UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________to _________
Commission file number: : 1-12882
Boyd Gaming Corporation
(Exact name of Registrant as Specified in its Charter)
|
Nevada
|
88-0242733
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification Number)
|
3883 Howard Hughes Parkway, Ninth Floor
Las Vegas, Nevada 89169
(Address of Principal Executive Offices including Zip Code)
(702) 792-7200
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES
x
NO
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES
¨
NO
x
Shares outstanding of each of the Registrant's classes of common stock as of July 31, 2007:
|
Class
|
Outstanding
|
|
Common stock, $.01 par value
|
87,706,940
|
Note:
PDF provided as a courtesy
BOYD GAMING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2007
TABLE OF CONTENTS
Part I. Financial Information
Item 1.
Unaudited Condensed Consolidated Financial Statements
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share data)
June 30, December 31,
2007 2006
-------------- --------------
ASSETS
Current assets
Cash and cash equivalents $ 159,382 $ 169,397
Restricted cash 42,597 12,604
Accounts receivable, net 21,566 26,275
Inventories 10,848 11,037
Prepaid expenses and other current assets 46,393 42,417
Assets held for sale, net of cash 23,188 102,977
Income taxes receivable 10,697 8,286
Deferred income taxes 1,684 1,685
-------------- --------------
Total current assets 316,355 374,678
Property and equipment, net 2,572,332 2,129,445
Investments in and advances to unconsolidated subsidiaries, net 387,839 385,751
Other assets, net 98,532 100,469
Intangible assets, net 541,385 506,750
Goodwill, net 404,206 404,206
-------------- --------------
Total assets $ 4,320,649 $ 3,901,299
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 565 $ 5,550
Accounts payable 58,452 77,532
Construction payables 25,723 23,516
Accrued liabilities
Payroll and related 64,713 72,162
Interest 17,715 20,620
Gaming 60,871 64,085
Accrued expenses and other 98,837 65,532
Liabilities related to assets held for sale -- 2,993
-------------- --------------
Total current liabilities 326,876 331,990
Long-term debt, net of current maturities 2,214,124 2,133,016
Deferred income taxes 364,712 301,639
Other long-term tax liabilities 35,994 --
Other liabilities 26,670 24,702
Commitments and contingencies (Note 15)
Stockholders' equity
Preferred stock, $.01 par value, 5,000,000 shares authorized -- --
Common stock, $.01 par value, 200,000,000 shares authorized, 87,646,558
and 87,105,106 shares outstanding 876 871
Additional paid-in capital 588,136 561,298
Retained earnings 758,954 544,080
Accumulated other comprehensive income, net 4,307 3,703
-------------- --------------
Total stockholders' equity 1,352,273 1,109,952
-------------- --------------
Total liabilities and stockholders' equity $ 4,320,649 $ 3,901,299
============== ==============
The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenues
Gaming $ 425,671 $ 452,264 $ 857,602 $ 941,287
Food and beverage 68,955 76,560 137,261 155,791
Room 39,156 44,630 79,128 91,444
Other 33,083 37,568 65,967 73,628
------------ ------------ ------------ ------------
Gross revenues 566,865 611,022 1,139,958 1,262,150
Less promotional allowances 55,474 59,532 111,537 121,038
------------ ------------ ------------ ------------
Net revenues 511,391 551,490 1,028,421 1,141,112
Costs and expenses
Gaming 195,624 216,052 393,247 429,278
Food and beverage 41,260 47,986 82,497 96,710
Room 11,990 14,246 23,362 28,721
Other 25,092 28,830 48,461 55,358
Selling, general and administrative 80,705 80,140 157,951 158,461
Maintenance and utilities 23,750 25,363 46,428 49,561
Depreciation and amortization 41,937 48,462 82,549 97,642
Corporate expense 13,544 13,581 28,815 27,089
Preopening expenses 6,062 7,249 10,512 13,094
Write-downs and other charges, net 1,972 31,249 10,980 32,740
------------ ------------ ------------ ------------
Total costs and expenses 441,936 513,158 884,802 988,654
------------ ------------ ------------ ------------
Operating income from Borgata 17,713 19,144 38,825 43,400
------------ ------------ ------------ ------------
Operating income 87,168 57,476 182,444 195,858
------------ ------------ ------------ ------------
Other income (expense)
Interest income 110 36 110 72
Interest expense, net of amounts capitalized (33,797) (36,274) (70,345) (71,124)
Loss on early retirements of debt (16,945) -- (16,945) --
Increase in value of derivative instruments 2,601 -- 2,525 --
Other non-operating expenses from Borgata, net (3,574) (2,070) (7,375) (4,295)
------------ ------------ ------------ ------------
Total (51,605) (38,308) (92,030) (75,347)
------------ ------------ ------------ ------------
Income from continuing operations before provision for income taxes 35,563 19,168 90,414 120,511
Provision for income taxes (12,622) (6,802) (32,368) (42,876)
------------ ------------ ------------ ------------
Income from continuing operations 22,941 12,366 58,046 77,635
Discontinued operations:
Income (loss) from discontinued operations (including a
gain on disposition of $285,033 during the six months
ended June 30, 2007) (1,284) (3,355) 281,672 (6,652)
(Provision for) benefit from income taxes 455 1,149 (99,740) 2,417
------------ ------------ ------------ ------------
Net income (loss) from discontinued operations (829) (2,206) 181,932 (4,235)
------------ ------------ ------------ ------------
Net income $ 22,112 $ 10,160 $ 239,978 $ 73,400
============ ============ ============ ============
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - (continued)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Basic net income (loss) per common share:
Income from continuing operations $ 0.26 $ 0.14 $ 0.66 $ 0.87
Net income (loss) from discontinued operations (0.01) (0.03) 2.09 (0.05)
------------ ------------ ------------ ------------
Net income $ 0.25 $ 0.11 $ 2.75 $ 0.82
============ ============ ============ ============
Weighted average basic shares outstanding 87,497 89,635 87,369 89,473
============ ============ ============ ============
Diluted net income (loss) per common share:
Income from continuing operations $ 0.26 $ 0.14 $ 0.66 $ 0.85
Net income (loss) from discontinued operations (0.01) (0.03) 2.05 (0.04)
------------ ------------ ------------ ------------
Net income $ 0.25 $ 0.11 $ 2.71 $ 0.81
============ ============ ============ ============
Weighted average diluted shares outstanding 88,714 91,103 88,588 90,978
============ ============ ============ ============
Dividends declared per common share $ 0.15 $ 0.135 $ 0.30 $ 0.26
============ ============ ============ ============
The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
For the six months ended June 30, 2007
(In thousands, except share data)
Accumulated
Common Stock Additional Other Total
----------------------- Paid-in Retained Comprehensive Stockholders'
Shares Amount Capital Earnings Income, Net Equity
------------ --------- ------------ ---------- --------------- ------------
Balances, January 1, 2007 87,105,106 $ 871 $ 561,298 $ 544,080 $ 3,703 $ 1,109,952
Cumulative effect of a change in accounting
for uncertainty in income taxes -- -- -- (105) -- (105)
Our share of Borgata's cumulative effect of a
change in accounting for uncertainty
in income taxes -- -- -- (122) -- (122)
Net income -- -- -- 239,978 -- 239,978
Derivative instruments market
adjustment, net of taxes of ($289) -- -- -- -- 510 510
Restricted available for sale securities
market adjustment, net of taxes of $52 -- -- -- -- 94 94
Stock options and awards exercised 541,452 5 12,857 -- -- 12,862
Tax benefit from share-based
compensation arrangements -- -- 4,397 -- -- 4,397
Share-based compensation costs -- -- 9,584 -- -- 9,584
Dividends paid on common stock -- -- -- (24,877) -- (24,877)
------------ --------- ------------ ---------- --------------- ------------
Balances, June 30, 2007 87,646,558 $ 876 $ 588,136 $ 758,954 $ 4,307 $ 1,352,273
============ ========= ============ ========== =============== ============
The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Net income $ 22,112 $ 10,160 $ 239,978 $ 73,400
Derivative instruments market adjustment, net of tax 1,902 1,846 510 4,168
Restricted available for sale securities market
adjustment, net of tax 60 (16) 94 (37)
------------ ------------ ------------ ------------
Comprehensive income $ 24,074 $ 11,990 $ 240,582 $ 77,531
============ ============ ============ ============
The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Six Months Ended
June 30,
--------------------------
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 239,978 $ 73,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 82,549 113,676
Amortization of debt issuance costs 2,284 2,220
Deferred income taxes 62,733 (11,707)
Operating and non-operating income from Borgata (31,450) (39,105)
Distributions of earnings received from Borgata 32,245 42,653
Share-based compensation expense 9,011 12,092
Excess tax benefit from share-based compensation arrangements (4,178) (5,928)
Gain on disposition of Barbary Coast (285,033) --
Loss on early retirements of debt 16,945 --
Increase in value of derivative instruments (2,525) --
Non-cash asset write-downs 3,744 29,135
Other 370 --
Changes in operating assets and liabilities:
Restricted cash 634 (3,673)
Accounts receivable, net 4,882 202
Insurance receivable -- 4,313
Inventories 318 (291)
Prepaid expenses and other (3,832) (5,628)
Income taxes receivable 1,767 (10,085)
Other assets (7,303) (2,149)
Other current liabilities (33,633) 3,274
Other liabilities 3,708 2,121
Other long-term tax liabilities 35,889 --
------------ ------------
Net cash provided by operating activities 129,103 204,520
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (116,225) (286,152)
Net cash paid for Dania Jai-Alai (80,904) --
Investments in and advances to unconsolidated subsidiaries (3,005) --
Net proceeds from sale of assets 1,614 --
Insurance recoveries for replacement assets -- 23,000
------------ ------------
Net cash used in investing activities (198,520) (263,152)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (271) (359)
Payments under bank credit facilities (196,000) (494,050)
Borrowings under bank credit facilities 523,500 297,350
Retirement of long-term debt (260,938) --
Proceeds from termination of derivative instruments 989 --
Net proceeds from issuance of long-term debt -- 246,300
Proceeds from exercise of stock options 12,821 7,668
Excess tax benefit from share-based compensation arrangements 4,178 5,928
Dividends paid on common stock (24,877) (23,269)
------------ ------------
Net cash provided by financing activities 59,402 39,568
------------ ------------
Net decrease in cash and cash equivalents (10,015) (19,064)
Cash and cash equivalents, beginning of period 169,397 188,406
------------ ------------
Cash and cash equivalents, end of period $ 159,382 $ 169,342
============ ============
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - (continued)
(In thousands)
Six Months Ended
June 30,
--------------------------
2007 2006
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 71,490 $ 77,428
Cash paid for income taxes, net of refunds 31,501 62,252
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Payables for capital expenditures $ 28,599 $ 47,972
Restricted cash received as a deposit for Morgans joint venture 30,627 --
Restricted cash proceeds from maturities of restricted investments 6,240 250
Restricted cash used to purchase restricted investments 6,765 --
Restricted cash proceeds from sales of restricted investments 596 --
Land acquired in exchange for Barbary Coast 364,000 --
Acquisition of Dania Jai-Alai
Fair value of non-cash assets acquired $ 84,724 $ --
Net cash paid (80,904) --
------------ ------------
Liabilities assumed $ 3,820 $ --
============ ============
The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Boyd Gaming Corporation and its
subsidiaries. Investments in unconsolidated affiliates which are 50% or less owned and do not meet the consolidation criteria of
Financial Accounting Standards Board ("FASB") Interpretation No. 46 (R) (as amended),
"Consolidation of Variable
Interest Entities - An Interpretation of ARB No. 51"
("FIN 46(R)"), are accounted for under the equity method. All material
intercompany accounts and transactions have been eliminated.
As of June 30, 2007, we wholly-owned and operated 16 gaming entertainment facilities located in Nevada, Mississippi, Illinois,
Louisiana, Indiana and Florida. In addition, we own and operate two travel agencies, an insurance company that underwrites
travel-related insurance, and an offsite sports book located in Las Vegas. We are also a 50% partner in a joint venture that owns a limited
liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey, which we account for using the equity
method.
We are developing Echelon on land we own on the Las Vegas Strip
and have entered into two joint
ventures associated with Echelon:
Morgans Las Vegas, LLC
- This entity is a 50/50 joint venture with Morgans Hotel Group LLC, or Morgans, which will
develop, construct and operate the Delano Las Vegas and the Mondrian Las Vegas hotels (see Notes 5,
"Investments in and
Advances to Unconsolidated Subsidiaries, Net"
and 15,
"Commitments and Contingencies"
). We currently
account for this joint venture under the equity method as we are not the primary beneficiary of this entity under FIN 46(R). We will
continue to evaluate our accounting treatment for this joint venture under FIN 46(R) as the entity is developed.
Echelon Place Retail Promenade, LLC
- This entity is a 50/50 joint venture with General Growth Properties, or GGP, which
will develop, construct and operate the Echelon Retail Promenade (see Note 15). We currently consolidate this joint venture as we are
the primary beneficiary of this entity under FIN 46(R). We will continue to evaluate our accounting treatment for this joint venture under
FIN 46(R) as the entity is developed.
Basis of Presentation
In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments
necessary to present fairly the results of our operations for the three and six months ended June 30, 2007 and 2006, our cash flows for
the six months ended June 30, 2007 and 2006 and our balance sheets as of June 30, 2007 and December 31, 2006. We suggest
reading this report in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the
year ended December 31, 2006. As permitted by the rules and regulations of the Securities and Exchange Commission, certain
information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles, or GAAP, have been condensed or omitted. Our operating results for the three and six months ended June 30,
2007 and 2006 and our cash flows for the six months ended June 30, 2007 and 2006 are not necessarily indicative of the results that
will be achieved for the full year or future periods.
Reclassifications
Certain prior period amounts in the condensed consolidated financial statements, including the discontinued operations
presentation on the condensed consolidated statements of operations, have been reclassified to conform to the
June 30, 2007 presentation due to the sale of our South Coast Hotel and Casino on October 25, 2006, and the exchange
of our Barbary Coast Hotel and Casino for certain real property on February 27, 2007. These reclassifications had no effect on our net
income as previously reported. For further information, see Note 11, "
Discontinued Operations
".
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates
incorporated into our condensed consolidated financial statements include the estimated useful lives for depreciable and amortizable
assets, the estimated allowance for doubtful accounts receivable, the estimated valuation allowance for deferred tax assets, other
long-term tax liabilities, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and related
intangible assets, share-based payment values, fair value of derivative instruments, fair value of acquired assets and liabilities, property
closure costs, our self-insured liability reserves, slot bonus point programs, contingencies, and litigation, claims and assessments.
Actual results could differ from those estimates.
Capitalized Interest
Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets.
When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using our weighted
average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially
complete. We amortize capitalized interest over the estimated useful life of the related asset. Capitalized interest for the three and six
months ended June 30, 2007 was $4.6 million and $6.3 million, respectively. Capitalized interest for the three and six months ended
June 30, 2006 was $2.0 million and $4.2 million, respectively.
Preopening Expenses
We expense certain costs of start-up activities as incurred. During the three and six months ended June 30, 2007, we
expensed $6.1 million and $10.5 million, respectively, in preopening costs that primarily related to our Echelon development project on
the Las Vegas Strip. During the three and six months ended June 30, 2006, we expensed $7.2 million and $13.1 million, respectively, in
preopening costs that primarily related to Echelon, the opening of our new gaming vessel at Blue Chip in January 2006 and casino
development opportunities in other jurisdictions.
Recently Issued Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 159,
"The
Fair Value Option for Financial Assets and Financial Liabilities".
SFAS No. 159 permits companies to choose to measure
many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies
with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. The fair value option established by SFAS No. 159 permits all companies to
choose to measure eligible items at fair value at specified election dates. At each subsequent reporting date, companies shall report in
earnings any unrealized gains and losses on items for which the fair value option has been elected. SFAS No. 159 is effective as of the
beginning of a company's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a
fiscal year that begins on or before November 15, 2007, provided the company also elects to apply the provisions of SFAS No. 157,
"Fair Value Measurements"
(see below). We are currently evaluating whether to adopt the fair value option under
SFAS No. 159 and evaluating what impact such adoption would have on our condensed consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157,
"Fair Value Measurements"
, which defines fair value,
establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157
applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded
in those accounting pronouncements that fair value is the relevant measurement attribute. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are
currently evaluating the impact that the adoption of SFAS No. 157 will have on our condensed consolidated financial statements.
Note 2. Restricted Investments
Pursuant to our investment policy related to customer payments for advanced bookings with our Hawaii travel agency, we
invest in certain financial instruments. Hawaii regulations require us to maintain a separate charter tour client trust account solely for the
purpose of the travel agency's charter tour business. Our investment policy generally allowed us to invest these restricted funds in
investments with a maximum maturity of three years and with certain credit ratings as determined by specified rating agencies;
however, in April 2007, we amended our investment policy to allow these restricted funds to be in investments that have a maximum
maturity of 90 days. As of June 30, 2007, the maturity dates of the investments extend as far as November 2008; however, in July
2007, we sold those investments and replaced them with investments with maturities of 90 days or less. We will record a loss on the
sale of those investments of less than $0.1 million on our condensed consolidated statements of operations during the three months
ending September 30, 2007.
At June 30, 2007 and December 31, 2006, our restricted investments consisted primarily of fixed income bonds. We have
classified these investments as available for sale. The table below sets forth certain information about our restricted investments (in
thousands):
Gross Unrealized
------------------------- Market
Cost Gains Losses Value
----------- ----------- ------------ -------------
December 31, 2006 $ 10,029 $ 5 $ (174) $ 9,860
=========== =========== ============ =============
June 30, 2007 $ 9,375 $ 27 $ (50) $ 9,352
=========== =========== ============ =============
We have classified the fair market value of these restricted investments on our accompanying condensed consolidated balance
sheets based upon the maturities of the investments. Investments maturing in less than one year totaling $8.7 million have been
presented in prepaid expenses and other current assets, while all other long-term investments totaling $0.7 million have been
presented in other assets. Net unrealized holding losses have been recorded in accumulated other comprehensive income, net of
taxes, on the accompanying condensed consolidated balance sheets. For the three and six months ended June 30, 2007, we recorded
the increase in fair values of these restricted investments of less than $0.1 million, net of taxes, in accumulated other comprehensive
income. For the three and six months ended June 30, 2006, we recorded the decrease in fair values of these restricted investments of
less than $0.1 million, net of taxes, in accumulated other comprehensive income.
During the six months ended June 30, 2007, we sold certain of our restricted investments and recorded proceeds of approximately
$0.6 million, which approximated our cost basis in these investments as determined by specific identification. There were no sales of
our restricted investments during the three months ended June 30, 2007 and the three and six months ended June 30, 2006.
Note 3. Intangible Assets
The balance of intangible assets as of June 30, 2007 and December 31, 2006 is presented below:
June 30, December 31,
2007 2006
------------ -------------
(In thousands)
License rights $ 524,465 $ 486,064
Trademarks 50,700 54,400
Customer lists 400 450
------------ -------------
Total intangible assets 575,565 540,914
Less accumulated amortization:
License rights 33,939 33,939
Customer lists 241 225
------------ -------------
Intangible assets, net $ 541,385 $ 506,750
============ =============
The following table sets forth the change in our intangible assets, net during the six months ended June 30, 2007 (in
thousands):
Balance as of January 1, 2007 $ 506,750
Intangible license right from
Dania Jai-Alai acquisition (see Note 13) 38,403
Write-off of Barbary Coast trademark (see Note 11) (3,700)
Write-off of Barbary Coast customer list, net (28)
Amortization expense (40)
------------
Balance as of June 30, 2007 $ 541,385
============
License rights are intangible assets acquired from the purchase of gaming entities that operate in gaming jurisdictions where
competition is limited to a specified number of licensed gaming operators. License rights and trademarks are not subject to amortization
as we have determined that they have an indefinite useful life.
Customer lists are being ratably amortized over a five-year period. For the three and six months ended June 30, 2007 and 2006,
amortization expense for the customer lists was less than $0.1 million. For each year in the period ending December 31, 2009,
amortization expense related to the customer lists is expected to be approximately $0.1 million.
Note 4. Property and Equipment
Property and equipment consists of the following:
Estimated June 30, December 31,
Life (Years) 2007 2006
----------- ------------ -----------
(In thousands)
Land -- $ 639,054 $ 261,428
Buildings and improvements 10-40 1,790,998 1,939,611
Furniture and equipment 3-10 742,110 718,647
Riverboats and barges 10-40 166,190 165,362
Construction in progress -- 155,595 95,556
------------ -----------
Total 3,493,947 3,180,604
Less accumulated depreciation 921,615 1,051,159
------------ -----------
Property and equipment, net $ 2,572,332 $ 2,129,445
============ ===========
Note 5. Investments in and Advances to Unconsolidated Subsidiaries, Net
Investments in and advances to unconsolidated subsidiaries, net consist of the following (in thousands):
June 30, December 31,
2007 2006
------------ ------------
Net investment in and advances to Borgata (50%) $ 381,696 $ 382,192
Investment in and advances to Morgans Las Vegas, LLC (50%) 5,649 2,966
Investment in and advances to Tunica Golf Course, L.L.C. (33.3%) 494 593
------------ ------------
Total investments in and advance to unconsolidated
subsidiaries, net $ 387,839 $ 385,751
============ ============
Borgata Hotel Casino and Spa
We are a 50% partner in Borgata Hotel Casino and Spa located at Renaissance Pointe in Atlantic City, New Jersey. We
use the equity method to account for our investment in Borgata. Included in our investment in Borgata is our share of Borgata's
cumulative effect of a change in accounting for uncertainty in income taxes resulting from its January 1, 2007 adoption of FASB
Interpretation No. 48.
Summarized financial information of Borgata is as follows (in thousands):
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Gaming revenue $ 177,966 $ 172,855 $ 365,235 $ 347,111
Non-gaming revenue 71,686 64,282 138,423 120,383
------------ ------------ ------------ ------------
Gross revenues 249,652 237,137 503,658 467,494
Less promotional allowances 47,553 47,765 97,829 90,554
------------ ------------ ------------ ------------
Net revenues 202,099 189,372 405,829 376,940
Expenses 147,636 131,762 290,797 254,051
Depreciation and amortization 16,906 14,773 33,732 29,271
Preopening expenses 1,077 3,815 2,018 5,145
Loss on asset disposals 403 83 334 375
------------ ------------ ------------ ------------
Operating income 36,077 38,939 78,948 88,098
------------ ------------ ------------ ------------
Interest expense, net (7,823) (4,271) (15,516) (8,353)
Benefit from (provision for) income taxes 676 130 766 (237)
------------ ------------ ------------ ------------
Total non-operating expenses (7,147) (4,141) (14,750) (8,590)
------------ ------------ ------------ ------------
Net income $ 28,930 $ 34,798 $ 64,198 $ 79,508
============ ============ ============ ============
Our share of Borgata's results is included in our accompanying condensed consolidated statements of operations for the following
periods on the following lines (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Our share of Borgata's operating income $ 18,038 $ 19,469 $ 39,474 $ 44,049
Net amortization expense related to our investment in Borgata (325) (325) (649) (649)
------------ ------------ ------------ ------------
Our share of Borgata's operating income, as reported $ 17,713 $ 19,144 $ 38,825 $ 43,400
============ ============ ============ ============
Our share of Borgata's non-operating expenses, net $ (3,574) $ (2,070) $ (7,375) $ (4,295)
============ ============ ============ ============
Note 6. Long-term Debt
Long-term debt consists of the following:
June 30, December 31,
2007 2006
------------ -------------
(In thousands)
Bank credit facilities $ 1,300,800 $ 973,300
8.75% Senior Subordinated Notes due 2012 -- 250,000
7.75% Senior Subordinated Notes due 2012 300,000 300,000
6.75% Senior Subordinated Notes due 2014 350,000 350,000
7.125% Senior Subordinated Notes due 2016 250,000 250,000
Other 13,889 14,160
------------ -------------
Total long-term debt 2,214,689 2,137,460
Less current maturities (565) (5,550)
Market value adjustment related to interest rate swap -- 1,106
------------ -------------
Total $ 2,214,124 $ 2,133,016
============ =============
On May 24, 2007, we entered into a new $4.0 billion revolving bank credit facility that matures on May 24, 2012. The new bank
credit facility may be increased at our request by up to an aggregate of $1.0 billion. The interest rate on the new bank credit facility is
based upon, at our option, the LIBOR rate or the "base rate", plus an applicable margin in either case. The applicable
margin is a percentage per annum (which ranges from 0.625% to 1.625% if we elect to use the LIBOR rate, and 0.0% to 0.375% if we
elect to use the base rate) determined in accordance with a specified pricing grid based upon our predefined total leverage ratio. In
addition, we incur commitment fees on the unused portion of the new bank credit facility that range from 0.200% to 0.350% per annum.
The new bank credit facility is guaranteed by our material subsidiaries and is secured by the capital stock of those subsidiaries.
The new bank credit facility contains certain financial and other covenants, including various covenants (i) requiring the
maintenance of a minimum consolidated interest coverage ratio, (ii) establishing a maximum permitted consolidated total leverage ratio,
(iii) imposing limitations on the incurrence of indebtedness, (iv) imposing limitations on transfers, sales and other dispositions and (v)
imposing restrictions on investments, dividends and certain other payments.
The new bank credit facility replaces our former $1.85 billion bank credit facility. We recorded a $4.4 million non-cash loss on early
retirement of debt for the three and six months ended June 30, 2007 for the write-off of unamortized debt fees associated with our
former bank credit facility.
On April 16, 2007, we redeemed our $250 million principal amount of 8.75% senior subordinated notes that were originally due to
mature in April 2012 at a redemption price of $1,043.75 per $1,000.00 principal amount of notes. The redemption was funded by
availability under our former bank credit facility. In connection with the redemption of these notes, we terminated our $50 million
notional amount fixed-to-floating interest rate swap. During the three and six months ended June 30, 2007, we recorded a loss on the
early retirement of these notes and related interest rate swap of $12.5 million.
Note 7. Derivative Instruments and Other Comprehensive Income
GAAP requires all derivative instruments to be recognized on the balance sheet at fair value. Derivatives that are not
designated as hedges for accounting purposes must be adjusted to fair value through income. If the derivative qualifies and is
designated as a hedge, depending on the nature of the hedge, changes in its fair value will either be offset against the change in fair
value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.
During the three and six months ended June 30, 2007 and 2006, we utilized derivative instruments to manage interest rate risk.
The net effect of our interest rate swaps resulted in a reduction of interest expense of $0.6 million and $1.4 million for the three and six
months ended June 30, 2007, respectively, and $0.5 million and $0.8 million for the three and six months ended June 30, 2006,
respectively, as compared to the contractual rate of the underlying debt for the three and six months ended June 30, 2007 and 2006.
In connection with the termination of certain LIBOR contracts upon entering into our new bank credit facility on May 24, 2007 (see
Note 6,
"Long-term Debt"
), we elected to remove the cash flow hedge designation and discontinue hedge accounting
on $500 million notional amount of interest rate derivatives that hedge the variability in the cash flows of our floating rate borrowings. As
a result, the $2.6 million increase in value of these interest rate derivatives from May 24, 2007 through June 30, 2007 is recorded as a
gain on our condensed consolidated statement of operations for the three months ended June 30, 2007. In addition, $4.3 million
of existing net gains related to these interest rate derivatives is included in accumulated other comprehensive income on our
condensed consolidated balance sheet at June 30, 2007. These net gains will be accreted as a reduction of interest expense over the
original remaining terms of these interest rate derivatives which extend into 2011; therefore, we recorded $0.2 million as a reduction of
interest expense and accumulated other comprehensive income during the three months ended June 30, 2007, and we will record $1.3
million as a reduction of interest expense and other comprehensive income during the remainder of 2007.
In July 2007, we terminated our positions in these $500 million notional amount of interest rate derivatives. In connection with these
transactions, we received an aggregate of $4.9 million in cash and incurred a loss of approximately $3.5 million representing the
change in value of these interest rate derivatives from June 30, 2007. In addition, we entered into new forward starting swaps with an
aggregate notional amount of $500 million to hedge the variability in the cash flows of our floating rate borrowings through June 30,
2011. We have designated and qualified these new forward starting swaps as cash flow hedges and expect to account for them
accordingly.
Note 8. Other Long-term Tax Liabilities
On July 13, 2006, the FASB issued Interpretation No. 48 "
Accounting for Uncertainty in Income Taxes - An Interpretation of
FASB Statement 109
" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity's financial
statements in accordance with FASB Statement 109, "
Accounting for Income Taxes
" and prescribes a recognition threshold and
measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return.
Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount
that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be
recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN 48 provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006.
The total amount of unrecognized tax benefits upon the adoption of FIN 48 on January 1, 2007 was $32.7 million. As a result of the
implementation of FIN 48, we recognized a $31.7 million increase in the liability for unrecognized tax benefits which was accounted for
as follows (in thousands):
Reduction in retained earnings (cumulative effect) $ 105
Additional deferred tax assets 31,639
------------
Increase in income tax liabilities $ 31,744
============
Included in the $32.7 million balance of unrecognized tax benefits at January 1, 2007 are $8.8 million of tax benefits that, if
recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefits at January 1, 2007 are $6.3
million of tax benefits that, if recognized, would result in a decrease to goodwill recorded in purchase business combinations, and $17.7
million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.
We recognize accrued interest and penalties related to unrecognized tax benefits in our income tax provision. During the year
ended December 31, 2006, we recognized a reduction in accrued interest and penalties of approximately $1.0 million. During the years
ended 2005 and 2004, we recognized approximately $1.1 million and $1.8 million, respectively, in penalties and interest. We had $2.8
million and $3.8 million accrued for interest and penalties at December 31, 2006 and 2005, respectively. Upon our adoption of FIN 48
on January 1, 2007, we decreased our accrual for interest and penalties to $2.4 million due primarily to interest netting.
We are subject to federal income taxes and taxation in various states. Our federal tax returns are subject to examination for tax
years ended on or after December 31, 2001. Our federal tax returns for the periods 2001 through 2003, which would normally be closed
due to statute limitations, are open to the extent of net operating loss carryback claims attributable to the 2003 tax year. Our material
state income tax returns are subject to examination for years ended on or after December 31, 2001.
We are currently under examination in both federal and state jurisdictions. As we are in various stages of the appeal process in
connection with many of our audits, it is difficult to determine when these examinations will be closed. In the event that we are able to
close these audits over the next 12 month period, we expect a decrease in our recorded unrecognized tax benefits, as of January 1,
2007, of approximately $1.8 million. Such reduction is due primarily to depreciation adjustments resulting from changes made to
assigned asset class lives. Other than the resolution of the audits discussed above, while we can provide no assurances, we do not
anticipate any material changes to our recorded unrecognized tax benefits over the next 12 month period.
Note 9. Share-Based Employee Compensation Plans
Share-based compensation costs related to stock option awards are calculated based on the fair value of each option grant on
the date of the grant using the Black-Scholes option pricing model. The following table discloses the assumptions used in estimating the
fair value of our most recent major stock option grant on November 2, 2006. There were no major grants during the six months ended
June 30, 2007.
Expected stock price volatility 38 %
Annual dividend rate 1.4 %
Risk-free interest rate 4.6 %
Expected option life (years) 4.4
Estimated fair value per share of options granted $13.16
The following provides detail of compensation costs related to our share-based employee compensation plans in our condensed
consolidated financial statements in the following categories for the three and six months ended June 30, 2007 and 2006 (in
thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Gaming $ 122 $ 187 $ 290 $ 376
Food and beverage 20 26 48 54
Room 12 13 28 25
Selling, general and administrative 663 1,044 1,550 2,091
Corporate expense 3,549 4,498 6,627 8,514
Preopening expenses 279 459 466 917
------------ ------------ ------------ ------------
Total share-based compensation expense
from continuing operations 4,645 6,227 9,009 11,977
Discontinued operations -- 58 2 115
------------ ------------ ------------ ------------
Total share-based compensation expense 4,645 6,285 9,011 12,092
Capitalized share-based compensation 307 -- 614 --
------------ ------------ ------------ ------------
Total share-based compensation costs $ 4,952 $ 6,285 $ 9,625 $ 12,092
============ ============ ============ ============
The total income tax benefit recognized in income resulting from share-based compensation expense was $1.7 million and $3.2
million, respectively, for the three and six months ended June 30, 2007. The total income tax benefit recognized in income resulting
from share-based compensation expense was $2.4 million and $4.6 million, respectively, for the three and six months ended June 30,
2006.
Stock Options
Summarized stock option plan activity for the six months ended June 30, 2007 is as follows:
Weighted
Average
Option
Options Price
----------- ---------
Options outstanding at January 1, 2007 6,551,787 $ 33.40
Options granted 63,200 47.99
Options canceled (77,330) 38.24
Options exercised (540,554) 23.72
-----------
Options outstanding at June 30, 2007 5,997,103 $ 34.36
=========== =========
Options exercisable at June 30, 2007 2,646,658 $ 28.53
=========== =========
Shares available for grant at June 30, 2007 3,847,345
===========
Restricted Stock Units
On May 18, 2006, our board of directors amended and restated our 2002 Stock Incentive Plan to provide for the grant of
Restricted Stock Units ("RSUs"). An RSU is an award which may be earned in whole or in part upon the passage of time or
the attainment of performance criteria and which may be settled for cash, shares or other securities or a combination of cash, shares or
other securities. The RSUs do not contain voting rights and are not entitled to dividends. We annually award RSUs to certain members
of our board of directors. Each RSU is fully vested upon grant and is to be paid in shares of common stock upon cessation of service on
the board of directors.
We issued a total of 19,600 RSUs with a grant date fair vale of $43.27 per unit during the six months ended June 30, 2007 and
17,500 RSUs with a grant gate fair value of $43.17 per unit during the six months ended June 30, 2006, representing $0.8 million of
share-based compensation expense for each respective grant.
Career Shares
In January 2007, we issued 26,000 Career Shares to certain of our executive management employees. The Career Shares
reward eligible executives with annual grants of Boyd Gaming stock units, to be paid out at retirement. The payout at retirement is
dependent upon the respective executive's age at retirement and the number of years of service with the Company. Executives must be
at least 60 years old and have at least 15 years of service to receive a payout at retirement. We recorded $0.3 million of share-based
compensation expense related to the issuance of these Career Shares during the six months ended June 30, 2007.
Note 10. Earnings per Share
Income from continuing operations and the weighted average number of common shares and common share equivalents used
in the calculation of basic and diluted earnings per share consisted of the following:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(in thousands)
Income from continuing operations $ 22,941 $ 12,366 $ 58,046 $ 77,635
============ ============ ============ ============
Weighted average common shares outstanding 87,497 89,635 87,369 89,473
Dilutive effect of stock options 1,217 1,468 1,219 1,505
------------ ------------ ------------ ------------
Weighted average common and potential shares outstanding 88,714 91,103 88,588 90,978
============ ============ ============ ============
Anti-dilutive options not included in the computation of diluted earnings per share amounted to 1.8 million and less than 0.1 million
for the three months ended June 30, 2007 and 2006, respectively, and 1.8 million for each of the respective six months ended June 30,
2007 and 2006.
Note 11. Discontinued Operations
South Coast
On October 25, 2006, we completed the sale of South Coast for total consideration of approximately $513 million. The total
loss on the disposition of South Coast was $69 million.
Barbary Coast
On February 27, 2007, we completed our exchange of the Barbary Coast and its related 4.2 acres of land for a total of
approximately 24 acres located north of and contiguous to our Echelon development project on the Las Vegas Strip in a nonmonetary,
tax-free transaction. Upon the closing of the transaction, we recorded a non-cash, pre-tax gain of approximately $285 million and wrote-
off the $3.7 million carrying value of the Barbary Coast trademark as we will retain the trademark but no longer have underlying cash
flows to support its value.
Summary Financial Information for Discontinued Operations
The operating results of South Coast and Barbary Coast for the three and six months ended June 30, 2007 and 2006 are
presented as net income (loss) from discontinued operations on our condensed consolidated statements of operations. The assets held
for sale and liabilities related to assets held for sale for South Coast and Barbary Coast are separately presented on our condensed
consolidated balance sheet as of December 31, 2006. Included in the income (loss) from discontinued operations is an allocation of
interest expense related to the $401 million of debt repaid as a result of the South Coast disposal transaction, as well as other
consolidated interest based on the ratio of: (i) the net assets of our discontinued operations less the debt repaid as a result of the South
Coast disposal transaction, to (ii) the sum of total consolidated net assets and consolidated debt of the Company, other than the debt
repaid as a result of the disposal transaction. The amount of interest expense allocated to discontinued operations was $0.6 million for
the six months ended June 30, 2007. The amount of interest expense allocated to discontinued operations was $8.0 million and $15.0
million for the three and six months ended June 30, 2006, respectively.
Summary operating results for the discontinued operations are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(in thousands)
Net revenues $ -- $ 59,376 $ 9,706 $ 116,227
Operating income (loss) (1,128) 4,691 (2,761) 8,314
Gain on disposition of Barbary Coast (156) -- 285,033 --
Income (loss) from discontinued operations (1,284) (3,355) 281,672 (6,652)
(Provision for) benefit from income taxes 455 1,149 (99,740) 2,417
Net income (loss) from discontinued operations (829) (2,206) 181,932 (4,235)
Note 12. Write-downs and Other Charges, Net
Write-downs and other charges, net include the following for the three and six months ended June 30, 2007 and 2006 (in
thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Property closure costs $ 1,972 $ 1,956 $ 10,020 $ 3,447
Acquisition related expenses -- -- 944 --
Asset write-downs -- 29,135 16 29,135
Hurricane and related expenses -- 158 -- 158
------------ ------------ ------------ ------------
Total write-downs and other charges, net $ 1,972 $ 31,249 $ 10,980 $ 32,740
============ ============ ============ ============
Property Closure Costs
In connection with our Las Vegas Strip development project, we closed the Stardust Hotel and Casino on November 1,
2006. During the three and six months ended June 30, 2007, property closure costs consisted principally of costs incurred to demolish
the Stardust. Property closure costs incurred during the three and six months ended June 30, 2006 consisted mainly of Stardust
employee termination costs.
