relating thereto and NRS 40.451 et seq. and judicial decisions
relating thereto, the Sponsors agreeing that the waiver in this
paragraph (h) is intended to take advantage of the two (2) waivers
permitted by NRS 40.495 (1) and (2) to the maximum extent permitted.
9. Waivers of Subrogation and Other Rights.
(a) Upon the occurrence of any Event of Default, the Administrative
Agent in its sole discretion, without prior notice to or consent of
the Sponsors, may elect to: (i) foreclose either judicially or
nonjudicially against any real or personal property security for the
Obligations under the Loan Documents, (ii) accept a transfer of any
such security in lieu of foreclosure, (iii) compromise or adjust the
Loans or any part thereof or any of the Letters of Credit or make
any other accommodation with the Borrower or any Guarantor, or (iv)
exercise any other remedy against the Borrower, any Guarantor or any
security. No such action by the Administrative Agent or any Lender
shall release or limit the liability of the Sponsors, who shall
remain liable under this Agreement after the action, even if the
effect of the action is to deprive the Sponsors of any subrogation
rights, rights of indemnity, or other rights to collect
reimbursement from the Borrower for any sums paid to the
Administrative Agent or the Lenders, whether contractual or arising
by operation of law or otherwise. The Sponsors expressly waive any
defenses or benefits that may be derived from NRS Section 40.451, et
seq. and judicial decisions relating thereto, or comparable
provisions
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of Nevada law which are comparable to California Civil Procedure
ss.ss. 580a, 580b, 580d, or 726 or comparable provisions of the laws
of any other jurisdiction, and all other suretyship defenses they
otherwise might or would have under Nevada law or other applicable
law. The Sponsors expressly agree that under no circumstances shall
they be deemed to have any right, title, interest or claim in or to
any real or personal property to be held by the Administrative Agent
or any Lender or any third party after any foreclosure or transfer
in lieu of foreclosure of any security for the Obligations under the
Credit Agreement.
(b) Regardless of whether the Sponsors may have made any payments to the
Administrative Agent or any Lender, the Sponsors hereby waive: (i)
all rights of subrogation, all rights of indemnity, and any other
rights to collect reimbursement from the Borrower for any sums paid
to the Administrative Agent or any Lender, whether contractual or
arising by operation of law (including the Bankruptcy Code) or
otherwise, (ii) all rights to enforce any remedy that the
Administrative Agent or any Lender may have against the Borrower or
any other Person, and (iii) all rights to participate in any
security now or later to be held by the Administrative Agent or any
Lender for the Obligations under the Credit Agreement. The waivers
given in this Section 9(b) shall be effective until the Loans and
all other Obligations under the Credit Agreement have been
indefeasibly paid and performed in full and all Commitments have
been terminated.
(c) The Sponsors understand and acknowledge that if the Administrative
Agent or any Lender forecloses judicially or nonjudicially against
any real property security for the Obligations under the Loan
Documents, that foreclosure could impair or destroy any ability that
the Sponsors may have to seek reimbursement, contribution or
indemnification from the Borrower or others based on any right the
Sponsors may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by the Sponsors under this
Agreement. The Sponsors further understand and acknowledge that in
the absence of this Section 9, such potential impairment or
destruction of the
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Sponsors' rights, if any, may entitle the Sponsors to assert a
defense to this Agreement. By executing this Agreement, the Sponsors
freely, irrevocably and unconditionally: (i) waive and relinquish
that defense and agree that the Sponsors will be fully liable under
this Agreement even though the Administrative Agent of the Lenders
may foreclose judicially or nonjudicially against any real property
security for the Obligations under the Loan Documents; (ii) agree
that the Sponsors will not assert that defense in any action or
proceeding which the Administrative Agent or the Lenders may
commence to enforce this Agreement; and (iii) acknowledge and agree
that the Administrative Agent and the Lenders are relying on this
waiver in making the Loans and issuing the Letters of Credit, and
that this waiver is a material part of the consideration which they
are receiving for making the Loans and issuing the Letters of
Credit.
10. Revival and Reinstatement. If the Lenders are required to pay, return or
restore to the Borrower or any other person any amounts previously paid on
the Loans or the Letters of Credit because of any Insolvency Proceeding of
the Borrower, any stop notice or any other reason, to the extent that the
source of such payment was a Cash Equity Contribution from the Sponsors or
the payment of the Accelerated Payment Amount by the Sponsors pursuant to
this Agreement, the obligations of the Sponsors shall be reinstated and
revived and the rights of the Administrative Agent and the Lenders shall
continue with regard to such amounts, as though they had never been paid.
11. Representations and Warranties. Each Sponsor hereby represents and
warrants unto the Administrative Agent and each Lender as follows:
(a) The most recent audited consolidated balance sheet of such Sponsor
and its consolidated Subsidiaries (in the case of AHL, as of
December 31, 1996, in the case of LCI, as of March 30, 1997 and in
the case of ABH, as of December 31, 1997 and the related
consolidated statements of earnings and stockholders' equity (or
profit and loss in the case of LCI) and of cash flows for the fiscal
year ended on such date, reported on by such Sponsor's independent
public
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accountants, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly (or give a true
and fair view of in the case of LCI) the consolidated financial
condition of such Sponsor and its consolidated Subsidiaries as at
such date, and the results of their operations (or consolidated
profit and loss in the case of LCI) and their consolidated cash
flows for the fiscal year then ended. The unaudited consolidated
balance sheet of such Sponsor and its consolidated Subsidiaries as
at September 30, 1997 and the related unaudited consolidated
statements of earnings and of cash flows for the nine-month period
(or, in the case of LCI, six month period) ended on such date,
certified by an Authorized Representative of such Sponsor, are
complete and correct and present fairly (or give a true and fair
view of in the case of LCI) the consolidated financial condition of
such Sponsor and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated
cash flows for the nine-month period (or, in the case of LCI,
six-month period) then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as
approved by such accountants or Authorized Representative, as the
case may be, and as disclosed therein).
(b) Since December 31, 1996, in the case of AHL, since March 30, 1997,
in the case of LCI, and since December 31, 1997, in the case of ABH,
there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
(c) Each of such Sponsor and its Subsidiaries (a) is duly organized,
and, to the extent applicable, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) to
the extent applicable, is duly qualified as a foreign corporation or
company and in good standing under the laws of each jurisdiction
where its ownership, lease
16
or operation of property or the conduct of its business requires
such qualification and (d) is in compliance with all material
Requirements of Law except where failure to comply with any of the
foregoing could not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
(d) Each of such Sponsors has the corporate power and authority, and the
legal right, to make, deliver and perform this Agreement and to
provide the undertakings hereunder and has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. No consent or authorization of,
filing with or other act by or in respect of, any Governmental
Instrumentality or any other Person is required to be obtained or
made, as the case may be, by such Sponsor in connection with this
Agreement or with the execution, delivery, performance, validity or
enforceability of this Agreement by or against such Sponsor, except
as has been obtained and remains in full force and effect on the
date hereof. This Agreement has been duly executed and delivered on
behalf of such Sponsor. This Agreement constitutes a legal, valid
and binding obligation of such Sponsor enforceable against it in
accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement
is sought by proceedings in equity or at law).