Acquisition Related Expenses
Acquisition related expenses represent indirect and general costs incurred in connection with our acquisition of Dania Jai-
Alai (see Note 13,
"Acquisition of Dania Jai-Alai"
).
Asset Write-Downs
Asset write-downs during the three and six months ended June 30, 2006 include $28 million related to the write-off of the
net book value of the original Blue Chip gaming vessel, which was replaced with a new gaming vessel in conjunction with our
expansion project. After analysis of alternative uses for the original vessel, management decided in June 2006 to permanently retire the
asset from further operations, resulting in the write-off.
Note 13. Acquisition of Dania Jai-Alai
On March 1, 2007, we acquired Dania Jai-Alai and approximately 47 acres of related land located in Dania Beach, Florida.
Dania Jai-Alai is one of four pari-mutuel facilities approved under Florida law to operate 2,000 Class III slot machines (see Note 15,
"
Commitments and Contingencies",
for information related to the Broward County slot initiative). We paid
approximately $81 million to close this transaction, and we will be required to pay an additional $75 million, plus interest accrued at the
prime rate, in March 2010 or earlier, if certain conditions are satisfied. We can provide no assurances as to when, or whether, such
conditions will be satisfied. We will not record a liability for the additional $75 million obligation unless or until the contingency has been
resolved and the additional consideration is distributable. If the contingency is resolved and the $75 million payment, plus interest
accrued at the prime rate, is made, it will be added to the cost of the acquisition. We continue to work on our plans for the addition of a
casino and other amenities at Dania Jai-Alai; however, we can provide no assurances as to when, if at all, our plans will result in the
construction or opening of a new addition or amenities to the existing facility.
We are in the process of finalizing our valuation of significant identifiable intangible assets, as well as other assets acquired and
liabilities assumed based upon the estimated fair value at the date of acquisition. Our initial allocation is preliminary and may be
adjusted up to one year after the acquisition date, and we can provide no assurances that our preliminary allocations will approximate
the final allocations or that the estimated fair value will approximate the actual fair value. The following table sets forth the preliminary
allocation of the purchase price (in thousands):
March 1, 2007
------------
Current assets, including cash of $780 $ 1,101
Property and equipment 46,000
Intangible license right 38,403
------------
Total assets acquired 85,504
Current liabilities assumed (3,820)
------------
Net assets acquired $ 81,684
============
The amount allocated to an intangible gaming license right is not subject to amortization as it has an indefinite useful life.
We also reported $0.9 million of indirect and general expenses related to this acquisition, which we included in write-downs and
other charges, net on our condensed consolidated statement of operations for the six months ended June 30, 2007 (see Note 12,
"Write-downs and Other Charges, Net"
). In addition, pro forma financial information is not provided herein as Dania
Jai-Alai is not a significant subsidiary of the Company and its primary gaming operations have not yet commenced.
Note 14. Related Party Transactions
Percentage Ownership
William S. Boyd, our Chairman and Chief Executive Officer, together with his immediate family, beneficially owned
approximately 36% of our outstanding shares of common stock as of June 30, 2007. As a result, the Boyd family has the ability to
significantly influence our affairs, including the electing of our directors and, except as otherwise provided by law, approving or
disapproving other matters submitted to a vote of our stockholders, including a merger, consolidation or sale of assets. For the three
and six months ended June 30, 2007 and 2006, there were no material related party transactions between us and the Boyd family.
Note 15. Commitments and Contingencies
Commitments
Echelon
In January 2006, we formed a joint venture with Morgans, whereby we will contribute approximately 6.1 acres of land and
Morgans will contribute approximately $91.5 million to the venture, and the venture will arrange non-recourse project financing to
develop two hotel properties, the Delano Las Vegas and the Mondrian Las Vegas. Pursuant to an amendment on May 15, 2006 to our
joint venture agreement, Morgans deposited $30 million with us as an advance toward their $91.5 million capital contribution to be
made to the venture. This deposit, plus accrued interest, is included in restricted cash and accrued expenses and other on our
accompanying condensed consolidated balance sheet as of June 30, 2007. The expected cost of the project, including the land, is
estimated to be approximately $950 million; however, we can provide no assurances that the estimated cost will approximate the actual
cost.
In May 2007, we formed a joint venture with GGP whereby we will contribute above ground real estate (air rights) and GGP will
contribute $100 million to develop the Echelon Retail Promenade. Both members may contribute the necessary funds to the venture to
complete the project or the venture may arrange non-recourse financing. The expected cost of the project, including air rights, is
estimated to be approximately $500 million; however, we can provide no assurances that the estimated cost will approximate the actual
cost.
Contingencies
Dania Jai-Alai Slot Initiative
On August 8, 2006, a three-judge panel of the First District Court of Appeals in Broward County, Florida overturned a lower
court decision which in turn could lead to the invalidation of a November 2004 initiative approved by Florida voters to operate slot
machines at certain pari-mutuel gaming facilities in Broward County. This decision was essentially reaffirmed by the First District Court
of Appeals on November 30, 2006, with two questions being certified to the Florida Supreme Court. On March 27, 2007, the Florida
Supreme Court accepted jurisdiction to hear the certified questions. If the initiative is invalidated, we may not be able to operate slot
machines at the Dania Jai-Alai facility, which would materially affect any potential revenue and cash flow expected from the Dania Jai-
Alai facility (see Note 13,
"Acquisition of Dania Jai-Alai"
).
Copeland
Alvin C. Copeland, the sole shareholder of an unsuccessful applicant for a riverboat license at the location of our Treasure
Chest Casino, has made several attempts to have the Treasure Chest license revoked and awarded to his company. In 1999 and 2000,
Copeland unsuccessfully opposed the renewal of the Treasure Chest license and has brought two separate legal actions against us. In
November 1993, Copeland objected to the relocation of Treasure Chest Casino from the Mississippi River to its current site on Lake
Pontchartrain. The predecessor to the Louisiana Gaming Control Board allowed the relocation over Copeland's objection. Copeland
then filed an appeal of the agency's decision with the Nineteenth Judicial District Court. Through a number of amendments to the
appeal, Copeland unsuccessfully attempted to transform the appeal into a direct action suit and sought the revocation of the Treasure
Chest license. Treasure Chest intervened in the matter in order to protect its interests. The appeal/suit, as it related to Treasure Chest
Casino, was dismissed by the District Court and that dismissal was upheld on appeal by the First Circuit Court of Appeal. Additionally,
in 1999, Copeland filed a direct action against Treasure Chest and certain other parties seeking the revocation of Treasure Chest's
license, an award of the license to him and monetary damages. The suit was dismissed by the trial court citing that Copeland failed to
state a claim on which relief could be granted. The dismissal was appealed by Copeland to the Louisiana First Circuit Court of Appeal.
On June 21, 2002, the First Circuit Court of Appeal reversed the trial court's decision and remanded the matter to the trial court.
On January 14, 2003, we filed a motion to dismiss the matter and that motion was partially denied. The Court of Appeals refused
to reverse the denial of the motion to dismiss. In May 2004, we filed additional motions to dismiss on other grounds. There was no
activity regarding this matter during 2005 and 2006, but the plaintiff recently filed a motion to set a hearing date related to the motions to
dismiss, which hearing has been scheduled for August 27, 2007. We currently are vigorously defending the law suit. If this matter
ultimately results in the Treasure Chest license being revoked, it could have a significant adverse effect on our business, financial
condition and results of operations.
Blue Chip Property Taxes
In May 2007, Blue Chip received a notice indicating an unanticipated increase of nearly 400% to its assessed property value as
of January 1, 2006. We estimate that this increase in assessed property value could result in a property tax assessment ranging
between $4 million and $11 million for the eighteen-month period ended June 30, 2007. We recorded an additional charge of $3.2
million during the three months ended June 30, 2007 to increase our property tax liability to $5.8 million at June 30, 2007 as we
estimate that is the most likely amount to be assessed within the range; however, we can provide no assurances that the estimated
amount will approximate the actual amount. The actual assessment is expected to be received later this year and could result in further
adjustment to our estimated property tax liability at Blue Chip.
We are also parties to various legal proceedings arising in the ordinary course of business. We believe that, except for the matters
discussed above, all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position
or results of operations.
Note 16. Segment Information
We have aggregated certain of our properties in order to present five reportable segments: Las Vegas Locals, Downtown Las
Vegas, Midwest and South, Stardust and Borgata, our 50% joint venture in Atlantic City. The table below lists the classification of each
of our properties. Beginning in 2007, with our acquisition of Dania Jai-Alai, we have renamed what we previously referred to as the
Central Region, as the Midwest and South. On March 1, 2007, we acquired Dania Jai-Alai, which currently does not have any slot
operations (see Note 13, "
Acquisition of Dania Jai-Alai"
). Due to the disposition of Barbary Coast and South Coast,
the operating results from these two properties are classified as discontinued operations in our condensed consolidated statements of
operations for all periods presented and are excluded from our presentation in the Las Vegas Locals segment. In addition, we ceased
operations at the Stardust on November 1, 2006. Results for the Las Vegas Locals segment also include the results of an offsite sports
book. Results for Downtown Las Vegas include the results of our two travel agencies and our insurance company.
|
Las Vegas Locals
|
|
Downtown Las Vegas
|
|
|
Gold Coast Hotel and Casino
|
Las Vegas, NV
|
California Hotel and Casino
|
Las Vegas, NV
|
|
The Orleans Hotel and Casino
|
Las Vegas, NV
|
Fremont Hotel and Casino
|
Las Vegas, NV
|
|
Sam's Town Hotel and Gambling Hall
|
Las Vegas, NV
|
Main Street Station Casino, Brewery
|
|
|
Suncoast Hotel and Casino
|
Las Vegas, NV
|
and Hotel
|
Las Vegas, NV
|
|
Eldorado Casino
|
Henderson, NV
|
Midwest and South
|
|
|
Jokers Wild Casino
|
Henderson, NV
|
Sam's Town Hotel and Gambling Hall
|
Tunica, MS
|
|
|
|
Par-A-Dice Hotel Casino
|
East Peoria, IL
|
|
Stardust Resort and Casino
|
Las Vegas, NV
|
Treasure Chest Casino
|
Kenner, LA
|
|
|
|
Blue Chip Hotel and Casino
|
Michigan City, IN
|
|
Borgata Hotel Casino and Spa
|
Atlantic City, NJ
|
Delta Downs Racetrack Casino & Hotel
|
Vinton, LA
|
|
|
|
Sam's Town Hotel and Casino
|
Shreveport, LA
|
|
|
|
Dania Jai-Alai
|
Dania Beach, FL
|
The following table sets forth, for the periods indicated, certain operating data for our reportable segments.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Gross Revenues
Las Vegas Locals $ 233,558 $ 228,207 $ 475,190 $ 476,614
Downtown Las Vegas 70,526 70,522 140,443 140,886
Midwest and South 262,781 271,266 524,325 558,339
Stardust -- 41,027 -- 86,311
------------ ------------ ------------ ------------
Total gross revenues $ 566,865 $ 611,022 $ 1,139,958 $ 1,262,150
============ ============ ============ ============
Adjusted EBITDA (1)
Las Vegas Locals $ 66,844 $ 65,193 $ 141,423 $ 147,143
Downtown Las Vegas 13,156 12,906 27,037 26,922
Midwest and South 54,917 58,587 112,198 142,446
Stardust -- 4,620 -- 11,378
------------ ------------ ------------ ------------
Wholly-owned property Adjusted EBITDA 134,917 141,306 280,658 327,889
Corporate expense (2) (9,995) (9,085) (22,188) (18,575)
------------ ------------ ------------ ------------
Wholly-owned Adjusted EBITDA 124,922 132,221 258,470 309,314
Our share of Borgata's operating income before net
amortization, preopening and other items (3) 18,778 21,419 40,650 46,810
------------ ------------ ------------ ------------
Adjusted EBITDA 143,700 153,640 299,120 356,124
------------ ------------ ------------ ------------
Other operating costs and expenses
Deferred rent 1,130 1,158 2,260 2,315
Depreciation and amortization (4) 42,262 48,787 83,198 98,291
Preopening expenses 6,062 7,249 10,512 13,094
Our share of Borgata's preopening expenses 539 1,908 1,009 2,573
Our share of Borgata's loss on asset disposals 201 42 167 188
Share-based compensation expense 4,366 5,771 8,550 11,065
Write-downs and other charges, net 1,972 31,249 10,980 32,740
------------ ------------ ------------ ------------
Total other operating costs and expenses 56,532 96,164 116,676 160,266
------------ ------------ ------------ ------------
Operating income 87,168 57,476 182,444 195,858
------------ ------------ ------------ ------------
Other non-operating costs and expenses
Interest expense, net (5) 33,687 36,238 70,235 71,052
Loss on early retirements of debt 16,945 -- 16,945 --
Increase in value of derivative instruments (2,601) -- (2,525) --
Our share of Borgata's non-operating expenses, net 3,574 2,070 7,375 4,295
------------ ------------ ------------ ------------
Total other non-operating costs and expenses 51,605 38,308 92,030 75,347
------------ ------------ ------------ ------------
Income from continuing operations before provision for income taxes 35,563 19,168 90,414 120,511
Provision for income taxes (12,622) (6,802) (32,368) (42,876)
------------ ------------ ------------ ------------
Income from continuing operations $ 22,941 $ 12,366 $ 58,046 $ 77,635
============ ============ ============ ============
(1) Earnings before interest, taxes, depreciation and amortization, or EBITDA, is a commonly used measure of performance in
our industry which we believe, when considered with measures calculated in accordance with United States Generally Accepted
Accounting Principles, or GAAP, gives investors a more complete understanding of operating results before the impact of investing and
financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically
adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and
non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate
period-to-period results. We have chosen to provide this information to investors to enable them to perform more meaningful
comparisons of past, present and future operating results and as a means to evaluate the results of core on-going operations. We do
not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. We
have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides
consistency in our financial reporting. We use Adjusted EBITDA because we believe it is useful to investors in allowing greater
transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA
is among the more significant factors in management's internal evaluation of total company and individual property performance and in
the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in
determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely used by management in the annual budget
process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and
the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based
compensation expense, change in value of derivative instruments, write-downs and other charges, net, loss on early retirements of debt
and our share of Borgata's non-operating expenses, preopening expenses and gain or loss on asset disposals.
(2) The following table reconciles the presentation of corporate expense on our condensed consolidated statements of
operations to the presentation on the accompanying table:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Corporate expense as reported on our
condensed consolidated statements of operations $ 13,544 $ 13,581 $ 28,815 $ 27,089
Corporate share-based compensation expense (3,549) (4,496) (6,627) (8,514)
------------ ------------ ------------ ------------
Corporate expense as reported on accompanying table $ 9,995 $ 9,085 $ 22,188 $ 18,575
============ ============ ============ ============
(3) The following table reconciles the presentation of our share of Borgata's operating income on our condensed consolidated
statements of operations to the presentation of our share of Borgata's results on the accompanying table:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Operating income from Borgata, as reported on our
condensed consolidated statements of operations $ 17,713 $ 19,144 $ 38,825 $ 43,400
Add back:
Net amortization expense related to our
investment in Borgata 325 325 649 649
Our share of Borgata's preopening expenses 539 1,908 1,009 2,573
Our share of Borgata's loss on asset disposals 201 42 167 188
------------ ------------ ------------ ------------
Our share of Borgata's operating income before net
amortization, preopening and other items $ 18,778 $ 21,419 $ 40,650 $ 46,810
============ ============ ============ ============
(4) The following table reconciles the presentation of depreciation and amortization on our condensed consolidated statements
of operations to the presentation on the accompanying table:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Depreciation and amortization as reported on our
condensed consolidated statements of operations $ 41,937 $ 48,462 $ 82,549 $ 97,642
Net amortization expense related to
our investment in Borgata 325 325 649 649
------------ ------------ ------------ ------------
Depreciation and amortization as reported on accompanying table $ 42,262 $ 48,787 $ 83,198 $ 98,291
============ ============ ============ ============
(5) Net of interest income and amounts capitalized.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
We are a diversified operator of 16 wholly-owned gaming entertainment properties and one joint-venture property.
Headquartered in Las Vegas, we have gaming operations in Nevada, Illinois, Louisiana, Mississippi, Indiana, Florida and New Jersey.
We aggregate certain of our properties in order to present five reportable segments: Las Vegas Locals, Downtown Las Vegas, Midwest
and South, Stardust (closed November 1, 2006) and Borgata, our 50% joint venture in Atlantic City. We own 87 acres on the Las Vegas
Strip where our Echelon project is currently under development.
Beginning in 2007, with our acquisition of Dania Jai-Alai, we have renamed what we previously referred to as the Central Region,
as the Midwest and South segment. Due to the disposition of Barbary Coast on February 27, 2007 and the South Coast on October 25,
2006, the operating results from these two properties are classified as discontinued operations in our condensed consolidated
statements of operations. We have reclassified their results for the three and six months ended June 30, 2006 to conform to the current
presentation. For further information related to our segment information, including the property compositions of each segment, the
definition of Adjusted EBITDA and reconciliations of certain financial information, see Note 16,
"Segment
Information
", to our Condensed Consolidated Financial Statements
.
Our main business emphasis is on slot revenues, which are highly dependent on the volume of customers at our properties.
Gross revenues are one of the main performance indicators of our properties. Most of our revenue is cash-based, and our properties
have historically generated significant operating cash flow. Our industry is capital intensive, and we rely heavily on the ability of our
properties to generate operating cash flow to repay debt financing, pay income taxes, fund maintenance capital expenditures and
provide excess cash for future development and the payment of dividends.
Overall Outlook
Over the past few years, we have been working to strategically position our Company for greater success by strengthening our
operating foundation and effecting strategic growth in order to attempt to increase shareholder value. The following is a listing of our
most recently completed areas of growth:
-
Opening of Borgata's public space expansion in June 2006, which includes three new signature restaurants and nine
additional casual dining outlets, additional casino games, an 85-table poker room and an ultra lounge.
-
Expansion of Blue Chip Casino Hotel in January 2006 through the construction of a single-level boat that allowed us to
expand our gaming space and increase the number of slot machines and table games. In connection with this expansion project, we
also added a new parking structure and enhanced the land-based pavilion.
We are currently focused on future expansion projects at several of our properties, such as Echelon, our Las Vegas Strip
development, which we expect to open in the third quarter of 2010. See
"Other Items Affecting Liquidity"
and
"Other Opportunities"
below for a more comprehensive description of our expansion projects.
In October 2006, we completed the sale of South Coast, which provided us with additional capital for future growth opportunities
and reduced our issued and outstanding common stock by approximately 3.4 million shares. On February 27, 2007, we completed our
transaction to exchange the Barbary Coast for approximately 24 acres of land on the Las Vegas Strip adjacent to our Echelon
development project, which will allow us to strengthen our future growth pipeline.
In addition to our expansion projects mentioned above, we regularly evaluate opportunities for growth through the development of
gaming operations in existing or new markets and through acquiring other gaming entertainment facilities. For example, on March 1,
2007, we completed our acquisition of Dania Jai-Alai and approximately 47 acres of related land located in Dania Beach, Florida. This
transaction is described in more detail at "
Other Items Affecting Liquidity"
below.
Summary Financial Results
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Gross revenues
Las Vegas Locals $ 233,558 $ 228,207 $ 475,190 $ 476,614
Downtown Las Vegas 70,526 70,522 140,443 140,886
Midwest and South 262,781 271,266 524,325 558,339
Stardust -- 41,027 -- 86,311
------------ ------------ ------------ ------------
Total gross revenues $ 566,865 $ 611,022 $ 1,139,958 $ 1,262,150
============ ============ ============ ============
Operating income $ 87,168 $ 57,476 $ 182,444 $ 195,858
============ ============ ============ ============
Income from continuing operations $ 22,941 $ 12,366 $ 58,046 $ 77,635
============ ============ ============ ============
Significant events that affected our results for the three and six months ended June 30, 2007 as compared to the same periods in
2006 are described below:
-
A decline in 2007 operating results at Treasure Chest, reflecting normalization of its results as the Gulf Coast continued to rebuild
and other forms of entertainment have reopened after the impact of Hurricane Katrina.
-
The addition of a new property by a major competitor in the Las Vegas Locals market in April 2006.
-
The closing of the Stardust on November 1, 2006 to make way for the development of Echelon on the Las Vegas Strip.
-
A $28 million charge during the three months ended June 30, 2006 to write-off the net book value of the original Blue Chip gaming
vessel, which was replaced with a new gaming vessel in connection with our 2006 expansion project.
-
A $16.9 million loss on early retirements of our $250 million principal amount 8.75% senior subordinated notes and our former bank
credit facility during the three months ended June 30, 2007.
Adjusted EBITDA
We have aggregated certain of our properties in order to present the five reportable segments listed in the table below. See
Note 16,
"Segment Information",
to our Condensed Consolidated Financial Statements
for a definition of
Adjusted EBITDA and a reconciliation of this financial information to operating income and income from continuing operations
presented in accordance with GAAP.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Adjusted EBITDA
Las Vegas Locals $ 66,844 $ 65,193 $ 141,423 $ 147,143
Downtown Las Vegas 13,156 12,906 27,037 26,922
Midwest and South 54,917 58,587 112,198 142,446
Stardust -- 4,620 -- 11,378
Our share of Borgata's operating income before net
amortization, preopening and other items 18,778 21,419 40,650 46,810
The significant factors that affected Adjusted EBITDA for the three and six months ended June 30, 2007 as compared to the same
periods in 2006 are listed below:
-
Las Vegas Locals Adjusted EBITDA decreased during the six months ended June 30, 2007 as compared to the same period in
2006 due primarily to the addition of increased competition and promotional spending in the market, which had a negative impact on
this segment's results; however, this segment's results have begun to show improvement during the three months ended June 30, 2007
as compared to the same period in 2006 as the Las Vegas population continues to grow and absorb the increased capacity in the
market.
-
Midwest and South Adjusted EBITDA decreased primarily due to the following items:
-
The normalization of Adjusted EBITDA at Treasure Chest during the three and six months ended June 30, 2007 as compared to
the same periods in 2006 as the Gulf Coast continued to rebuild and other forms of entertainment that have reopened after the impact
of Hurricane Katrina. Results at Treasure Chest appear to have stabilized as this is the third consecutive quarter at similar Adjusted
EBITDA levels for the property;
-
Adjusted EBITDA at Blue Chip declined during the three and six months ended June 30, 2007 as compared to the same periods in
the prior year due to the January 2006 grand opening of our new gaming vessel, which resulted in a significant increase in customer
volume and operating results during the prior year. In addition, results at Blue Chip for the three months ended June 30, 2007 were
impacted by a $3.2 million estimated property tax charge retroactive to January 1, 2006. This charge was the result of a notice
indicating an unanticipated increase of nearly 400% to Blue Chip's assessed property value.
-
We closed the Stardust on November 1, 2006 to make way for the development of Echelon on the Las Vegas Strip.
Operating Data for Borgata - our 50% joint venture in Atlantic City
The following table sets forth, for the periods indicated, certain operating data for Borgata, our 50% joint venture in Atlantic
City. We use the equity method to account for our investment in Borgata.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Gross revenues $ 249,652 $ 237,137 $ 503,658 $ 467,494
Operating income 36,077 38,939 78,948 88,098
Total non-operating expenses (7,147) (4,141) (14,750) (8,590)
Net income 28,930 34,798 64,198 79,508
The following table reconciles the presentation of our share of Borgata's operating income.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Operating income from Borgata, as reported on our condensed
consolidated statements of operations $ 17,713 $ 19,144 $ 38,825 $ 43,400
Net amortization expense related to our investment in Borgata 325 325 649 649
------------ ------------ ------------ ------------
Our share of Borgata's operating income 18,038 19,469 39,474 44,049
Our share of Borgata's preopening expenses 539 1,908 1,009 2,573
Our share of Borgata's loss on asset disposals 201 42 167 188
------------ ------------ ------------ ------------
Our share of Borgata's operating income before net
amortization, preopening and other items $ 18,778 $ 21,419 $ 40,650 $ 46,810
============ ============ ============ ============
Our share of Borgata's operating income before net amortization, preopening and other items decreased $2.6 million and $6.2
million during the three and six months ended June 30, 2007, respectively, as compared to the same periods in 2006. This decline is
mainly attributable to the heightened competitive environment in Atlantic City as a result of new competition from surrounding
jurisdictions, as well as higher fixed costs associated with Borgata's public space expansion that opened in June 2006.
Operating Results-Discussion of Certain Charges
Significant charges during the three and six months ended June 30, 2007 and 2006 are discussed below:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Depreciation and amortization $ 42,262 $ 48,787 $ 83,198 $ 98,291
Preopening expenses 6,062 7,249 10,512 13,094
Write-downs and other charges, net 1,972 31,249 10,980 32,740
Depreciation and Amortization.
The decline in depreciation and amortization expense during the
three and six months ended June 30, 2007 as compared to the same periods in 2006 is principally due to the closure of the Stardust on
November 1, 2006. Additionally, in connection with the planned closure of the Stardust, the useful lives of the depreciable assets
residing on the land associated with our Las Vegas Strip development project, including our corporate office building, were re-
evaluated. During the three and six months ended June 30, 2006, we recorded $2.7 million and $5.3 million, respectively, in
accelerated depreciation related to those assets.
Preopening Expenses.
For the respective three and six months ended June 30, 2007, preopening expenses related to the following items:
-
$5.0 million and $8.0 million for our Echelon development project;
-
$0.8 million and $1.7 million for our Dania Jai-Alai development project; and
-
$0.3 million and $0.8 million for other projects.
For the respective three and six months ended June 30, 2006, preopening expenses related to the following items:
-
$5.3 million and $7.6 million for our Echelon development project;
-
$0.0 million and $2.6 million for our Blue Chip expansion project, which opened on January 31, 2006; and
-
$1.9 million and $2.9 million for other projects.
Write-downs and Other Charges, Net
.
For the three and six months ended June 30, 2007, write-downs and other charges, net primarily consist of the following:
-
In connection with our Echelon development project on the Las Vegas Strip, we closed the Stardust on November 1, 2006 and
demolished the property in 2007. During the three and six months ended June 30, 2007, we recorded $2.0 million and $10.0 million,
respectively, in property closure costs, the majority of which represents demolition costs. During the three and six months ended June
30, 2006, we incurred $2.0 million and $3.4 million, respectively, in property closure costs related to one-time termination benefits to our
Stardust employees.
-
During the three months ended June 30, 2006, we recorded a $28 million non-cash charge to write off the net book value of the
original Blue Chip gaming vessel, which was replaced with a new gaming vessel in conjunction with our expansion project. After
analysis of alternative uses for the original vessel, management decided in June 2006 to permanently retire the asset from further
operations.
Other Operating Items
Asset Impairment
Due to a history of operating losses at Sam's Town Tunica, we continue to test the assets of Sam's Town Tunica for
recoverability pursuant to SFAS No. 144, "
Accounting for the Impairment or Disposal of Long-Lived Assets".
The asset recoverability test requires estimating Sam's Town Tunica's undiscounted future cash flows and comparing that
aggregate total to the property's carrying value. As the property's estimated undiscounted future cash flows exceed its carrying value,
we do not believe Sam's Town Tunica's assets to be impaired at this time; however, we will continue to monitor the performance of
Sam's Town Tunica and, if necessary, continue to update our asset recoverability test under SFAS No. 144. If future asset
recoverability tests indicate that the assets of Sam's Town Tunica are impaired, we will be subject to a non-cash write-down of its
assets, which could have a material impact on our condensed consolidated statements of operations.
We have significant amounts of goodwill and indefinite-life intangible assets on our condensed consolidated balance sheet as of
June 30, 2007. In accordance with SFAS No. 142, "
Goodwill and Other Intangible Assets",
we perform an annual
impairment test of these assets during the second quarter of each year, which resulted in no impairment charge for 2007; however, if
our ongoing estimates of projected cash flows related to these assets are not met, we may be subject to a non-cash write-down of
these assets in the future, which could have a material impact on our condensed consolidated statements of operations.
Blue Chip
The Pokagon Band of Potawatomi Indians, a federally recognized Native American tribe, commenced operations of its
Four Winds Casino in New Buffalo, Michigan (which is located approximately fifteen miles from Blue Chip) in August 2007. Although we
have expanded our facility at Blue Chip in an effort to be more competitive in this market, the Four Winds Casino could have a material
adverse impact on the operations of Blue Chip.
Other Non-Operating Costs and Expenses
Interest Costs
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(In thousands)
Interest costs $ 38,361 $ 46,305 $ 77,233 $ 90,320
Less capitalized interest (4,564) (1,985) (6,288) (4,230)
Less interest costs related to discontinued operations -- (8,046) (600) (14,966)
Less interest income (110) (36) (110) (72)
------------ ------------ ------------ ------------
Interest expense, net $ 33,687 $ 36,238 $ 70,235 $ 71,052
============ ============ ============ ============
Weighted average debt balance $ 2,197,885 $ 2,596,168 $ 2,160,003 $ 2,596,768
============ ============ ============ ============
Weighted average interest rate 7.0 % 7.1 % 7.2 % 7.0 %
============ ============ ============ ============
Interest costs decreased for the three and six months ended June 30, 2007 as compared to the same periods in the prior year
principally due to a decrease in the average levels of debt outstanding as a result of the $401 million of cash proceeds we received
from the sale of South Coast in October 2006. Capitalized interest increased during the three and six months ended June, 30, 2007 as
compared to the same periods in the prior year due primarily to an increase in capital spending on our Echelon development project.
We expect interest costs and capitalized interest to increase in 2007 due primarily to expected increases in capital spending on our
Echelon and Dania Jai-Alai development projects and our new hotel tower at Blue Chip.
Included in the loss from discontinued operations for the three and six months ended June 30, 2006 is an allocation of interest
expense related to the $401 million of debt that was repaid as a result of the South Coast disposal transaction, as well as other
consolidated interest based on the ratio of: (i) the net assets of our discontinued operations less the debt repaid as a result of the South
Coast disposal transaction, to (ii) the sum of total consolidated net assets and consolidated debt of the Company, other than the debt
repaid as a result of the disposal transaction. With the February 2007 completion of the Barbary Coast exchange transaction, we do not
expect further allocation of interest to discontinued operations from these transactions.
Loss on Early Retirements of Debt
On May 24, 2007, we entered into a new $4.0 billion revolving bank credit facility that matures on May 24, 2012. The new
bank credit facility replaces our former $1.85 billion bank credit facility. We recorded a $4.4 million non-cash loss on early retirement of
debt for the three and six months ended June 30, 2007 for the write-off of unamortized debt fees associated with our former bank credit
facility.
On April 16, 2007, we redeemed our $250 million principal amount of 8.75% senior subordinated notes that were originally due to
mature in April 2012. In connection with the redemption of these notes, we terminated our $50 million notional amount fixed-to-floating
interest rate swap. During the three and six months ended June 30, 2007, we recorded a loss on the early retirement of these notes
and related interest rate swap of $12.5 million.
Increase in Value of Derivative Instruments
In connection with the termination of certain LIBOR contracts upon entering into our new bank credit facility on May 24,
2007, we elected to remove the cash flow hedge designation and discontinue hedge accounting on $500 million notional amount of
interest rate derivatives that hedge the variability in the cash flows of our floating rate borrowings. As a result, the $2.6 million increase
in value of these interest rate derivatives from May 24, 2007 through June 30, 2007 is recorded as a gain on our condensed
consolidated statement of operations for the three months ended June 30, 2007. In addition, $4.3 million of existing net gains
related to these interest rate derivatives is included in accumulated other comprehensive income on our condensed consolidated
balance sheet at June 30, 2007. These net gains will reduce interest expense over the original remaining terms of these interest rate
derivatives which extend into 2011; therefore, we recorded $0.2 million as a reduction of interest expense and accumulated other
comprehensive income during the three months ended June 30, 2007, and we will record $1.3 million as a reduction of interest expense
and other comprehensive income during the remainder of 2007.
In July 2007, we terminated our positions in these $500 million notional amount of interest rate derivatives. In connection with these
transactions, we received an aggregate of $4.9 million in cash and incurred a loss of approximately $3.5 million representing the
change in value of these interest rate derivatives from June 30, 2007. In addition, we entered into new forward starting swaps with an
aggregate notional amount of $500 million to hedge the variability in the cash flows of our floating rate borrowings through June 30,
2011. We have designated and qualified these new forward starting swaps as cash flow hedges and expect to account for them
accordingly.
Provision for Income Taxes
The effective tax rate for continuing operations was 35.5% for the three months ended June 30, 2007 and 2006, respectively.
The effective tax rate for continuing operations for the six months ended June 30, 2007 was 35.8% compared to 35.6% for the six
months ended June 30, 2006.
Income from Continuing Operations
As a result of the factors discussed above, we reported income from continuing operations of $22.9 million and $12.4 million,
respectively, for the three months ended June 30, 2007 and 2006, and $58.0 million and $77.6 million, respectively, for the six months
ended June 30, 2007 and 2006.
Liquidity and Capital Resources
Cash Flows Summary
Six Months Ended
June 30,
--------------------------
2007 2006
------------ ------------
(In thousands)
Net cash provided by operating activities $ 129,103 $ 204,520
------------ ------------
Cash flows from investing activities:
Net cash paid for Dania Jai-Alai (80,904) --
Capital expenditures (116,225) (286,152)
Insurance recoveries for replacement assets -- 23,000
Other (1,391) --
------------ ------------
Net cash used in investing activities (198,520) (263,152)
------------ ------------
Cash flows from financing activities:
Net (payments) borrowings under bank credit facilities 327,500 (196,700)
Retirement of long-term debt (260,938) --
Net proceeds from issuance of long-term debt -- 246,300
Dividends paid on common stock (24,877) (23,269)
Proceeds from exercise of stock options 12,821 7,668
Other 4,896 5,569
------------ ------------
Net cash provided by financing activities 59,402 39,568
------------ ------------
Net decrease in cash and cash equivalents $ (10,015) $ (19,064)
============ ============
Cash Flows from Operating Activities and Working Capital
For the six months ended June 30, 2007, we generated operating cash flow of $129 million compared to $205 million for
the six months ended June 30, 2006. The primary reason for the decrease in operating cash flows was due to a decline in operating
results in our Midwest and South segment, for the reasons cited above, as well as increased competition in our Las Vegas Locals
segment and the closure of the Stardust on November 1, 2006. In addition, our distributions from Borgata declined from $42.7 million
during the six months ended June 30, 2006 to $32.2 million during the six months ended June 30, 2007 due to the decline in
Borgata's operating results discussed above. Borgata has significant uses for its cash flows, including maintenance and expansion
capital expenditures, interest payments, state income taxes and the repayment of debt. Borgata's cash flows are primarily used for its
business needs and are not generally available (except to the extent distributions are paid to us) to service our indebtedness.
Due to the sale of South Coast on October 25, 2006, the closure of the Stardust on November 1, 2006 and the exchange of the
Barbary Coast on February 27, 2007, we anticipate that our 2007 cash flows from operating activities will decline from comparative
2006 levels without the future operating results from these properties.
As of June 30, 2007 and 2006, we had balances of cash and cash equivalents of $159 million and $169 million, respectively. We
had working capital deficits of $10.5 million and $97 million, respectively, as of June 30, 2007 and 2006.
Historically, we have operated with minimal or negative levels of working capital in order to minimize borrowings and related
interest costs under our revolving bank credit facility. The revolver portion of our bank credit facility generally provides any necessary
funds for our day-to-day operations, interest and tax payments as well as capital expenditures. On a daily basis, we evaluate our cash
position and adjust our revolver balance as necessary by either paying it down with excess cash or borrowing under the revolver. We
also plan the timing and the amounts of our capital expenditures. We believe that our revolving bank credit facility and cash flows from
operating activities will be sufficient to meet our projected operating and maintenance capital expenditures for the next twelve months.
The source of funds for our development projects, such as Blue Chip's new hotel tower, Echelon and Dania Jai-Alai, is expected to
come primarily from cash flows from operations, availability under our revolving bank credit facility, to the extent availability exists after
we meet our working capital needs, as well as additional funds that are expected to be generated from incremental bank financing or
other additional debt. We could also fund these projects with equity offerings. Additional financing may not be available to us, or, if
available, may not be on terms favorable to us.
Cash Flows from Investing Activities
Cash paid for capital expenditures on major projects for the six months ended June 30, 2007 included the following:
-
Echelon development project;
-
New corporate offices; and
-
New hotel tower expansion project at Blue Chip.
Spending on these and other expansion projects totaled $71 million. We also paid $45 million for maintenance capital expenditures
during the six months ended June 30, 2007. In addition, we paid approximately $81 million for our acquisition of Dania Jai-Alai.
Cash paid for capital expenditures on major projects and land acquisitions for the six months ended June 30, 2006, included the
following:
-
Blue Chip expansion project that opened in January 2006;
-
South Coast expansion project;
-
Acquisition of North Las Vegas land;
-
Acquisition of land and building for our new corporate office; and
-
Hurricane restoration costs at Delta Downs.
Spending on these and other expansion projects totaled $243 million for the six months ended June 30, 2006. We also paid $43
million for maintenance capital expenditures and received $23 million of property insurance recoveries as a reimbursement of our
capital spending related to our hurricane restoration project at Delta Downs.
Cash Flows from Financing Activities
Substantially all of the funding for our acquisitions and renovation and expansion projects comes from cash flows from
existing operations and debt financing.
On January 30, 2006, we issued $250 million principal amount of 7.125% senior subordinated notes due February 2016. The
$246 million of net proceeds from this debt issuance was used to repay a portion of the outstanding borrowings under our bank credit
facility.
On April 16, 2007, we redeemed our $250 million principal amount of 8.75% senior subordinated notes that were due to mature in
April 2012 for $261 million. This redemption was funded by availability under our bank credit facility.
During 2007, we have paid a quarterly cash dividend of $0.15 per share on March 1, 2007 and June 1, 2007. During the six months
ended June 30, 2007, the total amount paid for dividends was $24.9 million. In July 2007, our Board of Directors declared a dividend of
$0.15 per share, payable on September 4, 2007 to shareholders of record on August 17, 2007. During the six months ended June 30,
2006, we paid a quarterly cash dividend of $0.125 on March 1, 2006 and $0.135 on June 1, 2006. The total amount paid for dividends
during the six months ended June 30, 2006 was $23.3 million. Dividends are declared at the discretion of our Board of Directors. We
are subject to certain limitations regarding the payment of dividends, such as restricted payment limitations related to our outstanding
notes and our bank credit facility.
As a result of the items discussed above, we incurred $328 million in net borrowings on our bank credit facility during the six
months ended June 30, 2007. We made net payments on our bank credit facility of $197 million during the six months ended June 30,
2006.
Other Items Affecting Liquidity
Echelon.
In January 2006, we announced plans to develop Echelon on the Las Vegas Strip and
commenced construction in June 2007, with a planned third quarter 2010 opening. We estimate that the wholly-owned components of
Echelon will cost $3.3 billion. In addition, we have recently completed our design and development work on the two joint-venture
elements of Echelon, which include our hotel joint venture with Morgans Hotel Group LLC, or Morgans, and our retail promenade joint
venture with General Growth Properties, or GGP.
Echelon will include a total of approximately 5,000 rooms in five unique hotels, including the following amenities:
-
Casino space: 140,000 square feet
-
Entertainment venues: 4,000-seat and 1,500-seat theaters, operated by AEG Live
-
Retail promenade: 300,000 square feet
-
Meeting and Convention space: 750,000 square feet
-
Parking: approximately 9,000 spaces
Echelon will also include approximately 30 dining, nightlife and beverage venues in addition to an approximately 4.5 acre multi-level
pool and recreation deck.
On February 27, 2007, we exchanged the Barbary Coast for 24 acres on the Las Vegas Strip, which will bring our total land
holdings to 87 contiguous acres on the Echelon site. The additional land allowed us to modify the site layout of Echelon, increases the
overall size of the project to 65 acres, and will provide us with two additional parcels of six and 16 acres that could allow for the addition
of another distinct hotel, a residential component, and additional retail, dining, meeting and casino space.
In connection with our joint venture with Morgans to develop, construct and operate the Delano Las Vegas and the Mondrian Las
Vegas hotels, we will contribute approximately 6.1 acres of land and Morgans will contribute $91.5 million to the venture, and the
venture will arrange non-recourse project financing. The expected cost of the project, including the land, is estimated to be
approximately $950 million; however, we can provide no assurances that the estimated cost will approximate the actual cost. Morgans
is expected to begin construction in the first quarter 2008.
In connection with our joint venture with GGP to develop, construct and operate the Echelon Retail Promenade, we will contribute
the above ground real estate (air rights) and GGP will contribute $100 million to the venture. Both members may contribute the
necessary funds to the venture to complete the project or the venture may arrange non-recourse project financing. The expected cost of
this project, including the air rights, is estimated to be approximately $500 million; however, we can provide no assurances that the
estimated cost will approximate the actual cost.
Blue Chip.
In October 2006, we announced a $130 million expansion project at Blue Chip that will add a second hotel with
approximately 300 guest rooms to our existing 184-room hotel, a spa and fitness center, additional meeting and event space as well as
more dining and nightlife experiences. We began construction on the project in March 2007 and it is expected to open in late 2008.
Dania Jai-Alai.
On March 1, 2007, we acquired Dania Jai-Alai and approximately 47 acres of related land located in Dania
Beach, Florida. Dania Jai-Alai is one of four pari-mutuel facilities approved under Florida law to operate 2,000 Class III slot machines
(see Note 15, "
Commitments and Contingencies",
for information related to the Broward County slot initiative). We
paid approximately $81 million to close this transaction, and we will be required to pay an additional $75 million, plus interest accrued at
the prime rate, in March 2010 or earlier, if certain conditions are satisfied. We can provide no assurances as to when, or whether, such
conditions will be satisfied. We will not record a liability for the additional $75 million obligation unless or until the contingency has been
resolved and the additional consideration is distributable. If the contingency is resolved and the $75 million payment, plus interest
accrued at the prime rate, is made, it will be added to the cost of the acquisition. We continue to develop our plans for the addition of a
casino and other amenities at Dania Jai-Alai; however, we can provide no assurances as to when, if at all, our plans will result in the
construction or opening of a new addition or amenities to the existing facility.
Other Opportunities
We regularly investigate and pursue additional expansion opportunities in markets where casino gaming is currently
permitted. We also pursue expansion opportunities in jurisdictions where casino gaming is not currently permitted in order to be
prepared to develop projects upon approval of casino gaming. Such expansions will be affected and determined by several key factors,
including:
-
outcome of license selection processes;
-
approval of gaming in jurisdictions where we have been active but where casino gaming is not currently permitted;
-
identification of additional suitable investment opportunities in current gaming jurisdictions; and
-
availability of acceptable financing.
Additional projects may require us to make substantial investments or may cause us to incur substantial costs related to the
investigation and pursuit of such opportunities, which investments and costs we may fund through cash flow from operations or
availability under our bank credit facility. To the extent such sources of funds are not sufficient, we may also seek to raise such
additional funds through public or private equity or debt financings or from other sources. No assurance can be given that additional
financing will be available or that, if available, such financing will be obtainable on terms favorable to us.
We can provide no assurances that our expansion and development projects will be completed within our current estimates,
commence operations as expected, include all of the anticipated amenities, features or facilities or achieve market acceptance. Our
expansion and development projects are subject to those risks inherent in the development and operation of a new or expanded
business enterprise, including potential unanticipated operating problems, as well as risks, including the risk of non-performance, posed
by our joint venture partners or other third parties whom we rely on in certain of our expansion and development projects. If our
expansion or development projects do not become operational within the time frame and project costs currently contemplated or do not
successfully compete in their markets, it could have a material adverse effect on our business, financial condition and results of
operations. Once our projects become operational, they will face many of the same risks that our current properties face including, but
not limited to, increases in taxes due to changes in legislation.
The source of funds for these projects is expected to come from cash flows from operations and availability under our bank credit
facility, to the extent availability exists after we meet our working capital needs. We could also fund these projects with incremental
bank financing, additional debt or equity offerings. Additional financing may not be available to us, or, if available, may not be on terms
favorable to us.
Indebtedness
Our long-term debt primarily consists of a bank credit facility and senior subordinated notes. We pay variable rate interest
based on LIBOR on our bank credit facility, which matures in May 2012. At June 30, 2007, we had availability under our bank credit
facility of $2.7 billion. We pay fixed rates of interest ranging from 6.75% to 7.75% on our senior subordinated notes.
On May 24, 2007, we entered into a new $4.0 billion revolving bank credit facility that matures on May 24, 2012. The bank credit
facility may be increased at our request by up to an aggregate of $1.0 billion. The interest rate on the bank credit facility is based upon,
at our option, the LIBOR rate or the "base rate", plus an applicable margin in either case. The applicable margin is a
percentage per annum (which ranges from 0.625% to 1.625% if we elect to use the LIBOR rate, and 0.0% to 0.375% if we elect to use
the base rate) determined in accordance with a specified pricing grid based upon our predefined total leverage ratio. In addition, we
incur commitment fees on the unused portion of the bank credit facility that range from 0.200% to 0.350% per annum. The bank credit
facility is guaranteed by our material subsidiaries and is secured by the capital stock of those subsidiaries.
The new bank credit facility replaces our former $1.85 billion bank credit facility. We recorded a $4.4 million non-cash loss on early
retirement of debt for the three and six months ended June 30, 2007 for the write-off of unamortized debt fees associated with our
former bank credit facility.
On April 16, 2007, we redeemed our $250 million principal amount of 8.75% senior subordinated notes that were originally due to
mature in April 2012 at a redemption price of $1,043.75 per $1,000.00 principal amount of notes. The redemption was funded by
availability under our former bank credit facility. In connection with the redemption of these notes, we terminated our $50 million
notional amount fixed-to-floating interest rate swap. During the three and six months ended June 30, 2007, we recorded a loss on the
early retirement of these notes and related interest rate swap of $12.5 million.
Bank Credit Facility Covenants.
The bank credit facility contains certain financial and other covenants, including various
covenants (i) requiring the maintenance of a minimum consolidated interest coverage ratio, (ii) establishing a maximum permitted
consolidated total leverage ratio, (iii) imposing limitations on the incurrence of indebtedness, (iv) imposing limitations on transfers, sales
and other dispositions and (v) imposing restrictions on investments, dividends and certain other payments. We believe we are in
compliance with the bank credit facility covenants at June 30, 2007.
Notes.
Our $300 million, $350 million and $250 million principal amounts of senior subordinated notes due 2012, 2014, and
2016, respectively, contain limitations on, among other things, (i) our ability and our restricted subsidiaries' (as defined in the
indentures governing the notes) ability to incur additional indebtedness, (ii) the payment of dividends and other distributions with
respect to our capital stock and of our restricted subsidiaries and the purchase, redemption or retirement of our capital stock and of our
restricted subsidiaries, (iii) the making of certain investments, (iv) asset sales, (v) the incurrence of liens,
(vi) transactions with affiliates, (vii) payment restrictions affecting restricted subsidiaries, and (viii) certain
consolidations, mergers and transfers of assets. We believe we are in compliance with the covenants related to notes outstanding at
June 30, 2007.
Our ability to service our debt will be dependent on future performance, which will be affected by, among other things, prevailing
economic conditions and financial, business and other factors, certain of which are beyond our control. It is unlikely that our business
will generate sufficient cash flow from operations to enable us to pay our indebtedness as it matures and to fund our other liquidity
needs. We believe that we will need to refinance all or a portion of our indebtedness at each maturity.
Recently Issued Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 159,
"The
Fair Value Option for Financial Assets and Financial Liabilities".
SFAS No. 159 permits companies to choose to measure
many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies
with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. The fair value option established by SFAS No. 159 permits all companies to
choose to measure eligible items at fair value at specified election dates. At each subsequent reporting date, companies shall report in
earnings any unrealized gains and losses on items for which the fair value option has been elected. SFAS No. 159 is effective as of the
beginning of a company's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a
fiscal year that begins on or before November 15, 2007, provided the company also elects to apply the provisions of SFAS No. 157,
"Fair Value Measurements"
(see below). We are currently evaluating whether to adopt the fair value option under
SFAS No. 159 and evaluating what impact such adoption would have on our condensed consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157,
"Fair Value Measurements"
, which defines fair value,
establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157
applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded
in those accounting pronouncements that fair value is the relevant measurement attribute. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are
currently evaluating the impact that the adoption of SFAS No. 157 will have on our condensed consolidated financial statements.
In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"),
"Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement No. 109".
FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with SFAS No. 109,
Accounting for Income Taxes.
FIN
48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006, and applies to all tax positions accounted for in accordance with SFAS No. 109. We adopted FIN 48
on January 1, 2007. The total amount of unrecognized tax benefits upon the adoption of FIN 48 was $32.7 million. As a result of the
implementation of FIN 48, we recognized a $31.7 million increase in the liability for unrecognized tax benefits. See Note 8,
"
Other Long-Term Tax Liabilities"
for more information related to our adoption of FIN 48.
Critical Accounting Policies
A description of our critical accounting policies can be found in our Annual Report on Form 10-K for the year ended
December 31, 2006.
Important Information Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
contain words such as "may," "will," "might," "expect," "believe,"
"anticipate," "could," "would," "estimate," "continue," "pursue," or
the negative thereof or comparable terminology, and may include (without limitation) information regarding our expectations, hopes or
intentions regarding the future, including but not limited to statements regarding our operating foundation and growth strategies, our
current focus on expansion and development projects, including our Echelon, Blue Chip, and Dania Jai-Alai projects, and the timing and
source of funds for such projects and any additional expansion projects, our regular evaluations of growth opportunities through
operations development and acquisitions, our competition, including the impact of increased competition in the Las Vegas Locals
segment, our expectation that cash flows from operating activities will decline from current levels due to the sale of the South Coast, the
closure of the Stardust and the exchange of the Barbary Coast, our belief that the Barbary Coast exchange will allow us to strengthen
our future growth pipeline, our ability to effect strategic growth, indebtedness, financing, revenue, adjusted EBITDA, amortization
expense, tax benefits, estimated share-based compensation expenses and other effects of our adoption of SFAS 123R, including the
effect of additional share-based payment awards in 2007, depreciation recorded in connection with our Echelon development plan, our
estimates regarding the expected amenities, timing and cost of our Echelon development plan and the related Morgans and GGP joint
ventures, the effects on Dania Jai-Alai if the slot initiative is overturned, our valuation estimate of Dania Jai-Alai assets and liabilities,
our continued monitoring of the performance of Sam's Town Tunica, our beliefs regarding the sufficiency of our bank credit facility and
cash flows from operating activities to meet our projected expenditures (including operating and maintenance capital expenditures) and
costs associated with certain of our projects over the next twelve months, estimated asset and liability values, our beliefs relating to our
credit facility and notes covenant compliance, the estimated rates relating to our derivative instruments, our need and ability to
refinance all or a portion of our indebtedness at each maturity, risk of counterparty nonperformance, our legal strategies and the
potential effect of pending legal claims on our business and financial condition, declaration of future dividends, and the effects of the
adoption of various accounting pronouncements.
Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in
each such statement. In particular, we can provide no assurances regarding the various expansion projects, including the development
plans for the Echelon, Blue Chip, Dania Jai-Alai and the Borgata project, and whether such projects will be completed within the
estimated time frame and budget, or at all. Among the factors that could cause actual results to differ materially are the following:
-
The effects of intense competition that exists in the gaming industry.
-
The fact that our expansion, development and renovation projects (including enhancements to improve property performance) are
subject to the many risks inherent in the expansion, development or construction of a new or existing project, including:
-
unanticipated design, construction, regulatory, environmental and operating problems and lack of demand for our projects;
-
unanticipated delays and significant cost increases, shortages of materials, shortages of skilled labor or work stoppages;
-
poor performance or non-performance of any of our joint venture partners or other third parties on whom we are relying in
connection with any of our projects;
-
unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems, weather
interference, floods, fires or other casualty losses; and
-
failure to obtain necessary government or other approvals on time, or at all.
-
The risk that any of our projects may not be completed, if at all, on time or within established budgets, or that any project will result
in increased earnings to us.
-
The risk that significant delays, cost overruns, or failures of any of our projects to achieve market acceptance could have a material
adverse effect on our business, financial condition and results of operations.
-
The risk that our projects may not help us compete with new or increased competition in our markets.
-
The risk that the actual fair value for assets acquired and liabilities assumed from any of our acquisitions materially differ from our
preliminary estimates.
-
The risks associated with growth and acquisitions, including our ability to identify, acquire, develop or profitably manage additional
companies or operations or successfully integrate such companies or operations into our existing operations without substantial costs,
delays or other problems.
-
The risk that we may not receive gaming or other necessary licenses for new projects or that gaming will not be approved in
jurisdictions where it is currently prohibited.
-
The risk that we may be unable to finance our expansion, development and renovation projects, including cost overruns on any
particular project, as well as other capital expenditures through cash flow, borrowings under our bank credit facility and additional
financings, which could jeopardize our expansion, development and renovation efforts.
-
The risk that we may not be ultimately successful in dismissing the action filed against our Treasure Chest Casino property and
may lose our ability to operate the property, which result could materially, adversely affect our business, financial condition and results
of operations.
-
The effects of the extensive governmental gaming regulation and taxation policies that we are subject to, as well as any changes in
laws and regulations, including increased taxes, which could harm our business.
-
The effects of extreme weather conditions on our facilities and the geographic areas where we draw our customers, and our ability
to recover insurance proceeds (if any).
-
The risks relating to mechanical failure and regulatory compliance at any of our facilities.
-
The effects of events adversely impacting the economy or the regions where we draw a significant percentage of our customers,
including the effects of war, terrorist or similar activity or disasters in, at, or around our properties.
-
The effects of energy price increases on our cost of operations and our revenues.
-
Financial community and rating agency perceptions of our Company, and the effect of economic, credit and capital market
conditions on the economy and the gaming and hotel industry.
Additional factors that could cause actual results to differ are discussed in Part II, Item 1A. under the heading
"Risk
Factors"
and in our other current and periodic reports filed from time to time with the SEC. All forward-looking statements in
this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation
to update any forward-looking statement.
Item 3.
Quantitative and Qualitative Disclosure about Market Risk
As of June 30, 2007, except for the changes to our long-term debt described below, there were no material changes to the
information previously reported under Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2006.
On April 16, 2007, we redeemed our $250 million principal amount of 8.75% senior subordinated notes that were originally due to
mature in April 2012. The redemption was funded by availability under our former bank credit facility. In connection with the redemption
of these notes, we terminated our $50 million notional amount fixed-to-floating interest rate swap.
On May 24, 2007, we entered into a new $4.0 billion revolving bank credit facility that matures on May 24, 2012. The bank credit
facility may be increased at our request by up to an aggregate of $1.0 billion. The interest rate on the bank credit facility is based upon,
at our option, the LIBOR rate or the "base rate", plus an applicable margin in either case. The applicable margin is a
percentage per annum (which ranges from 0.625% to 1.625% if we elect to use the LIBOR rate, and 0.0% to 0.375% if we elect to use
the base rate) determined in accordance with a specified pricing grid based upon our predefined total leverage ratio. In addition, we
incur commitment fees on the unused portion of the bank credit facility that range from 0.200% to 0.350% per annum. The bank credit
facility is guaranteed by our material subsidiaries and is secured by the capital stock of those subsidiaries.
The new bank credit facility replaces our former $1.85 billion bank credit facility.
Item 4.
Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in
our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. Based on the evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.
There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that
has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II. Other Information
Item 1.
Legal Proceedings
Copeland
Alvin C. Copeland, the sole shareholder of an unsuccessful applicant for a riverboat license at the location of our Treasure
Chest Casino, has made several attempts to have the Treasure Chest license revoked and awarded to his company. In 1999 and 2000,
Copeland unsuccessfully opposed the renewal of the Treasure Chest license and has brought two separate legal actions against us. In
November 1993, Copeland objected to the relocation of Treasure Chest Casino from the Mississippi River to its current site on Lake
Pontchartrain. The predecessor to the Louisiana Gaming Control Board allowed the relocation over Copeland's objection. Copeland
then filed an appeal of the agency's decision with the Nineteenth Judicial District Court. Through a number of amendments to the
appeal, Copeland unsuccessfully attempted to transform the appeal into a direct action suit and sought the revocation of the Treasure
Chest license. Treasure Chest intervened in the matter in order to protect its interests. The appeal/suit, as it related to Treasure Chest
Casino, was dismissed by the District Court and that dismissal was upheld on appeal by the First Circuit Court of Appeal. Additionally,
in 1999, Copeland filed a direct action against Treasure Chest and certain other parties seeking the revocation of Treasure Chest's
license, an award of the license to him and monetary damages. The suit was dismissed by the trial court citing that Copeland failed to
state a claim on which relief could be granted. The dismissal was appealed by Copeland to the Louisiana First Circuit Court of Appeal.
On June 21, 2002, the First Circuit Court of Appeal reversed the trial court's decision and remanded the matter to the trial court.
On January 14, 2003, we filed a motion to dismiss the matter and that motion was partially denied. The Court of Appeals refused
to reverse the denial of the motion to dismiss. In May 2004, we filed additional motions to dismiss on other grounds. There was no
activity regarding this matter during 2005 and 2006, but the plaintiff recently filed a motion to set a hearing date related to the motions to
dismiss, which hearing has been scheduled for August 27, 2007. We currently are vigorously defending the law suit. If this matter
ultimately results in the Treasure Chest license being revoked, it could have a significant adverse effect on our business, financial
condition and results of operations.
We are also parties to various legal proceedings arising in the ordinary course of business. We believe that, except for the
Copeland matter discussed above
,
all pending claims, if adversely decided, would not have a material adverse effect on our
business, financial position or results of operations.
Item 1A.
Risk Factors
We have revised the risk factors that relate to our business, as set forth below. These risks include any material
changes to and supersede the risks previously disclosed in Part I, Item 1A, in our Annual Report on Form 10-K for the year ended
December 31, 2006. We encourage investors to review the risk factors and uncertainty relating to our business disclosed in that Form
10-K, as well as those contained under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Important Information Regarding Forward-Looking Statements"
in Part I above.
Intense competition exists in the gaming industry, and we expect competition to continue to intensify.
The gaming industry is highly competitive for both customers and employees, including those at the management level. We
compete with numerous casinos and casino hotels of varying quality and size in market areas where our properties are located. We
also compete with other non-gaming resorts and vacation areas, and with various other casino and other entertainment businesses,
and could compete with any new forms of gaming that may be legalized in the future. The casino entertainment business is
characterized by competitors that vary considerably in their size, quality of facilities, number of operations, brand identities, marketing
and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. In most
markets, we compete directly with other casino facilities operating in the immediate and surrounding market areas. In some markets,
we face competition from nearby markets in addition to direct competition within our market areas.
In recent years, with fewer new markets opening for development, competition in existing markets has intensified. We have
invested in expanding existing facilities, such as Blue Chip, developing new facilities, such as Echelon, and acquiring established
facilities in existing markets, such as our acquisition of Coast Casinos, Inc. in July 2004. In addition, our competitors have also invested
in expanding their existing facilities and developing new facilities. This expansion of existing casino entertainment properties, the
increase in the number of properties and the aggressive marketing strategies of many of our competitors have increased competition in
many markets in which we compete, and this intense competition can be expected to continue.
If our competitors operate more successfully than we do, if they are more successful than us in attracting and retaining employees,
if their properties are enhanced or expanded, or if additional hotels and casinos are established in and around the locations in which we
conduct business, we may lose market share or the ability to attract or retain employees. In particular, the expansion of casino gaming
in or near any geographic area from which we attract or expect to attract a significant number of our customers could have a significant
adverse effect on our business, financial condition and results of operations.
We also compete with legalized gaming from casinos located on Native American tribal lands. A proliferation of Native American
gaming in areas located near our properties, or in areas in or near those from which we draw our customers, could have an adverse
effect on our operating results.
The Pokagon Band of Potawatomi Indians, a federally recognized Native American tribe, commenced operations of its Four Winds
Casino in New Buffalo, Michigan (which is located approximately fifteen miles from Blue Chip) in August 2007. Although we have
expanded our facility at Blue Chip in an effort to be more competitive in this market, the Four Winds Casino could have a material
adverse impact on the operations of Blue Chip. In Illinois, there is currently an additional casino license that is the subject of litigation
and administrative action. If a gaming facility is opened, depending on its location, it could compete with Blue Chip.
Our expansion, development and renovation projects may face significant risks inherent in construction projects or
implementing a new marketing strategy, including receipt of necessary government approvals.
We regularly evaluate expansion, development and renovation opportunities. On January 4, 2006, we announced our planned Las
Vegas Strip development, Echelon, which will be the largest and most expensive development project we have undertaken to date. In
addition, we have announced a new hotel expansion project at Blue Chip and that Borgata has recently completed a public space
expansion and is constructing a new hotel tower and spa. We also closed our acquisition of Dania Jai-Alai in March 2007.
These projects and any other development projects we may undertake will be subject to the many risks inherent in the expansion or
renovation of an existing enterprise or construction of a new enterprise, including unanticipated design, construction, regulatory,
environmental and operating problems and lack of demand for our projects. Our current and future projects could also experience:
-
unanticipated delays and significant cost increases;
-
shortages of materials;
-
shortages of skilled labor or work stoppages;
-
poor performance or non-performance by any of our joint venture partners or other third parties on whom we are relying;
-
unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems; and
-
weather interference, floods, fires or other casualty losses.
Our anticipated costs and construction periods for projects are based upon budgets, conceptual design documents and
construction schedule estimates prepared by us in consultation with our architects and contractors. Many of these costs are estimated
at inception of the project and can change over time as the project is built to completion. For example, we recently announced that the
estimated cost of the wholly-owned portion of Echelon increased from $2.9 billion to $3.3 billion, principally as a result of additional
scope, larger guest rooms and suites, and increased estimated construction costs, and that the development costs associated with the
properties that will be developed and constructed in connection with our joint venture with Morgans increased from $700 million to $950
million. Additional cost increases may continue to occur as we develop Echelon. The cost of any project may vary significantly from
initial budget expectations, and we may have a limited amount of capital resources to fund cost overruns. If we cannot finance cost
overruns on a timely basis, the completion of one or more projects may be delayed until adequate funding is available. The completion
dates of any of our projects could also differ significantly from expectations for construction-related or other reasons. We cannot assure
you that any project will be completed, if at all, on time or within established budgets, or that any project will result in increased earnings
to us. Significant delays, cost overruns, or failures of our projects to achieve market acceptance could have a material adverse effect on
our business, financial condition and results of operations. Furthermore, our projects may not help us compete with new or increased
competition in our markets.
Certain permits, licenses and approvals necessary for some of our current or anticipated projects have not yet been obtained. The
scope of the approvals required for expansion, development or renovation projects can be extensive and may include gaming
approvals, state and local land-use permits and building and zoning permits. Unexpected changes or concessions required by local,
state or federal regulatory authorities could involve significant additional costs and delay the scheduled openings of the facilities. We
may not receive the necessary permits, licenses and approvals or obtain the necessary permits, licenses and approvals within the
anticipated time frames, or at all.
In addition, although we design our projects for existing facilities to minimize disruption of existing business operations, expansion
and renovation projects require, from time to time, portions of the existing operations to be closed or disrupted. For example, in
November 2006 we closed the Stardust and demolished the property in March 2007 to make way for the development of Echelon. Any
significant disruption in operations could have a significant adverse effect on our business, financial condition and results of
operations.
We face risks associated with growth and acquisitions.
As part of our business strategy, we regularly evaluate opportunities for growth through development of gaming operations in
existing or new markets, through acquiring other gaming entertainment facilities or through redeveloping our existing gaming facilities.
For example, in February 2007 we completed the Barbary Coast exchange transaction. In addition, in March 2007 we completed the
acquisition of Dania Jai-Alai, and have previously announced an expansion project at Blue Chip and our Echelon development project.
We may also pursue expansion opportunities, including joint ventures, in jurisdictions where casino gaming is not currently permitted in
order to be prepared to develop projects upon approval of casino gaming. The expansion of our operations, whether through
acquisitions, development or internal growth, could divert management's attention and could also cause us to incur substantial costs,
including legal, professional and consulting fees. There can be no assurance that we will be able to identify, acquire, develop or
profitably manage additional companies or operations or successfully integrate such companies or operations into our existing
operations without substantial costs, delays or other problems. Additionally, there can be no assurance that we will receive gaming or
other necessary licenses for our new projects or that gaming will be approved in jurisdictions where it is not currently approved.
In addition, ballot measures or other voter approved initiatives to allow gaming in jurisdictions where gaming, or certain types of
gaming (such as slots), was not previously permitted could be challenged, and, if such challenges are successful, these ballot
measures or initiatives could be invalidated. For example, in October 2004, a group of plaintiffs brought suit in the Circuit Court in Leon
County, Florida, against a group of defendants, including the Florida Secretary of State among others, seeking to permanently enjoin a
proposed ballot measure to amend the Florida Constitution to allow Florida voters to approve slot machines at certain pari-mutuel
gaming facilities in Miami-Dade and Broward Counties (the "Slot Initiative"). The plaintiffs alleged that petition gatherers committed
fraud in obtaining signatures to get the Slot Initiative placed on the ballot. Prior to the issuance of a final order by the Circuit Court, the
Slot Initiative was approved by voters in November 2004. In January 2005, the Circuit Court granted summary judgment in favor of the
defendants, citing among other reasons, that the Slot Initiative had been approved by voters. The plaintiffs appealed this decision, and
on August 8, 2006, a three-judge panel of the First District Court of Appeals in Broward County, Florida, reversed the Circuit Court
decision and ordered that the case be brought to trial. In its decision, the panel indicated that in the event that the trial court determines
that the petition did not have sufficient signatures to place the Slot Initiative on the ballot due to fraud, the trial court should invalidate
the Slot Initiative. On August 23, 2006, the defendants filed a motion seeking a rehearing by the three-judge panel, or alternatively, to
have the First District Court of Appeals rehear the case en banc or to have the case certified to the Florida Supreme Court for
rehearing. On November 30, 2006, the First District Court of Appeals, in an en banc decision, essentially reaffirmed the panel's
decision, but certified two questions to the Florida Supreme Court: (1) whether validations of signatures by supervisors of elections can
be challenged based upon allegations of fraud after certifications of signatures have been accepted by the Secretary of State and the
ballot printed and absentee voting commenced in accord with Florida law, and (2) whether an amendment to the Florida Constitution
that is approved by vote of the electors may be subsequently invalidated if, in an action filed before the election, there is a showing
made after the election that necessary signatures on the petition proposing the amendment were fraudulently obtained. On March 27,
2007, the Florida Supreme Court accepted jurisdiction to hear the certified questions. If the Slot Initiative is invalidated, we may not be
able to operate slot machines at the Dania Jai-Alai facility, which would materially affect any potential revenue and cash flow expected
from the Dania Jai-Alai facility.
If we are unable to finance our expansion, development and renovation projects as well as other capital expenditures through
cash flow, borrowings under our bank credit facility and additional financings, our expansion, development and renovation efforts will be
jeopardized.
We intend to finance our current and future expansion, development and renovation projects, as well as our other capital
expenditures, primarily with cash flow from operations, borrowings under our bank credit facility and equity or debt financings. If we are
unable to finance our current or future expansion, development and renovation projects, or our other capital expenditures, we will have
to adopt one or more alternatives, such as reducing or delaying planned expansion, development and renovation projects as well as
other capital expenditures, selling assets, restructuring debt, reducing the amount or discontinuing the distribution of dividends,
obtaining additional equity financing or joint venture partners, or modifying our bank credit facility. These sources of funds may not be
sufficient to finance our expansion, development and renovation projects, and other financing may not be available on acceptable
terms, in a timely manner or at all. In addition, our existing indebtedness contains certain restrictions on our ability to incur additional
indebtedness. If we are unable to secure additional financing, we could be forced to limit or suspend expansion, development and
renovation projects and other capital expenditures, which may adversely affect our business, financial condition and results of
operations.
If we are not ultimately successful in dismissing the action filed against our Treasure Chest Casino property, we may potentially
lose our ability to operate the Treasure Chest Casino property and our business, financial condition and results of operations could be
materially adversely affected.
Alvin C. Copeland, the sole shareholder of an unsuccessful applicant for a riverboat license at the location of our Treasure Chest
Casino, has made several attempts to have the Treasure Chest license revoked and awarded to his company. In 1999 and 2000,
Copeland unsuccessfully opposed the renewal of the Treasure Chest license and has brought two separate legal actions against us. In
November 1993, Copeland objected to the relocation of Treasure Chest Casino from the Mississippi River to its current site on Lake
Pontchartrain. The predecessor to the Louisiana Gaming Control Board allowed the relocation over Copeland's objection. Copeland
then filed an appeal of the agency's decision with the Nineteenth Judicial District Court. Through a number of amendments to the
appeal, Copeland improperly attempted to transform the appeal into a direct action suit and sought the revocation of the Treasure
Chest license. Treasure Chest intervened in the matter in order to protect its interests. The appeal/suit, as it related to Treasure Chest
Casino, was dismissed by the District Court and that dismissal was upheld on appeal by the First Circuit Court of Appeal. Additionally,
in 1999, Copeland filed a direct action against Treasure Chest and certain other parties seeking the revocation of Treasure Chest's
license, an award of the license to him and monetary damages. The suit was dismissed by the trial court citing that Copeland failed to
state a claim on which relief could be granted. The dismissal was appealed by Copeland to the First Circuit Court of Appeal. On
June 21, 2002, the First Circuit Court of Appeal reversed the trial court's decision and remanded the matter to the trial court. On
January 14, 2003, we filed a motion to dismiss the matter and that motion was partially denied. The Court of Appeal refused to
reverse the denial of the motion to dismiss. In May 2004, we filed additional motions to dismiss on other grounds. There was no activity
regarding this matter during 2005 and 2006, but the plaintiff recently filed a motion to set a hearing date related to the motions to
dismiss, which hearing has been scheduled for August 27, 2007. We currently are vigorously defending the lawsuit.
If this matter ultimately results in the Treasure Chest license being revoked, it could have a significant adverse effect on our
business, financial condition and results of operations.
We are subject to extensive governmental gaming regulation and taxation policies, which may harm our business.
We are subject to a variety of regulations in the jurisdictions in which we operate. Regulatory authorities at the federal, state and
local levels have broad powers with respect to the licensing of casino operations and may revoke, suspend, condition or limit our
gaming or other licenses, impose substantial fines and take other actions, any one of which could have a significant adverse effect on
our business, financial condition and results of operations. A more detailed description of the governmental gaming regulations to which
we are subject is included in Exhibit 99.1, Governmental Gaming Regulations filed with this quarterly report on Form 10-Q and
incorporated herein by reference.
If additional gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions or
costs that could have a significant adverse effect on us. From time to time, various proposals are introduced in the legislatures of some
of the jurisdictions in which we have existing or planned operations that, if enacted, could adversely affect the tax, regulatory,
operational or other aspects of the gaming industry and our company. Legislation of this type may be enacted in the future. For
example, on January 15, 2006, the New Jersey State Legislature enacted the Smoke-Free Air Act that became effective April 15, 2006.
This law called for smoke-free environments in essentially all indoor workplaces and places open to the public including places of
business and service-related activities. The law contains several exemptions, including an exemption for all casino floor space and 20%
of a hotel's designated hotel rooms. On February 15, 2007, Atlantic City promulgated a local ordinance that is more restrictive than the
aforementioned state law. Specifically, this ordinance reduced the casino floor exemption to 25% of a casino's floor space. As such,
smoking is prohibited on 75% of a casino's floor space and permitted on 25% of a casino's floor space, subject to the following
conditions:
-
By April 15, 2007, casinos were required to limit smoking to 25% of their casino floor space, which areas initially were not required
to be enclosed and separately ventilated.
-
Ultimately, the 25% of the casino floor in which smoking will be permissible will be required to be enclosed and separately
ventilated. Casinos have until September 15, 2007 to submit construction plans for such enclosures to applicable authorities for the
issuance of building permits and related required approvals. Once permits are issued, the casinos will have 90 days to commence
construction of the enclosures.
Under the Atlantic City ordinance, smoking will remain permissible in 20% of a hotel's designated hotel rooms, consistent with state
law. This legislation, and the local ordinance, could materially impact Borgata's operations and comparable legislation in other
jurisdictions in which we operate could materially impact our other properties.
The federal government has also previously considered a federal tax on casino revenues and may consider such a tax in the future.
In addition, gaming companies are currently subject to significant state and local taxes and fees in addition to normal federal and state
corporate income taxes, and such taxes and fees are subject to increase at any time. For example, in June 2006, the Illinois legislature
passed certain amendments to the Riverboat Gambling Act which affected the tax rate at Par-A-Dice. The legislation, which imposes an
incremental 5% tax on adjusted gross gaming revenues, was retroactive to July 1, 2005. As a result of this legislation, we were required
to pay additional taxes, resulting in a $6.7 million tax assessment in June 2006. If there is any material increase in state and local taxes
and fees, our business, financial condition and results of operations could be adversely affected. Also, in May 2007, Blue Chip received
a notice indicating an unanticipated increase of nearly 400% to its assessed property value as of January 1, 2006. We estimate that this
increase in assessed property value could result in a property tax assessment ranging between $4 million and $11 million for the
eighteen-month period ended June 30, 2007. We recorded an additional charge of $3.2 million during the three months ended June 30,
2007 to increase our property tax liability to $5.8 million at June 30, 2007 as we estimate that is the most likely amount to be assessed
within the range; however, we can provide no assurances that the estimated amount will approximate the actual amount. The actual
assessment is expected to be received later this year and could result in further adjustment to our estimated property tax liability at Blue
Chip.
Our directors, officers and key employees must also be approved by certain state regulatory authorities. If state regulatory
authorities were to find a person occupying any such position unsuitable, we would be required to sever our relationship with that
person. Certain public and private issuances of securities and certain other transactions by us also require the approval of certain state
regulatory authorities.
In addition to gaming regulations, we are also subject to various federal, state and local laws and regulations affecting businesses
generally. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages,
environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such
laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. For
example, on July 5, 2006, New Jersey gaming properties, including Borgata, were required to temporarily close their casinos for three
days as a result of a New Jersey statewide government shutdown that affected certain New Jersey state employees required to be at
casinos when they are open for business. In addition, Nevada recently enacted legislation that eliminated in most instances, and, for
certain pre-existing development projects such as Echelon, otherwise reduced, property tax breaks and retroactively eliminated certain
sales tax exemptions offered as incentives to companies developing projects that meet certain environmental "green"
standards. As a result, we, along with other companies developing projects that meet such standards, may not realize the full tax
benefits that were originally anticipated.
We own facilities that are located in areas that experience extreme weather conditions.
We own facilities that are located in areas that experience extreme weather conditions, including, but not limited to, hurricanes.