(e) Each Subsidiary Guarantor has the corporate power and authority, and
the legal right, to make, deliver and perform the Subsidiary
Guaranty and to provide the undertakings thereunder and has taken
all necessary corporate action to authorize the execution, delivery
and performance of the Subsidiary Guaranty. No consent or
authorization of, filing with or other act by or in respect of, any
Governmental Instrumentality or any other Person is required to be
obtained or made, as the case may be, by such Subsidiary Guarantor
in connection with the Subsidiary Guaranty or with the execution,
delivery, performance, validity or enforceability of the Subsidiary
Guaranty by or against such Subsidiary Guarantor, except as has been
obtained and remains
17
in full force and effect on the date hereof. The Subsidiary Guaranty
has been duly executed and delivered on behalf of each Subsidiary
Guarantor. The Subsidiary Guaranty constitutes a legal, valid and
binding obligation of each Subsidiary Guarantor enforceable against
it in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(f) The execution, delivery and performance of this Agreement by the
Sponsors and the execution, delivery and performance by the
Subsidiary Guarantors of the Subsidiary Guaranty will not (i)
violate any Legal Requirement or contractual obligations of such
Sponsor or Subsidiary Guarantor, (ii) result in, or require, the
creation or imposition of any Lien on any of its properties or
revenues pursuant to any such Legal Requirement or contractual
obligations or (iii) conflict with or result in a breach of any of
the terms, conditions or provisions of any order, judgment, decree
or ruling of any court, arbitrator or Governmental Instrumentality
applicable to such Sponsor or Subsidiary Guarantor.
(g) Schedule 4 contains (except as noted therein) complete and correct
lists of each Sponsor's Subsidiaries (other than Dormant
Subsidiaries), showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of
shares of each class of its capital stock or similar equity
interests outstanding owned by each Sponsor and each other
Subsidiary of such Sponsor. All of the outstanding shares of capital
stock or similar equity interests of each Subsidiary shown in
Schedule 4 as being owned by a Sponsor and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned
by such Sponsor or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 4). Each Subsidiary
identified in Schedule 4 is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is duly qualified
18
as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, assets, debt service
capacity, property or financial condition, operations or prospects
of such Subsidiary. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it
purports to own or hold under lease and to transact the business it
transacts and proposes to transact. No Subsidiary identified in
Schedule 4 is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary
to pay dividends out of profits or make any other similar
distributions of profits to its Sponsor parent or any of such
Sponsor's Subsidiaries that owns outstanding shares of capital stock
or similar equity interests of such Subsidiary.
(h) Except as disclosed in Schedule 5 there are no actions, suits or
proceedings pending or, to the knowledge of any Sponsor, threatened
against or affecting such Sponsor or any Subsidiary or any property
of such Sponsor or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental
Instrumentality that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. Neither
any Sponsor nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Instrumentality or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Instrumentality,
which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
19
(i) Except as disclosed in Schedule 5-A, each Sponsor and its
Subsidiaries have filed all material tax returns that are required
to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due
and payable and before they have become delinquent, except for any
taxes and assessments (i) the non-payment of which could not
reasonably be expected to have a Material Adverse Effect or (ii) the
amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect
to which such Sponsor or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. Each Sponsor
knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of each Sponsor and its
Subsidiaries in respect of governmental or other taxes for all
fiscal periods are adequate.
(j) Each Sponsor and its Subsidiaries have adequate and appropriate
insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-insurance and
self- insurance) to the extent this is customary in the case of
entities of established reputations engaged in the same or a similar
business and similarly situated, except where the failure to so
maintain insurance, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(k) Each Sponsor and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate
are Material, including all such properties reflected in the most
recent audited balance sheet referred to in clause (a) hereof or
purported to have been acquired by such Sponsor or any Subsidiary
after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement. All leases that individually or in the
aggregate are
20
Material are valid and subsisting and are in full force and effect
in all material respects.
(l) Except as disclosed in Schedule 6,
(i) each Sponsor and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto,
that individually or in the aggregate are Material, without
known conflict with the rights of others;
(ii) to the best knowledge of each Sponsor, no product or such
Sponsor infringes in any material respect on any license,
permit, franchise, authorization, patent, copyright, service
mark, trademark, trade name or other right owned by any other
Person; and
(iii) to the best knowledge of each Sponsor, there is no Material
violation by any Person of any right of such Sponsor or any of
its Subsidiaries with respect to any patent, copyright,
service mark, trademark, trade name or other right owned or
used by such Sponsor or any of its Subsidiaries.
(m) Except as described therein, Schedule 7 sets forth a complete and
correct list of all outstanding Indebtedness of each Sponsor and its
Subsidiaries as of September 30, 1997, since which date there has
been no Material changes in the amounts, interest rates, sinking
funds, installment payments or maturities of the Indebtedness of
such Sponsor or its Subsidiaries. Neither any Sponsor nor any
Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any
Indebtedness of such Sponsor or such Subsidiary and no event or
condition exists with respect to any Indebtedness of any Sponsor or
any Subsidiary in an aggregate principal amount in excess of
$1,500,000 that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable
21
before its stated maturity or before its regularly scheduled dates
of payment. Except as disclosed in Schedule 7, neither any Sponsor
nor any Subsidiary has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to
a Lien not permitted by Section 14(a).
(n) Neither any Sponsor nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, or the Federal
Power Act, as amended.
(o) Neither any Sponsor nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and no proceeding has been
instituted raising any claim against such Sponsor or any of its
Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
(p) Each Sponsor's ownership interest in the Borrower as of the date
hereof is set forth on Schedule 8.
(q) LCI has delivered to the Administrative Agent true, correct and
complete copies of all material documents, instruments, opinions and
certificates with respect to the Existing Senior Debt.
12. Affirmative Covenants. Until the Keep-Well Termination Date, each Sponsor
agrees as follows:
(a) LCI shall furnish to the Administrative Agent the documentation
required to be delivered pursuant to Section 12.1(i) and (ii)(a),
(b), (c), (d) and (e) of the LCI Facilities Agreement, or the
comparable provisions of any facilities agreement executed in
substitution of, or as a replacement of, the LCI Facilities
Agreement.
22
(b) AHL and ABH shall furnish to the Administrative Agent:
(i) as soon as available, but in any event within 120 days after
the end of each fiscal year of such Sponsor, a copy of the
consolidated and consolidating balance sheet of such Sponsor
and its consolidated Subsidiaries as at the end of such year
and the related consolidated and consolidating statements of
earnings and stockholders' equity and of cash flows for such
year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by an independent
certified public accountants of nationally recognized
standing; and
(ii) as soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly periods of
each fiscal year of such Sponsor, (A) the unaudited
consolidated and consolidating balance sheet of such Sponsor
and its consolidated Subsidiaries as at the end of such
quarter and in comparative form the figures for the end of the
previous fiscal year, (B) the unaudited consolidated and
consolidating statement of earnings of such Sponsor and its
consolidated Subsidiaries for such quarter and the portion of
the fiscal year through the end of such quarter, and in
comparative form the figures for the previous year and (C) the
consolidated and consolidating statement of cash flows of such
Sponsor and its consolidated Subsidiaries for the portion of
the fiscal year through the end of such quarter, and in
comparative form the figures for the previous year, certified
by an Authorized Representative of such Sponsor as being
fairly stated in all material respects when considered in
relation to the consolidated and consolidating financial
statements of such Sponsor and its consolidated Subsidiaries
(subject to normal year-end audit adjustments);
23
all such financial statements to be complete and correct in
all material respects and to be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods (except
as approved by such accountants or officer, as the case may
be, and disclosed therein).
(c) LCI shall furnish to the Administrative Agent, concurrently with the
delivery of the financial statements described in clause (a) above,
a certificate of a Authorized Representative of LCI showing in
reasonable detail the calculations demonstrating compliance with
Section 12(g) of this Agreement for the fiscal period ending on such
date. Each Sponsor shall furnish to the Administrative Agent within
thirty days after the same are sent, copies of all financial
statements and reports which such Sponsor sends to its stockholders,
and within thirty days after the same are filed, copies of all
financial statements and reports which such Sponsor may make to, or
file with, the LSE, the Securities and Exchange Commission or any
successor or analogous Governmental Instrumentality. Each Sponsor
shall furnish to the Administrative Agent with reasonable
promptness, such additional financial and other information as the
Administrative Agent, on behalf of any Lender, may from time to time
reasonably request.
(d) Each Sponsor shall keep true and correct books of records and
account in conformity with GAAP and all Requirements of Law; and
permit the Administrative Agent:
(i) No Event of Default -- if no Event of Default then exists,
at the expense of such Administrative Agent and upon reasonable
prior notice to such Sponsor, to visit the principal executive
office of such Sponsor and to discuss the affairs, finances and
accounts of such Sponsor and its Subsidiaries with such Sponsor's
officers, all at such reasonable times and as often as may be
reasonably requested in writing; and
24
(ii) Event of Default -- if an Event of Default then exists,
at the expense of such Sponsor to visit and inspect any of the
offices of properties of such Sponsor or any Subsidiary, to examine
their respective books and records and to make copies and extracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public
accountants, all at such reasonable times and as often as may be
requested.
A Sponsor shall not be under any obligation under this Agreement to
provide information pursuant to the last sentence of Section 12(c)
or pursuant to this Section 12(d) if (i) disclosure of such
information, on the written advice of such Sponsor's counsel
provided to such Sponsor, would be prohibited by law or by decree of
any Governmental Instrumentality or arbitral body or by the terms of
any obligation of confidentiality contained in any agreement binding
upon such Sponsor and not entered into in contemplation of this
Section 12(d) or (ii) such information relates to the identity or
personal details of any of the customers or clients of LCI or any of
its Subsidiaries.
In addition, LCI shall not be under any obligation under this
Agreement to provide information pursuant to the last sentence of
Section 12(c) or pursuant to Section 12(d) if LCI has been advised
in writing by an investment or merchant bank in London, that the
requested disclosure to the Administrative Agent or any Lender would
require LCI to make public disclosure of such information to comply
with its continuing obligations under the rules of the LSE or would
otherwise be prohibited by such rules. If the Administrative Agent
shall contest such written advice from the investment or merchant
bank by itself providing advice in writing to the contrary from an
investment or merchant bank in London, then LCI will obtain advice
in writing from a senior official of the LSE as to whether the
requested disclosure would require LCI to make public disclosure of
such information to comply with any of such obligations or would
otherwise be prohibited as aforesaid. Before seeking such advice
from the LSE (either directly or through its listing sponsor), LCI
will
25
consult with the Administrative Agent and submit to the LSE such
factual submissions and other representations that the
Administrative Agent may provide to LCI for such purpose. The
written advice of such senior official shall be conclusive as to the
disclosure in question.
(e) Each Sponsor shall promptly give notice to the Administrative Agent
(which shall promptly transmit such notice to each Lender) of:
(i) any breach by such Sponsor of any of its obligations hereunder
or with respect to Existing Senior Debt;
(ii) any (a) default or event of default under any contractual
obligation of such Sponsor or any of its Subsidiaries or (b)
litigation, investigation or proceeding which may exist at any
time between such Sponsor or any of its Subsidiaries and any
Governmental Instrumentality, which in either case, if not
cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(iii) any material litigation or proceeding affecting such Sponsor
or any of its Subsidiaries; and
(iv) any development or other event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this clause (e) shall be accompanied by a
statement of a Authorized Representative of such Sponsor setting
forth details of the occurrence referred to therein and stating what
action such Sponsor or any of its Subsidiaries propose to take with
respect thereto.
(f) LCI shall, in the aggregate, continue to own, directly or through
one or more wholly-owned Subsidiaries, free of any Lien other than
Liens in favor of the Administrative Agent and the Lenders, the same
aggregate percentage of the capital stock of the Borrower as set
forth on Schedule 8 hereof, subject to adjustment as provided in
clause (k)
26
of the definition of the term "Change in Control" in the Credit
Agreement.
(g) LCI covenants and agrees that
(i) the ratio of Group Operating Profit to Net Interest Payable in
respect of each 12 month period ending on the last day of each
financial year and financial half year of the Group shall not
be less than 2.5:1;
(ii) the ratio of Consolidated Net Borrowings to Consolidated Net
Worth shall not at any time exceed 1.5:1; and
(iii) Consolidated Net Worth shall at all times be greater than
(pound)95,000,000,
and that the finance director of LCI for the time being shall
certify compliance or, as the case may be, non-compliance by LCI and
the Group with each of the provisions referred to in paragraphs (i),
(ii) and (iii) above at the same time as LCI shall furnish to the
Administrative Agent the financial statements referred to in Section
12(a) provided that following receipt of any such certificate the
Administrative Agent may in its absolute discretion require LCI to
instruct its auditors for the time being to certify compliance or,
as the case may be, non-compliance by LCI and the Group with each of
the provisions referred to in paragraphs (i), (ii) and (iii) above
and further that in the event of any changes in any of the
accounting principles and bases upon which any of such financial
statements are prepared, the financial covenants set out in this
sub-clause shall be adjusted or otherwise amended so as to ensure
that or, as nearly as possible that, following such changes the
obligations, limitations and restrictions contained in such
covenants shall, mutatis mutandis, have the same effect as if such
changes had not been made and that the Administrative Agent shall be
provided with all appropriate information and details that it may
request in connection with such adjustments or amendments.
27
(h) Each Sponsor will cause each of its Subsidiaries to comply with all
laws, ordinances or governmental rules or regulations to which each
of them is subject, including, without limitation, Environmental
Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such
laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(i) Each Sponsor will and will cause each of its Subsidiaries to
maintain, with institutions it reasonably believes to be financially
sound insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance if adequate reserves
are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or similar
business and similarly situated.
(j) Each Sponsor will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their
respective properties in reasonably good repair, working order and
condition (other than ordinary wear and tear), so that the business
carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent a Sponsor from
discontinuing the operation and maintenance of or the liquidation of
any Dormant Subsidiary and shall not prevent a Sponsor or any
Subsidiary from discontinuing the operation and the maintenance of
any of its properties if such discontinuance is desirable in the
conduct of its business and such Sponsor has concluded that such
discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
28
(k) Each Sponsor will and will cause each of its Subsidiaries to file
all material tax returns required to be filed in any jurisdiction
and to pay and discharge all taxes, assessments, governmental
charges, or levies shown to be due and payable on such returns and
all other taxes imposed on them or any of their properties, assets,
income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and
all claims for which sums have become due and payable that have or
might become a Lien on properties or assets of such Sponsor or any
Subsidiary, provided that neither a Sponsor nor any Subsidiary need
to pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by such Sponsor or
such Subsidiary on a timely basis in good faith in appropriate
proceedings and such Sponsor or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of
such Sponsor or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
(l) Each Sponsor will at all times preserve and keep in full force and
effect its corporate or other existence. Except as allowed under the
Note Agreements, each Sponsor will at all times preserve and keep in
full force and effect the corporate or other existence of each of
its Subsidiaries (other than Dormant Subsidiaries or unless merged
into such Sponsor or a Subsidiary) and all licenses, consents,
certificates and authorizations of such Sponsor and its Subsidiaries
unless, in the good faith judgment of such Sponsor, the termination
of or failure to preserve and keep in full force and effect such
corporate or other existence, licenses, consents, certificates and
authorizations could not, individually or in the aggregate, have a
Material Adverse Effect.