Extreme weather conditions may interrupt our operations, damage our properties and reduce the number of customers who visit our
facilities in the affected areas. For example, our Treasure Chest Casino, which is located near New Orleans, Louisiana, suffered minor
damage and was closed for 44 days in 2005 as a result of Hurricane Katrina. Additionally, our Delta Downs Racetrack Casino &
Hotel, which is located in southwest Louisiana, suffered significant property damage and closed for 42 days in 2005 as a result of
Hurricane Rita. While we maintain insurance that may cover some of the costs we incur as a result of some extreme weather
conditions, our coverage is subject to deductibles and limits on maximum benefits. There can be no assurance that we will be able to
fully collect, if at all, on any claims resulting from extreme weather conditions. If any of our properties are damaged or if their operations
are disrupted as a result of extreme weather in the future, or if extreme weather adversely impacts general economic or other
conditions in the areas in which our properties are located or from which they draw their patrons, our business, financial condition and
operating results could be materially adversely affected.
Our facilities, including our riverboats and dockside facilities, are subject to risks relating to mechanical failure and regulatory
compliance.
Generally, all of our facilities are subject to the risk that operations could be halted for a temporary or extended period of time, as
the result of casualty, forces of nature, mechanical failure or extended or extraordinary maintenance, among other causes. In addition,
our gaming operations, including those conducted on riverboats or at dockside facilities could be damaged or halted due to extreme
weather conditions.
We currently conduct our Treasure Chest, Par-A-Dice, Blue Chip and Sam's Town Shreveport gaming operations on riverboats.
Each of our riverboats must comply with U.S. Coast Guard requirements as to boat design, on-board facilities, equipment, personnel
and safety. Each riverboat must hold a Certificate of Inspection for stabilization and flotation, and may also be subject to local zoning
codes. The U.S. Coast Guard requirements establish design standards, set limits on the operation of the vessels and require individual
licensing of all personnel involved with the operation of the vessels. Loss of a vessel's Certificate of Inspection or American Bureau of
Shipping approval would preclude its use as a casino.
U.S. Coast Guard regulations require a hull inspection for all riverboats at five-year intervals. Under certain circumstances,
extensions may be approved. The U.S. Coast Guard may require that such hull inspections be conducted at a U.S. Coast Guard-
approved dry-docking facility, and if so required, the cost of travel to and from such docking facility, as well as the time required for
inspections of the affected riverboats, could be significant. To date, the U.S. Coast Guard has allowed in-place inspections of our
riverboats. The U.S. Coast Guard might not allow these types of inspections in the future. The loss of a dockside casino or riverboat
casino from service for any period of time could adversely affect our business, financial condition and results of operations.
U.S. Coast Guard regulations also require us to prepare and follow certain security programs. In 2004, we implemented the
American Gaming Association's Alternative Security Program at our riverboat casinos and dockside facilities. The American Gaming
Association's Alternative Security Program is specifically designed to address riverboat casinos and their respective dockside facilities
maritime security requirements. Changes to these regulations could adversely affect our business, financial condition and results of
operations.
We draw a significant percentage of our customers from limited geographic regions. Events adversely impacting the economy
or these regions, including terrorism, may also impact our business.
Our California Hotel and Casino, Fremont Hotel and Casino and Main Street Station Casino, Brewery and Hotel draw a substantial
portion of their customers from the Hawaiian market. For the year ended December 31, 2006, patrons from Hawaii comprised
approximately 67% of the room nights sold at the California, 56% at the Fremont and 55% at Main Street Station. An increase in fuel
costs or transportation prices, a decrease in airplane seat availability, or a deterioration of relations with tour and travel agents,
particularly as they affect travel between the Hawaiian market and our facilities, could adversely affect our business, financial condition
and results of operations.
Our Las Vegas properties also draw a substantial number of customers from certain other specific geographic areas, including
Southern California, Arizona and Las Vegas. Native American casinos in California and other parts of the United States have diverted
some potential visitors away from Nevada, which has had and could continue to have a negative effect on Nevada gaming markets. In
addition, due to our significant concentration of properties in Nevada, any terrorist activities or disasters in or around Nevada, or the
areas from which we draw customers for our Las Vegas properties, could have a significant adverse effect on our business, financial
condition and results of operations. Each of our other properties located outside of Nevada depends primarily on visitors from their
respective surrounding regions and are subject to comparable risk. The outbreak of public health threats at any of our properties or in
the areas in which they are located, or the perception that such threats exist, as well as adverse economic conditions that affect the
national or regional economies, whether resulting from war, terrorist activities or other geopolitical conflict, weather or other factors,
could have a significant adverse effect on our business, financial condition and results of operations.
In addition, to the extent that the airline industry is negatively impacted due to the outbreak of war, public health threats, terrorist or
similar activity, increased security restrictions or the public's general reluctance to travel by air, our business, financial condition and
results of operations could be significantly adversely affected.
Energy price increases may adversely affect our cost of operations and our revenues.
Our casino properties use significant amounts of electricity, natural gas and other forms of energy. In addition, our Hawaiian air
charter operation uses a significant amount of jet fuel. While no shortages of energy or fuel have been experienced to date, substantial
increases in energy and fuel prices in the United States have negatively affected and may continue to negatively affect our operating
results. The extent of the impact is subject to the magnitude and duration of the energy and fuel price increases, but this impact could
be material. In addition, energy and gasoline price increases in cities that constitute a significant source of customers for our properties
could result in a decline in disposable income of potential customers, an increase in the cost of travel and a corresponding decrease in
visitation and spending at our properties, which could have a significant adverse effect on our business, financial condition and results
of operations.
Certain of our stockholders own large interests in our capital stock and may significantly influence our affairs.
William S. Boyd, our Chairman and Chief Executive Officer, together with his immediate family, beneficially owned approximately
36% of our outstanding shares of common stock as of June 30, 2007. As a result, the Boyd family has the ability to significantly
influence our affairs, including the electing of our directors and, except as otherwise provided by law, approving or disapproving other
matters submitted to a vote of our stockholders, including a merger, consolidation or sale of assets.
Some of our hotel casinos are located on leased property. If we default on one or more leases, the applicable lessors could
terminate the affected leases and we could lose possession of the affected hotel casino.
We lease certain parcels of land on which The Orleans Hotel and Casino, Suncoast Hotel and Casino, Sam's Town Tunica,
Treasure Chest Casino and Sam's Town Shreveport are located. In addition, we lease other parcels of land on which portions of the
California and the Fremont are located. If we were to default on any one or more of these leases, the applicable lessors could terminate
the affected leases and we could lose possession of the affected land and any improvements on the land, including the hotel casinos.
This would have a significant adverse effect on our business, financial condition and results of operations as we would then be unable
to operate all or portions of the affected facilities.
We have a significant amount of indebtedness.
We had total consolidated long-term debt, less current maturities, of approximately $2.2 billion at June 30, 2007. We expect
that our long-term indebtedness will substantially increase in connection with the capital expenditures we anticipate making as a result
of our planned expansion, development and renovation projects. Our substantial indebtedness could have important consequences.
For example, it could:
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make it more difficult for us to satisfy our obligations under our current indebtedness;
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increase our vulnerability to general adverse economic and industry conditions;
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which would reduce
the availability of our cash flows to fund working capital, capital expenditures, expansion efforts and other general corporate
purposes;
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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place us at a disadvantage compared to our competitors that have less debt; and
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limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow
additional funds. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could have a
significant adverse effect on us.
The interest rates on a portion of our long-term debt are subject to fluctuation based upon changes in short-term interest rates, and
as a result our interest expense could increase.
Our current debt service requirements on our bank credit facility primarily consist of interest payments on outstanding
indebtedness. The bank credit facility consists of a $4.0 billion revolving credit facility that matures in May 2012. Subject to certain
limitations, we may at any time, without the consent of the lenders under our bank credit facility, request incremental commitments to
increase the size of the revolving credit facility, or request new commitments to add a term loan facility, by up to an aggregate amount
of $1.0 billion.
Debt service requirements under our currently outstanding senior subordinated notes consist of semi-annual interest payments
(based upon fixed annual interest rates ranging from 6.75% to 7.75%) and repayment of the $300 million, $350 million and $250 million
of principal on December 15, 2012, April 15, 2014, and February 1, 2016, respectively.
Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures and expansion efforts
will depend upon our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our control. It is unlikely that our business will generate sufficient
cash flow from operations, or that future borrowings will be available to us under our bank credit facility, in amounts sufficient to enable
us to pay our indebtedness as it matures and to fund our other liquidity needs. We believe that we will need to refinance all or part of
our indebtedness at or prior to each maturity. However, we may not be able to refinance any of our indebtedness on commercially
reasonable terms or at all. We could have to adopt one or more alternatives, such as reducing or delaying planned expenses and
capital expenditures, selling assets, restructuring debt, or obtaining additional equity or debt financing or joint venture partners. These
financing strategies may not be affected on satisfactory terms, if at all. In addition, certain states' laws contain restrictions on the ability
of companies engaged in the gaming business to undertake certain financing transactions. Some restrictions may prevent us from
obtaining necessary capital.
Our common stock price may fluctuate substantially, and your investment could suffer a decline in value.
The market price of our common stock may be volatile and could fluctuate substantially due to many factors, including:
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actual or anticipated fluctuations in our results of operations;
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announcements of significant acquisitions or other agreements by us or by our competitors;
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our sale of common stock or other securities in the future;
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the trading volume of our common stock;
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conditions and trends in the gaming and destination entertainment industries;
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changes in the estimation of the future size and growth of our markets; and
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general economic conditions, including, among other things, changes in the cost of fuel and air travel.
In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or
disproportionate to companies' operating performance. Broad market and industry factors may materially harm the market price of our
common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's
securities, shareholder derivative lawsuits securities class action litigation has often been instituted against that company. Such
litigation, if instituted against us, could result in substantial costs and a diversion of management's attention and resources.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
(c) No repurchases were made pursuant to our share repurchase program during the three and six months ended
June 30, 2007.
Item 4.
Submission of Matters to a Vote of Securities Holders
Our Annual Meeting of Stockholders was held on May 17, 2007.
The stockholders elected twelve members to our
board of directors to serve until the next annual meeting of stockholders or until their respective successors have been duly elected and
qualified. In addition, the stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2007.
The number of shares voting as to the above issues is set forth below:
Votes
------------------------
Election of Directors: For Withheld
-------------------------------- ----------- -----------
Robert L. Boughner 81,305,213 1,856,767
William R. Boyd 82,474,742 687,238
William S. Boyd 82,568,044 593,936
Thomas V. Girardi 82,786,630 375,350
Marianne Boyd Johnson 82,470,013 691,967
Luther W. Mack, Jr. 82,778,129 383,851
Michael O. Maffie 82,282,548 379,432
Billy G. McCoy 82,782,859 379,121
Frederick J. Schwab 82,798,772 363,208
Keith E. Smith 82,476,427 685,553
Peter M. Thomas 82,780,395 381,585
Veronica J. Wilson 82,781,435 380,545
The stockholders ratified the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2007 with voting as follows: 82,920,724 for; 189,143 against; 52,113 abstain.
Item 6.
Exhibits
(a) Exhibits
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3.1
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Amended and Restated Bylaws of Boyd Gaming Corporation (as amended on July 26, 2007).
PDF
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10.1*
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Form of Restricted Stock Unit Agreement and Notice of Award Pursuant to Boyd Gaming Corporation 2002 Stock
Incentive Plan.
PDF
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10.2
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First Amended and Restated Credit Agreement, dated as of May 24, 2007, among the Registrant, as Borrower,
certain commercial lending institutions, as the Lenders, Bank of America, N.A., as the Administrative Agent and L/C Issuer, Wells Fargo
Bank, N.A., as the Syndication Agent and Swing Line Lender, and Citibank, N.A., Deutsche Bank Securities Inc., JPMorgan Chase
Bank, N.A., Merrill Lynch Bank USA and Wachovia Bank, National Association, as Co-Documentation Agents.
PDF
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31.1
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Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act Rule 13a-14(a).
PDF
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31.2
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Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act Rule 13a-14(a).
PDF
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32.1
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Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18
U.S.C. § 1350.
PDF
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32.2
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Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18
U.S.C. § 1350.
PDF
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99.1
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Governmental Gaming Regulations
PDF
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_______________________
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*
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Management contracts or compensatory plans or arrangements.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 9, 2007.
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B
OYD
G
AMING
C
ORPORATION
/
S
/ J
EFFREY
G. S
ANTORO
Jeffrey G. Santoro
Vice President and Controller
(Principal Accounting Officer)
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Exhibit 10.2
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Published CUSIP Numbers
:
Deal:
Revolver Facility:
|
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 24, 2007
among
BOYD GAMING CORPORATION,
as the Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer,
WELLS FARGO BANK, N.A.,
as Syndication Agent and Swing Line Lender
CITIBANK, N.A.,
DEUTSCHE BANK SECURITIES INC.,
JPMORGAN CHASE BANK, N.A.,
MERRILL LYNCH BANK USA
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Co-Documentation Agents
and
The Other Lenders Party Hereto
BANC OF AMERICA SECURITIES LLC,
CITIGROUP GLOBAL MARKETS INC.,
DEUTSCHE BANK SECURITIES INC.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
J.P. MORGAN SECURITIES INC.
WACHOVIA BANK, NATIONAL ASSOCIATION
and
WELLS FARGO BANK, N.A.,
as Joint Lead Arrangers and Joint Book Managers
|
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CONTENTS
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Clause
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Page
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ARTICLE I
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DEFINITIONS AND ACCOUNTING TERMS
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1.01
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Defined Terms
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1
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1.02
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Other Interpretive Provisions
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22
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1.03
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Accounting Terms
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22
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1.04
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Rounding
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23
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1.05
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References to Agreements and Laws
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23
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1.06
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Times of Day
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23
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1.07
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Letter of Credit Amounts
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|
23
|
|
|
|
|
|
|
|
ARTICLE II
|
|
THE COMMITMENTS AND CREDIT EXTENSIONS
|
|
23
|
|
2.01
|
|
Committed Loans
|
|
24
|
|
2.02
|
|
Borrowings, Conversions and Continuations of Committed Loans
|
|
24
|
|
2.03
|
|
Letters of Credit
|
|
25
|
|
2.04
|
|
Swing Line Loans
|
|
33
|
|
2.05
|
|
Prepayments
|
|
36
|
|
2.06
|
|
Termination or Reduction of Commitments
|
|
37
|
|
2.07
|
|
Repayment of Loans
|
|
37
|
|
2.08
|
|
Interest
|
|
37
|
|
2.09
|
|
Fees
|
|
38
|
|
2.10
|
|
Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate
|
|
39
|
|
2.11
|
|
Evidence of Debt
|
|
39
|
|
2.12
|
|
Payments Generally
|
|
40
|
|
2.13
|
|
Sharing of Payments
|
|
41
|
|
2.14
|
|
Increase in Commitments
|
|
42
|
|
|
|
|
|
|
|
ARTICLE III
|
|
TAXES, YIELD PROTECTION AND ILLEGALITY
|
|
43
|
|
3.01
|
|
Taxes
|
|
43
|
|
3.02
|
|
Illegality
|
|
44
|
|
3.03
|
|
Inability to Determine Rates
|
|
45
|
|
3.04
|
|
Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.
|
|
45
|
|
3.05
|
|
Compensation for Losses
|
|
46
|
|
3.06
|
|
Matters Applicable to all Requests for Compensation
|
|
46
|
|
3.07
|
|
Survival
|
|
47
|
|
|
|
|
|
|
|
ARTICLE IV
|
|
CONDITIONS PRECEDENT TO EFFECTIVENESS AND CREDIT EXTENSIONS
|
|
47
|
|
4.01
|
|
Conditions of Effectiveness
|
|
47
|
|
|
|
CONTENTS
|
|
|
|
Clause
|
|
|
|
Page
|
|
|
|
|
|
|
|
4.02
|
|
Conditions to all Credit Extensions
|
|
49
|
|
|
|
|
|
|
|
ARTICLE V
|
|
REPRESENTATIONS AND WARRANTIES
|
|
50
|
|
5.01
|
|
Existence, Qualification and Power; Compliance with Laws
|
|
50
|
|
5.02
|
|
Authorization; No Contravention
|
|
50
|
|
5.03
|
|
Governmental Authorization; Other Consents
|
|
50
|
|
5.04
|
|
Binding Effect
|
|
50
|
|
5.05
|
|
Financial Statements; No Material Adverse Effect
|
|
51
|
|
5.06
|
|
Litigation
|
|
51
|
|
5.07
|
|
No Default
|
|
51
|
|
5.08
|
|
Ownership of Property; Liens
|
|
51
|
|
5.09
|
|
Environmental Compliance
|
|
52
|
|
5.10
|
|
Insurance
|
|
52
|
|
5.11
|
|
Taxes
|
|
52
|
|
5.12
|
|
ERISA Compliance
|
|
52
|
|
5.13
|
|
Subsidiaries
|
|
53
|
|
5.14
|
|
Margin Regulations; Investment Company Act
|
|
53
|
|
5.15
|
|
Disclosure
|
|
53
|
|
5.16
|
|
Intellectual Property; Licenses, Etc
|
|
53
|
|
5.17
|
|
Collateral Documents
|
|
54
|
|
|
|
|
|
|
|
ARTICLE VI
|
|
AFFIRMATIVE COVENANTS
|
|
54
|
|
6.01
|
|
Financial Statements
|
|
54
|
|
6.02
|
|
Certificates; Other Information
|
|
55
|
|
6.03
|
|
Notices
|
|
56
|
|
6.04
|
|
Preservation of Existence, Etc
|
|
57
|
|
6.05
|
|
Maintenance of Properties
|
|
57
|
|
6.06
|
|
Maintenance of Insurance
|
|
57
|
|
6.07
|
|
Compliance with Laws
|
|
58
|
|
6.08
|
|
Books and Records
|
|
58
|
|
6.09
|
|
Inspection Rights
|
|
58
|
|
6.10
|
|
Use of Proceeds
|
|
58
|
|
6.11
|
|
Environmental Covenant
|
|
58
|
|
6.12
|
|
Accuracy of Information
|
|
59
|
|
6.13
|
|
Additional Guarantors
|
|
59
|
|
|
|
|
|
|
|
ARTICLE VII
|
|
NEGATIVE COVENANTS
|
|
59
|
|
7.01
|
|
Liens
|
|
59
|
-ii-
|
|
|
CONTENTS
|
|
|
|
Clause
|
|
|
|
Page
|
|
|
|
|
|
|
|
7.02
|
|
Investments
|
|
60
|
|
7.03
|
|
Indebtedness
|
|
61
|
|
7.04
|
|
Fundamental Changes
|
|
62
|
|
7.05
|
|
Dispositions
|
|
62
|
|
7.06
|
|
Restricted Payments
|
|
63
|
|
7.07
|
|
Change in Nature of Business
|
|
64
|
|
7.08
|
|
Transactions with Affiliates
|
|
64
|
|
7.09
|
|
Negative Pledges and Other Contractual Restrictions
|
|
64
|
|
7.10
|
|
Financial Covenants
|
|
64
|
|
7.11
|
|
Use of Proceeds
|
|
65
|
|
|
|
|
|
|
|
ARTICLE VIII
|
|
EVENTS OF DEFAULT AND REMEDIES
|
|
65
|
|
8.01
|
|
Events of Default
|
|
65
|
|
8.02
|
|
Remedies Upon Event of Default
|
|
68
|
|
8.03
|
|
Application of Funds
|
|
68
|
|
|
|
|
|
|
|
ARTICLE IX
|
|
ADMINISTRATIVE AGENT
|
|
69
|
|
9.01
|
|
Appointment and Authority.
|
|
69
|
|
9.02
|
|
Rights as a Lender
|
|
70
|
|
9.03
|
|
Exculpatory Provisions
|
|
70
|
|
9.04
|
|
Reliance by Administrative Agent
|
|
71
|
|
9.05
|
|
Delegation of Duties
|
|
71
|
|
9.06
|
|
Resignation of Administrative Agent
|
|
71
|
|
9.07
|
|
Non-Reliance on Administrative Agent and Other Lenders
|
|
72
|
|
9.08
|
|
No Other Duties, Etc
|
|
73
|
|
9.09
|
|
Administrative Agent May File Proofs of Claim
|
|
73
|
|
9.10
|
|
Collateral and Guaranty Matters
|
|
73
|
|
|
|
|
|
|
|
ARTICLE X
|
|
MISCELLANEOUS
|
|
74
|
|
10.01
|
|
Amendments, Etc
|
|
74
|
|
10.02
|
|
Notices and Other Communications; Facsimile Copies
|
|
76
|
|
10.03
|
|
No Waiver; Cumulative Remedies
|
|
77
|
|
10.04
|
|
Attorney Costs, Expenses and Taxes
|
|
78
|
|
10.05
|
|
Indemnification by the Borrower; Reimbursement by Lenders; Waiver
|
|
78
|
|
10.06
|
|
Payments Set Aside
|
|
80
|
|
10.07
|
|
Successors and Assigns
|
|
80
|
|
10.08
|
|
Confidentiality
|
|
85
|
|
10.09
|
|
Set-off
|
|
85
|
-iii-
|
|
|
CONTENTS
|
|
|
|
Clause
|
|
|
|
Page
|
|
|
|
|
|
|
|
10.10
|
|
Interest Rate Limitation
|
|
86
|
|
10.11
|
|
Counterparts
|
|
86
|
|
10.12
|
|
Integration
|
|
86
|
|
10.13
|
|
Survival of Representations and Warranties
|
|
86
|
|
10.14
|
|
Severability
|
|
87
|
|
10.15
|
|
Tax Forms
|
|
87
|
|
10.16
|
|
Replacement of Lenders
|
|
88
|
|
10.17
|
|
Governing Law
|
|
89
|
|
10.18
|
|
Waiver of Right to Trial by Jury
|
|
89
|
|
10.19
|
|
USA PATRIOT Act Notice
|
|
89
|
|
10.20
|
|
OFAC
|
|
90
|
|
10.21
|
|
Designation as Senior Debt
|
|
90
|
|
10.22
|
|
Gaming Boards
|
|
90
|
|
10.23
|
|
Gaming Regulations
|
|
90
|
-iv-
SCHEDULES
2.01 Commitments and Pro Rata Shares
2.03 Existing Letters of Credit
5.06 Litigation
5.09 Environmental Matters
5.13 Subsidiaries and Other Equity Investments
5.16 Intellectual Property Matters
7.01 Existing Liens
7.02 Identified Investments
7.03 Existing Indebtedness
10.02 Administrative Agent's Office, Certain Addresses for Notices
EXHIBITS
Form of
A Committed Loan Notice
B Swing Line Loan Notice
C-1 Revolving Note
C-2 Swing Line Note
D Compliance Certificate
E Assignment and Assumption
F Guaranty
G Opinion Matters
H Pledge Agreement
-v-
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDED AND RESTATED CREDIT AGREEMENT ("
Agreement
") is entered into
as of May 24, 2007, among BOYD GAMING CORPORATION, a Nevada corporation (the "
Borrower
"), each lender from time
to time party hereto (collectively, the "
Lenders
" and individually, a "
Lender
"), BANK OF AMERICA, N.A.
("
Bank of America
"), as Administrative Agent and L/C Issuer, and WELLS FARGO BANK, N.A., as Swing Line Lender.
The Borrower, various lenders and Bank of America, as administrative agent for such
lenders, are parties to that certain Credit Agreement dated as of May 20, 2004, as the same has been amended prior to the date hereof (as
so amended, the "
Existing Credit Agreement
"). The Borrower, the Lenders and the Administrative Agent have agreed that
the Existing Credit Agreement shall be amended and restated in its entirety.
In consideration of the mutual covenants and agreements herein contained, the parties hereto agree that the Existing
Credit Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01
Defined Terms
. As used in this Agreement, the following terms shall have
the meanings set forth below:
"
Administrative Agent
" means Bank of America in its capacity as administrative agent under any of
the Loan Documents, or any successor administrative agent.
"
Administrative Agent's Office
" means the Administrative Agent's address and, as appropriate,
account as set forth on
Schedule 10.02
, or such other address or account as the Administrative Agent may from time to time
notify the Borrower and the Lenders.
"
Administrative Questionnaire
" means an Administrative Questionnaire in a form supplied by the
Administrative Agent.
"
Affiliate
" means, with respect to any Person, another Person that directly, or indirectly through one
or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "
Control
" means
the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. "
Controlling
" and "
Controlled
" have meanings
correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other
Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.
"
Agent-Related Persons
" means the Administrative Agent, together with its Affiliates (including, in the
case of Bank of America in its capacity as the Administrative Agent, the
1
Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"
Aggregate Commitments
" means the Commitments of all the Lenders.
"
Aggregate Revolving Commitments
" means the Revolving Commitments of all Revolving Lenders.
As of the Closing Date, the Aggregate Revolving Commitments are $4,000,000,000.
"
Agreement
" means this Credit Agreement.
"
Applicable Rate
" means in the case of Credit Extensions under the Revolving Commitment, (a) from
the Closing Date until December 31, 2007, all pricing shall be determined by reference to Level 3 below, and (b) beginning January 1, 2008, the
following rates per annum (expressed in basis points), based upon the Total Leverage Ratio as set forth below:
|
Applicable Rate
|
|
Pricing Level
|
Total Leverage Ratio
|
Unused Fee
|
Eurodollar Rate + Letters of Credit
|
Base Rate +
|
|
1
|
<
3.50x
|
20.0
|
62.5
|
.0
|
|
2
|
3.50x < x
<
4.00x
|
20.0
|
87.5
|
.0
|
|
3
|
4.00x < x
<
4.50x
|
25.0
|
100.0
|
.0
|
|
4
|
4.50x < x
<
5.00x
|
25.0
|
112.5
|
.0
|
|
5
|
5.00x < x
<
5.50x
|
30.0
|
137.5
|
12.5
|
|
6
|
> 5.50x
|
35.0
|
162.5
|
37.5
|
The Applicable Rate beginning January 1, 2008 shall be based on the Total Leverage Ratio as of September 30, 2007.
Any subsequent increase or decrease in the Applicable Rate resulting from a change in the Total Leverage Ratio shall become effective as of the
first Business Day immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b)
;
provided
,
however
, that if a Compliance Certificate is not delivered when due in accordance with
Section 6.02(b)
, then Pricing
Level 6 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and
shall continue to apply until the first Business Day after the date such certificate is delivered.
"
Approved Fund
" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate
of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
"
Arrangers
" means Banc of America
Securities LLC, Citigroup Global Markets Inc.,
Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Wachovia Bank, National
Association and Wells Fargo Bank, N.A., in their capacities as joint lead arrangers and joint book managers.
"
Assignee Group
" means two or more Eligible Assignees that are Affiliates of one another or two or
more Approved Funds managed by the same investment advisor.
2
"
Assignment and Assumption
" means an Assignment and Assumption substantially in the form of
Exhibit E
.
"
Attorney Costs
" means and includes all reasonable fees, expenses and disbursements of any law
firm or other external counsel.
"
Attributable Indebtedness
" means, on any date, (a) in respect of any capital lease of any Person,
the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b)
in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear
on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.
"
Audited Financial Statements
" means the audited consolidated balance sheet of the Borrower and
its Subsidiaries for the fiscal year ended December 31, 2006, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
"
Availability Period
" means the period from and including the Effective Date to the earliest of (a) the
Revolving Loan Maturity Date, (b) the date of termination of the Aggregate Revolving Commitments pursuant to
Section 2.06
, and
(c) the date of termination of the commitment of each Revolving Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit
Extensions pursuant to
Section 8.02
.
"
Bank of America
" means Bank of America, N.A. and its successors.
"
Bankruptcy Code
" means the Bankruptcy Reform Act of 1978, 11 U.S.C. 101 et seq., as
amended.
"
Base Rate
" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal
Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its
"prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's
costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of
business on the day specified in the public announcement of such change.
"
Base Rate Committed Loan
" means a Committed Loan that is a Base Rate Loan.
"
Base Rate Loan
" means a Loan that bears interest based on the Base Rate.
"
Borgata
" means the Borgata Hotel, Casino and Spa in Atlantic City, New Jersey which is owned by
MDDC.
"
Borgata EBIT
" means for any period, the consolidated earnings of MDDC before interest expense,
taxes, non-cash rent expense, preopening expenses, share-based compensation expense, non-cash change in value of derivative instruments,
charges for the early retirement of
3
debt, non-recurring non-cash losses (or gains), acquisition and merger related charges, and extraordinary
items, all as determined in accordance with GAAP, plus (or minus) any loss (or gain) arising from a change in GAAP.
"
Borrower
" has the meaning specified in the introductory paragraph hereto.
"
Borrower Materials
" has the meaning specified in
Section 6.02
.
"
Borrowing
" means a Committed Borrowing or a Swing Line Borrowing, as the context may
require.
"
Boyd Family
" means William S. Boyd, any direct descendant or spouse of such person, any direct
descendant of such spouse, and any trust or other estate in which each person who has a beneficial interest directly or indirectly through one or
more intermediaries in any Capital Stock of the Borrower is one of the foregoing persons.
"
Business Day
" means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the State of Nevada or the State of New York and, if such day relates to
any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.
"
Capital Stock
" means, with respect to any Person, any and all shares or other equivalents (however
designated) of corporate stock, partnership interests, limited liability company membership interests, or any other participation, right, warrants,
options or other interest in the nature of an equity interest in such Person, but excluding any debt security convertible or exchangeable into such
equity interest.
"
Cash Collateralize
" has the meaning specified in
Section 2.03(g)
.
"
Change of Control
" means the occurrence of any of the following: (i) the consummation of
any transaction, the result of which any "person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing
of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Boyd Family and other than a Restricted Subsidiary,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or
only after the passage of time) of 50% or more of the total voting power of all classes of the Voting Stock of the Borrower and/or warrants or
options to acquire such Voting Stock, calculated on a fully diluted basis; provided that for purposes of this clause (i), the members of the
Boyd Family shall be deemed to beneficially own any Voting Stock of a corporation held by any other corporation (the "parent
corporation") so long as the members of the Boyd Family beneficially own (as so defined), directly or indirectly through one or more
intermediaries, in the aggregate 50% or more of the total voting power of the Voting Stock of the parent corporation; (ii) the sale, lease,
conveyance or other transfer of all or substantially all of the property of the Borrower (other than to any
Restricted
Subsidiary); (iii) the approval of any plan of liquidation or dissolution of the Borrower by the stockholders of
4
the Borrower; (iv) the Borrower consolidates with or merges into another Person or any Person consolidates with or merges into the Borrower in any such
event pursuant to a transaction in which the outstanding Voting Stock of the Borrower is reclassified into or exchanged for cash, securities or
other property, other than any such transaction where (a) the outstanding Voting Stock of the Borrower is reclassified into or exchanged for
Voting Stock of the surviving corporation that is Capital Stock and (b) the holders of the Voting Stock of the Borrower immediately prior to
such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such
transaction in substantially the same proportion as before the transaction; (v) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such board
or whose nomination for election by the stockholders of the Borrower was approved by a vote of either (a) 66 2/3% of the directors then still
in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, or
(b) members of the Boyd Family who beneficially own (as defined for purposes of clause (i) above), directly or indirectly through one or
more intermediaries, in the aggregate 50% or more of the total voting power of the Voting Stock of the Borrower), cease for any reason to
constitute a majority of the Board of Directors then in office; or (vi) any change in control (or similar event, however denominated) with respect to
the Borrower shall occur under and as defined in any indenture or agreement to which the Borrower is a party with an outstanding principal
amount equal or greater than $100,000,000.
"
Closing Date
" means the date that this Agreement has been executed by all parties hereto.
"
Code
" means the Internal Revenue Code of 1986.
"
Collateral
" means the Property described in the Pledge Agreement and any additional Property
pledged to the Administrative Agent pursuant to
Section 6.13
.
"
Commercial Letter of Credit
" means each Letter of Credit issued to support the purchase of goods
that is determined to be a commercial letter of credit by the Issuing Bank.
"
Commitment
" means for each Lender, such Lender's Revolving Commitment and/or Term Loan
Commitment.
"
Commitments
" means the Revolving Commitments and the Term Loan Commitments.
"
Committed Borrowing
" means a borrowing consisting of simultaneous Committed Loans of the
same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Term Loan Lenders pursuant to
Section 2.14
or by each of the Revolving Lenders pursuant to
Section 2.01
.
"
Committed Loan
" means a Loan made or to be made by a Lender pursuant to
Section 2.01
or
Section 2.14
.
"
Committed Loan Notice
" means a notice of (a) a Committed Borrowing, (b) a conversion of
Committed Loans from one Type to the other, or (c) a continuation of Eurodollar
5
Rate Loans, pursuant to
Section 2.02(a)
, which, if in writing, shall be substantially in the form of
Exhibit A
.
"
Compliance Certificate
" means a certificate substantially in the form of
Exhibit D
.
"
Consolidated EBITDA
" means, for any period, the Borrower and its Restricted Subsidiaries'
consolidated earnings before interest expense, taxes, depreciation, amortization, non-cash rent expense, preopening expenses, share-based
compensation expense, non-cash change in value of derivative instruments, charges for the early retirement of debt, non-recurring non-cash
losses (or gains), acquisition and merger related charges, and extraordinary items, all as determined in accordance with GAAP
("EBITDA"), plus (or minus) without duplication, the EBITDA during such twelve month period for any Restricted Subsidiary acquired
(or disposed of ) by the Borrower during such period, in either case, plus (or minus) any loss (or gain) arising from a change in GAAP, plus 50%
of Borgata EBIT to the extent that on the date of determination, no Event of Default under and as defined in Borgata's bank credit agreement has
occurred and is continuing, and plus (after the same shall have been open for at least one full calendar month) the annualized pro forma EBITDA
of any new Venture of the Borrower and its Restricted Subsidiaries (including the Dania Jai Alai development project). "Consolidated
EBITDA" shall exclude the Consolidated EBITDA of each Unrestricted Subsidiary and all Subsidiaries of any Unrestricted Subsidiary.
"
Consolidated Funded Indebtedness
" means, as of any date of determination, for the Borrower and
its Restricted Subsidiaries on a consolidated basis (exclusive of any Indebtedness of the Borrower's Restricted Subsidiaries to the Borrower or
another Restricted Subsidiary or any Indebtedness of the Borrower to any Restricted Subsidiary), the sum (without duplication) of (a) the
outstanding principal amount of all Indebtedness for borrowed money, (b) the aggregate amount of all capital lease obligations, and (c) all
Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) and (b) above of Persons other than the Borrower or
any Restricted Subsidiary. Notwithstanding the foregoing, Consolidated Funded Indebtedness shall not include any Defeased Indebtedness.
The amount of Consolidated Funded Indebtedness shall be deemed to be zero with respect to (i) any letter of credit, unless and until a drawing is
made with respect thereto, and (ii) any Guarantee, unless and until demand for payment is made with respect thereto. "Consolidated
Funded Indebtedness" shall exclude the Consolidated Funded Indebtedness of each Unrestricted Subsidiary and all Subsidiaries of any
Unrestricted Subsidiary.
"
Consolidated Gross Revenue
" means, as of the end of any fiscal quarter of the Borrower, the gross
revenue of the Borrower and its Restricted Subsidiaries calculated on a consolidated basis at such date, excluding the Consolidated Gross
Revenue of each Unrestricted Subsidiary and all Subsidiaries of any Unrestricted Subsidiary.
"
Consolidated Total Assets
" means, as of the end of any fiscal quarter of the Borrower, the total
assets of the Borrower and its Restricted Subsidiaries calculated on a consolidated basis at such date excluding the Consolidated Total Assets of
each Unrestricted Subsidiary and all Subsidiaries of any Unrestricted Subsidiary.
6
"
Contractual Obligation
" means, as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
"
Control
" has the meaning specified in the definition of "Affiliate."
"
Credit Extension
" means each of the following: (a) a Borrowing and (b) an L/C Credit
Extension.
"
Dania Jai Alai
" means, collectively, FGB Development, Inc., a Florida corporation,
The Aragon Group, Inc., a Florida corporation, and Summersport Enterprises, LLLP, a Florida limited
liability limited partnership.
"
Debtor Relief Laws
" means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or
similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors
generally.
"
Default
" means any event or condition that constitutes an Event of Default or that, with the giving of
any notice, the passage of time, or both, would be an Event of Default.
"
Default Rate
" means a fluctuating interest rate per annum at all times equal to the interest rate
otherwise applicable to such Obligation
plus
2% per annum, to the fullest extent permitted by applicable Laws.
"
Defaulting Lender
" means any Lender that (a) has failed to fund any portion of the Committed
Loans, participations in L/C Obligations or participations in Swing Line Loans required to be funded by it hereunder within one Business Day of
the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other
amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has
been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.
"
Defeased Indebtedness
" means Indebtedness (a) that has been defeased in accordance with the
terms of the indenture or other agreement under which it was issued, (b) that has been called for redemption and for which funds sufficient to
redeem such Indebtedness have been set aside by the Borrower, (c) for which amounts are set aside in trust or are held by a representative of
the holders of such Indebtedness or any third party escrow agent pending satisfaction or waiver of the conditions for the release of such funds, or
(d) that has otherwise been defeased to the satisfaction of the Administrative Agent.
"
Disposition
" or "
Dispose
" means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any Property by the Borrower or any Guarantor, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
"
Dollar
" and "
$
" mean lawful money of the United States.
7
"
Domestic Subsidiary
" means any Subsidiary that is organized under the laws of any political
subdivision of the United States.
"
Echelon
" means the proposed development by Echelon Resorts, LLC of the approximately 65 acre
site on Las Vegas Boulevard South in Las Vegas, Nevada.
"
Echelon Resorts, LLC
" means Echelon Resorts, LLC, a Nevada limited liability company and
wholly-owned Restricted Subsidiary of the Borrower.
"
Effective Date
" means the first date all the conditions precedent in
Section 4.01
are
satisfied or waived in accordance with
Section 10.01
.
"
Eligible Assignee
" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d)
any other Person (other than a natural person) approved by (i) the Administrative Agent, and in the case of assignments of Revolving
Commitments only, the L/C Issuer and the Swing Line Lender, and (ii) unless an Event of Default has occurred and is continuing, the Borrower
(each such approval not to be unreasonably withheld or delayed);
provided
that notwithstanding the foregoing, "Eligible
Assignee" shall not include the Borrower or any of the Borrower's Affiliates or Subsidiaries.