(m) Each Sponsor will, and will cause each of its Subsidiaries to, keep
proper books of record and account in accordance with GAAP as
applied in the jurisdiction of its incorporation as such Sponsor may
deem appropriate from time to time.
29
(n) Neither any Sponsor nor any Subsidiary will engage in any business
if, as a result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by such Sponsor
and its Subsidiaries would be materially changed from the general
nature of the business engaged in by such Sponsor and its
Subsidiaries as of the date hereof.
(o) Promptly upon the determination that any Subsidiary of LCI has
become a Material Subsidiary, LCI shall cause such Subsidiary to
execute and deliver a joinder agreement for the Subsidiary Guaranty
pursuant to which such Subsidiary shall become a party thereto and
Subsidiary Guarantor thereunder.
13. Consequences of Specified Events. If at any time prior to the Keep-Well
Termination Date (each of the following, a "Specified Event"),
(a) LCI shall at any time fail to comply with the covenants set forth in
Sections 12(f), 12(g), 12(o) or 14 hereof and to the extent such
non-compliance is capable of being cured, such non-compliance shall
not have been cured within twenty-five (25) days; or
(b) any borrowed money for a sum in excess of (pound)2,500,000 or the
equivalent thereof in any other currency of LCI or any Material
Subsidiary shall by reason of breach or default become due and
payable prior to its stated maturity or due date therefor or if any
such borrowed money is not paid at the maturity thereof or due date
therefor (or within any originally stated applicable grace period
therefor) or, if payable on demand, is not paid on demand; or
(c) LCI or any Material Subsidiary becomes insolvent or applies for or
consents to or suffers the appointment of a liquidator, receiver,
administrative receiver, administrator, guardian, encumbrancer,
trustee in bankruptcy or similar official of the whole or any
substantial part of its respective assets, business, property,
revenues or undertaking (other than in any of such cases (except for
the appointment of any administrator) for the purposes of a solvent
reconstruction or
30
amalgamation the terms of which have previously been approved by the
Required Lenders) LCI or any Material Subsidiary takes any
proceedings under any law for adjustment, deferment or rescheduling
of its Indebtedness or any part thereof or makes or enters or any
proposal is made to make or enter into a general assignment or
arrangement (including, without limitation, any voluntary
arrangement under part I of the Insolvency Act 1986) or composition
with or for the benefit of its creditors or a moratorium shall be
declared on any of its Indebtedness or any part thereof or any
creditor of LCI or any Material Subsidiary exercises a contractual
right to take over the financial management of LCI or any Material
Subsidiary or LCI or any Material Subsidiary is deemed or shall
become unable to pay its debts as defined in Section 123 Insolvency
Act 1986 or LCI or any Material Subsidiary fails generally to pay
its debts as and when they fall due or if the equivalent of any of
the foregoing shall occur in relation to LCI or any Material
Subsidiary under the laws of any jurisdiction to which it or any of
its rights, property or assets are subject; or
(d) a petition is presented (but only if such petition remains
undischarged 90 days after presentation thereof) or a meeting is
convened or an order is made or resolution is passed for or other
action or proceedings or steps are taken with a view to the
appointment of an administrator, winding-up, liquidation or
dissolution of LCI or any Material Subsidiary or if the equivalent
of any of the foregoing shall occur in relation to LCI or any
Material Subsidiary under the laws of any jurisdiction to which it
or any of its rights, property or assets are subject (other than in
any of such cases (except for the appointment of any administrator)
for the purposes of the winding up of a dormant member of the Group
or a solvent reconstruction or amalgamation, in each case the terms
of which have previously been approved by the Required Lenders), or
LCI or any Material Subsidiary stops or threatens to stop payments
generally or ceases or threatens to cease to carry on its business
or a substantial part thereof or LCI or any Material Subsidiary
merges, consolidates or amalgamates with or into
31
any other company, corporation or entity in a transaction not
otherwise permitted under the Facilities Agreement; or
(e) a distress, execution or other legal process is levied against any
of the assets of LCI or any Material Subsidiary and is not
discharged or paid out within 90 days, except where such distress,
execution or other legal process is in the reasonable opinion of the
Required Lenders being contested in good faith by LCI or the
relevant Material Subsidiary or any analogous proceedings shall be
commenced against LCI or any Material Subsidiary or its assets under
the laws of any other jurisdiction; or
(f) an encumbrancer takes possession or a receiver or an administrative
receiver is appointed of the whole or any substantial part of the
assets or undertaking of LCI or any Material Subsidiary or any
analogous action shall be taken against LCI or any Material
Subsidiary or its assets or undertaking under the laws of any
jurisdiction;
then, not later than five (5) days after such Specified Event, LCI shall
pay the Accelerated Payment Amount to the Administrative Agent for the
benefit of the Lenders. The Accelerated Payment Amount shall be applied by
the Administrative Agent to the payment of the Borrower's Obligations
under the Credit Agreement.
14. Negative Covenants. At all times prior to the Keep-Well Termination Date,
(a) Each Sponsor will not, and will not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or
with respect to any property or asset except:
(i) Liens securing Existing Senior Debt;
(ii) any Lien arising by operation of law which secures amounts not
more than 45 days overdue or, if so overdue, are being
32
contested on a timely basis in good faith and in appropriate
proceedings;
(iii) any Lien imposed on a Sponsor or any of its Subsidiaries in
relation to its purchase of goods, products or supplies in the
ordinary course of business;
(iv) any rights of set-off in the normal course of trading or of
any bank or financial institution or combination of accounts
arising in favor of such bank or financial institution as a
result of the day-to-day operation of banking arrangements,
including without limitation, rights of set-off granted to
such bank or financial institution in respect of the issuance
of letters of credit, or as a result of any currency or
interest rate hedging operations carried out in the ordinary
course of business, in each case, provided that there is no
agreement to confer a security interest;
(v) statutory Liens of landlords, Liens over goods or documents of
title arising in the ordinary course of documentary credit
transactions and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens, in each case, incurred in
the ordinary course of business;
(vi) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or the payment of which is
not at the time required by Note Agreements;
(vii) Liens incurred or deposits made in the ordinary course of
business (A) in connection with workers' compensation,
unemployment insurance and other types of social security or
retirement benefits, or (B) to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory
obligations, surety bonds, appeal bonds, bids, leases (other
than capital leases), performance bonds, purchase,
construction or sales contracts and other similar obligations,
in each case not incurred or made in connection with the
borrowing of money, the obtaining of advances or credit or the
payment of the deferred purchase price of property;
33
(viii) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or
encumbrances, in each case incidental to, and not interfering
with, the ordinary conduct of business of a Sponsor and its
Subsidiaries, provided that such Liens do not, in the
aggregate, materially detract from the value of such property;
(ix) any Lien renewing, extending or refunding any Lien permitted
by clause (i), provided that (A) the principal amount of
Indebtedness secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the
maturity thereof reduced, (B) such Lien is not extended to any
other property and (C) immediately after such extension,
renewal or refunding no Specified Event would exist;
(x) any Lien securing the obligations of LCI under this Agreement,
the Credit Facility and the obligations of any Subsidiary
Guarantor under any Subsidiary Guarantee;
(xi) any Lien not otherwise permitted by clauses (i) through (x)
above, provided that on the date any Indebtedness secured by
any such Lien, is created, incurred, assumed or guaranteed by
such Sponsor or any Subsidiary, and immediately after giving
effect thereto and to the concurrent retirement of any other
Indebtedness, the sum of (A) the aggregate principal amount of
all Indebtedness secured by Liens pursuant to this clause (xi)
plus (B) all unsecured Indebtedness of such Sponsor and its
Subsidiaries (excluding any unsecured Existing Senior Debt)
that is senior in any respect in right of payment to the
obligations of such Sponsor hereunder, does not exceed 25% of
the Consolidated Tangible Assets of such Sponsor as of such
date; and
(xii) any Lien set forth on Schedule 3, in the case of ABH.