"
Environmental Laws
" means any and all Federal, state, local, and foreign 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 those related
to hazardous substances or wastes, air emissions and discharges to waste or public systems.
"
Environmental Liability
" means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened
release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.
"
ERISA
" means the Employee Retirement Income Security Act of 1974.
"
ERISA Affiliate
" means any trade or business (whether or not incorporated) under common control
with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
"
ERISA Event
" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any
8
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041
or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"
Eurodollar Rate
" means for any Interest Period with respect to a Eurodollar Rate Loan, the rate per
annum equal to the British Bankers Association LIBOR Rate, as published by Reuters (or other commercially available source providing
quotations of such rate as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period. If such rate is not available at such time for any reason, then the "Eurodollar Rate" for such
Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the
first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted
by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch to major banks in
the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
"
Eurodollar Rate Loan
" means a Committed Loan that bears interest at a rate based on the
Eurodollar Rate.
"
Event of Default
" has the meaning specified in
Section 8.01
.
"
Exchange Act
" means the Securities Exchange Act of 1934.
"
Existing Credit Agreement
" has the meaning specified in the second introductory paragraph
hereto.
"
Existing Letters of Credit
" means letters of credit issued and outstanding under the Existing Credit
Agreement as set forth in
Schedule 2.03
(as such Schedule may be updated prior to the Effective Date), which shall be deemed
outstanding as Letters of Credit hereunder as of the Closing Date pursuant to
Section 2.03(a)
.
"
Federal Funds Rate
" means, for any day, the rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next succeeding such day;
provided
that (a) if such day is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole
9
multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
"
Fee Letter
" means that certain letter agreement dated April 2, 2007, among the Borrower, the
Administrative Agent and Banc of America Securities LLC.
"
Foreign Lender
" has the meaning specified in
Section 10.15(a)(i)
.
"
FRB
" means the Board of Governors of the Federal Reserve System of the United States.
"
Fund
" means any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business.
"
GAAP
" means generally accepted accounting principles in the United States set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
"
Gaming Board
" means any governmental agency that holds regulatory, licensing or permit authority
over gambling, gaming or casino activities conducted by the Borrower or any of its Subsidiaries within its jurisdiction.
"
Gaming Laws
" means all Laws pursuant to which any Gaming Board possesses regulatory,
licensing or permit authority over gambling, gaming or casino activities conducted by the Borrower or any of its Subsidiaries within its
jurisdiction.
"
Gaming License
" means any license, permit, franchise or other authorization from any governmental
authority required to own, lease, operate or otherwise conduct the gaming business of the Borrower or any of its Subsidiaries, including all
licenses granted under Gaming Laws.
"
Governmental Authority
" means any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
"
Granting Lender
" has the meaning specified in
Section 10.07(g)
.
"
Guarantee
" means, as to any Person, any (a) any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another
Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase
or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the
10
payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, keep well arrangements, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness
or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The term "Guarantee" as a verb has a corresponding meaning.
"
Guarantors
" means those Persons identified as a Guarantor on Schedule 5.13 and any other
Subsidiary that executes a Guaranty;
provided
that (i) any Guarantor that is not identified on Schedule 5.13 as a Guarantor and that is
not a Significant Subsidiary, (ii) any Guarantor that is sold or otherwise transferred in a Disposition permitted by
Section 7.05
, and
(iii) Boyd Atlantic City, Inc., a New Jersey corporation, may be released from the Guaranty in accordance with
Section 9.11
and
thereafter such Person shall no longer be a "Guarantor" or a "Loan Party" for purposes of any Loan Document.
"
Guaranty
" means the guaranty executed and delivered by the Guarantors pursuant to
Section 4.01(a)(iii)
, and any amendment to guaranty executed and delivered by a Subsidiary pursuant to
Section 6.13
hereof, which shall be substantially in the form of
Exhibit F
hereto, as amended, supplemented or
otherwise modified from time to time.
"
Hazardous Materials
" means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"
Indebtedness
" means, as to any Person at a particular time, without duplication, all of the following,
whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments and all Guarantees of any such Indebtedness;
(b) all direct or contingent obligations of such Person arising under Standby Letters of Credit unpaid at draw, bankers'
acceptances, bank guaranties, surety bonds and similar instruments;
(c) net obligations of such Person under any Swap Contract in respect of interest rate hedging;
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade
accounts payable in the ordinary course of business);
11
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse; and
(f) capital leases.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint
venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any capital lease as of any date shall be
deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. Indebtedness shall not include any Defeased
Indebtedness. The amount of any Indebtedness consisting of a Guarantee shall be deemed to be zero, unless and until demand for payment is
made under such Guarantee.
"
Indemnified Liabilities
" has the meaning specified in
Section 10.05
.
"
Indemnitees
" has the meaning specified in
Section 10.05
.
"
Interest Coverage Ratio
" means, for any period, the ratio of (a) twelve month trailing
Consolidated EBITDA to (b) consolidated interest expense (as defined in GAAP) of the Borrower and its Restricted Subsidiaries for such
period. Consolidated interest expense shall exclude the interest expense of each Unrestricted Subsidiary and all Subsidiaries of Unrestricted
Subsidiaries.
"
Interest Payment Date
" means, (a) as to any Loan other than a Base Rate Loan, the last day of
each Interest Period applicable to such Loan and the applicable Maturity Date;
provided
,
however
, that if any Interest Period for
a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each March, June,
September and December and the applicable Maturity Date.
"
Interest Period
" means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Committed Loan Notice or such other period that is requested by the Borrower and determined by
the Administrative Agent to be available in the eurodollar market;
provided
that:
(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next
preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar
12
month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the applicable Maturity Date.
"
Investment
" means any direct or indirect acquisition or investment by the Borrower or any Guarantor
in any other Person that is not a Guarantor prior to or substantially concurrently with such acquisition or investment, whether by means of (a) the
purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any
partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of
assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment. The amount of any
Investment consisting of a Guarantee shall be deemed to be zero, unless and until demand for payment is made under such Guarantee.
"
IP Rights
" has the meaning specified in
Section 5.16
.
"
IRS
" means the United States Internal Revenue Service.
"
ISP
" means, with respect to any Letter of Credit, the "International Standby Practices
1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of
issuance).
"
Issuer Documents
" means with respect to any Letter of Credit, the Letter Credit Application, and any
other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Restricted Subsidiary) or in favor the L/C
Issuer and relating to any such Letter of Credit.
"
Laws
" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules,
guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.
"
L/C Advance
" means, with respect to each Revolving Lender, such Revolving Lender's funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.
"
L/C Borrowing
" means an extension of credit resulting from a drawing under any Letter of Credit
which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.
"
L/C Credit Extension
" means, with respect to any Letter of Credit, the issuance thereof or extension
of the expiry date thereof, or the increase of the amount thereof.
13
"
L/C Issuer
" means Bank of America in its capacity as issuer of Letters of Credit hereunder and in its
capacity as issuer of the Existing Letters of Credit, any other Lender approved by the Borrower and the Administrative Agent or any successor
issuer of Letters of Credit hereunder.
"
L/C Obligations
" means, as at any date of determination, the aggregate undrawn amount of all
outstanding Letters of Credit
plus
the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For all purposes of this
Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of
the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding" in the amount so remaining available
to be drawn.
"
Lender
" has the meaning specified in the introductory paragraph hereto and, as the context
requires, includes the L/C Issuer and the Swing Line Lender.
"
Lending Office
" means, as to any Lender, the office or offices of such Lender described as such in
such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.
"
Letter of Credit
" means any Standby Letter of Credit or Commercial Letter of Credit issued
hereunder and shall include the Existing Letters of Credit.
"
Letter of Credit Application
" means an application and agreement for the issuance or amendment of
a Letter of Credit in the form from time to time in use by the L/C Issuer.
"
Letter of Credit Expiration Date
" means the fifth Business Day prior to the Revolving Loan Maturity
Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).
"
Letter of Credit Fee
" has the meaning specified in
Section 2.03(i)
.
"
Letter of Credit Sublimit
" means an amount equal to $250,000,000. The Letter of Credit Sublimit is
part of, and not in addition to, the Aggregate Revolving Commitments.
"
License Revocation
" means the revocation, failure to renew or suspension of, or the appointment of
a receiver, supervisor or similar official with respect to any casino, gambling or gaming license issued by any Gaming Board covering any casino
or gaming facility.
"
Lien
" means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a
security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease
having substantially the same economic effect as any of the foregoing).
"
Loan
" means an extension of credit by a Lender to the Borrower under
Article II
in
the form of a Committed Loan or a Swing Line Loan.
14
"
Loan Documents
" means this Agreement, each Note, each Issuer Document, the Fee Letter, the
Pledge Agreement and the Guaranty.
"
Loan Parties
" means, collectively, the Borrower and each Guarantor.
"
Material Adverse Effect
" means (a) a material adverse change in, or a material adverse effect upon,
the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Borrower and its Restricted
Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.
"
Maturity Date
" means, as the context may require, the Revolving Loan Maturity Date or the Term
Loan Maturity Date.
"
MDDC
" means Marina District Development Company, LLC, a New Jersey limited liability company,
which is wholly owned by Marina District Development Holding Co., LLC, a New Jersey limited liability company, which as of the Closing Date is
owned fifty percent by a Subsidiary of MGM MIRAGE and fifty percent by Boyd Atlantic City, Inc., or any successor entity to MDDC.
"
Multiemployer Plan
" means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the
preceding five plan years, has made or been obligated to make contributions.
"
Note
" means a promissory note made by the Borrower in favor of a Lender evidencing Loans made
by such Lender, substantially in the form of
Exhibit C-1
or
C-2
.
"
Obligations
" means all advances to, and debts, liabilities, obligations, covenants and duties of, any
Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that
accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming
such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
"
Organization Documents
" means, (a) with respect to any corporation, the certificate or articles of
incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to
any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
15
organization and, if applicable, any certificate or articles of formation or organization of such entity.
"
Outstanding Amount
" means (i) with respect to Committed Loans and Swing Line Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed
Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.
"
Participant
" has the meaning specified in
Section 10.07(d)
.
"
PBGC
" means the Pension Benefit Guaranty Corporation.
"
Pension Plan
" means any "employee pension benefit plan" (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the
Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a
multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five
plan years.
"
Permitted Liens
" means the Liens permitted under
Section 7.01
.
"
Person
" means any natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.
"
Plan
" means any "employee benefit plan" (as such term is defined in Section 3(3)
of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.
"
Pledge Agreement
" means the pledge agreement executed and delivered pursuant to
Section 4.01(a)(iv)
, as such agreement may be amended, supplemented, restated or otherwise modified from time to time, which
will cover all present and future shares of Capital Stock of (or other ownership or profit interests in) each of the Borrower's present and future
Significant Subsidiaries that are Guarantors (limited, in the case of each entity that is a "controlled foreign corporation" under Section
957 of the Internal Revenue Code, to a pledge of 66% of the Capital Stock of each such first-tier foreign Subsidiary to the extent the pledge of
any greater percentage would result in material adverse tax consequences to the Borrower) and which will be in substantially the form of
Exhibit H
hereto.
"
Property
" of a Person means any and all property, whether real, personal, tangible, intangible, or
mixed, of such Person, or other assets owned, leased or operated by such Person.
"
Pro Rata Share
" means, with respect to any Commitment of Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the numerator of
16
which is the amount of the respective Commitment of such
Lender at such time and the denominator of which is the amount of the aggregate amount of such Commitments at such time or, in the case of
the Term Loan Lenders from and after the Effective Date, a fraction (expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of Term Loans of such Term Loan Lender and the denominator of which is the Outstanding Amount of all Term
Loans;
provided
that if the commitment of each Revolving Lender to make Revolving Loans and the obligation of the L/C Issuer to make
L/C Credit Extensions have been terminated pursuant to
Section 8.02
, then the Pro Rata Share of each Revolving Lender shall be
determined based on the Pro Rata Share of such Revolving Lender immediately prior to such termination and after giving effect to any
subsequent assignments made pursuant to the terms hereof.
"
Register
" has the meaning specified in
Section 10.07(c)
.
"
Related Parties
" means, with respect to any Person, such Person's Affiliates and the partners,
directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.
"
Reportable Event
" means any of the events set forth in Section 4043(c) of ERISA, other than events
for which the 30 day notice period has been waived.
"
Request for Credit Extension
" means (a) with respect to a Borrowing, conversion or continuation of
Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a
Swing Line Loan, a Swing Line Loan Notice.
"
Required Lenders
" means, as of any date of determination, Lenders having more than 50% of the
sum of (i) the Aggregate Revolving Commitments and (ii) prior to the Effective Date, the Term Loan Commitments and thereafter the aggregate
Outstanding Amount of all Term Loans or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to
Section 8.02
, Lenders holding in the aggregate more than 50% of the Total
Outstandings (with the aggregate amount of each Lender's risk participation and funded participation in L/C Obligations and Swing Line Loans
being deemed "held" by such Lender for purposes of this definition);
provided
that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required
Lenders.
"
Required Revolving Lenders
" means, as of any date of determination, Revolving Lenders having
more than 50% of the Aggregate Revolving Commitments or, if the commitment of each Revolving Lender to make Revolving Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to
Section 8.02
, Revolving Lenders
holding in the aggregate more than 50% of the Total Revolving Outstandings (with the aggregate amount of each Revolving Lender's risk
participation and funded participation in L/C Obligations and Swing Line Loans being deemed "held" by such Revolving Lender for
purposes of this definition);
provided
that the Commitment of, and the portion of the Total Revolving
17
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Revolving Lenders.
"
Responsible Officer
" means the chief executive officer, president, chief operating officer, chief
financial officer or treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
"
Restricted Payment
" means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other equity interest of the Borrower or any Restricted Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other equity interest or of any option, warrant or other right to acquire any such capital
stock or other equity interest.
"
Restricted Subsidiary
" means each Subsidiary of the Borrower that is not an Unrestricted
Subsidiary.
"
Revolving Commitment
" means, as to each Revolving Lender, its obligation to (a) make Revolving
Loans to the Borrower pursuant to
Section 2.01
, (b) purchase participations in L/C Obligations, and (c) purchase participations in
Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Revolving
Lender's name on
Schedule 2.01
or in the Assignment and Assumption pursuant to which such Revolving Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
"
Revolving Lender
" means each Lender that holds a Revolving Commitment.
"
Revolving Loan
" means each Loan made by a Revolving Lender under the Revolving
Commitment.
"
Revolving Loan Maturity Date
" means May 24, 2012.
"
Revolving Note
" means the promissory note made by the Borrower to a Revolving Lender
evidencing that Lender's Pro Rata Share of the Revolving Commitment, substantially in the form of Exhibit C-1, either as originally
executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted.
"
SEC
" means the Securities and Exchange Commission, or any Governmental Authority succeeding
to any of its principal functions.
"
Secured Obligations
" means, collectively, the Obligations and all obligations of any Loan Party to
any Lender or any Affiliate of a Lender under any Swap Contracts permitted under
Section 7.01(p)
.
18
"
Secured Parties
" means, collectively, the Lenders, any Affiliate or any Lender that is a party to any
Swap Contract with the Borrower permitted under
Section 7.01(p)
and the Administrative Agent.
"
Significant Subsidiary
" means each Restricted Subsidiary (including such Restricted Subsidiary's
interest in its direct and indirect Restricted Subsidiaries) of the Borrower that:
(a) accounted for at least 5% of Consolidated Gross Revenue of the Borrower and its Restricted Subsidiaries or 5%
of Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, in each case for the four fiscal quarters of the Borrower ending on the
last day of the last fiscal quarter of the Borrower immediately preceding the date as of which any such determination is made; or
(b) has assets which represent at least 5% of the Consolidated Total Assets of the Borrower and its Restricted
Subsidiaries as of the last day of the last fiscal quarter of the Borrower immediately preceding the date as of which any such determination is
made; or
(c) owns a hotel or casino on the Closing Date (other than Eldorado, Inc.);
all of which, with respect to clauses (a) and (b), shall be as reflected on the financial statements of the Borrower for the
period, or as of the date, in question, adjusted for the pro forma effect of any Restricted Subsidiary acquired (or disposed of) by the Borrower
during such period or concurrently with the date as of which such determination is made. Notwithstanding the foregoing, the term Significant
Subsidiary shall exclude any Subsidiary that would not be a Significant Subsidiary other than as a result of its ownership of Capital Stock of one
or more Persons that are not Subsidiaries or that are Unrestricted Subsidiaries. For the avoidance of doubt, it is understood and agreed that
Echelon is a Significant Subsidiary.
"
SPC
" has the meaning specified in
Section 10.07(g)
.
"
Standby Letter of Credit
" means each Letter of Credit that is not a Commercial Letter of Credit.
"
Subsidiary
" of a Person means a corporation, partnership, joint venture, limited liability company or
other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or
other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"
Swap Contract
" means (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor
19
transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "
Master
Agreement
"), including any such obligations or liabilities under any Master Agreement.
"
Swap Termination Value
" means, in respect of any one or more Swap Contracts, after taking into
account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date
prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined
based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may
include a Lender or any Affiliate of a Lender).
"
Swing Line
" means the revolving credit facility made available by the Swing Line Lender pursuant to
Section 2.04
.
"
Swing Line Borrowing
" means a borrowing of a Swing Line Loan pursuant to
Section 2.04
.
"
Swing Line Lender
" means Wells, in its capacity as provider of Swing Line Loans, or any successor
swing line lender hereunder.
"
Swing Line Loan
" has the meaning specified in
Section 2.04(a)
.
"
Swing Line Loan Notice
" means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b)
, which, if in writing, shall be substantially in the form of
Exhibit B
.
"
Swing Line Note
" means the promissory note made by the Borrower to the Swing Line Lender,
substantially in the form of Exhibit C-2, either as originally executed or as the same may from time to time be supplemented, modified, amended,
renewed, extended or supplemented.
"
Swing Line Sublimit
" means an amount equal to the lesser of (a) $100,000,000 and (b) the
Aggregate Revolving Commitments. The Swing Line Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments.
"
Synthetic Lease Obligation
" means the monetary obligation of a Person under (a) a so-called
synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).
20
"
Term Loan
" means a term loan or term loans made pursuant to the Borrower's request under
Section 2.14
hereof.
"
Term Loan Commitment
" means the Commitment of a Term Loan Lender to make Term Loans
pursuant to the Borrower's request pursuant to
Section 2.14
hereof.
"
Term Loan Lender
" means any Lender that makes a Term Loan pursuant to
Section 2.14
hereof.
"
Term Loan Maturity Date
" means, in the case of any Term Loans, the final maturity date
thereof.
"
Term Note
" means a promissory note of the Borrower payable to the order of any Term Loan
Lender evidencing the indebtedness of the Borrower to such Lender resulting from the Term Loans made by such Lender.
"
Threshold Amount
" means, as of any date, an amount equal to 5% of the Consolidated Total Assets
of the Borrower and its Restricted Subsidiaries as of the last day of the last fiscal quarter of the Borrower for which financial statements are
available.
"
Total Leverage Ratio
" means the ratio of (a) Consolidated Funded Indebtedness to
(b) twelve-month trailing Consolidated EBITDA. For purposes of determining such ratio, the outstanding Consolidated Funded
Indebtedness shall be calculated as of the last day of the applicable Fiscal Quarter.
"
Total Outstandings
" means the aggregate Outstanding Amount of all Loans and all L/C
Obligations.
"
Total Revolving Outstandings
" means the aggregate Outstanding Amount of all Revolving Loans,
Swing Line Loans and all L/C Obligations.
"
Type
" means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar
Rate Loan.
"
Unfunded Pension Liability
" means the excess of a Pension Plan's benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used
for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.
"
United States
" and "U.S." mean the United States of America.
"
Unreimbursed Amount
" has the meaning specified in
Section 2.03(c)(i)
.
"
Unrestricted Subsidiary
" means each Subsidiary of the Borrower that is so designated in a written
notice from the Borrower to the Administrative Agent.
"
Venture
" means any casino, hotel, casino/hotel, resort, resort/hotel, retail, residential, riverboat,
riverboat/dockside casino, horse racing track, entertainment center or similar facility
21
(or any site or proposed site for any of the foregoing), and
any and all reasonably related businesses necessary for, in support, furtherance or anticipation of and/or ancillary to or in preparation for, any
such business, including off-track betting facilities and golf courses.
"
Voting Stock
" means securities of any class or classes of any a Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for corporate directors (or Persons performing equivalent functions).
"
Wells
" means Wells Fargo Bank, N.A.
1.02
Other Interpretive Provisions
. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan Document:
-
The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
-
The words "
herein
," "
hereto
," "
hereof
" and
"
hereunder
" and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole
and not to any particular provision thereof.
-
Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference
appears.
-
The term "
including
" is by way of example and not limitation.
-
The term "
documents
" includes any and all instruments, documents, agreements, certificates,
notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
-
In the computation of periods of time from a specified date to a later specified date, the word
"
from
" means "
from and including
;" the words "
to
" and "
until
"
each mean "
to but excluding
;" and the word "
through
" means "
to and
including
."
-
Section headings herein and in the other Loan Documents are included for convenience of reference only and shall
not affect the interpretation of this Agreement or any other Loan Document.
1.03
Accounting Terms
.
-
All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to
be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time,
applied in a manner consistent with that used in preparing the Audited Financial Statements,
except
as otherwise specifically prescribed
herein.
-
If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of
22
such change in GAAP (subject to the
approval of the Required Lenders);
provided
that
, until so amended, (i) such ratio or requirement shall continue to be computed
in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders
financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
1.04
Rounding
. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).
1.05
References to Agreements and Laws
. Unless otherwise expressly provided
herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b)
references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such
Law.
1.06
Times of Day
. Unless otherwise specified, all references herein to times of
day shall be references to Pacific time (daylight or standard, as applicable).
1.07
Letter of Credit Amounts
. Unless otherwise specified, all references herein to
the amount of a Letter of Credit at any time shall be deemed to mean the face amount of such Letter of Credit as in effect at such
time.
ARTICLE II
THE
COMMITMENTS AND CREDIT EXTENSIONS
2.01
Committed Loans.
Subject to the terms and conditions set forth herein,
each Revolving Lender severally agrees to make Revolving Loans to the Borrower from time to time, on any Business Day during the Availability
Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender's Revolving Commitment;
provided
,
however
, that after giving effect to any Borrowing of Revolving Loans, (i) the Total Revolving Outstandings shall not exceed the
Aggregate Revolving Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Revolving Lender,
plus
such Revolving Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations,
plus
such Revolving Lender's Pro Rata
Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender's Revolving Commitment. Within the limits of each
Revolving Lender's Revolving Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this
Section 2.01
, prepay under
Section 2.05
, and reborrow under this
Section 2.01
. Revolving Loans
may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.
23
2.02
Borrowings, Conversions and Continuations of Committed
Loans.
-
Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each
continuation of Eurodollar Rate Loans shall be made upon the Borrower's irrevocable notice to the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the
requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to
Base Rate Committed Loans, and (ii) on the requested date of any Borrowing of Base Rate Committed Loans;
provided
,
however
, that if the Borrower wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six
months in duration as provided in the definition of "Interest Period", the applicable notice must be received by the Administrative
Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation. Each telephonic
notice by the Borrower pursuant to this
Section 2.02(a)
must be confirmed promptly by delivery to the Administrative Agent of a
written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to
or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof or such
other amount as corresponds to any Term Loan amortization payment. Except as provided in
Sections 2.03(c)
and
2.04(c)
, each Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $100,000 or a whole multiple
of $100,000 in excess thereof or such other amount as corresponds to any Term Loan amortization payment. Each Committed Loan Notice
(whether telephonic or written) shall specify (i) whether the Borrower is requesting a Committed Borrowing, a conversion of Committed Loans
from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as
the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the
Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, (v) whether the Borrowing is to be of Term
Loans or Revolving Loans, and (vi) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of
Committed Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the
applicable Committed Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a
Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period,
it will be deemed to have specified an Interest Period of one month.
-
Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender that holds
a Commitment for the type of Loan requested of the amount of its Pro Rata Share of the applicable Committed Loans, and if no timely notice of a
conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each applicable Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Committed Borrowing, each Lender that holds
a Commitment for the type of Loan requested shall make the amount of its Committed Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent's Office not later than 1:00 p.m. on the Business Day specified in the applicable
24
Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in
Section 4.02
(and, if such Borrowing is the initial Credit
Extension,
Section 4.01
), the Administrative Agent shall make all funds so received available to the Borrower in like funds as
received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such
funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Borrower;
provided
,
however
, that if, on the date the Committed Loan Notice with respect to such
Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing,
first
, shall be applied to
the payment in full of any such L/C Borrowings, and
second
, shall be made available to the Borrower as provided above.
-
Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of
an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Term Loans may be requested as, converted to or
continued as Eurodollar Rate Loans without the consent of the Term Loan Lenders holding more than 50% of the outstanding Term Loans and
no Revolving Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Revolving
Lenders.
-
The Administrative Agent shall promptly notify the Borrower and the Lenders funding such Loans of the interest rate
applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by
the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the
Administrative Agent shall notify the Borrower and the Lenders holding such Loans of any change in the Base Rate promptly following such
change.
-
After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and
all continuations of Committed Loans as the same Type, there shall not be more than twenty-five Interest Periods in effect with respect to
Committed Loans.
2.03
Letters of Credit.
-
The Letter of Credit Commitment
.
-
Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of
the other Revolving Lenders set forth in this
Section 2.03
, (1) from time to time on any Business Day during the period from the
Effective Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower or its Restricted Subsidiaries,
and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the
Letters of Credit; and (B) the Revolving Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its
Restricted Subsidiaries and any drawings thereunder;
provided
that after giving effect to any L/C Credit Extension with respect to any
Letter of Credit, (x) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, (y) the aggregate Outstanding
Amount of the Committed Loans of any Revolving Lender,
plus
such Revolving Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations,
25
plus
such Revolving Lender's Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed
such Revolving Lender's Commitment, or (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each
request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C
Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and
subject to the terms and conditions hereof, the Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower
may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and
reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Effective Date shall be
subject to and governed by the terms and conditions hereof.
-
The L/C Issuer shall not issue any Letter of Credit, if the expiry date of such requested Letter of Credit would occur
after the Letter of Credit Expiration Date, unless all of the Revolving Lenders have approved such expiry date.
-
The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:
-
any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain
from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter
of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and
which the L/C Issuer in good faith deems material to it;
-
the issuance of such Letter of Credit would violate any Laws or one or more policies of the L/C Issuer;
-
except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is in an initial face
amount less than $25,000;
-
such Letter of Credit is to be denominated in a currency other than Dollars;
-
such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing
thereunder; or
-
a default of any Revolving Lender's obligations to fund under
Section 2.03(c)
exists or any Lender is
at such time a Defaulting Lender hereunder,
26
unless the L/C Issuer has entered into satisfactory arrangements with the Borrower or such Lender
to eliminate the L/C Issuer's risk with respect to such Lender.
-
The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue
such Letter of Credit in its amended form under the terms hereof.
-
The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no
obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit
does not accept the proposed amendment to such Letter of Credit.
-
Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit
.
-
Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to
the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later
than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an
initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D)
the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F)
the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer
may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form
and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a
Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Borrower
shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit
issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.
-
Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the
L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Revolving
Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained in
Article IV
shall not then be satisfied, then,
27
subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or the
applicable Restricted Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's
usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Revolving Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal
to the product of such Revolving Lender's Pro Rata Share
times
the amount of such Letter of Credit.
-
If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute
discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an "
Auto-Extension Letter of
Credit
");
provided
that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary
thereof not later than a day (the "
Non-Extension Notice Date
") in each such twelve-month period to be agreed upon at the
time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to
the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Revolving Lenders shall be deemed to have
authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the
Letter of Credit Expiration Date;
provided
,
however
, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer
has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as
extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of
Section 2.03(a)
or otherwise), or (B) it has
received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date
(1) from the Administrative Agent that the Required Revolving Lenders have elected not to permit such extension or (2) from the Administrative
Agent, any Revolving Lender or any Loan Party that one or more of the applicable conditions specified in
Section 4.02
is not then
satisfied, and in each such case directing the L/C Issuer not to permit such extension.
-
Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with
respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete
copy of such Letter of Credit or amendment.
-
Drawings and Reimbursements; Funding of Participations
.
-
Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the
L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer
under a Letter of Credit (each such date, an "
Honor Date
"), the Borrower shall reimburse the L/C Issuer through the
Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the
Administrative Agent shall promptly notify each Revolving Lender of the
28
Honor Date, the amount of the unreimbursed drawing (the
"
Unreimbursed Amount
"), and the amount of such Revolving Lender's Pro Rata Share thereof. In such event, the Borrower
shall be deemed to have requested a Committed Borrowing of Base Rate Loans under the Revolving Commitment to be disbursed on the Honor
Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.02
for
the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions
set forth in
Section 4.02
(other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this
Section 2.03(c)(i)
may be given by telephone if immediately confirmed in writing;
provided
that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
-
Each Revolving Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to
Section 2.03(c)(i)
make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent's
Office in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such
notice by the Administrative Agent, whereupon, subject to the provisions of
Section 2.03(c)(iii)
, each Revolving Lender that so
makes funds available shall be deemed to have made a Base Rate Committed Loan to the Borrower in such amount. The Administrative Agent
shall remit the funds so received to the L/C Issuer.
-
With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans
because the conditions set forth in
Section 4.02
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing
shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Revolving Lender's
payment to the Administrative Agent for the account of the L/C Issuer pursuant to
Section 2.03(c)(ii)
shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Revolving Lender in satisfaction of its
participation obligation under this
Section 2.03
.
-
Until each Revolving Lender funds its Committed Loan or L/C Advance pursuant to this
Section 2.03(c)
to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's
Pro Rata Share of such amount shall be solely for the account of the L/C Issuer.
-
Each Revolving Lender's obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for
amounts drawn under Letters of Credit, as contemplated by this
Section 2.03(c)
, shall be absolute and unconditional and shall not
be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against
the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided
,
however
, that each Revolving Lender's obligation to make
29
Committed Loans pursuant to this
Section 2.03(c)
is subject to the conditions set forth in
Section 4.02
(other than delivery by the Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve
or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any
Letter of Credit, together with interest as provided herein.
-
If any Revolving Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any
amount required to be paid by such Revolving Lender pursuant to the foregoing provisions of this
Section 2.03(c)
by the time
specified in
Section 2.03(c)(ii)
, the L/C Issuer shall be entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which
such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of the L/C Issuer submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.
-
Repayment of Participations
.
-
At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Revolving
Lender such Lender's L/C Advance in respect of such payment in accordance with
Section 2.03(c)
, if the Administrative Agent
receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from
the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will
distribute to such Revolving Lender its Pro Rata Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of
time during which such Lender's L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.
-
If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to
Section 2.03(c)(i)
is required to be returned under any of the circumstances described in
Section 10.06
(including
pursuant to any settlement entered into by the L/C Issuer in its discretion), each Revolving Lender shall pay to the Administrative Agent for the
account of the L/C Issuer its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand
to the date such amount is returned by such Revolving Lender, at a rate per annum equal to the Federal Funds Rate from time to time in
effect.
-
Obligations Absolute
.
The obligation of the Borrower to reimburse the L/C Issuer for each drawing
under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including the following:
-
any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
30
-
the existence of any claim, counterclaim, set-off, defense or other right that the Borrower or any Restricted
Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
-
any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
-
any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not
strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of
or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any
Debtor Relief Law; or
-
any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Restricted Subsidiary.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it
and, in the event of any claim of noncompliance with the Borrower's instructions or other irregularity, the Borrower will promptly notify the L/C
Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such
notice is given as aforesaid.
-
Role of L/C Issuer
.
Each Revolving Lender and the Borrower agree that, in paying any drawing
under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and
documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the L/C Issuer, any Agent-Related Person nor any of the respective
correspondents, participants or assignees of the L/C Issuer shall be liable to any Revolving Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Revolving Lenders or the Required Revolving Lenders, as applicable; (ii) any action
taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any
document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter of Credit;
provided
,
however
, that this
assumption is not intended to, and shall not, preclude the Borrower's pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other
31
agreement. None of the L/C Issuer, any Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of
Section 2.03(e)
;
provided
,
however
, that anything in such clauses to the contrary notwithstanding, the Borrower
may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer's willful
misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of
a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit.
In furtherance and not in limitation of
the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reason.
-
Cash Collateral
. Upon the request of the Administrative Agent, (i) if the L/C Issuer has honored any full or
partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration
Date, any Letter of Credit for any reason remains outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize
the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C
Borrowing or the Letter of Credit Expiration Date, as the case may be).
Sections 2.05
and
8.02(c)
set forth certain
additional requirements to deliver Cash Collateral hereunder. For purposes of this
Section 2.03
,
Section 2.05
and
Section 8.02(c)
, "
Cash Collateralize
" means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Revolving Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are
hereby consented to by the Revolving Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuer and the Revolving Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked deposit accounts at Bank of
America.
-
Applicability of ISP98 and UCP
.
Unless otherwise expressly agreed by the L/C Issuer and the
Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall
apply to each Standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce at the time of issuance shall apply to each Commercial Letter of Credit.
-
Letter of Credit Fees
. The Borrower shall pay to the Administrative Agent for the account of each Revolving
Lender in accordance with its Pro Rata Share a Letter of Credit fee (the "
Letter of Credit Fee
")
equal to (i) the
Applicable Rate
times
the daily maximum amount available to be drawn under such Letter of Credit for each Standby Letter of Credit
and (ii) 50% of the Applicable Rate
times
the daily maximum amount available to be drawn under such Letter
32
of Credit for each Commercial Letter of Credit. Letter of Credit Fees shall be computed on a quarterly basis in arrears and shall be due and payable on the last
Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of
Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the
daily maximum amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.
-
Documentary and Processing Charges Payable to L/C Issuer
.
The Borrower shall pay directly to
the L/C Issuer for its own account a fronting fee with respect to each Standby Letter of Credit in such amounts and at such times as agreed from
time to time by the Borrower and the L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account fees with respect to
Commercial Letters of Credit in such amounts and at such times as agreed from time to time by the Borrower and the L/C Issuer.
-
Conflict with Issuer Documents
. In the event of any conflict between the terms hereof and the terms of any
Issuer Document, the terms hereof shall control.
-
Letters of Credit Issued for Subsidiaries
. Notwithstanding that a Letter of Credit issued or outstanding
hereunder is in support of any obligations of, or is for the account of, any Person other than the Borrower, the Borrower shall be obligated to
reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby represents and warrants that the
issuance of any Letters of Credit at the Borrower's request for the account of any other Person will inure to the benefit of the
Borrower.
2.04
Swing Line Loans.
-
The Swing Line
. Subject to the terms and conditions set forth herein, the Swing Line Lender agrees, in
reliance upon the agreements of the other Lenders set forth in this
Section 2.04
, to make loans (each such loan, a
"
Swing Line Loan
") to the Borrower from time to time on any Business Day during the Availability Period in an aggregate
amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when
aggregated with the Pro Rata Share of the Outstanding Amount of Revolving Loans and L/C Obligations of the Revolving Lender acting as Swing
Line Lender, may exceed the amount of such Lender's Revolving Commitment;
provided
,
however
, that after giving effect to
any Swing Line Loan, (i) the Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments, and (ii) the aggregate
Outstanding Amount of the Revolving Loans of any Revolving Lender,
plus
such Revolving Lender's Pro Rata Share of the Outstanding
Amount of all L/C Obligations,
plus
such Revolving Lender's Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall
not exceed such Lender's Revolving Commitment, and
provided
,
further
, that the Borrower shall not use the proceeds of any
Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof,
the Borrower may borrow under this
Section 2.04
, prepay under
Section 2.05
, and reborrow under this
Section 2.04
. Immediately upon the making of a Swing Line Loan, each Revolving Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk
33
participation in such Swing Line Loan in an amount equal
to the product of such Revolving Lender's Pro Rata Share
times
the amount of such Swing Line Loan.
-
Borrowing Procedures
. Each Swing Line Borrowing shall be made upon the Borrower's irrevocable notice
to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line
Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed,
which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must
be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line
Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the
contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the
request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such
Swing Line Loan as a result of the limitations set forth in the proviso to the first sentence of
Section 2.04(a)
, or (B) that one or
more of the applicable conditions specified in
Article IV
is not then satisfied, then, subject to the terms and conditions hereof, the
Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing
Line Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swing Line Lender in immediately
available funds.
-
Refinancing of Swing Line Loans
.
-
The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which
hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Revolving Lender make a Base Rate Committed Loan
in an amount equal to such Lender's Pro Rata Share of the amount of Swing Line Loans then outstanding. Such request shall be made in writing
(which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of
Section 2.02
, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but
subject to the unutilized portion of the Aggregate Revolving Commitments and the conditions set forth in
Section 4.02
. The Swing
Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the
Administrative Agent. Each Revolving Lender shall make an amount equal to its Pro Rata Share of the amount specified in such Committed
Loan Notice available to the Administrative Agent in immediately available funds for the account of the Swing Line Lender at the Administrative
Agent's Office not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to
Section 2.04(c)(ii)
, each Revolving Lender that so makes funds available shall be deemed to have made a Base Rate Revolving
Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
34
-
If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with
Section 2.04(c)(i)
, the request for Base Rate Revolving Loans submitted by the Swing Line Lender as set forth herein shall be
deemed to be a request by the Swing Line Lender that each of the Revolving Lenders fund its risk participation in the relevant Swing Line Loan
and each Revolving Lender's payment to the Administrative Agent for the account of the Swing Line Lender pursuant to
Section 2.04(c)(i)
shall be deemed payment in respect of such participation.
-
If any Revolving Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender
any amount required to be paid by such Revolving Lender pursuant to the foregoing provisions of this
Section 2.04(c)
by the time
specified in
Section 2.04(c)(i)
, the Swing Line Lender shall be entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which
such payment is immediately available to the Swing Line Lender at a rate per annum equal to the Federal Funds Rate from time to time in effect.
A certificate of the Swing Line Lender submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing
under this clause (iii) shall be conclusive absent manifest error.
-
Each Revolving Lender's obligation to make Committed Loans or to purchase and fund risk participations in Swing
Line Loans pursuant to this
Section 2.04(c)
shall be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender may have against the Swing Line
Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided
,
however
, that each Revolving Lender's
obligation to make Committed Loans pursuant to this
Section 2.04(c)
is subject to the conditions set forth in
Section 4.02
. No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing
Line Loans, together with interest as provided herein.
-
Repayment of Participations
.
-
At any time after any Revolving Lender has purchased and funded a risk participation in a Swing Line Loan, if the
Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Revolving Lender
through the Administrative Agent its Pro Rata Share of such payment (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Revolving Lender's risk participation was funded) in the same funds as those received by the Swing Line
Lender.
-
If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is
required to be returned by the Swing Line Lender under any of the circumstances described in
Section 10.06
(including pursuant
to any settlement entered into by the Swing Line Lender in its discretion), each Revolving
35
Lender shall pay to the Swing Line Lender its Pro Rata
Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at
a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender.
-
Interest for Account of Swing Line Lender
. The Swing Line Lender shall be responsible for invoicing the
Borrower for interest on the Swing Line Loans. Until each Revolving Lender funds its Base Rate Committed Loan or risk participation pursuant to
this
Section 2.04
to refinance such Lender's Pro Rata Share of any Swing Line Loan, interest in respect of such Pro Rata Share
shall be solely for the account of the Swing Line Lender.
-
Payments Directly to Swing Line Lender
. The Borrower shall make all payments of principal and interest in
respect of the Swing Line Loans directly to the Swing Line Lender.
2.05
Prepayments.
-
The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay
Committed Loans in whole or in part without premium or penalty;
provided
that (i) such notice must be received by the Administrative
Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a principal amount of
$100,000 or a whole multiple of $100,000 in excess thereof or, in each case, such other amount equal to the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such prepayment, whether the Loans to be prepaid are Term Loans or
Revolving Loans and the Type(s) of Committed Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of
each such notice, and of the amount of such Lender's Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any
prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required
pursuant to
Section 3.05
. Each such prepayment shall be applied to the Committed Loans of the Revolving Lenders or Term
Loan Lenders, as applicable, in accordance with their respective Pro Rata Shares. Once prepaid, Term Loans may not be reborrowed.
-
The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or
from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty;
provided
that (i) such notice must
be received by the Swing Line Lender and the Administrative Agent not later than 4:00 p.m. on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If
such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due
and payable on the date specified therein.
36
-
If for any reason the Total Revolving Outstandings at any time exceed the Aggregate Revolving Commitments then
in effect, the Borrower shall immediately prepay Revolving Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess;
provided
,
however
, that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to
this
Section 2.05(c)
unless after the prepayment in full of the Revolving Loans and Swing Line Loans the Total Revolving
Outstandings exceed the Aggregate Revolving Commitments then in effect.
-
All prepayments of Term Loans shall be applied to installments of Term Loans in the inverse order of
maturity.
2.06
Termination or Reduction of Commitments.
The Borrower may, upon notice
to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments;
provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in
excess thereof, (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any reduction of the
Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such
Sublimit shall be automatically reduced by the amount of such excess. The Administrative Agent will promptly notify the Lenders of any such
notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the
Commitment of each Revolving Lender according to its Pro Rata Share. All fees accrued until the effective date of any termination of the
Aggregate Commitments shall be paid on the effective date of such termination.
2.07
Repayment of Loans.
-
The Borrower shall make repayments of any Term Loans as provided in the Term Notes evidencing such Loans.
The Borrower shall repay the outstanding principal amount of all Term Loans on the Term Loan Maturity Date.
-
The Borrower shall repay to the Revolving Lenders on the Revolving Loan Maturity Date the aggregate principal
amount of Revolving Loans outstanding on such date.
-
The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the request of the Swing Line Lender
pursuant to
Section 2.04(c)
and (ii) the Revolving Loan Maturity Date.
2.08
Interest.
-
Subject to the provisions of subsection (b) below, (i) each Revolving Loan that is a Eurodollar Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period
plus
the Applicable Rate; (ii) each Revolving Loan that is a Base Rate Committed Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a rate
37
per annum equal to the Base Rate
plus
the Applicable
Rate; (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per
annum equal to the Overnight Eurodollar Rate (as defined in the Swing Line Note) or any other rate as the Borrower and the Swing Line Lender
may agree; and (iv) each Term Loan shall bear interest on the outstanding principal amount thereof at the rate per annum set forth in the
Term Note evidencing such Loan.
-
-
If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all
times equal to the Default Rate to the fullest extent permitted by applicable Laws.
-
If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when
due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the
Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the
fullest extent permitted by applicable Laws.
-
Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable
upon demand.
-
Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at
such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after
judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
2.09
Fees
. In addition to certain fees described in subsections (i) and (j) of
Section 2.03
:
-
Unused Fee
. The Borrower shall pay to the Administrative Agent for the account of each
Revolving Lender in accordance with its Pro Rata Share, an unused fee equal to the Applicable Rate
times
the actual daily amount by
which the Aggregate Revolving Commitments exceed the sum of (i) the Outstanding Amount of Revolving Loans and (ii) the Outstanding Amount
of L/C Obligations. The unused fee shall accrue at all times during the Availability Period, including at any time during which one or more of the
conditions in
Section 4.02
is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March,
June, September and December, commencing with the first such date to occur after the Effective Date, and on the Revolving Loan Maturity Date.
The unused fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily
amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in
effect.
-
Other Fees
.
The Borrower shall pay to the Arrangers and the Administrative Agent for their own
respective accounts fees in the amounts and at the times specified in the Fee
38
Letter. The Borrower shall pay to the Lenders such fees as shall
have been separately agreed upon in writing in the amounts and at the times so specified. Notwithstanding the foregoing, no such fees shall be
payable prior to the Effective Date.
2.10
Computation of Interest and Fees; Retroactive Adjustments of Applicable
Rate
.
-
All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's
"prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest,
as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid,
provided
that any
Loan that is repaid on the same day on which it is made shall, subject to
Section 2.12(a)
, bear interest for one day.
-
If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other
reason, the Borrower or the Lenders determine that (i) the Total Leverage Ratio as calculated by the Borrower as of any applicable date was
inaccurate and (ii) a proper calculation of the Total Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall
immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders, promptly on demand by
the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the
Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), an
amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees
actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may
be, under
Section 2.03(c)(iii)
,
2.03(i)
or
2.08(b)
or under
Article VIII
. The Borrower's obligations under
this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
2.11
Evidence of Debt
.
-
The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained
by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative
Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower
and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender's Loans in
39
addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.
-
In addition to the accounts and records referred to in subsection (a), each Revolving Lender and the Administrative
Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Revolving Lender of
participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Revolving Lender in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error.
2.12
Payments Generally
.
-
All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the
Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars
and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each
Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such
Lender's Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue.
-
If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may
be.
-
Unless the Borrower has notified the Administrative Agent, prior to the date any payment is required to be made by it
to the Administrative Agent hereunder, that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower
has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed
Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such
Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender's share of such Committed Borrowing,
the Administrative Agent may assume that such Lender has made such share available on such date in accordance with
Section 2.02
(or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in
accordance with and at the time required by
Section 2.02
) and may, in reliance upon such assumption, make available to the
applicable Borrower a corresponding amount. If and to the extent that such payment was not in fact made to the Administrative Agent in
immediately available funds, then:
-
if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative
Agent the portion of such assumed payment that
40
was made available to such Lender in immediately available funds, together with interest
thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the
date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect;
and
-
if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent
the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by
the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the "
Compensation
Period
") at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Committed Loan included in the applicable Borrowing. If such Lender
does not pay such amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent may make a demand therefor
upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this
subsection (c) shall be conclusive, absent manifest error.
-
If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this
Article II
, and such funds are not made available to the Borrower by the Administrative
Agent because the conditions to the applicable Credit Extension set forth in
Article IV
are not satisfied or waived in accordance
with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without
interest.
-
The obligations of the Lenders hereunder to make Committed Loans and the obligations of the Revolving Lenders to
fund participations in Letters of Credit and Swing Line Loans are several and not joint. The failure of any Lender to make any Committed Loan or
to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such
date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan or purchase its
participation.
-
Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.
2.13
Sharing of Payments
. If, other than as expressly provided elsewhere herein,
any Lender shall obtain on account of the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it,
any payment (whether voluntary, involuntary,
41
through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the
other Lenders entitled to such payment such participations in the Committed Loans made by them and/or such subparticipations in the
participations in L/C Obligations or Swing Line Loans held by them, as the case may be, as shall be necessary to cause such purchasing Lender
to share the excess payment in respect of such Committed Loans or such participations, as the case may be, pro rata with each other Lender
entitled to such payment;
provided
,
however
, that if all or any portion of such excess payment is thereafter recovered from the
purchasing Lender under any of the circumstances described in
Section 10.06
(including pursuant to any settlement entered into by the
purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the
amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to
Section 10.09
) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any
such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the
right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.
2.14
Increase in Commitments
.
-
Provided there exists no Default, upon notice to the Administrative Agent the Borrower may from time to time
request an increase in the Revolving Commitment or request the addition of, or increase in, a Term Loan Commitment (or other term loans) in
accordance with this Section (the amount of any such increase, the "
Increased Revolving Commitment
" or
"
Increased Term Loan
", as applicable). The aggregate amount of all increases shall not exceed $1,000,000,000. Any such
request for an increase shall be in a minimum amount of $100,000,000.
-
The Borrower may designate any Lender party to this Agreement (with the consent of such Lender, which may be
given or withheld in its sole discretion) or another Person which qualifies as an Eligible Assignee (which may be, but need not be, existing
Lenders) which at the time agrees to (i) in the case of any such designated Lender that is an existing Lender, increase its Pro Rata Share
of the Revolving Commitment or its Term Loans, as applicable, and (ii) in the case of any other such Person (an "
Additional
Lender
"), become a party to this Agreement. The sum of the increases in the Pro Rata Shares of the Revolving Commitment and the
Term Loans of the existing Lenders pursuant to this subsection (b) plus the new
42
commitments of the Additional Lenders shall not in the
aggregate exceed the unsubscribed amount of the Increased Revolving Commitment and the Increased Term Loans.
-
If the Revolving Commitment and/or the Term Loans are increased in accordance with this Section, the
Administrative Agent and the Borrower shall determine the effective date (the "
Increase Effective Date
") and the final
allocation of such increase. The Administrative Agent shall promptly notify the Borrower and the Lenders that have agreed to increase their
Commitments of the final allocation of such increase and the Increase Effective Date. As a condition precedent to such increase, the Borrower
shall deliver to the Administrative Agent a certificate of the Borrower dated as of the Increase Effective Date signed by a Responsible Officer of
the Borrower (i) certifying and attaching the resolutions adopted by the Borrower approving or consenting to such increase, and (ii) certifying that,
before and after giving effect to such increase, (A) the representations and warranties contained in
Article V
and the other Loan
Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this
Section 2.14
, the representations and warranties contained in subsections (a) and (b) of
Section 5.05
shall be
deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of
Section 6.01
, and
(B) no Default exists. If the Borrower shall increase the Revolving Commitment, the Borrower shall prepay any Revolving Loans outstanding on
the Increase Effective Date (and pay any additional amounts required pursuant to
Section 3.05
) to the extent necessary to keep
the outstanding Revolving Loans ratable with any revised Pro Rata Shares arising from any nonratable increase in the Revolving Commitments
under this Section. The Borrower shall also pay any costs and expenses (including, without limitation, Attorney Costs) incurred in connection with
the increase of any Commitment pursuant to this
Section 2.14
.
-
Notwithstanding anything to the contrary herein, in no event shall the interest rate payable on any Increased
Revolving Commitment exceed the interest rate from time to time payable on Revolving Loans, nor shall any Increased Term Loan mature prior
to the Revolving Loan Maturity Date.
-
This Section shall supersede any provisions in
Sections 2.13
or
10.01
to the
contrary.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01
Taxes
.
-
Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any
Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities with respect thereto,
excluding
, (i) taxes imposed on or measured
by its overall net income, (ii) franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof)
under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains an
43
office, and (iii) any withholding taxes or other tax based on gross income imposed by the United States of America that are not attributable to any change in any Law
or the interpretation or administration of any Law by any Governmental Authority (all such non-excluded taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "
Taxes
"). If
the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after
the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a
certified copy of a receipt evidencing payment thereof.
-
In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any
other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution,
delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as
"
Other Taxes
").
-
If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable
under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent or to such Lender,
as the case may be, at the time interest is paid, such additional amount that the Administrative Agent or such Lender specifies is necessary to
preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Administrative Agent or
such Lender would have received if such Taxes or Other Taxes had not been imposed.
-
The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the
Administrative Agent and such Lender, (ii) amounts payable under
Section 3.01(d)
and (iii) any liability (including additions to tax,
penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly
or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the
date the Lender or the Administrative Agent makes a demand therefor.
3.02
Illegality
. If any Lender determines that any Law has made it unlawful, or that
any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar
Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower
through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Committed
Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the
44
circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to
the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of
the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such
Lender.
3.03
Inability to Determine Rates
. If the Required Lenders determine that for any
reason adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan
does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower
and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke
any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted
such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.
3.04
Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Rate Loans.
-
If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any
Law, or such Lender's compliance therewith, by any central bank or other Governmental Authority charged with the interpretation or
administration thereof, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar
Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such
Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount
resulting from (i) Taxes or Other Taxes (as to which
Section 3.01
shall govern), (ii) changes in the basis of taxation of overall net
income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of
which such Lender is organized or has its Lending Office, and (iii) reserve requirements contemplated by
Section 3.04(c)
), then
from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender
such additional amounts as will compensate such Lender for such increased cost or reduction.
-
If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the
interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its
policies with respect to capital adequacy and
45
such Lender's desired return on capital), then from time to time upon demand of such Lender (with
a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such
Lender for such reduction.
-
The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional
interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on
which interest is payable on such Loan,
provided
the Borrower shall have received at least 15 days' prior notice (with a copy to the
Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 30 days from receipt of such notice.
3.05
Compensation for Losses
. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss,
cost or expense incurred by it as a result of:
-
any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than
the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
-
any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or
-
any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result
of a request by the Borrower pursuant to
Section 10.16
;
including any loss of anticipated profits solely attributable to a decline in the Eurodollar Rate after the date such Loan was
made and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to
terminate the deposits from which such funds were obtained.
For purposes of calculating amounts payable by the Borrower to the Lenders under this
Section 3.05
,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded. Any Lender making a claim for compensation for losses pursuant to this
Section 3.05
shall make such claim within 30 days after such Lender first becomes aware of the loss, cost or expense incurred by
it.
3.06
Matters Applicable to all Requests for Compensation
. A certificate of the
Administrative Agent or any Lender claiming compensation under this
Article III
and setting forth the additional amount or
amounts to be paid to it hereunder (including calculations thereof in reasonable detail) shall be conclusive in the absence of manifest error. In
determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and
46
attribution methods. Any and all claims for compensation under this
Article III
shall be made by a Lender within 30 days after such Lender becomes aware of the facts or
circumstances giving rise to such claim. Each Lender agrees to designate a different lending office if such designation will avoid the need for or
reduce the amount of any request for compensation under this
Article III
and take any other action available to reduce or mitigate
such costs in each case if such action will not, in the good faith judgment of such Lender, be materially disadvantageous to such
Lender.
3.07
Survival
. All of the Borrower's obligations under this
Article III
shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.
ARTICLE IV
CONDITIONS PRECEDENT TO EFFECTIVENESS AND CREDIT EXTENSIONS
4.01
Conditions of Effectiveness
. The effectiveness of this Agreement is subject to
satisfaction of the following conditions precedent:
-
The Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly
by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, and each in form and
substance satisfactory to the Administrative Agent and each of the Lenders:
-
executed counterparts of this Agreement;
-
a Note executed by the Borrower and dated the Effective Date in favor of each Lender requesting a Note;
-
the Guaranty, dated as of the Effective Date, duly executed by each Guarantor;
-
the Pledge Agreement, dated as of the Effective Date, duly executed by the Borrower and each Restricted Subsidiary
that holds the Capital Stock of a Guarantor, covering all present and future shares of Capital Stock of (or other ownership or profit interests in)
each of its present and future Guarantors, except that the pledge of Capital Stock of a Guarantor that is not a Significant Subsidiary shall be at
the option of the Borrower (limited, in the case of each entity that is a "controlled foreign corporation" under Section 957 of the Internal
Revenue Code, to a pledge of 66% of the Capital Stock of each such first-tier foreign Subsidiary to the extent the pledge of any greater
percentage would result in material adverse tax consequences to the Borrower), together with;
-
certificates representing the pledged securities referred to therein accompanied by undated stock powers executed in
blank;
-
acknowledgment copies of properly filed Uniform Commercial Code financing statements (Form UCC-1),
amendments to the collateral descriptions contained in filed financing statements, or such other evidence of filing as may be acceptable to the
Administrative Agent, naming each party to the Pledge Agreement as
47
the debtor, and the Administrative Agent on behalf of the Secured Parties,
as the secured party, or other similar instruments or documents, filed under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent, desirable to perfect the security interest of the Administrative Agent pursuant to the
Pledge Agreement;
-
Uniform Commercial Code termination statements necessary to release all Liens and other rights of any Person
securing any existing Liens (other than Permitted Liens), together with such other Uniform Commercial Code termination statements as the
Administrative Agent may reasonably request; and
-
certified copies of Uniform Commercial Code Requests for Information or Copies (Form UCC-3), or a similar search
report certified by a party selected by and acceptable to the Administrative Agent, dated a date reasonably near to the Effective Date, listing all
effective financing statements which name any of the Loan Parties (under their present names and any previous names) as the debtor and which
are filed in the jurisdictions in which filings were made pursuant to clause (B) above, together with copies of such financing statements (none of
which (other than those described in clause (B), if such Form UCC-3 or search report, as the case may be, is current enough to list such
financing statements described in clause (B)) shall cover any Collateral described in the Pledge Agreement except as permitted by
Section
7.01
);
-
such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is
a party;
-
such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan
Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in each
jurisdiction where such Person is qualified to do business;
-
a favorable opinion of Morrison & Foerster LLP, McDonald Carano Wilson LLC, Watkins Ludlam Winter
& Stennis, P.A., Greenberg Traurig LLP, McGlinchey Stafford, PLLC, Ice Miller LLP, and Cooper Levenson April Niedelman &
Wagenheim, P.A., counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to the matters set forth in
Exhibit G
and such other matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably
request;
-
a certificate of a Responsible Officer of the Borrower stating that each Loan Party has received all consents, licenses
and approvals required in connection with the execution, delivery and performance by each Loan Party and the validity against each Loan Party
of the Loan Documents to which it is a party, that such consents, licenses and approvals are in full force and effect, or that no such consents,
licenses or approvals are required;
48
-
such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuer, the
Swing Line Lender or the Required Lenders reasonably may require.
-
Any fees required to be paid on or before the Effective Date shall have been paid.
-
The Administrative Agent shall have provided evidence satisfactory to the Borrower of the concurrent reconveyance
of the Deeds of Trust (as such term is defined in the Existing Credit Agreement) executed and delivered in connection with the Existing Credit
Facility and termination of all uniform commercial code financing statements filed naming the Administrative Agent as secured party and any
Subsidiary of the Borrower as the Debtor, other than any financing statement naming a Subsidiary of the Borrower as the debtor that is being
amended pursuant to clause (a)(iv)(A) above.
-
The Effective Date shall have occurred on or before July 31, 2007.
Without limiting the generality of the provisions of
Section 9.03
, for purposes of determining compliance
with the conditions specified in this
Section 4.01
, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed
Closing Date specifying its objection thereto.
4.02
Conditions to all Credit Extensions
. The obligation of each Lender to honor
any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions precedent:
-
The representations and warranties of the Borrower contained in
Article V
or any other Loan
Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct
on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date, and except that for purposes of this
Section 4.02
, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05
shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01
.
-
No Default shall exist or would result from such proposed Credit Extension.
-
The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request
for Credit Extension in accordance with the requirements hereof.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in
Sections 4.02(a)
and
(b)
have been satisfied on and as of the date of the
applicable Credit Extension.
49
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders that:
5.01
Existence, Qualification and Power; Compliance with Laws.
Each Loan Party
(a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has
all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on
its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is
licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its
business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to
the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
5.02
Authorization; No Contravention.
The execution, delivery and performance
by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) except where such
conflict, breach or contravention or creation of a Lien may not reasonably be expected to have a Material Adverse Effect, conflict with or result in
any breach or contravention of, or the creation of any Lien under, (i) any Contractual Obligation to which such Person is a party, or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) except where
such breach or contravention may not reasonably be expected to have a Material Adverse Effect, violate any Law.
5.03
Governmental Authorization; Other Consents.
Except for such
authorizations, approvals or notices obtained or delivered as of the Effective Date, authorizations, approvals or notices to or from Gaming Boards
which have been applied for but not yet obtained as of the Effective Date or subsequently required in connection with the addition of any
Guarantor or the pledge of any additional Collateral pursuant to
Section 6.13
, no approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except that pursuant to
regulation 8.130 of the Nevada Gaming Control Board a notice of the Borrower's execution of this Agreement must be filed with the Nevada
Gaming Control Board within the time periods prescribed therein, pursuant to Mississippi Gaming Commission Regulation II.I. Section 11 a notice
and report of the material terms of this Agreement and certain related information must be filed with the Mississippi Gaming Commission within
the time period prescribed therein and notice of the Borrower's execution of this Agreement and of information relating thereto, including but not
limited to the Lenders who are a party hereto must be filed with the New Jersey Casino Control Commission and the New Jersey Division of
Gaming Enforcement within the time prescribed.
5.04
Binding Effect.
This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is
50
party thereto. This Agreement constitutes,
and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against
each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights generally, and general principles of equity.
5.05
Financial Statements; No Material Adverse Effect.
-
The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and
Indebtedness.
-
The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated March 31, 2007, and the
related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period
covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.
-
Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in
the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
5.06
Litigation.
Except as specifically disclosed in
Schedule 5.06
,
there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties
or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby,
or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse
Effect.
5.07
No Default
. Neither the Borrower nor any Restricted Subsidiary is in default
under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.
5.08
Ownership of Property; Liens
. Each of the Borrower and each Restricted
Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, except for such defects
51
in title as could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The property of the Borrower and its Restricted Subsidiaries is subject to no Liens, other than Liens permitted by
Section 7.01
.
5.09
Environmental Compliance
. The Borrower and its Restricted Subsidiaries
conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof the
Borrower has reasonably concluded that, except as specifically disclosed in
Schedule 5.09
, such Environmental Laws and claims
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.10
Insurance
. The properties of the Borrower and its Restricted Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts (after giving effect to any
self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Restricted Subsidiary
operates.
5.11
Taxes
. The Borrower and its Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in
accordance with GAAP and except immaterial taxes and tax returns so long as no material portion of the Collateral is in jeopardy of being seized,
levied upon or forfeited. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material
Adverse Effect.
5.12
ERISA Compliance.
-
Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other
Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter
from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the
Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.
-
There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected
to result in a Material Adverse Effect.
52
-
No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.
5.13
Subsidiaries
. As of the Effective Date, the Borrower has no Subsidiaries
other than those specifically disclosed on
Schedule 5.13
and has no equity investments in excess of $500,000 in any other
corporation or entity other than those specifically disclosed in Part (b) of
Schedule 5.13
. All Guarantors as of the Effective Date
are identified in part (a) of
Schedule 5.13
. As of the Effective Date, there are no Unrestricted Subsidiaries.
5.14
Margin Regulations; Investment Company Act.
-
The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business
of purchasing or carrying margin stock (within the meaning of Regulations U and X issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.
-
None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an
"investment company" under the Investment Company Act of 1940.
5.15
Disclosure
. The Borrower has disclosed to the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Restricted Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial
statement, certificate or other written information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading;
provided
that, with respect to
projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
5.16
Intellectual Property; Licenses, Etc.
The Borrower and its Restricted
Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises,
licenses and other intellectual property rights (collectively, "
IP Rights
") that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other Person, except as would not be reasonably expected to have a Material
Adverse Effect. To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material
53
now employed, or now contemplated to be employed, by the Borrower or any Restricted Subsidiary infringes upon any rights held
by any other Person, except as would not be reasonably expected to have a Material Adverse Effect. Except as specifically disclosed in
Schedule 5.16
, no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower,
threatened, which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse
Effect.
5.17
Collateral Documents.
The provisions of the Pledge Agreement are effective
to create, in favor of the Administrative Agent (for the benefit of the Lenders), valid and perfected first priority Liens on the Property described in
the Pledge Agreement, to the extent that such Liens can be perfected by filing, subject only to the Permitted Liens. All governmental approvals
necessary or desirable to perfect and protect, and establish and maintain the priority of, such Liens have been duly effected or taken, including
any such approvals reasonably requested by the Administrative Agent.
ARTICLE VI
AFFIRMATIVE COVENANTS
From the Effective Date and thereafter so long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding:
6.01
Financial Statements
. The Borrower shall deliver to the Administrative Agent
and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
-
as soon as available, but in any event within 75 days after the end of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not be subject to any "going concern" or like
qualification or exception or any qualification or exception as to the scope of such audit; and
-
as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower (commencing with the fiscal quarter ended June 30, 2007), a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal quarter and for the portion of the Borrower's fiscal year then ended, setting forth in each case in comparative form the figures
for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail
and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations, shareholders' equity
54
and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes.
As to any information contained in materials furnished pursuant to
Section 6.02(d)
, the Borrower shall not
be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of
the Borrower to furnish the information and materials described in subsections (a) and (b) above at the times specified therein.
6.02
Certificates; Other Information
. The Borrower shall deliver to the
Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
-
concurrently with the delivery of the financial statements referred to in
Section 6.01(a)
, a certificate of
its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no
knowledge was obtained of any Default under Article VII hereof or, if any such Default shall exist, stating the nature and status of such
event;
-
within five (5) Business Days after the delivery of the financial statements referred to in
Sections 6.01(a)
and
(b)
and in any event within the time period specified therein (commencing with the delivery of the
financial statements for the fiscal quarter ended June 30, 2007), a duly completed Compliance Certificate signed by a Responsible Officer of the
Borrower;
-
promptly after any request by the Administrative Agent or any request by a Lender made through the Administrative
Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee
of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Restricted
Subsidiary, or any audit of any of them;
-
promptly after the same are available, copies of each annual report, proxy or financial statement or other report or
communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration
statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and
not otherwise required to be delivered to the Administrative Agent pursuant hereto; and
-
promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any
Restricted Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender acting through the
Administrative Agent may from time to time reasonably request.
Documents required to be delivered pursuant to
Section 6.01(a)
or
(b)
or
Section 6.02(d)
(to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower's website on the Internet at the website address listed on
Schedule 10.02
; or (ii) on
55
which such documents are posted on the Borrower's behalf on an Internet or intranet website, if any, to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent);
provided
that: (i) the
Borrower shall deliver paper copies of such documents to the Administrative Agent upon request of the Administrative Agent or any Lender until a
written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall provide to the
Administrative Agent by electronic mail electronic versions (
i.e.
, soft copies) of such documents and the Administrative Agent shall post
such documents and notify (which may be by facsimile or electronic mail) each Lender of the posting of any such documents. Notwithstanding
anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by
Section 6.02(b)
to the Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the
Lenders and the L/C Issuer materials and/or information provided by or on behalf of the Borrower hereunder (collectively, "
Borrower
Materials
") by posting the Borrower Materials on IntraLinks or another similar electronic system (the "
Platform
")
and (b) certain of the Lenders may be "public-side" Lenders (i.e., Lenders that do not wish to receive material non-public information
with respect to the Borrower or its securities) (each, a "
Public Lender
"). The Borrower hereby agrees that (w) all Borrower
Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" which, at a minimum,
shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials
"PUBLIC", the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the Lenders
to treat such Borrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary)
with respect to the Borrower or its securities for purposes of United States Federal and state securities laws; (y) all Borrower Materials marked
"PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Investor;" and (z) the
Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being
suitable only for posting on a portion or the Platform not designated "Public Investor."
6.03
Notices
. The Borrower shall promptly notify the Administrative Agent and
each Lender:
-
of the occurrence of any Default;
-
of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i)
breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Restricted Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Borrower or any Restricted Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any
56
litigation or proceeding affecting the Borrower or any Restricted Subsidiary, including pursuant to any applicable Environmental Laws;
-
of the occurrence of any ERISA Event; and
-
of any material change in accounting policies or financial reporting practices by the Borrower or any Restricted
Subsidiary.
Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower
setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect
thereto. Each notice pursuant to
Section 6.03(a)
shall describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.
6.04
Preservation of Existence, Etc
. The Borrower shall, and shall cause each
Guarantor to: (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of
its organization except in a transaction permitted by
Section 7.04
or
7.05
; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses (including, without limitation, liquor licenses) and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew
all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.
6.05
Maintenance of Properties
. The Borrower shall, and shall cause its
Guarantors to: (a) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good
working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in
the industry in the operation and maintenance of its facilities.
6.06
Maintenance of Insurance
. The Borrower shall, and shall cause each
Restricted Subsidiary, to maintain liability, casualty and other insurance (subject to customary deductibles and retentions) with responsible
insurance companies in such amounts (after giving effect to any self-insurance compatible with the following standards) and against such risks as
is carried by responsible companies engaged in similar businesses and owning similar assets in the general areas in which the Borrower and its
Restricted Subsidiaries operate. Each policy evidencing such insurance shall name the Administrative Agent as loss payee and additional
insured, and provide that such insurance companies provide the Administrative Agent thirty (30) days written notice before the termination
thereof. Without limiting the obligations of the Borrower under the foregoing provisions of this
Section 6.06
, in the event the Borrower
shall fail to maintain in full force and effect insurance as required by the foregoing provisions of this
Section 6.06
, then the Administrative
Agent may, and shall if instructed so to do by the Required Lenders, procure insurance covering the interests of the Lenders and the
Administrative Agent in such amounts and against such risks as otherwise would be required hereunder and the Borrower shall reimburse the
Administrative Agent in respect of any premiums paid by the Administrative Agent in respect thereof.
57
6.07
Compliance with Laws
. The Borrower shall, and shall cause each Restricted
Subsidiary to comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to
its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
6.08
Books and Records
. The Borrower shall, and shall cause each Restricted
Subsidiary to (a) maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Restricted Subsidiary, as the
case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental
Authority having regulatory jurisdiction over the Borrower or such Restricted Subsidiary, as the case may be.
6.09
Inspection Rights
. The Borrower shall, and shall cause each Restricted
Subsidiary to, permit representatives and independent contractors of the Administrative Agent to visit and inspect the Collateral, to examine its
corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with
its directors, officers, and independent public accountants, and at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower.
6.10
Use of Proceeds
. The Borrower shall use the proceeds of the Credit
Extensions for any one or more of the following: (i) to finance capital expenditures in connection with the Echelon project and other projects, (ii)
to fund the transaction costs in connection with this Agreement and (iii) for working capital and general corporate purposes not in contravention of
any Law or of any Loan Document.
6.11
Environmental Covenant.
The Borrower shall, and shall cause each
Restricted Subsidiary to:
-
use and operate all of its facilities and properties in material compliance with all applicable Environmental Laws, keep
all permits, approvals, certificates, licenses and other authorizations required pursuant to applicable Environmental Laws in effect and remain in
material compliance therewith, and handle all Hazardous Materials in material compliance with all applicable Environmental Laws;
-
promptly notify the Administrative Agent and provide copies upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of its facilities and properties under, or compliance of its facilities and properties with, applicable Environmental
Laws, and shall promptly commence and diligently proceed to cure, to the reasonable satisfaction of the Administrative Agent any actions and
proceedings relating to violations of compliance with applicable Environmental Laws; and
-
provide such information and certifications which the Administrative Agent may reasonably request from time to time
to evidence compliance with this
Section 6.11
.
58
6.12
Accuracy of Information.
The Borrower shall cause all factual information
furnished after the date of execution and delivery of this Agreement by or on behalf of the Borrower or any Guarantor in writing to the
Administrative Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby to be true and
accurate in all material respects on the date as of which such information is dated or certified, and such information shall not be incomplete by
omitting to state any material fact necessary to make such information not misleading.
6.13
Additional Guarantors.
Promptly upon the determination that any Restricted
Subsidiary has become a Significant Subsidiary, the Borrower shall cause such Significant Subsidiary to become a Guarantor by executing and
delivering to the Administrative Agent for the benefit of the Lenders all documents reasonably requested by the Administrative Agent, which may
include (i) legal opinions in form and substance satisfactory to the Administrative Agent, (ii) the documentation required by clauses (v) and (vi) of
Section 4.01(a)
hereof in respect of such Restricted Subsidiary and (iii) the documentation needed to pledge the ownership
interests of any Significant Subsidiary held by such Significant Subsidiary. Upon written notice from the Borrower to the Administrative Agent, the
Borrower may cause any other Subsidiary to become a Guarantor by executing and delivering documentation described in the preceding
sentence.
ARTICLE VII
NEGATIVE COVENANTS
From the Effective Date and thereafter so long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding:
7.01
Liens
. The Borrower shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than the following:
-
Liens pursuant to any Loan Document;
-
Liens existing on the date hereof and listed on
Schedule 7.01
and any renewals or extensions
thereof,
provided
that the property covered thereby is not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by
Section 7.03(c)
;
-
Liens for taxes, assessments or other governmental charges or levies not yet delinquent or thereafter payable
without penalty or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with GAAP;
-
carriers', warehousemen's, mechanics', materialmen's, repairmen's, Liens for labor done and materials and services
supplied and furnished or other like Liens and statutory Liens (i) which are not filed or recorded for a period of more than 60 days, (ii) which are
being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on
the books of the applicable Person, or (iii) which have been bonded in a manner satisfactory to the Administrative Agent;
59
-
pledges or deposits made or Liens incurred in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other social security or employment or insurance legislation;
-
deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory
obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred
in the ordinary course of business, including during the course of any development;
-
Liens on Capital Stock not required to be pledged pursuant hereto;
-
easements, rights-of-way, reservations, covenants, conditions, restrictions, defects and irregularities in title to any
real property and other similar encumbrances affecting real property which, in the aggregate, do not materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;
-
rights reserved to or vested in any Governmental Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to (i) the use of any real property, or (ii) any right, power, franchise, grant, license, or permit, including
present or future zoning laws, building codes and ordinances, zoning restrictions, or other laws and ordinances restricting the occupancy, use, or
enjoyment of real property;
-
rights of tenants under leases and rental agreements covering real property entered into in the ordinary course of
business of the Person owning such real property;
-
Liens consisting of any right of offset, or statutory bankers' lien, on bank deposit accounts maintained in the ordinary
course of business so long as such bank deposit accounts are not established or maintained for the purpose of providing such right of offset or
bankers' lien;
-
Liens securing writs of attachment or similar instruments or judgments for the payment of money not constituting an
Event of Default under
Section 8.01(h)
or securing appeal or other surety bonds related to such judgments;
-
Liens on cash securing only Defeased Indebtedness;
-
precautionary UCC financing statement filings made in connection with operating leases;
-
Liens securing Indebtedness permitted under
Section 7.03(e)
;
-
Liens ratably secured by the Collateral in favor of Lenders party to Swap Contracts permitted under
Section
7.03(d)
; and
-
other Liens securing obligations in an aggregate amount not to exceed $100,000.
7.02
Investments
. The Borrower shall not, and shall cause each Restricted
Subsidiary not to, directly or indirectly, make any Investments, except:
60
-
Investments held by the Borrower or such Restricted Subsidiary in the form of cash equivalents or short-term
marketable securities;
-
advances to officers, directors and employees of the Borrower and its Restricted Subsidiaries for travel,
entertainment, relocation and analogous ordinary business purposes consistent with past practice;
-
purchases or redemption of the Borrower's Capital Stock to the extent permitted by
Section 7.06
;
-
Investments of the Borrower in any Guarantor and Investments of any Restricted Subsidiary in the Borrower or in a
Guarantor;
-
Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from
the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
-
capital expenditures;
-
Investments representing all or a portion of the sales price for property sold to another Person;
-
Investments identified on Schedule 7.02; and
-
other Investments not exceeding 15% of Consolidated Total Assets.
7.03
Indebtedness
. The Borrower shall not, and shall cause each Guarantor not
to, directly or indirectly, create, incur, assume or suffer to exist any Indebtedness secured by a Lien, and the Borrower shall cause each
Restricted Subsidiary not to, directly or indirectly, create, incur, assume or suffer to exist any Indebtedness, in each case, other
than:
-
Indebtedness under the Loan Documents;
-
unsecured intercompany Indebtedness;
-
Indebtedness outstanding on the date hereof and listed on
Schedule 7.03
and any refinancings,
refundings, renewals or extensions thereof;
provided
that the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized
thereunder;
-
obligations under Swap Contracts entered into by the Borrower with any Lender (or any Person that was a Lender
when entering into such Swap Contract) or Affiliate of any Lender (or any Person that was a Lender when such Swap Contract was executed);
provided
, in no event shall the notional principal amount of such obligations exceed $2,000,000,000 in the
61
aggregate (it being understood that the notional amount of each such Swap Contract shall be included in such calculation); and
-
other Indebtedness up to an aggregate amount at any one time outstanding not to exceed the Threshold
Amount.