(b) Each Sponsor will not, and will not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or suffer to exist
any secured or unsecured Indebtedness that is senior in any respect
in right
34
of payment to the obligations of such Sponsor hereunder (excluding
(A) any Indebtedness secured by Liens pursuant to clauses (i)
through (x) of Section 14(a) hereof and (B) any unsecured Existing
Senior Debt but including any Indebtedness secured by Liens pursuant
to clause (xi) of Section 14(a) hereof) if the aggregate amount of
all such senior Indebtedness described in this clause (b) would
exceed 25% of the Consolidated Tangible Assets of such Sponsor as of
such date.
(c) In the case of ABH and AHL only, declare, pay or make any dividend
or distribution (in cash, property or obligations) on any shares of
any class of interests (now or hereafter outstanding) of such
Sponsor or on any warrants, options or other rights with respect to
any interests in any class of interests (now or hereafter
outstanding) of such Sponsor (other than dividends or distributions
payable in its common interests or warrants to purchase its common
interests or splitups or reclassifications of its interests into
additional or other interests) or apply, or permit any of its
Subsidiaries to apply, any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of, or agree
or permit any of its Subsidiaries to purchase or redeem, any shares
of any class of interests (now or hereafter outstanding) of such
Sponsor, or warrants, options or other rights with respect to any
shares of any class of interests (now or hereafter outstanding) of
such Sponsor.
15. Payments Free and Clear of Taxes, etc. Each Sponsor hereby agrees that:
(a) All payments by such Sponsor hereunder to the Borrower or to a
Lender shall be made free and clear of and without deduction for any
present or future income, excise, stamp or franchise taxes and other
taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise
taxes and taxes imposed on or measured by any Lender's net income or
receipts (such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to be made
by a Sponsor hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then such Sponsor will
35
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Borrower or such Lender an official
receipt or other documentation satisfactory to the Borrower or
such Lender evidencing such payment to such authority; and
(iii) pay to the Borrower or such Lender such additional amount or
amounts ("Additional Amounts") as is necessary to ensure that
the net amount actually received by the Borrower or such
Lender will equal the full amount the Borrower or such Lender
would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Borrower or
any such Lender with respect to any payment received by the Borrower
or such Lender hereunder, the Borrower or such Lender may pay such
Taxes and the Sponsor will promptly pay such Additional Amounts
(including any penalties, interest or expenses ) as is necessary in
order that the net amount received by the Borrower or such Lender
after the payment of such Taxes (including any Taxes on such
Additional Amounts) shall equal the amount the Borrower or such
Lender would have received had not such Taxes been asserted.
Upon the request of any Sponsor, each Lender that is organized under
the laws of a jurisdiction other than the United States or a State
thereof (for purposes of this paragraph (k), a "Non-U.S. Lender")
shall, prior to the date on which any payment is made hereunder (or
in the case of a Lender that becomes a party to the Credit Agreement
pursuant to Section 4.11 of the Credit Agreement or any Assignee
Lender, before it becomes a party hereto) (i) execute and deliver to
each Sponsor and the Administrative Agent one or more (as the
Sponsors or the Administrative Agent may reasonably request) United
States Internal Revenue Service Forms 4224 or Forms 1001 or such
other forms or documents (or successor forms or documents),
appropriately completed, certifying in each case that such Lender or
Assignee Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income
taxes,
36
and an applicable Internal Revenue Service Form W-8 or Form W-9 or
successor applicable form (if required by law), as the case may be,
to establish an exemption from United States backup withholding tax
or (ii) if such Non-U.S. Lender is not a "bank" or other person
described in Section 881 (c) (3) of the Code and cannot deliver
either Form 4224 or Form 1001 pursuant to clause (a) above, execute
and deliver to each Sponsor and the Administrative Agent one or more
(as the Sponsors or the Administrative Agent may reasonably request)
copies of the Tax Certificate, Form W-8 (or any successor form) and
any other certificate or statement of exemption required under the
Code or Treasury Regulations issued thereunder, appropriately
completed, certifying that such Lender or Assignee Lender is
entitled to receive payments under this Agreement without deduction
or withholding of United States federal income tax and establishing
an exemption from United States backup withholding tax. All Lenders
other than Non-U.S. Lenders shall, prior to the date on which any
payment is made hereunder (or in the case of a Lender that becomes a
party to the Credit Agreement pursuant to Section 4.11 of the Credit
Agreement or is an Assignee Lender, before such Lender becomes a
party hereto) execute and deliver to the Borrower and the
Administrative Agent one or more copies (as the Borrower or
Administrative Agent may reasonably request) of United States
Internal Revenue Form W-9 or successor applicable form (if required
by law), as the case may be, to establish exemption from United
States backup withholding tax.
Each Lender which undertakes to deliver to the Sponsors or the
Administrative Agent a Tax Certificate, a Form 4224, Form 1001, Form
W-8 or Form W-9 pursuant to the preceding paragraph shall further
undertake to deliver to the Sponsors and the Administrative Agent
two further copies of said Tax Certificate, Form 4224, Form 1001,
Form W-8 or Form W-9 (if required by law), or successor applicable
forms, or other manner of certification, as the case may be, on or
before the date that such form expires or becomes obsolete or after
the occurrence of an event requiring a change in the most recent
form delivered by it to the Sponsors and the Administrative Agent,
and such extensions or renewals thereof as may be reasonably
requested by the Sponsors or Administrative Agent, certifying in the
37
case of a Tax Certificate, Form 4224 or Form 1001 that such Lender
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes,
unless in any case an event (including any change in treaty, law or
regulation) has occurred prior to the date on which such delivery
would otherwise be required which renders all forms inapplicable or
which would prevent such Lender from duly completing and delivering
any such form with respect to it and such Lender advises the
Sponsors and the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or Form
W-9, establishing an exemption from backup withholding.
(b) If the Sponsor fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Borrower or any Lender the
required receipts or other required documentary evidence, the
Sponsor shall indemnify the Borrower or such Lender for any
incremental Taxes, interest or penalties that may become payable by
the Borrower or such Lender as a result of any such failure.