7.04
Fundamental Changes
. The Borrower shall not, and shall cause each
Restricted Subsidiary not to, directly or indirectly, merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except that, so long as no Default exists or would result therefrom:
-
any Restricted Subsidiary may merge with (i) the Borrower,
provided
that the Borrower shall be the
continuing or surviving Person, or (ii) any one or more other Restricted Subsidiaries,
provided
that when any Guarantor is merging with
another Restricted Subsidiary that is not a Guarantor, the Guarantor shall be the continuing or surviving Person or such surviving Person shall
execute and deliver a Guaranty;
-
any Restricted Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise)
to the Borrower or to another Restricted Subsidiary;
provided
that if the transferor in such a transaction is a Guarantor, then the
transferee must either be the Borrower or a Guarantor; and
-
the Borrower or any Restricted Subsidiary may make a Disposition to the extent permitted by
Section
7.05
.
7.05
Dispositions
. The Borrower will not, and shall cause each Guarantor not to,
directly or indirectly, make any Disposition or enter into any agreement to make any Disposition unless (i) such agreement includes an express
condition precedent to closing that the Borrower shall have obtained all requisite consents under this Agreement or (ii) (A) the net proceeds of
such Disposition are used solely to repay the Obligations, and in the case of net proceeds used to repay the Revolving Loans, with a
corresponding reduction in the Revolving Commitment and (B) such Disposition is made at the fair market value, which shall be conclusively
evidenced by approval of such Disposition by the board of directors of the Person disposing such Property or by a Responsible Officer pursuant
to authority delegated to such Responsible Officer by the Board of Directors of the Person disposing such Property, except:
-
Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of
business;
-
Dispositions of inventory in the ordinary course of business;
-
Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the
purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of
such replacement property;
61
-
Dispositions of property by the Borrower or any Guarantor to any other Guarantor or to the Borrower;
-
Dispositions of property by any entity that is not required to be a Guarantor pursuant to the terms hereof; provided
that in connection with such Disposition, such Guarantor is released from the Guaranty pursuant to
Section 9.10
;
-
Dispositions of the Capital Stock of Eldorado, Inc., a Nevada corporation;
-
Dispositions permitted by
Section 7.04
; and
-
Dispositions by the Borrower and the Guarantor not otherwise permitted under this
Section 7.05
;
provided
that (i) at the time of such Disposition, no Default shall exist or would result from such Disposition, (ii) such Disposition is made
at the fair market value, which shall be conclusively evidenced by approval of such Disposition by the board of directors of the Person disposing
such Property or by a Responsible Officer pursuant to authority delegated to such Responsible Officer by the Board of Directors of the Person
disposing such Property, and (iii) the aggregate book value of all property Disposed of in reliance on this clause (h) in any fiscal year shall not
exceed the Threshold Amount or such greater amount if the net proceeds of such Disposition in excess of the Threshold Amount are used to
repay the outstanding Loans with a concurrent reduction in Commitments or the Borrower reinvests or commits to reinvest such net proceeds
within one year.
7.06
Restricted Payments
. The Borrower shall not, and shall cause each
Restricted Subsidiary not to, directly or indirectly, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that:
-
each Restricted Subsidiary may make Restricted Payments to the Borrower and to wholly-owned Restricted
Subsidiaries (and, in the case of a Restricted Payment by a non-wholly-owned Restricted Subsidiary, to the Borrower and any Restricted
Subsidiary and to each other owner of capital stock or other equity interests of such Restricted Subsidiary on a pro rata basis based on their
relative ownership interests);
-
the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributions
payable solely in the common stock or other common equity interests of such Person;
-
the Borrower and each Restricted Subsidiary may purchase, redeem or otherwise acquire shares of its common
stock or other common equity interests or warrants or options to acquire any such shares with the proceeds received from the substantially
concurrent issue of new shares of its common stock or other common equity interests; and
-
the Borrower may declare or pay cash dividends to its stockholders and purchase, redeem or otherwise acquire
shares of its capital stock or warrants, rights or options to acquire any such shares for cash (i) in an amount not to exceed $100,000,000 in the
aggregate in any fiscal year if the Total Leverage Ratio as of the end of the preceding fiscal quarter was greater than 4.50 to 1.0 and (ii) in an
unlimited amount in any fiscal year if the Total Leverage Ratio as of the end of the preceding fiscal quarter was 4.50 to 1.0 or less;
provided
that immediately after
63
giving effect to such proposed action, no Default would exist. Notwithstanding the foregoing, this
Section 7.06(d)
shall not prohibit the payment of any cash dividends within 60 days after the date of its declaration if such
dividend could have been paid on the date of its declaration in compliance with such provisions.
7.07
Change in Nature of Business
. The Borrower shall not, and shall cause each
Restricted Subsidiary not to, directly or indirectly, engage in any material line of business substantially different from those lines of business
conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.
7.08
Transactions with Affiliates
. The Borrower shall not, and shall cause each
Restricted Subsidiary not to, directly or indirectly, enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the
ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Restricted Subsidiary as
would be obtainable by the Borrower or such Restricted Subsidiary at the time in a comparable arm's length transaction with a Person other than
an Affiliate, provided that the foregoing restriction shall not apply to transactions between or among the Borrower and any of its wholly-owned
Restricted Subsidiaries or between and among any wholly-owned Restricted Subsidiaries.
7.09
Negative Pledges and Other Contractual Restrictions
. The Borrower shall
not, and shall cause each Restricted Subsidiary not to, directly or indirectly, enter into any Contractual Obligation (other than this Agreement or
any other Loan Document) that (a) limits the ability (i) of any Restricted Subsidiary to make Restricted Payments to the Borrower or any
Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any Restricted Subsidiary to Guarantee the Obligations or (iii)
of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person to secure the
Obligations;
provided
,
however
, that this clause (iii) shall not prohibit any Contractual Obligation in an agreement evidencing
Indebtedness permitted under
Section 7.03(b)
or
Section 7.03(e)
solely to the extent any such Contractual
Obligation relates to the property financed by or the subject of such Indebtedness;
and
provided
,
further
, that this
clause (a) shall not apply to any non-recourse Indebtedness permitted under
Section 7.03(e)
of any Restricted Subsidiary
which is not a Guarantor so long as the Contractual Obligations relate solely to the property financed by or the subject of such Indebtedness; or
(b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure the Obligations, other than any Lien that
would be permitted under
Section 7.01
.
7.10
Financial Covenants
. The Borrower shall not:
-
Interest Coverage Ratio
. Permit the Interest Coverage Ratio as of the end of any fiscal quarter of the
Borrower from and after June 30, 2007 to be less than 2.00 to 1.00.
-
Total Leverage Ratio
. Permit the Total Leverage Ratio on the last day of any
period of four fiscal quarters of the Borrower set forth below to be greater than the ratio set forth below opposite such period:
64
|
Four Fiscal Quarters Ending
|
Maximum Total
Leverage Ratio
|
|
June 30, 2007 through December 31, 2007
|
5.25 to 1.00
|
|
March 31, 2008 through December 31, 2008
|
6.00 to 1.00
|
|
March 31, 2009 through December 31, 2009
|
6.50 to 1.00
|
|
March 31, 2010
|
6.75 to 1.00
|
|
June 30, 2010
|
7.00 to 1.00
|
|
September 30, 2010
|
7.25 to 1.00
|
|
December 31, 2010
|
7.50 to 1.00
|
|
March 31, 2011
|
6.50 to 1.00
|
|
June 30, 2011 and each quarter thereafter
|
5.25 to 1.00
|
At any time prior to December 31, 2008, the Borrower may make a one-time election to defer the subsequent step
ups and step downs in the Total Leverage Ratio for one or two fiscal quarters.
-
Incurrence of Indebtedness
. Incur Indebtedness if the incurrence of such Indebtedness is reasonably
expected to result in a Default under this
Section 7.10
.
7.11
Use of Proceeds
. The Borrower shall not use the proceeds of any Credit
Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the
meaning of Regulations U and X of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
8.01
Events of Default
. Any of the following shall constitute an Event of
Default:
-
Non-Payment
. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan or any L/C Obligation, (ii) within five Business Days after the same becomes due, any interest
on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five Business Days after demand therefor, any other amount
payable hereunder or under any other Loan Document; or
-
Specific Covenants
. The Borrower fails to perform or observe any term, covenant or agreement contained
in
Sections 7.04
,
7.05
, 7
.06
,
7.07
,
7.09
,
7.10
or
7.11
; or
-
Other Defaults
. Any Loan Party fails to perform or observe any other covenant or agreement (not specified
in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days
after notice shall have been given to the Borrower by the Administrative Agent; or
-
Representations and Warranties
. Any representation, warranty, certification or statement of fact made or
deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or
65
therewith shall be incorrect or misleading in any material respect when made or deemed made; or
-
Cross-Default
. The Borrower or any Restricted Subsidiary (A) fails to make any payment when due after
giving effect to any applicable notice and cure periods (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
in respect of any Indebtedness (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal
amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated
credit arrangement) in an amount equal to or greater than the sixty percent (60%) of the Threshold Amount, or (B) fails to observe or perform any
other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, in each case after giving effect to any applicable notice and cure periods, the effect of which default or other
event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be
made, prior to its stated maturity, or any Indebtedness consisting of a Guarantee to become payable or cash collateral in respect thereof to be
demanded; or any counterparty under Swap Contract terminates such Swap Contract as a result of an Early Termination Date (as defined in
such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Restricted Subsidiary is
the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Restricted Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the
Borrower or such Restricted Subsidiary as a result thereof is equal to or greater than sixty percent (60%) of the Threshold Amount and the
Borrower or such Restricted Subsidiary, as the case may be, has not paid such Swap Termination Value within 30 days of the due date thereof,
unless such termination or such Swap Termination Value is being contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves in accordance with GAAP have been provided; or
-
Insolvency Proceedings, Etc.
The Borrower or any Guarantor institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 90 calendar days; or any proceeding under any Debtor Relief Law relating to any such
Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 90
calendar days, or an order for relief is entered in any such proceeding; or
-
Inability to Pay Debts; Attachment
. (i) The Borrower or any Significant Subsidiary becomes unable or
admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is
66
issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within
90 calendar days after its issue or levy; or
-
Judgments
. There is entered against the Borrower or any Guarantor a final judgment or order for the
payment of money in an aggregate amount equal to or greater than sixty percent (60%) of the Threshold Amount (to the extent not covered by
independent third-party insurance of a solvent insurer and as to which the insurer does not dispute coverage) and either (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
-
ERISA
. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer
Plan or the PBGC in an aggregate amount in excess of $25,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $25,000,000; or
-
Invalidity of Loan Documents
. Any Loan Document, at any time after its execution and delivery and for any
reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect and, in the
reasonable judgment of the Required Lenders, such circumstance is materially adverse to the interests of the Lenders; or any Lien in favor of the
Administrative Agent on a material portion of the Collateral any time after its perfection and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect and, in the reasonable judgment of the Required
Lenders, such circumstance is materially adverse to the interests of the Lenders; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or
-
Change of Control
. There occurs any Change of Control with respect to the Borrower; or
-
License Revocation
. The occurrence of a License Revocation that continues for fifteen consecutive
calendar days with respect to gaming operations at any gaming facility accounting for ten percent or more of the Consolidated Total Assets,
Consolidated Gross Revenue or Consolidated EBITDA of the Borrower and its Restricted Subsidiaries; or
-
Governmental Approvals
. Any Loan Party shall fail to obtain, renew, maintain or comply with any such
governmental approvals as shall be necessary (1) for the execution, delivery or performance by such Loan Party of its obligations, or the exercise
of its rights, under the Loan Documents, or (2) for the grant of the Liens created under the Pledge Agreement or for the validity and enforceability
or the perfection of or exercise by the Administrative Agent of its rights and remedies under Pledge Agreement; or any such governmental
approval shall be revoked, terminated, withdrawn, suspended, modified or withheld or shall cease to be effective;
66
or any proceeding shall be commenced by or before any Governmental Authority for the purpose of revoking, terminating, withdrawing, suspending, modifying or withholding
any such governmental approval and such proceeding is not dismissed within 60 days; and such failure, revocation, termination, withdrawal,
suspension, modification, cessation or commencement is reasonably likely to materially adversely affect (i) the rights or the interests of the
Lenders under the Loan Documents or (ii) the ability of the Loan Parties to perform their obligations under the Loan Documents; or
-
Liens on Shares of Guarantors
. Any Lien, other than a Lien in favor of the Administrative Agent on behalf of
the Lenders, shall be placed on the Capital Stock of any person that is required to be a Guarantor hereunder.
8.02
Remedies Upon Event of Default
. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following
actions:
-
declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
-
declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;
-
require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount
thereof); and
-
exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law;
provided
,
however
, that upon the occurrence of an actual or deemed entry of an order for relief with
respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the
L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and
other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
8.03
Application of Funds
. After the exercise of remedies provided for in
Section 8.02
(or after the Loans have automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the proviso to
Section 8.02
), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the following order:
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First
, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts
other than principal and interest (including Attorney Costs and amounts payable under
Article III
) payable to the Administrative Agent in
its capacity as such;
Second
, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other
than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under
Article III
), ratably
among them in proportion to the amounts described in this clause
Second
payable to them;
Third
, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, L/C
Borrowings and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause
Third
payable to them;
Fourth
, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C
Borrowings and payments due to any Lender or an Affiliate of a Lender under any Swap Contract, ratably among the Lenders in proportion to the
respective amounts described in this clause
Fourth
held by them;
Fifth
, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit; and
Last
, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as
otherwise required by Law.
Subject to
Section 2.03(c)
, amounts used to Cash Collateralize the aggregate undrawn amount of Letters
of Credit pursuant to clause
Fifth
above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount
remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above.
ARTICLE IX
ADMINISTRATIVE AGENT
9.01
Appointment and Authority.
-
Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers
as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C
Issuer, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.
-
The Administrative Agent shall also act as the "
collateral agent
" under the Loan Documents, and
each of the Lenders (in its capacities as a Lender, Swing Line Lender (if applicable), or party to a Swap Contract) and the L/C Issuer hereby irrevocably appoints and
69
authorizes the Administrative Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring,
holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such
powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as "collateral agent" and any
co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to
Section 9.05
for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and
remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this
Article IX
and
Article X
(including
Sections 10.04
and
10.05
as though such co-agents, sub-agents and attorneys-
in-fact were the "collateral agent" under the Loan Documents) as if set forth in full herein with respect thereto.
9.02
Rights as a Lender
. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were
not the Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
9.03
Exculpatory Provisions
. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:
-
shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is
continuing;
-
shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents),
provided
that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion
of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and
-
shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall
not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the
Person serving as the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith shall be necessary, under the circumstances as provided in
Sections 10.01
and
8.02
) or (ii) in the absence
70
of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or
other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (v) the
satisfaction of any condition set forth in
Article IV
or elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
9.04
Reliance by Administrative Agent
. The Administrative Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such
Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
9.05
Delegation of Duties
. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed
by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
9.06
Resignation of Administrative Agent
. The Administrative Agent may at any
time give notice of its resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States. If no such successor shall
71
have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set
forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral
security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments,
communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender
and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this
Section. Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent
shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as
provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent's resignation hereunder
and under the other Loan Documents, the provisions of this Article and
Sections 10.04
and
10.05
shall continue in effect
for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation
as L/C Issuer with respect to the issuance of any Letter of Credit after the effective date of such resignation. Upon the acceptance of a
successor's appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of
Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume
the obligations of the retiring L/C Issuer with respect to such Letters of Credit.
9.07
Non-Reliance on Administrative Agent and Other Lenders
. Each Lender and
the L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action under or
72
based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
9.08
No Other Duties, Etc.
Anything herein to the contrary notwithstanding, none
of the joint lead arrangers, joint book managers, co-syndication agents or co-documentation agents listed on the cover page hereof shall have
any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the L/C Issuer hereunder.
9.09
Administrative Agent May File Proofs of Claim
. In case of the pendency of
any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention
in such proceeding or otherwise
-
to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans,
L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order
to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders, the L/C Issuer and the Administrative Agent under
Sections 2.03(i)
and
(j)
,
2.09
,
10.04
and
10.05
) allowed in such judicial proceeding; and
-
to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, if the Administrative
Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any
other amounts due the Administrative Agent under
Sections 2.09
,
10.04
and
10.05
.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or
adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or
the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer or
in any such proceeding.
9.10
Collateral and Guaranty Matters
. The Lenders and the L/C Issuer irrevocably
authorize the Administrative Agent, at its option and in its discretion,
-
to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i)
upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the
73
expiration or termination of all Letters of Credit, (ii) in connection with a corporate restructuring of the Borrower and its Subsidiaries so long as
after giving effect thereto all Capital Stock of each Guarantor of the Borrower that is then pledged to the Administrative Agent remains pledged to
the Administrative Agent; (iii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan
Document, or (iv) if approved, authorized or ratified in writing in accordance with
Section 10.01
;
-
to release any Guarantor from its obligations under the Guaranty if such Person is not a Significant Subsidiary or will
cease to be a Significant Subsidiary as a result of a transaction permitted hereunder;
-
to release any Guarantor from its obligations under the Guaranty as a result of a corporate restructuring of the
Borrower and its Subsidiaries so long as after giving effect thereto each Person that are required to be a Guarantor pursuant to the terms hereof
becomes or continues to be a Guarantor; and
-
to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to
the holder of any Lien on such property that is permitted by
Section 7.01(o)
.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative
Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations
under the Guaranty pursuant to this
Section 9.10
. In each case as specified in this
Section 9.10
, the
Administrative Agent will, at the Borrower's expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may
reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral
Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in
accordance with the terms of the Loan Documents and this
Section 9.10
.
ARTICLE X
MISCELLANEOUS
10.01
Amendments, Etc
. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the
Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given;
provided
,
however
, that no such amendment, waiver or consent shall:
-
extend or increase the Commitment of any Lender without the written consent of such Lender;
-
postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees
or other amounts due to the Lenders (or any of them) without the written consent of each Lender directly affected thereby;
74
-
reduce or forgive the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to
clause (v) of the second proviso to this
Section 10.01
) any fees or other amounts payable hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
provided
,
however
, that only the consent of the
Required Lenders shall be necessary to amend the definition of "Default Rate" or to waive any obligation of the Borrower to pay
interest or Letter of Credit Fees at the Default Rate;
-
change
Section 2.13
or
Section 8.03
in a manner that would alter the pro rata sharing
of payments required thereby without the written consent of each Lender;
-
change any provision of this Section or the definition of "Required Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder, without the written consent of each Lender;
-
impose any greater restriction on the ability of any Lender to assign any of its rights or obligations hereunder without
the written consent of Lenders having more than 50% of the sum of (x) the Aggregate Revolving Commitments then in effect and (y) the
outstanding principal amount of Term Loans at such time within each of the following classes of Commitments, Loans and other Credit
Extensions: (i) the class consisting of the Revolving Commitment, and (ii) the class consisting of the Term Loans. For purposes of this clause,
the aggregate amount of each Revolving Lender's risk participation and funded participation in L/C Obligations and Swing Line Loans shall be
deemed to be held by such Lender;
-
release all or substantially all of the Guarantors from the Guaranty without the written consent of each Lender;
or
-
release all or substantially all of the Collateral without the written consent of each Lender;
and,
provided
further
, that (i) no amendment, waiver or consent shall, unless in writing and signed by
the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit
Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii)
no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv)
Section 10.07(g)
may not
be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an
SPC at the time of such amendment, waiver or other modification; and (v) the Fee Letter may be amended, or rights or privileges thereunder
waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any
right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased
or extended without the consent of such Lender.
75
10.02
Notices and Other Communications; Facsimile Copies.
-
General
. Unless otherwise expressly provided herein, all notices and other communications provided
for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed certified or registered mail, faxed or
delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
-
if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile
number, electronic mail address or telephone number specified for such Person on
Schedule 10.02
or to such other address,
facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and
-
if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its
Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by
such party in a notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been
given when received; notices sent by facsimile shall be deemed to have been given when sent, if a confirmation of transmittal is confirmed
(except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the
next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).
-
Electronic Communications
. Notices and other communications to the Lenders and the L/C Issuer
hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent,
provided
that the foregoing shall not apply to notices to any Lender and the L/C Issuer pursuant
to
Article II
if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving
notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices
and other communications to it hereunder by electronic communications pursuant to procedures approved by it,
provided
that approval
of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return
receipt requested" function, as available, return e-mail or other written acknowledgement),
provided
that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at
the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or
76
intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and identifying the website address therefor.
THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY
OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS,
IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the
Administrative Agent or any of its Related Parties (collectively, the "
Agent Parties
") have any liability to the Borrower, any
Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of the Borrower's or the Administrative Agent's transmission of Borrower Materials through the Internet, except to the extent that such
losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such Agent Party;
provided
,
however
, that in no event shall
any Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential
or punitive damages (as opposed to direct or actual damages).
-
Effectiveness of Facsimile Documents and Signatures
. Loan Documents may be transmitted and/or signed
by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as
manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also
require that any such documents and signatures be confirmed by a manually-signed original thereof;
provided
,
however
, that
the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.
-
Reliance by Administrative Agent and Lenders
.
The
Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing
Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All
telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the
parties hereto hereby consents to such recording.
10.03
No Waiver; Cumulative Remedies.
No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising, any right,
77
remedy, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
10.04
Attorney Costs, Expenses and Taxes.
The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all reasonable costs and expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions
hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and
administration of the transactions contemplated hereby and thereby, including all Attorney Costs, (b) to pay or reimburse the Administrative Agent
for all reasonable out-of-pocket costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any
"workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor
Relief Law), including all Attorney Costs, and (c) after the occurrence and during the continuance of an Event of Default, to pay or reimburse each
Lender for all reasonable out-of-pocket costs and expenses incurred in connection with any "workout" or restructuring in respect of the
Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing
costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained
by the Administrative Agent. All amounts due under this
Section 10.04
shall be payable within ten Business Days after demand
therefor. The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other
Obligations.
10.05
Indemnification by the Borrower; Reimbursement by Lenders; Waiver.
The
Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any
of the foregoing Persons (each such Person being called an "
Indemnitee
") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related out-of-pocket expenses (including the fees, charges and disbursements of any
outside counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any
other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any
sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or
alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in
78
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the
Borrower or any other Loan Party or any of the Borrower's or such Loan Party's directors, shareholders or creditors, and regardless of whether
any Indemnitee is a party thereto;
provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower
or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan
Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction. In connection with any claim for indemnification pursuant to this Agreement by more than one Indemnitee, all
such Indemnitees shall be represented by the same legal counsel selected by the Indemnitees;
provided
that if such legal counsel
determines in good faith that representing all such Indemnitees is reasonably likely to result in a conflict of interest under Laws or ethical
principles applicable to such legal counsel or that a defense or counterclaim is available to an Indemnitee that is not available to all such
Indemnitees, then to the extent reasonably necessary to avoid such a conflict of interest or to permit unqualified assertion of such a defense or
counterclaim, each Indemnitee shall be entitled to separate representation.
To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under
Section 10.04
or
Section 10.05
to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C
Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the
L/C Issuer or such Related Party, as the case may be, such Lender's Pro Rata Share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount,
provided
that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent)
or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of
Section 2.12(c)
.
To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out
of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to above
shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended
recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting
from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent
jurisdiction.
79
All amounts due under this
Section 10.05
shall be payable within ten Business Days after demand
therefor. The agreements in this Section shall survive after the resignation of the Administrative Agent, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
10.06
Payments Set Aside.
To the extent that any payment by or on behalf of the
Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises
its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in
its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise,
then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender and the L/C Issuer severally agrees to
pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus
interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time
to time in effect. The obligations of the Lenders and the LC Issuer under clause (b) of the preceding sentence shall survive the payment in full of
the Obligations and the termination of this Agreement.
10.07
Successors and Assigns.
-
The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the
restrictions of subsection (f) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void ab initio). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the
extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
-
Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this
Section 10.07(b)
,
participations in L/C Obligations and in Swing Line Loans) at the time owing to it);
provided
that any such assignment shall be subject to
the following conditions:
-
Minimum Amounts
.
80
-
in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment under any
Commitment and the Loans at the time owing to it under such Commitment or in the case of an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund, no minimum amount need be assigned; and
-
in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for
this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of
the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $1,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);
provided
,
however
, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee
Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for
purposes of determining whether such minimum amount has been met;
-
Proportionate Amounts
. Each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not (A) apply to the Swing Line Lender's rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from
assigning all or a portion of its rights and obligations among separate Commitments on a non-pro rata basis;
-
Required Consents
. No consent shall be required for any assignment except to the extent required by
subsection (b)(i)(B) of this Section and, in addition:
-
the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1)
an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender
or an Approved Fund;
-
the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required
for assignments in respect of (1) a Term Commitment or Revolving Commitment if such assignment is to a Person that is not a Lender with a
Commitment in respect of the applicable Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender or (2) any
Term Loan to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund;
-
the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any
assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then
outstanding); and
81
-
the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for
any assignment in respect of the Revolving Commitment.
-
Assignment and Assumption
. The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $2,500;
provided
,
however
, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any
assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
-
No Assignment to Borrower
. No such assignment shall be made to the Borrower or any of the Borrower's
Affiliates or Subsidiaries.
-
No Assignment to Natural Persons
. No such assignment shall be made to a natural
person.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from
and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of
Sections 3.01
,
3.04
,
3.05
,
10.04
and
10.05
with respect to facts and circumstances occurring prior to the effective date of
such assignment. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with
Section 10.07(d)
.
-
The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the
Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to
the terms hereof from time to time (the "
Register
"). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a
material or other substantive change to the Loan Documents is pending, any Lender wishing to consult with other Lenders in connection
therewith may request and receive from the Administrative Agent a copy of the Register.
82
-
Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a
"
Participant
") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans (including such Lender's participations in L/C Obligations and/or Swing Line Loans) owing to it);
provided
that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the
sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided
that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver
or other modification that (i) reduces the fees, interest rate or principal payable directly or indirectly to such Participant (or such Lender in respect
of such Participant), (ii) increases the Commitment of such Participant (or such Lender in respect of such Participant) or (iii) extends the final
maturity date for the Loans held by such Participant (or such Lender in respect of such Participant). Subject to subsection (e) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01
,
3.04
and
3.05
to
the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.09
as though it were a Lender,
provided
such Participant agrees to be subject to
Section 2.13
as though it were a Lender.
-
A Participant shall not be entitled to receive any greater payment under
Section 3.01
or
3.04
than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of
Section 3.01
unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with
Section 10.15
as though it
were a Lender.
-
Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this
Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank;
provided
that no such pledge or assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto. In the case of any Lender that is a fund that invests in bank loans,
such Lender may, without the consent of Borrower or the Administrative Agent, collaterally assign or pledge all or any portion of its rights under
this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of,
trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or
securities.
-
Notwithstanding anything to the contrary contained herein, any Lender (a "
Granting Lender
")
may grant to a special purpose funding vehicle identified as such in writing
83
from time to time by the Granting Lender to the Administrative Agent
and the Borrower (an "
SPC
") the option to provide all or any part of any Committed Loan that such Granting Lender would
otherwise be obligated to make pursuant to this Agreement;
provided
that (i) nothing herein shall constitute a commitment by any SPC
to fund any Committed Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Committed
Loan, the Granting Lender shall be obligated to make such Committed Loan pursuant to the terms hereof or, if it fails to do so, to make such
payment to the Administrative Agent as is required under
Section 2.12(c)(ii)
. Each party hereto hereby agrees that (i) neither the
grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement (including its obligations under
Section 3.04
), (ii) no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all
purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of
record hereunder. The making of a Committed Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Committed Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of
all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such
SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof.
Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the
Administrative Agent and with the payment of a processing fee of $2,500 (which processing fee may be waived by the Administrative Agent in its
sole discretion), assign all or any portion of its right to receive payment with respect to any Committed Loan to the Granting Lender and (ii)
disclose on a confidential basis any non-public information relating to its funding of Committed Loans to any rating agency, commercial paper
dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.
-
Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving
Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days' notice to the Borrower and the Revolving
Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall be entitled to appoint from among the
Revolving Lenders a successor L/C Issuer hereunder;
provided
,
however
, that no failure by the Borrower to appoint any such
successor shall affect the resignation of Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and
all L/C Obligations with respect thereto (including the right to require the Revolving Lenders to make Base Rate Committed Loans or fund risk
participations in Unreimbursed Amounts pursuant to
Section 2.03(c)
).
-
Notwithstanding anything to the contrary contained herein, if at any time Wells assigns all of its Revolving
Commitment and Loans pursuant to subsection (b) above, Wells may, upon 30 days' notice to the Borrower and the Revolving Lenders, resign as
Swing Line Lender. In the event of any such resignation as Swing Line Lender, the Borrower shall be
84
entitled to appoint from among the
Revolving Lenders a successor Swing Line Lender hereunder;
provided
,
however
, that no failure by the Borrower to appoint
any such successor shall affect the resignation of Wells as Swing Line Lender. If Wells resigns as Swing Line Lender, it shall retain all the rights
and obligations of the Swing Line Lender hereunder with respect to all Swing Line Loans outstanding as of the effective date of its resignation as
Swing Line Lender (including the right to require the Revolving Lenders to make Base Rate Committed Loans pursuant to
Section 2.04(c)
).
-
Notwithstanding anything in this
Section 10.07
to the contrary, the rights of the Lenders to make
assignments of their Loans and corresponding Commitments therefor shall be subject to the approval of any Gaming Board, to the extent
required by applicable Gaming Laws.
10.08
Confidentiality.
Each of the Administrative Agent and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives that need to know such information (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to
keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii)
any pledgee referred to in
Section 10.07(f)
, or (iii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x)
becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, "
Information
" means all
information received from the Borrower or any of its Subsidiaries relating to the Borrower or any Subsidiary or any of their respective businesses,
other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure to any
such Person by the Borrower or any Subsidiary,
provided
that, in the case of information received from the Borrower or any Subsidiary
after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential
information.
10.09
Set-off.
In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence and during the continuance of any Event of Default, after obtaining the prior written consent of the Administrative Agent,
each Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being
85
waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender
to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under any
other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand
under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness. Each Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such set-off and application made by such Lender;
provided
,
however
, that the failure to give such notice shall not
affect the validity of such set-off and application.
10.10
Interest Rate Limitation.
Notwithstanding anything to the contrary contained
in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "
Maximum Rate
"). If the Administrative Agent or any Lender shall receive interest
in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations
hereunder.
10.11
Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.12
Integration.
This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control;
provided
that the inclusion of supplemental rights or remedies in favor of the
Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was
drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.
10.13
Survival of Representations and Warranties.
All representations and
warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the
86
time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or
any Letter of Credit shall remain outstanding.
10.14
Severability.
If any provision of this Agreement or the other Loan Documents
is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the
other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
10.15
Tax Forms.
-
-
Each Lender that is not a "United States person"
within the meaning of Section 7701(a)(30) of the Code (a "
Foreign Lender
") shall deliver to the Administrative Agent, prior to
receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed
copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction
of, withholding tax on all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any
successor thereto (relating to all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or such other
evidence satisfactory to the Borrower and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of,
U.S. withholding tax, including any exemption pursuant to Section 881(c) of the Code. Thereafter and from time to time, each such Foreign
Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then
current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any
available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement, (B) promptly notify the Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment
of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable
Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender.
-
Each Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of
any sums paid or payable to such Lender under any of the Loan Documents (for example, in the case of a typical participation by such Lender),
shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of
any such sums paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth
above, to establish the portion of any such sums paid or payable with respect to
87
which such Lender acts for its own account that is not subject to
U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with any information
such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Code, to establish that
such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender.
-
The Borrower shall not be required to pay any additional amount to any Foreign Lender under
Section 3.01
(A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or
statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this
Section 10.15(a)
or (B) if such Lender
shall have failed to satisfy the foregoing provisions of this
Section 10.15(a)
;
provided
that if such Lender shall have
satisfied the requirement of this
Section 10.15(a)
on the date such Lender became a Lender or ceased to act for its own account
with respect to any payment under any of the Loan Documents, nothing in this
Section 10.15(a)
shall relieve the Borrower of its
obligation to pay any amounts pursuant to
Section 3.01
in the event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account
of which such Lender receives any sums payable under any of the Loan Documents is not subject to withholding or is subject to withholding at a
reduced rate.
-
The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any
payment under any of the Loan Documents with respect to which the Borrower is not required to pay additional amounts under this
Section
10.15(a)
.
-
Upon the request of the Administrative Agent, each Lender that is a "United States person" within the
meaning of Section 7701(a)(30) of the Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such
Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to
the applicable back-up withholding tax imposed by the Code, without reduction.
-
If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as
the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the
Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the
Lenders under this Section shall survive the termination of the Aggregate Commitments, repayment of all other Obligations hereunder and the
resignation of the Administrative Agent.
10.16
Replacement of Lenders
. The Borrower shall have the right to remove a
Lender as a party to this Agreement at any time upon notice to the Administrative Agent and such
88
Lender, including but not limited to a Lender
who is disqualified by the Gaming Authorities. If the Borrower elects to remove a Lender pursuant to this
Section 10.16
, the
Lender being removed shall within five Business Days after notice of removal pursuant to this
Section 10.16
execute and deliver
an Assignment and Assumption covering its Loans and Commitments in favor of one or more Eligible Assignees designated by the Borrower and
reasonably acceptable to the Administrative Agent, subject to payment of a purchase price to such Lender being removed in an amount equal to
the principal, interest and fees (including accrued Letter of Credit Fees under
Section 2.03
) owed to such Lender and any costs
and compensation owed to such Lender under Article III;
provided
that no Lender shall be required to make such an assignment
to any such Eligible Assignee to the extent such Lender is not legally permitted to make such an assignment to such Eligible Assignee. In
addition to the foregoing, so long as there does not exist a Default or Event of Default, the Borrower may upon five Business Days' notice to the
Administrative Agent and any Lender, prepay the Loans of such Lender, terminate such Lender's Commitments and reduce the applicable
Commitment by the amount of such Lender's Commitment. The Commitment of any such Lender shall be terminated upon the payment by the
Borrower of a purchase price in an amount equal to the principal, interest and fees (including accrued Letter of Credit Fees under
Section
2.03
) owed to such Lender and any costs and compensation owed to such Lender under Article III.
10.17
Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, the LAW OF THE STATE OF NEVADA applicable to agreements made and to be performed entirely
within such State
;
PROVIDED
THAT THE ADMINISTRATIVE Agent AND EACH LENDER SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
10.18
Waiver of Right to Trial by Jury.
EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
10.19
USA PATRIOT Act Notice.
Each Lender and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the "
Act
"), it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.
89
10.20
OFAC
. No Loan Party (i) is a person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such person in any manner violative of Section
2, or (iii) is a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other
U.S. Department of Treasury's Office of Foreign Assets Control regulation or executive order.
10.21
Designation as Senior Debt
. All Obligations shall be "Designated
Senior Indebtedness" for purposes of and as defined in any existing or future Indenture between the Borrower and a trustee relating to any
subordinated debt issued by the Borrower, if and to the extent that such term (or any comparable term) is defined therein as providing specific
rights to certain holders of senior indebtedness.
10.22
Gaming Boards.
Each Lender and the Administrative Agent agrees to use its
best efforts to cooperate with all Gaming Boards in connection with the administration of their regulatory jurisdiction over the Borrower and its
Affiliates, including by providing in a timely manner such documents or other information as may be requested by any such Gaming Authority
relating to the Borrower or any of its Affiliates or to the Loan Documents. The Borrower and each of its Affiliates hereby consents to any such
disclosure by the Lenders and Administrative Agent to any Gaming Board and releases such parties from any liability for any such
disclosure.
10.23
Gaming Regulations.
Each party to this Agreement hereby acknowledges
that the consummation of the transactions contemplated by the Loan Documents is subject to applicable Gaming Laws, including but not limited
to any licensing or qualification requirements imposed on the Lenders and the Loan Parties thereby. The Borrower represents and warrants that
it will use its best efforts to obtain all requisite approvals necessary in connection with the transactions contemplated hereby and in the other
Loan Documents.
[Remainder of page intentionally left blank.]
90
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the date first
above written.
BOYD GAMING CORPORATION
By:
/s/ Paul J. Chakmak
Name: Paul J. Chakmak
Title: Executive Vice President, Treasurer
and Chief Financial Officer
S-1
BANK OF AMERICA, N.A.
, as Administrative Agent
By:
/s/ Maurice E. Washington
Name: Maurice E. Washington
Title: Vice President
S-2
BANK OF AMERICA, N.A.
, as a Lender and L/C Issuer
By:
/s/ Justin Lien
Name: Justin Lien
Title: Vice President
S-3
WELLS FARGO BANK N.A.
By:
/s/ Peitty Chou
Name: Peitty Chou
Title: Vice President
S-4
CITIBANK, N.A.
By:
/s/ Jeffrey Rothman
Name: Jeffrey Rothman
Title: Vice President & Managing Director
S-5
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:
/s/ Paul M. Whyte
Name: Paul M. Whyte
Title: Managing Director
By:
/s/ Drew Goldman
Name: Drew Goldman
Title: Managing Director
S-6
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
By:
/s/ Donald S. Shokrian
Name: Donald S. Shokrian
Title: Managing Director
S-7
MERRILL LYNCH BANK USA
By:
/s/ Louis Alder
Name: Louis Alder
Title: Director
S-8
WACHOVIA BANK, NATIONAL ASSOCIATION
By:
/s/ G. Lee Wagner, Jr.
Name: G. Lee Wagner, Jr.