(c) In the event that an Additional Amount is paid by a Sponsor for the
account of any Lender and such Lender is entitled to a refund of the
Tax (a "Tax Refund") to which such payment is attributable, then
such Lender shall take all reasonable steps which are necessary to
obtain such Tax Refund, including filings such forms, certificates,
documents, applications or returns as may be required to obtain such
Tax Refund. If such Lender subsequently receives such a Tax Refund,
and such Lender is readily able to identify the Tax Refund as being
attributable to the Tax with respect to which the Additional Amount
was made, then such Lender shall reimburse such Sponsor such amount
as such Lender shall determine acting in good faith to be the
proportion of the Tax Refund, together with any interest received
thereon, attributable to such Additional Amount as will leave such
Lender after the reimbursement (including such interest) in no
better or worse position than it would have been if the Additional
Amount had not been required.
38
(d) Without prejudice to the survival of any other agreement of the
Sponsors hereunder, the agreements and obligations of the Sponsors
contained in this Section 15 shall survive the payment in full of
the principal of and interest on the Loans.
16. Judgment. Each Sponsor hereby agrees that:
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in United States Dollars
into another currency, such Sponsor agrees, to the fullest extent
permitted by law, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the
Administrative Agent could purchase United States Dollars with such
other currency on the Business Day preceding that on which final
judgment is given.
(b) The obligation of each Sponsor in respect of any sum due from it to
any Lender hereunder shall, notwithstanding any judgment in a
currency other than United States Dollars, be discharged only to the
extent that on the Business Day following receipt by such Lender of
any sum adjudged to be so due in such other currency such Lender
may, in accordance with normal banking procedures, purchase United
States Dollars with such other currency; in the event that the
United States Dollars so purchased are less that the sum originally
due to such Lender in United States Dollars, the Sponsor, as a
separate obligation and notwithstanding any such judgment, shall
indemnify and hold harmless such Lender and such holder against such
loss, and if the United States Dollars so purchased exceed the sum
originally due to such Lender in United States Dollars, such Lender
shall remit to such Sponsor such excess.
17. Agreement to Subordinate. Notwithstanding anything to the contrary in this
Agreement, the Administrative Agent and each Lender, for itself and for
its successors assigns, agrees that it shall become party to an
Intercreditor Deed with terms substantially as described in the form of
Schedule 9 hereto. The payment of all sums payable by LCI hereunder shall
be subordinated in right of payment to the extent and in the manner
provided in such Intercreditor Deed.
39
18. Miscellaneous Provisions.
(a) This Agreement is a Loan Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and
provisions thereof.
(b) This Agreement shall be binding upon the Sponsors and their
permitted successors, transferees and assigns and shall inure to the
benefit of and be enforceable by the Administrative Agent and each
Lender and their respective successors, transferees and assigns;
provided, however, that the Sponsors may not assign any of their
obligations hereunder without the prior written consent of the
Required Lenders.
(c) No amendment to or waiver of any provision of this Agreement, nor
consent to any departure by any Sponsor herefrom, shall in any event
be effective unless the same shall be in writing and signed by the
Administrative Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.
(d) All notices and other communications provided to any party hereto
under this Agreement shall be in writing and addressed, delivered or
transmitted to such party at its address or facsimile number set
forth below or at such other address or facsimile number as may be
designated by such party in a notice to the other parties. All such
notices and communications shall be deemed to have been properly
given if (x) hand delivered with receipt acknowledged by the
recipient; (y) if mailed, upon the fifth Business Day after the date
on which it is deposited in registered or certified mail, postage
prepaid, return receipt requested or (z) if by Federal Express or
other nationally-recognized express courier service with
instructions to deliver on the following Business Day, on the next
Business Day after delivery to such express courier service. Notices
and other communications may also be properly given by facsimile but
shall be deemed to be received upon automatic facsimile confirmation
of receipt thereof by the intended recipient machine therefor with
the
40
original of such notice or communication to be given in the manner
provided in the second sentence of this Section; provided, however,
that the failure to deliver a copy in accordance with the second
sentence of this paragraph (d) shall not invalidate the
effectiveness of such facsimile notice. The address information for
the parties is set forth below:
If to the Administrative Agent: The Bank of Nova Scotia
580 California Street, 21st Floor
San Francisco, CA 94104
Attn: Alan W. Pendergast
Telephone No.: (415) 986-1100
Facsimile No.: (415) 397-0791
If to ABH: Aladdin Bazaar Holdings, LLC
831 Pilot Road
Las Vegas, Nevada 89119
Attn: Jack Sommer
Telephone No.: (702) 736-7114
Facsimile No.: (702) 736-7107
If to AHL: Aladdin Holdings, LLC
831 Pilot Road
Las Vegas, Nevada 89119
Attn: Jack Sommer
Telephone No.: (702) 736-7114
Facsimile No.: (702) 736-7107
If to LCI: London Clubs International, plc
10 Brick Street
London W1Y 8HO, England
Attn: Linda M. Lillis
Telephone No.: 011-44-171-518-0000
Facsimile No.: 011-44-171-493-6981
41
with a copy to: Ohrenstein & Brown, LLP
230 Park Avenue
New York, New York 10169
Attn: Peter J. Kiernan, Esq.
Telephone No.: (212)- 682-4500
Facsimile No.: (212)- 557-0910
and: Lionel, Sawyer & Collins
300 South 4th Street
Suite 1700
Las Vegas, Nevada 89101
Attn: Greg Giordano, Esq.
Telephone No.: (702)-383-8888
Facsimile No.: (702)-383-8845
(e) No failure on the part of the Administrative Agent or any Lender to
exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies
provided by law.
(f) Section captions used in this Agreement are for convenience of
reference only, and shall not affect the construction of this
Agreement.
(g) Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(h) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES
42
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT HERETO.
(i) ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
ADMINISTRATIVE AGENT, THE LENDERS OR THE SPONSORS SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK IN
THE CITY OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH PROPERTY MAY BE FOUND. THE SPONSORS HEREBY EXPRESSLY AND
IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK IN THE CITY OF NEW YORK AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE SPONSORS HEREBY IRREVOCABLY APPOINT CT CORPORATION SYSTEM (THE
"PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NEW YORK 10019, UNITED STATES, AS THEIR AGENT TO
RECEIVE, ON THE SPONSORS' BEHALF AND ON BEHALF OF THE SPONSORS'
PROPERTY, SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY
OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING.
SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH
PROCESS TO THE SPONSORS IN CARE OF THE PROCESS AGENT AT
43
THE PROCESS AGENT'S ABOVE ADDRESS, AND THE SPONSORS HEREBY
IRREVOCABLY AUTHORIZE AND DIRECT THE PROCESS AGENT TO ACCEPT SUCH
SERVICE ON THEIR BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, THE
SPONSORS FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. THE SPONSORS HEREBY EXPRESSLY AND
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE SPONSORS HAVE OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO THEMSELVES OR THEIR PROPERTY, THE
SPONSORS HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF THEIR
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(j) THE SPONSORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
ADMINISTRATIVE AGENT OR THE LENDERS OR THE SPONSORS. THE SPONSORS
ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR
44
THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE LENDERS ENTERING INTO THE CREDIT AGREEMENT.
45
IN WITNESS WHEREOF, the Sponsors have caused this Agreement to be duly
executed and delivered by their officers thereunto duly authorized as of the
date first above written.
ALADDIN HOLDINGS, LLC
By: /s/ Ronald Dictrow
-------------------------------
Ronald Dictrow
Title: Secretary, Treasurer
Address: 280 Park Avenue
New York, N.Y. 10017
Attention: Ronald Dictrow
Telecopy: 212-661-0844
ALADDIN BAZAAR HOLDINGS, LLC
By: /s/ Ronald Dictrow
-------------------------------
Ronald Dictrow
Title: Secretary, Treasurer
Address: 280 Park Avenue
New York, N.Y. 10017
Attention: Ronald Dictrow
Telecopy: 212-661-0844
LONDON CLUBS INTERNATIONAL PLC
By: /s/ G. Barry Hardy
-------------------------------
G. Barry Hardy
Title: Finance Director
Address: 30 Burlington Street
London W1X 2LN
England
Attention: G. Barry Hardy
Telecopy: 011-44-171-518-0174
46
SCHEDULE 1
- --------------------------------------------------------------------------------
DATE AGGREGATE PRINCIPAL
OUTSTANDING
($ Millions)
- --------------------------------------------------------------------------------
Conversion Date $285.0
- --------------------------------------------------------------------------------
End of First Quarter following Conversion Date $277.5
- --------------------------------------------------------------------------------
End of Second Quarter thereafter $270.0
- --------------------------------------------------------------------------------
End of Third Quarter thereafter $262.5
- --------------------------------------------------------------------------------
End of Fourth Quarter thereafter $255.0
- --------------------------------------------------------------------------------
End of Fifth Quarter thereafter $247.5
- --------------------------------------------------------------------------------
End of Sixth Quarter thereafter $240.0
- --------------------------------------------------------------------------------
End of Seventh Quarter thereafter $232.5
- --------------------------------------------------------------------------------
End of Eighth Quarter thereafter $225.0
- --------------------------------------------------------------------------------
End of Ninth Quarter thereafter $217.5
- --------------------------------------------------------------------------------
End of Tenth Quarter thereafter $210.0
- --------------------------------------------------------------------------------
End of Eleventh Quarter thereafter $202.5
- --------------------------------------------------------------------------------
End of Twelfth Quarter thereafter $195.0
- --------------------------------------------------------------------------------
End of Thirteenth Quarter thereafter $187.5
- --------------------------------------------------------------------------------
End of Fourteenth Quarter thereafter $180.0
- --------------------------------------------------------------------------------
End of Fifteenth Quarter thereafter $172.5
- --------------------------------------------------------------------------------
End of Sixteenth Quarter thereafter $165.0
- --------------------------------------------------------------------------------
End of Seventeenth Quarter thereafter $157.5
- --------------------------------------------------------------------------------
End of Eighteenth Quarter thereafter $150.0
- --------------------------------------------------------------------------------
End of Nineteenth Quarter thereafter $150.0
- --------------------------------------------------------------------------------
End of Twentieth Quarter thereafter $145.0
- --------------------------------------------------------------------------------
47
SCHEDULE 2
Additional Defined Terms
"Cash and Cash Equivalents" means:
(a) cash in hand or at a bank and beneficially owned by LCI or a
Subsidiary of LCI;
(b) Sterling or Dollar denominated commercial paper maturing not
more than nine months from the date of issue and rated A-1 or better by
Standard & Poor's Corporation or P-1 or better by Moody's Investors
Service, Inc.;
(c) any deposit with, or acceptance maturing not more than one year
after issue, accepted by, an authorized institution or an exempted
institution within the meaning of the Banking Act 1987 which has a
combined capital and surplus and undistributable profits of not less than
(pound)100,000,000 or by any bank, either of which shall have a long-term
debt rating of A- or better by Standard & Poor's Corporation or A3 or
better by Moody's Investors Service, Inc.;
(d) Sterling or Dollar denominated debt securities having not more
than one year until final maturity and listed on a recognized stock
exchange or in respect of which there is an active trading market in
London and rated at least Aa by Moody's Investors Service, Inc. or at
least AA by Standard and Poor's Corporation;
(e) direct obligations of the United States of America or any agency
or instrumentality of United States of America, the payment or guarantee
of which constitutes a full faith and credit obligation of the United
States of America, in each case maturing twelve months or less from the
date of acquisition thereof;
(f) gilt-edge securities issued directly, or unconditionally
guaranteed, by the United Kingdom Treasury, in each case maturing twelve
months or less from the date of acquisition thereof, legally and
beneficially owned, free of Liens and freely accessible by LCI or any
Subsidiary; or
(g) short-tem liquid debt securities which for the time being are
rated at least AAA by Standard & Poor's Corporation or an equivalent
rating by any other reputable, rating agency.
"Consolidated Net Borrowings" means the aggregate outstanding
principal amount of Indebtedness of the Group less Cash and Cash Equivalents.
"Consolidated Net Worth" means, the aggregate of the amounts paid-up
or credited as paid-up on LCI's issued share capital and the amount of the
consolidated capital and revenue reserves of the Group (including, without
limitation, any share premium account, merger reserve, capital redemption
reserve, revaluation reserve and retained earnings) and any credit balance on
LCI's consolidated profit and loss account all as shown by the latest
consolidated financial statements of LCI delivered or to be delivered pursuant
to the Keep-Well Agreement from time to time but after:
(i) deducting any debit balance on such consolidated profit and
loss account;
(ii) deducting the net book value of all assets, after deducting
any reserves applicable thereto, which would be treated as
intangible under GAAP (excluding amounts attributable to
acquisition goodwill, trademarks, trade names, service marks,
brand names, copyrights, patents and similar property);
(iii) deducting any amounts distributed or proposed to be
distributed (other than to LCI or any other member of the
Group) out of the profits accrued prior to the date of such
financial statements to the extent that such distribution is
not provided for therein;
(iv) deducting all amounts attributable to minority interests, if
any, in Subsidiaries of LCI;
(v) excluding any sums set aside or otherwise reserved or provided
for taxation;
2
(vi) adding back any diminution due to the writing off or
amortization of acquisition goodwill or the debiting of
acquisition goodwill to any reserve; and
(vii) making such adjustments to reflect any variations which shall
have occurred since the date of such financial statements:
(a) in the amounts paid up or credited as paid up on the
issued share capital of LCI and the consolidated capital
and revenue reserves of the Group;
(b) to reflect any changes in generally accepted accounting
principles and bases and the application of standards
and practices since then as may be appropriate in the
opinion of the auditors for the time being of LCI; and
(c) in the interest of LCI in any other member of the Group.
"Group" means LCI and its subsidiaries.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital
or other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation,
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
3
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
provided that, the obligations of LCI under the Keep-Well Agreement to pay the
Accelerated Payment Amount shall be treated at any time as a Guaranty of
Indebtedness of the Borrower in an amount equal to 25% of the Accelerated
Payment Amount at such time. In any computation of the indebtedness or other
liabilities of the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor.
"Group Operating Profit" means, in respect of any period of the
Group, (a) the consolidated profit of the Group for such period before crediting
or deducting amounts attributable to extraordinary and exceptional items, all as
determined in accordance with GAAP, plus (to the extent deducted in determining
such consolidated profits), (b) all provisions for Taxes and (c) Net Interest
Payable; in each case as determined from the relevant consolidated financial
statements of LCI deliver or to be delivered pursuant to the Keep-Well Agreement
for such period.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money (excluding accounts payable
in the ordinary course of business) and its redemption obligations upon
and following the date of redemption in respect of mandatorily redeemable
Preferred Stock;
(b) its liabilities pursuant to any note purchase facility or the
issue of bonds, notes, debentures, commercial paper, loan stock or similar
instruments;
4
(c) all actual (as opposed to contingent) reimbursement obligations
(other than accounts payable in the ordinary course of business) in
respect of any acceptance or documentary credit facilities;
(d) its liabilities for the deferred purchase price of property,
assets or services acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property, assets or services);
(e) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(f) its liabilities in respect of the principal amount of any
receivables sold or discounted to a third party to the extent of recourse
to such Person or any of its Subsidiaries;
(g) Swaps of such Person; and
(h) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (h) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (h) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Net Interest Payable" means in respect of any period of the Group,
the aggregate amount of the interest, commission, fees and other finance charges
of whatsoever nature (including, without limitation, arrangement fees,
commitment or non-utilization fees, agency fees, monitoring fees and any
interest in respect of Capital Leases) incurred by each member of the Group less
all interest payments received by each member of the Group including interest
received in respect of Cash and Cash Equivalents of the Group and similar income
received during such period. In each case as determined from the relevant
consolidated financial statements of LCI delivered or to be delivered pursuant
to this Agreement for such period.
5
"Subsidiary" means, as to any particular parent corporation, any
corporation of which more than 50% (by number of votes) of the Voting Shares
shall be owned, directly or indirectly, by such parent corporation; provided,
however, that notwithstanding the foregoing, the term subsidiary shall, in any
event, include any company or legal entity which is a "subsidiary" as defined in
Section 736 of the Companies Act 1985, as amended by Section 144 of the
Companies Act 1989, or as detailed in analogous legislation.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of the Keep-Well Agreement, the
amount of the obligation under any Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Taxes" means all present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other governmental charges of any
nature whatsoever and any liabilities with respect thereto, including any
surcharge, penalties, additions to tax, fines or interest thereon, now or
hereafter imposed, levied, collected withheld or assessed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein.
6
SCHEDULE 3
MATERIAL SUBSIDIARIES
LONDON CLUBS HOLDINGS LIMITED
LONDON AMBASSADEURS CLUB LIMITED
RENDEZVOUS CLUB (LONDON) LIMITED
PALM BEACH CLUB LIMITED
SIX HAMILTON PLACE LIMITED
BURLINGTON STREET SERVICES LIMITED
ZEALCASTLE LIMITED
CORBY LEISURE RETAIL DEVELOPMENTS LIMITED
UNITLAW TRADING LIMITED
LONDON PARK TOWER CLUB LIMITED
PUBLICACE LIMITED
LOMASBOND PROPERTIES LIMITED
LONDON CLUBS (OVERSEAS) LIMITED
DECBURY LIMITED
GOLDEN NUGGET CLUB LIMITED
LONDON CLUBS MANAGEMENT LIMITED
THE SPORTSMAN CLUB LIMITED
RITZ CLUB (LONDON) LIMITED
SCHEDULE 4
SUBSIDIARIES
(other than Dormant Subsidiaries)
ABH's Subsidiaries
Name: Aladdin Bazaar, LLC
State or Organization: Delaware
ABH Ownership: 50% member
In connection with the development of the Mall Project by Aladdin Bazaar, LLC
("Aladdin Bazaar"), if a guaranty, letter of credit or other form of credit
enhancement is required to be obtained by the Trust or ABH in order to insure
Aladdin Bazaar or any of its members that the Hotel/Casino will be completed and
opened successfully, ABH will be permitted to convey up to 50% of its interest
in Aladdin Bazaar to CS First Boston or any other institutional investor and
pledge any of its remaining interest in Aladdin Bazaar to such credit enhancer
or to any financial institution providing financing for the development of the
Mall Project. Furthermore, the Trust shall be entitled to pledge its membership
interest in ABH to either or both of a credit enhancer or financing source in
connection with the Mall Project.
Aladdin Holdings, LLC (AHL)
Name: Sommer Enterprises, LLC (SE)
State of Organization: Nevada
Ownership: SE owns a 98.7% membership interest in AHL
Name: Aladdin Gaming Enterprises, Inc. (AGE)
State of Organization: Nevada
Ownership: SE owns 100% of the issued and outstanding Class A Voting
Common Stock of AGE
SE owns 100% of the issued and outstanding Class B Non-Voting
Common Stock of AGE
Name: Aladdin Gaming Holdings, LLC (ABH)
State or Organization: Nevada
Ownership: AGE owns a 25% common interest in ABH
SE owns a 47% common interest in ABH
Name: Aladdin Capital Corp. (Capital)
State or Organization: Nevada
Ownership: ABH owns 100% of the issued and outstanding common stock of
Capital
Name: Aladdin Gaming, LLC (Gaming)
State or Organization: Nevada
Ownership: ABH owns 100% of the issued and outstanding Common Shares of
Gaming
ABH owns 100% of the issued and outstanding Series A Preferred
Shares of Gaming
Name: Aladdin Music Holdings, LLC (ABH)
State or Organization: Nevada
Ownership: Aladdin owns a 100% common interest in ABH
Name: Aladdin Music, LLC
State or Organization: Nevada
Ownership: ABH owns a 100% common interest in ABH
London Clubs' Subsidiaries
See attachment.
SCHEDULE 5
LITIGATION
Aronow, et al. v. Sommer, et al., Index No. 112618/95 (New York Sup. Ct.)
Kanbar, et al. v. Aronow, et al., Index No. 600301/97 (New York Sup. Ct.)
Sommer, et al. v. PMEC Associates and Co., et al., No. 88 Civ. 2537
(S.D.N.Y.)
SCHEDULE 5A
TAX LIABILITIES
None.
SCHEDULE 6
LICENSES, PERMITS, ETC.
ABH and AHL
See attachment.
SCHEDULE 7
EXISTING INDEBTEDNESS
Outstanding Indebtedness of ABH and/or its Subsidiaries
$30,000,000 contingent liability (see Schedule 4)
Outstanding Indebtedness of AHL and/or its Subsidiaries
$65,000,000.00 loan to AHL from Credit Suisse First Boston and Sun America to be
paid off in full at closing.
LCI and/or its Subsidiaries
See attachment.
SCHEDULE 8
OWNERSHIP OF BORROWER
See chart attached hereto.
SCHEDULE 9
Terms of Intercreditor Deed
The Intercreditor Deed shall provide as follows:
1. The banks under the Facilities Agreement (or the Agent Bank on
their behalf), the holders of the Notes issued under any Note
Agreements, the Lenders, the Administrative Agent, the
Subsidiary Guarantors and LCI shall be party to the Deed. Any
transferees or assignees of such parties shall be required to
execute and deliver a deed of accession.
2. In any fiscal year of the Borrower, the Lenders will have an
unsubordinated right to receive a maximum of net payments (net
of all reimbursements from the other Sponsors) of $37.5
million from LCI.
3. In any insolvency, liquidation or winding-up proceeding of LCI
or any Subsidiary Guarantor, the banks under the Facilities
Agreement and the holders of the Notes issued under the Note
Agreements (the "Senior Creditors") shall be entitled to
receive payment in full of all amounts due to them from LCI or
any such Subsidiary Guarantor, as the case may be, under the
terms of the Facilities Agreement, the Note Agreements or any
guarantee thereof by such Subsidiary Guarantor prior to the
Lenders or the Administrative Agent receiving any payment.
4. If the Lenders receive any payment to which they are not
entitled, they will hold such payments in trust for the
benefit of the Senior Creditors.
5. The Deed shall be governed by English law.