Title: Vice President
S-9
EXHIBIT A
FORM OF COMMITTED LOAN NOTICE
Date: ___________, _____
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain First Amended and Restated Credit Agreement, dated as of May 24, 2007 (as
amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "
Agreement
", the terms
defined therein being used herein as therein defined), among Boyd Gaming Corporation, a Nevada corporation (the
"
Borrower
"), the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer, and
Wells Fargo Bank, N.A., as Swing Line Lender.
The undersigned hereby requests (select one):
¨
A Borrowing of Committed Loans
¨
A conversion or continuation of Loans
1. On ____________________ (a Business Day).
2. In the amount of $______________.
3. Comprised of ________________.
[
Type of Committed Loan requested
]
4. For Eurodollar Rate Loans: with an Interest Period to ______(date).
The Committed Borrowing requested herein complies with the proviso to the first sentence of
Section 2.01
of the Agreement.
BOYD GAMING CORPORATION
By: __________________________________
Name: ________________________________
Title: _____________________________
Form of Committed Loan Notice
A-1
EXHIBIT B
[BOYD GAMING LETTERHEAD]
FORM OF SWING LINE LOAN NOTICE
Date: ___________, _____
To: Wells Fargo Bank, N.A., as Swing Line Lender
Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain First Amended and Restated Credit Agreement, dated as of May 24, 2007 (as
amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "
Agreement
", the terms
defined therein being used herein as therein defined), among Boyd Gaming Corporation, a Nevada corporation (the
"
Borrower
"), the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer, and
Wells Fargo Bank, N.A., as Swing Line Lender.
The undersigned hereby requests a Swing Line Loan:
1. On _______ (a Business Day).
2. In the amount of $____________.
3. Comprised of [Overnight Eurodollar Rate Loans/Loans Bearing Interest [as otherwise agreed]].
4. Swing Loan Balance: $________________
The Swing Line Borrowing requested herein complies with the requirements of the provisos to the first sentence of
Section 2.04(a)
of the Agreement.
BOYD GAMING CORPORATION
By: __________________________________
Name: ________________________________
Title: _____________________________
Form of Swing Line Loan Notice
B-1
EXHIBIT C-1
FORM OF REVOLVING NOTE
FOR VALUE RECEIVED, the undersigned (the "
Borrower
") hereby promises to pay to
_____________________ or registered assigns (the "
Lender
"), in accordance with the provisions of the Agreement (as
hereinafter defined), the principal amount of each Revolving Loan from time to time made by the Lender to the Borrower under that certain First
Amended and Restated Credit Agreement, dated as of May 24, 2007 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the "
Agreement
;" the terms defined therein being used herein as therein defined),
among the Borrower, the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer, and Wells
Fargo Bank, N.A., as Swing Line Lender.
The Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan from the date of such
Revolving Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. Except as
otherwise provided in
Section 2.04(f)
of the Agreement with respect to Swing Line Loans, all payments of principal and interest
shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's
Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date
thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.
This Revolving Note is one of the Revolving Notes referred to in the Agreement, is entitled to the benefits thereof and
may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty
and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all
amounts then remaining unpaid on this Revolving Note may become, or may be declared to be, immediately due and payable all as provided in
the Agreement. Revolving Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this Revolving Note and endorse thereon the date, amount and
maturity of its Revolving Loans and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and
notice of protest, demand, dishonor and non-payment of this Revolving Note.
Form of Revolving Note
C-1-1
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEVADA.
BOYD GAMING CORPORATION
By: __________________________________
Name: ________________________________
Title: _____________________________
Form of Revolving Note
C-1-2
REVOLVING LOANS AND PAYMENTS WITH RESPECT THERETO
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Form of Revolving Note
C-1-3
EXHIBIT C-2
FORM OF SWING LINE NOTE
$100,000,000
FOR VALUE RECEIVED, the undersigned (the "
Borrower
") hereby promises to pay to WELLS
FARGO BANK, N.A. or registered assigns (the "
Lender
"), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of each Swing Line Loan from time to time made by the Lender to the Borrower under that certain First Amended
and Restated Credit Agreement, dated as of May 24, 2007 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "
Agreement
;" the terms defined therein being used herein as therein defined), among the
Borrower, the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer and Wells Fargo Bank,
N.A., as Swing Line Lender.
The Borrower promises to pay interest (computed on the basis of a 360-day year, actual days elapsed) on the unpaid
principal amount of each Swing Line Loan from the date of such Swing Line Loan until such principal amount is paid in full, at a fluctuating rate
per annum equal to the [Overnight LIBOR Rate (as hereinafter defined) in effect from time to time
plus
the Applicable Rate for
Eurodollar Rate Loans under the Revolving Commitment][or as otherwise agreed]. Accrued interest shall be payable monthly on or before the
fifth Business Day after the end of each month. Each change in the rate of interest hereunder shall become effective on the date each Overnight
LIBOR Rate change is announced within the Lender. The Borrower may prepay principal on any portion of this Note in any amount and without
penalty. All payments of principal and interest shall be made to the Lender in Dollars in immediately available funds. If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual
payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.
As used herein, the following terms shall have the meanings hereinafter set forth:
(a) "LIBOR Reserve Percentage" means the reserve percentage prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended).
(b) "Overnight LIBOR Rate" means at any time the rate of interest most recently announced within Lender
at its principal office as its Overnight LIBOR Rate (reserve-adjusted), for an amount approximately equal to the principal amount to which such
interest rate applies, with the understanding that the Overnight LIBOR Rate is one of the Lender's base rates and serves as the basis upon which
effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof in such internal
publication or publications as the Lender may designate. The Borrower understands and agrees that (i) the Lender may base its determination of
the Overnight LIBOR Rate upon such offers for deposits on or other market indicators of the Inter-Bank Market as the Lender in its discretion
deems appropriate, including, but not limited to, the rate offered for U.S. dollar deposits on the London
Form of Swing Line Note
C-2-1
Inter-Bank Market, and (ii) the Overnight
LIBOR Rate available to the Borrower hereunder shall be adjusted by the Lender to take into account the LIBOR Reserve Percentage.
This Note is the Swing Line Note referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in
whole or in part subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of
Default specified in the Agreement, all amounts then remaining unpaid on this Note may become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Swing Line Loans made by the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Swing Line Loans and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and
notice of protest, demand, dishonor and non-payment of this Note.
BOYD GAMING CORPORATION
By: __________________________________
Name: ________________________________
Title: _____________________________
Form of Swing Line Note
C-2-2
SCHEDULE OF SWING LINE ADVANCES AND
PAYMENTS OF PRINCIPAL
|
Date
|
Amount of Swing Line Advance
|
Amount of
Principal Paid
|
Unpaid Principal Balance
|
Notation
Made By
|
|
__________
|
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Form of Swing Line Note
C-2-3
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: ___________, _____
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain First Amended and Retated Credit Agreement, dated as of May 24, 2007 (as
amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "
Agreement
", the terms
defined therein being used herein as therein defined), among Boyd Gaming Corporation, a Nevada corporation (the
"
Borrower
"), the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer and
Wells Fargo Bank, N.A. as Swing Line Lender.
The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the
___________________________________ of the Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on behalf of the Borrower, and that:
[
Use following paragraph 1 for fiscal year-end financial statements
]
1. The Borrower has delivered to the Administrative Agent the year-end audited financial statements required
by
Section 6.01(a)
of the Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion
of an independent certified public accountant required by such section.
[
Use following paragraph 1 for fiscal quarter-end financial statements
]
1. The Borrower has delivered to the Administrative Agent the unaudited financial statements required by
Section 6.01(b)
of the Agreement for the fiscal quarter of the Borrower ended as of the above date. Such financial statements fairly
present the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such
date and for such period, subject to normal year-end audit adjustments and the absence of footnotes.
2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be
made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting
period covered by the submitted financial statements.
3. A review of the activities of the Borrower during such fiscal period has been made under the supervision of the
undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all its Obligations under the Loan
Documents, and
Form of Compliance Certificate
D-1
[select one:]
[
to the best knowledge of the undersigned during such fiscal period, the Borrower performed and observed each
covenant and condition of the Loan Documents applicable to it.
]
--or--
[
the following covenants or conditions have not been performed or observed and, to the best knowledge of
the undersigned, the following is a list of each such Default and its nature and status:
]
4. The representations and warranties of the Borrower contained in
Article V
of the Agreement, and any
representations and warranties of the Borrower that are contained in any document furnished at any time under or in connection with the Loan
Documents, are true and correct on and as of the date hereof, except to the extent that
[
such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such earlier date,
]
--or--
[
the following representations and
warranties are not true as of such date,
]
and except that for purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of
Section 5.05
of the Agreement shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of
Section 6.01
of the Agreement, including the statements in connection with which this
Compliance Certificate is delivered.
5. The financial covenant analyses and information set forth on
Schedules 1
and
2
attached
hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF,
the undersigned has executed this Certificate as of _____________.
BOYD GAMING CORPORATION
By: __________________________________
Name: ________________________________
Title: _____________________________
Form of Compliance Certificate
D-2
For the Quarter/Year ended ___________________("
Statement Date
")
SCHEDULE 1
to the Compliance Certificate
($ in 000's)
I.
Section 7.10-(a) - Interest Coverage Ratio.
A. Consolidated EBITDA for the four consecutive fiscal quarters ending
on above date ("
Subject Period
") as set forth on Schedule 2: $ __________
B. Consolidated scheduled interest expense for Subject
Period: $ __________
C. Fixed Charge Coverage Ratio (Line I.A.
¸
Line I.B.): __________ to 1
Minimum required: 2.00 to 1.00
II Section 7.10(b) - Total Leverage Ratio.
A. Consolidated Funded Indebtedness at Statement Date: $___________
B. Consolidated EBITDA for Subject Period (Line I.A. above): $ _________
C. Consolidated Leverage Ratio (Line II.A
¸
Line II.B): __________ to 1
Maximum permitted:
|
Four Fiscal Quarters Ending
|
Maximum Total
Leverage Ratio
|
|
June 30, 2007 through December 31, 2007
|
5.25 to 1.00
|
|
March 31, 2008 through December 31, 2008
|
6.00 to 1.00
|
|
March 31, 2009 through December 31, 2009
|
6.50 to 1.00
|
|
March 31, 2010
|
6.75 to 1.00
|
|
June 30, 2010
|
7.00 to 1.00
|
|
September 30, 2010
|
7.25 to 1.00
|
|
December 31, 2010
|
7.50 to 1.00
|
|
March 31, 2011
|
6.50 to 1.00
|
|
June 30, 2011 and each quarter thereafter
|
5.25 to 1.00
|
[At any time prior to December 31, 2008, the Borrower may make a one-time election to defer the subsequent step ups
and step downs in the Maximum Total Leverage Ratio for one or two fiscal quarters.]
Form of Compliance Certificate
D-3
For the Quarter/Year ended ___________________("
Statement Date
")
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
Consolidated EBITDA
(in accordance with the definition of Consolidated EBITDA
as set forth in the Agreement)
|
Consolidated EBITDA
|
Quarter
Ended
_______
|
Quarter
Ended
_______
|
Quarter
Ended
_______
|
Quarter
Ended
_______
|
Twelve
Months
Ended
_______
|
|
Consolidated earnings before interest expense, taxes, depreciation, amortization, non-cash rent expense, preopening
expenses, share-based compensation expense, non-cash change in value of derivative instruments, charges for the early retirement of debt,
non-recurring non-cash losses (or gains), acquisition and merger related charges, and extraordinary items
|
|
|
|
|
|
|
+(-) the EBITDA during the Subject Period for any Restricted Subsidiary acquired (or disposed of) by the Borrower during
such period, in each case
|
|
|
|
|
|
|
+(-) any loss (or gain) arising from a change in GAAP
|
|
|
|
|
|
|
+ 50% of Borgata EBIT to the extent that on the date of determination, no Event of Default under and as defined in
Borgata's bank credit agreement has occurred and is continuing
|
|
|
|
|
|
|
+ (after the same shall have been open for at least one full calendar month) the annualized pro forma EBITDA of any new
Venture of the Borrower and its Restricted Subsidiaries (including the Dania Jai Alai development project)
|
|
|
|
|
|
|
= Consolidated EBITDA
|
|
|
|
|
|
|
Consolidated EBITDA shall exclude the Consolidated EBITDA of each Unrestricted Subsidiary and all Subsidiaries of any
Unrestricted Subsidiary
|
|
|
|
|
|
Form of Compliance Certificate
D-4
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this "
Assignment and Assumption
") is dated as of the
Effective Date set forth below and is entered into by and between
[
Insert name of Assignor
]
(the
"
Assignor
") and
[
Insert name of Assignee
]
(the "
Assignee
"). Capitalized terms
used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated
herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations as
a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below
(including, without limitation, the Letters of Credit, the Guaranties and the Swing Line Loans included in such facilities) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as, the "
Assigned Interest
"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1.
Assignor
: ______________________________
2.
Assignee
: ______________________________
[
and is an Affiliate/Approved Fund of
[
identify Lender
]
1
]
3.
Borrower
: Boyd Gaming Corporation
4.
Administrative Agent
: Bank of America, N.A., as the administrative agent under the Credit Agreement
5.
Credit Agreement
: First Amended and Restated Credit Agreement, dated as of May 24, 2007 (as
amended, restated, extended, supplemented or otherwise modified in writing
_________________
1
Select as applicable.
Form of Assignment and Assumption
E-1
from time to time, the "
Credit Agreement
", the
terms defined therein being used herein as therein defined), among Boyd Gaming Corporation, a Nevada corporation (the
"
Borrower
"), the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer, and
Wells Fargo Bank, N.A., as Swing Line Lender
6. Assigned Interest:
2
|
Facility Assigned
|
Aggregate Amount of Commitment/Loans
for all Lenders
*
|
Amount of Commitment/Loans
Assigned
*
|
Percentage Assigned of
Commitment/Loans
3
|
CUSIP
Number
|
|
Revolving Credit Commitment
|
$______________
|
$_____________
|
______%
|
|
|
_____________
|
$______________
|
$_____________
|
______%
|
|
|
_____________
|
$______________
|
$_____________
|
______%
|
|
[
7.
Trade Date
: __________________
]
4
Effective Date: __________________, 20__
[
TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.
]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[
NAME OF ASSIGNOR
]
By: ___________________________________
Title:
ASSIGNEE
[
NAME OF ASSIGNEE
]
By: ___________________________________
Title:
_________________
* Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
2
Tthe reference to "Loans" in the table should be used only if the Credit Agreement provides for Term Loans
3
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
4
To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.
Form of Assignment and Assumption
E-2
Consented to and Accepted:
BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer
By:
Title:
Consented to:
WELLS FARGO BANK, N.A.,
as Swing Line Lender
By:
Title:
BOYD GAMING CORPORATION
By:
Title:
Form of Assignment and Assumption
E-3
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
BOYD GAMING CORPORATION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties
.
1.1.
Assignor
. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the
Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any
other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2.
Assignee
. The Assignee (a) represents and warrants that (i) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to
Section 6.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached
hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the
Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.
2.
Payments
. From and after the Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have
accrued to but excluding the
Form of Assignment and Assumption
E-4
Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions
. This Assignment and Assumption shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law of the State of Nevada.
Form of Assignment and Assumption
E-5
EXHIBIT F
FORM OF GUARANTY
GENERAL CONTINUING GUARANTY
THIS GENERAL CONTINUING GUARANTY ("
Guaranty
"), dated as of May 24, 2007, is
executed and delivered by each Subsidiary that is a signatory hereto and any future Significant Subsidiary (as defined in the Credit Agreement
referenced below) that executes and delivers an Amendment hereto (each a "
Guarantor
" and, collectively, the
"
Guarantors
"), in favor of the commercial lending institutions (the "
Lenders
") from time to time party to
the Credit Agreement (as hereinafter defined) and Bank of America, N.A. ("
Bank of America
"), as Administrative Agent (in
such capacity, together with any successor appointed pursuant to Section 9.06 of the Credit Agreement, the "
Administrative
Agent
") for the Lenders.
WHEREAS, the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer are parties to a First
Amended and Restated Credit Agreement dated as of the date hereof (said Agreement, as it may hereafter be amended, supplemented, modified
or restated from time to time, being the "
Credit Agreement
"; the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Boyd Gaming Corporation, a Nevada corporation (the "
Borrower
");
WHEREAS, each of the Guarantors will derive substantial direct and indirect benefit from the transactions contemplated
by the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and in order to induce the Lenders to make the credit extensions
contemplated under the Credit Agreement, the Guarantors hereby agree, jointly and severally, as follows:
1.
Definitions and Construction
.
(a)
Definitions
. The following terms, as used in this Guaranty, shall have the following meanings:
"
Bankruptcy Code
" shall mean The Bankruptcy Reform Act of 1978 (11 U.S.C. 101-1330), as
amended or supplemented from time to time, and any successor statute, and any and all rules issued or promulgated in connection
therewith.
"
Beneficiaries
" shall mean Administrative Agent and Lenders.
"
Collateral
" shall mean the property or assets described in Section 16 hereof.
"
Guarantied Obligations
" shall mean the due and punctual payment of all Indebtedness owing by
Borrower.
"
Indebtedness
" shall mean any and all obligations, indebtedness, or liabilities of any kind or
character owed to Beneficiaries by Borrower and arising directly or indirectly
Form of Guaranty
F-1
out of or in connection with the Credit Agreement, the Notes, or the
other Loan Documents (in each case as amended, supplemented, modified or restated from time to time) plus all of the obligations of the
Borrower or any of its Subsidiaries under any and all Swap Contracts between the Borrower and any Lender or Affiliate of a Lender, including all
such obligations, indebtedness, or liabilities, whether for principal, interest (including any and all interest which, but for the application of the
provisions of the Bankruptcy Code, would have accrued on such amounts), premium, reimbursement obligations, fees, costs, expenses
(including reasonable attorneys' fees), or indemnity obligations, whether heretofore, now, or hereafter made, incurred, or created, whether
voluntarily or involuntarily made, incurred, or created, whether secured or unsecured (and if secured, regardless of the nature or extent of the
security), whether absolute or contingent, liquidated or unliquidated, or determined or indeterminate, whether Borrower is liable individually or
jointly with others, and whether recovery is or hereafter becomes barred by any statute of limitations or otherwise becomes unenforceable for any
reason whatsoever, including any act or failure to act by Beneficiaries.
(b)
Construction
. Unless the context of this Guaranty clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the part includes the whole, the term "including" is not limiting, and
the term "or" has the inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and other similar terms refer to this Guaranty as a whole and not to any
particular provision of this Guaranty. Any reference in this Guaranty to any of the following documents includes any and all alterations,
amendments, extensions, modifications, renewals, supplements or restatements thereto or thereof, as applicable: the Loan Documents; the
Credit Agreement; this Guaranty; and the Notes. Neither this Guaranty nor any uncertainty or ambiguity herein shall be construed or resolved
against Beneficiaries or any Guarantor, whether under any rule of construction or otherwise. On the contrary, this Guaranty has been reviewed
by Guarantors, Beneficiaries, and their respective counsel, and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of Beneficiaries and Guarantors.
2.
Guarantied Obligations
. Each Guarantor, jointly and severally, hereby irrevocably and unconditionally
guaranties to Beneficiaries, as and for its own debt, until final and indefeasible payment thereof has been made, the due and punctual payment of
the Guarantied Obligations, in each case when and as the same shall become due and payable, whether at maturity, by acceleration, or
otherwise; it being the intent of each Guarantor that the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection;
provided
,
however
, that each Guarantor shall be liable under this Guaranty for the maximum amount of such liability that can
be incurred without rendering this Guaranty, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer, and not for any greater amount.
Each Guarantor represents and warrants to Beneficiaries that (i) neither this Guaranty nor any collateral security therefor
has been given with an intent to hinder, delay or defraud any creditor of such Guarantor; (ii) such Guarantor is not engaged, or about to engage,
in any business or transaction for which its assets (other than those necessary to satisfy its obligations under this Guaranty or those given as
collateral security for such obligations) are unreasonably
Form of Guaranty
F-2
small in relation to the business or transaction, nor does such Guarantor intend to incur,
or believe or reasonably should believe that it will incur, debts beyond its ability to pay as they become due; and (iii) such Guarantor is not
insolvent at the time it gives this Guaranty, and the giving of this Guaranty and any collateral security provided in connection herewith will not
result in such Guarantor's becoming insolvent. Each Guarantor hereby covenants and agrees that, as long as this Guaranty remains in effect,
such Guarantor (i) shall incur no indebtedness beyond its ability to repay the same in full in accordance with the terms thereof; and (ii) shall not
take any action, or suffer to occur any omission, which could give rise to a claim by any third party to set aside this Guaranty or any collateral
given in connection herewith, or in any manner impair Beneficiaries' rights and privileges hereunder or thereunder.
3.
Continuing Guaranty
. This Guaranty includes Guarantied Obligations arising under successive
transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing the Guarantied Obligations, changing the interest
rate, payment terms, or other terms and conditions thereof, or creating new or additional Guarantied Obligations after prior Guarantied
Obligations have been satisfied in whole or in part. To the maximum extent permitted by law, each Guarantor hereby waives any right to revoke
this Guaranty as to future Indebtedness. If such a revocation is effective notwithstanding the foregoing waiver, each Guarantor acknowledges
and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Beneficiaries, (b) no such
revocation shall apply to any Guarantied Obligations in existence on such date (including any subsequent continuation, extension, or renewal
thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any
Guarantied Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Beneficiaries
in existence on the date of such revocation, (d) no payment by any Guarantor, Borrower, or from any other source, prior to the date of such
revocation, shall reduce the maximum obligation of such Guarantor hereunder, and (e) any payment by Borrower or from any source other
than such Guarantor subsequent to the date of such revocation shall first be applied to that portion of the Guarantied Obligations as to which the
revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligations
of such Guarantor hereunder.
4.
Performance under this Guaranty
. In the event that Borrower fails to make any payment of any
Guarantied Obligations on or before the due date thereof, each Guarantor immediately shall cause such payment to be made.
5.
Primary Obligations
. This Guaranty is a primary and original obligation of each Guarantor, is not merely
the creation of a surety relationship, and is an absolute, unconditional, and continuing guaranty of payment and performance which shall remain
in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to
the issuance of the Notes. Each Guarantor agrees that it is directly, jointly and severally with each other Guarantor, liable to Beneficiaries, that
the obligations of such Guarantor hereunder are independent of the obligations of Borrower or any other Guarantor, and that a separate action
may be brought against such Guarantor, whether such action is brought against Borrower or another Guarantor or whether Borrower or any such
other Guarantor is joined in such action. Guarantor agrees that its liability hereunder shall be immediate and shall not be contingent upon the
exercise or enforcement by Beneficiaries of
Form of Guaranty
F-3
whatever remedies they may have against Borrower or any other Guarantor, or the enforcement of
any lien or realization upon any security Beneficiaries may at any time possess. Each Guarantor agrees that any release which may be given by
Beneficiaries to Borrower or any other Guarantor shall not release such Guarantor. Each Guarantor consents and agrees that Beneficiaries shall
be under no obligation to marshal any property or assets of Borrower or any other Guarantor in favor of such Guarantor, or against or in payment
of any or all of the Guarantied Obligations.
6.
Waivers
.
(a) Each Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or other
financial accommodations made or extended under the Credit Agreement, or the creation or existence of any Guarantied Obligations;
(iii) notice of the amount of the Guarantied Obligations, subject, however, to such Guarantor's right to make inquiry of Administrative Agent
to ascertain the amount of the Guarantied Obligations at any reasonable time; (iv) notice of any adverse change in the financial condition of
Borrower or of any other fact that might increase such Guarantor's risk hereunder; (v) notice of presentment for payment, demand, protest,
and notice thereof as to the Notes or any other instrument; (vi) notice of any Default or Event of Default under the Credit Agreement; and
(vii) all other notices (except if such notice is specifically required to be given to a Guarantor under this Guaranty or any other Loan
Document to which such Guarantor is party) and demands to which such Guarantor might otherwise be entitled.
(b) To the fullest extent permitted by applicable law, each Guarantor waives the right by statute or otherwise to
require Beneficiaries to institute suit against Borrower or to exhaust any rights and remedies which Beneficiaries have or may have against
Borrower. In this regard, each Guarantor agrees that it is bound to the payment of each and all Guarantied Obligations, whether now existing or
hereafter accruing, as fully as if such Guarantied Obligations were directly owing to Beneficiaries by such Guarantor. Each Guarantor further
waives any defense arising by reason of any disability or other defense (other than the defense that the Guarantied Obligations shall have been
fully and finally performed and indefeasibly paid) of Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower
in respect thereof.
(c) To the maximum extent permitted by law, each Guarantor hereby waives: (i) any rights to assert against
Beneficiaries any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time hereafter have
against Borrower or any other party liable to Beneficiaries; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guarantied Obligations or any
security therefor; (iii) any defense arising by reason of any claim or defense based upon an election of remedies by Beneficiaries;
(iv) the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the enforcement thereof, and any act which shall
defer or delay the operation of any statute of limitations applicable to the Guarantied Obligations shall similarly operate to defer or delay the
operation of such statute of limitations applicable to such Guarantor's liability hereunder; and (v) to the fullest extent permitted by law, any
defense or benefit that may be derived from or afforded by law which limits the liability of or exonerates guaranties or sureties or requires
Beneficiaries to exhaust remedies against the Borrower prior to commencing any action or
Form of Guaranty
F-4
foreclosure against such Guarantor or its properties
including, without limitation, the benefits of Nevada Revised Statutes Sections 40.430 - 40.459, 40.475 and 40.485 as and to the fullest extent
permitted by Nevada Revised Statutes Section 40.495 (1989).
(d) Each Guarantor agrees that if all or a portion of the Indebtedness or this Guaranty is at any time secured by a
deed of trust or mortgage covering interests in real property, Beneficiaries, in their sole discretion, without notice or demand and without affecting
the liability of such Guarantor under this Guaranty, may foreclose pursuant to the terms of the Credit Agreement or otherwise the deed of trust or
mortgage and the interests in real property secured thereby by non-judicial sale. Each Guarantor understands that the exercise by Beneficiaries
of certain rights and remedies contained in the Credit Agreement and any such deed of trust or mortgage may affect or eliminate such
Guarantor's right of subrogation against Borrower and that such Guarantor may therefore incur a partially or totally non-reimbursable liability
hereunder. Nevertheless, each Guarantor hereby authorizes and empowers Beneficiaries to exercise, in their sole discretion, any rights and
remedies, or any combination thereof, which may then be available, since it is the intent and purpose of such Guarantor that the obligations
hereunder shall be absolute, independent and unconditional under any and all circumstances. Notwithstanding any foreclosure of the lien of any
deed of trust or security agreement with respect to any or all of any real or personal property secured thereby, whether by the exercise of the
power of sale contained therein, by an action for judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, each Guarantor shall
remain bound under this Guaranty including its obligation to pay any deficiency following a non-judicial foreclosure.
(e) (1) Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan Document, until full
and final payment of the Guaranteed Obligations, each Guarantor hereby waives with respect to Borrower and its respective successors and
assigns (including any surety) and any other party any and all rights at law or in equity, to subrogation, to reimbursement, to exoneration, to
contribution, to setoff or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an
accommodation party against the party accommodated, or to a holder or transferee against a maker and which such Guarantor may have or
hereafter acquire against Borrower or any other party in connection with or as a result of Borrower's execution, delivery and/or performance of the
Credit Agreement or any other Loan Document. Each Guarantor agrees that it shall not have or assert any such rights against Borrower or
Borrower's successors and assigns or any other Person (
including
any surety), either directly or as an attempted setoff to any action
commenced against such Guarantor by Borrower (as borrower or in any other capacity) or any other Person until the Guaranteed Obligations
have been fully and finally repaid to the Beneficiaries. Each Guarantor hereby acknowledges and agrees that this waiver is intended to benefit
the Beneficiaries and shall not limit or otherwise affect any of the Borrower's liability hereunder, under any other Loan Document to which
Borrower is a party, or the enforceability hereof or thereof.
(2) To the extent any waiver of subrogation contained in subparagraph (e)(1) is unenforceable, each Guarantor shall,
until the Guaranteed Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have
expired or been terminated or canceled, withhold exercise of (a) any claim, right or remedy, direct or indirect, that such Guarantor now has or
may hereafter have against
Form of Guaranty
F-5
Borrower or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and
including without limitation (i) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have
against Borrower, (ii) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have
against Borrower, and (iii) any benefit of, and any right to participate in, any collateral or security now or hereafter held by the Beneficiaries, and
(b) any right of contribution such Guarantor may have against any other Guarantor (including without limitation any such right of contribution).
Each Guarantor further agrees that, to the extent the agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of
contribution Guarantor may have against any such other Guarantor, shall be junior and subordinate to any rights the Administrative Agent or
Lenders may have against Borrower, to all right, title and interest the Beneficiaries may have in any such collateral or security, and to any right
the Beneficiaries may have against such other Guarantor. The Administrative Agent, on behalf of Lenders, may use, sell or dispose of any item
of collateral or security as it sees fit without regard to any subrogation rights any Guarantor may have, and upon any such disposition or sale any
rights of subrogation Guarantors may have shall terminate. If any amount shall be paid to any Guarantor on account of any such subrogation,
reimbursement or indemnification rights at any time when all Guaranteed Obligations shall not have been paid in full, such amount shall be held
in trust for the Administrative Agent on behalf of Lenders and shall forthwith be paid over to the Administrative Agent for the benefit of Lenders to
be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the Credit
Agreement.
7.
Releases
. Each Guarantor consents and agrees that, without notice to or by such Guarantor and without
affecting or impairing the obligations of such Guarantor hereunder, Beneficiaries may, by action or inaction, compromise or settle, extend the
period of duration or the time for the payment, or discharge the performance of, or may refuse to, or otherwise not enforce, or may, by action or
inaction, release all or any one or more parties to, any one or more of the Credit Agreement, the Notes, or any of the other Loan Documents or
may grant other indulgences to Borrower in respect thereof, or may amend or modify in any manner and at any time (or from time to time) any
one or more of the Credit Agreement, the Notes, or any of the other Loan Documents, or may, by action or inaction, release or substitute any
other Guarantor, if any, of the Guarantied Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for the
Guarantied Obligations (including the Collateral) or any other guaranty of the Guarantied Obligations, or any portion thereof.
8.
No Election
. Beneficiaries shall have the right to seek recourse against any Guarantor to the fullest extent
provided for herein and no election by Beneficiaries to proceed in one form of action or proceeding, or against any Guarantor or other party, or on
any obligation, shall constitute a waiver of Beneficiaries' right to proceed in any other form of action or proceeding or against any other Guarantor
or other parties unless Beneficiaries have expressly
Form of Guaranty
F-6
waived such right in writing. Specifically, but without limiting the generality of the foregoing,
no action or proceeding by Beneficiaries under any document or instrument evidencing the Guarantied Obligations shall serve to diminish the
liability of Guarantors under this Guaranty except to the extent that Beneficiaries finally and unconditionally shall have realized indefeasible
payment by such action or proceeding.
9.
Indefeasible Payment
. The Guarantied Obligations shall not be considered indefeasibly paid for purposes
of this Guaranty unless and until all payments to Beneficiaries are no longer subject to any right on the part of any person whomsoever, including
Borrower, Borrower as a debtor in possession, or any trustee (whether appointed under the Bankruptcy Code or otherwise) of Borrower's assets
to invalidate or set aside such payments or to seek to recoup the amount of such payments or any portion thereof, or to declare same to be
fraudulent or preferential. In the event that, for any reason, all or any portion of such payments to Beneficiaries is set aside or restored, whether
voluntarily or involuntarily, after the making thereof, the obligation or part thereof intended to be satisfied thereby shall be revived and continued
in full force and effect as if said payment or payments had not been made and each Guarantor shall be liable for the full amount Beneficiaries are
required to repay plus any and all costs and expenses (including attorneys' fees) paid by Beneficiaries in connection therewith.
10.
Financial Condition of Borrower
. Each Guarantor represents and warrants to Beneficiaries that it is
currently informed of the financial condition of Borrower and of all other circumstances which a diligent inquiry would reveal and which bear upon
the risk of nonpayment of the Guarantied Obligations. Each Guarantor further represents and warrants to Beneficiaries that it has read and
understands the terms and conditions of the Credit Agreement, the Notes, and the other Loan Documents. Each Guarantor hereby covenants
that it will continue to keep itself informed of Borrower's financial condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the Guarantied Obligations.
11.
Subordination
. Each Guarantor hereby agrees that any and all present and future indebtedness of
Borrower owing to such Guarantor is postponed in favor of and subordinated to payment in full of the Guarantied Obligations. Each Guarantor
agrees that amounts paid over to Beneficiaries pursuant to the subordination provisions of this Section 11 shall be separate and apart from, and
shall not be credited to, the liability of such Guarantor pursuant to Section 2.
12.
Payments; Application
. All payment to be made hereunder by any Guarantor shall be made in lawful
money of the United States of America at the time of payment, shall be made in immediately available funds, and shall be made without setoff,
deduction (whether for Taxes or otherwise) or counterclaim. All payments made by any Guarantor hereunder shall be applied as follows: first, to
all reasonable costs and expenses (including attorneys' fees) incurred by Beneficiaries in enforcing this Guaranty or in collecting the Guarantied
Obligations; second, to all accrued and unpaid interest, premium, if any, and fees owing to Beneficiaries constituting Guarantied Obligations; and
third, to the balance of the Guarantied Obligations.
13.
Attorneys' Fees and Costs
. Each Guarantor agrees to pay, on demand, all reasonable attorneys' fees
and all other reasonable costs and expenses which may be incurred by Beneficiaries in the enforcement of this Guaranty or in any way arising
out of, or consequential
Form of Guaranty
F-7
to the protection, assertion, or enforcement of the Guarantied Obligations (or any security therefor), irrespective of whether suit is brought.
14.
Notices
. All notices and other communications provided to any party hereto under this Guaranty shall be
in writing or by facsimile 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. Any notice, if mailed and properly addressed
with postage prepaid, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted.
If to any Guarantor: c/o Boyd Gaming Corporation
3883 Howard Hughes Parkway, 9
th
Floor
Las Vegas, Nevada 89169
Attn: Chief Financial Officer
Facsimile number: (702) 792-7214
Attn: General Counsel
Facsimile number: (702) 696-1114
With a copy to: Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, California 90013
Attn: Kathryn I. Johnstone, Esq.
Facsimile number: (213) 892-5454
If to Beneficiaries: Bank of America, N.A., as Administrative Agent
GCIB Agency Management Central I
Mail Code: TX1-492-14-11
Bank of America Plaza
901 Main Street, 14
th
Floor
Dallas, TX 75202-3714
Attention: Chris M. Levine - AVP, Agency Management Officer
Telephone: 214-209-4129
Facsimile: 214-290-9432
Email: chris.m.levine@bankofamerica.com
With a copy to: Mayer, Brown, Rowe & Maw LLP
350 South Grand Avenue
Suite 2500
Los Angeles, California 90071
Attn: Brian E. Newhouse, Esq.
Facsimile number: (213) 625-0248
15.
Cumulative Remedies
. No remedy under this Guaranty, under the Credit Agreement, the Notes, or any
Loan Document is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every
other remedy given under this Guaranty, under the Credit Agreement, the Notes, or any other Loan Document, and those provided by law. No
delay or omission by Beneficiaries to exercise any right under
Form of Guaranty
F-8
this Guaranty shall impair any such right nor be construed to be a waiver thereof.
No failure on the part of Beneficiaries to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise thereof or the exercise of any other
right.
16.
Collateral
. The obligations of one or more of the Guarantors under this Guaranty may be secured as
provided for in certain of the Loan Documents that have been or will be executed by such Guarantor in favor of the Administrative Agent.
17.
Severability of Provisions
. Any provision of this Guaranty which is prohibited or unenforceable under
applicable law, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
18.
Entire Agreement; Amendments
. This Guaranty constitutes the entire agreement among each
Guarantor and Beneficiaries pertaining to the subject matter contained herein. This Guaranty may not be altered, amended, or modified, nor may
any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by each Guarantor and
Administrative Agent. Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified therein and
for the specific purpose for which given. No course of dealing and no delay or waiver of any right or default under this Guaranty shall be deemed
a waiver of any other, similar or dissimilar, right or default or otherwise prejudice the rights and remedies hereunder.
19.
Successors and Assigns
. Subject to the terms of the Credit Agreement, this Guaranty shall be binding
each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of Beneficiaries;
provided
,
however
, no Guarantor shall assign this Guaranty or delegate any of its duties hereunder without Beneficiaries' prior written consent and
any unconsented to assignment shall be absolutely void. In the event of any assignment or other transfer of rights by Beneficiaries, the rights
and benefits herein conferred upon Beneficiaries shall automatically extend to and be vested in such assignee or other transferee.
20.
Choice of Law and Venue; Service of Process
. THE VALIDITY OF THIS GUARANTY, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF EACH GUARANTOR AND BENEFICIARIES, SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEVADA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR
WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEVADA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, GUARANTOR ACCEPTS, FOR ITSELF AND IN
CONNECTION WITH ITS ASSETS, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
GUARANTY FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE.
Form of Guaranty
F-9
21.
Waiver of Jury Trial
. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF GUARANTORS AND BENEFICIARIES WITH RESPECT TO THIS GUARANTY, OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH GUARANTOR
HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDINGS SHALL BE DECIDED BY A
COURT TRIAL WITHOUT A JURY AND THAT BENEFICIARIES MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY
COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH GUARANTOR TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.
22.
Joint and Several Liability
. The liability of the Guarantors hereunder shall be joint and several.
Form of Guaranty
F-10
IN WITNESS WHEREOF, each of the undersigned has executed and delivered this Guaranty as of the day and year first
written above.
MARE-BEAR, INC.,
a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
SAM-WILL, INC.,
a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
BOYD TUNICA, INC.,
a Mississippi corporation
By: ______________________________
Name: __________________________
Title: ________________________
CALIFORNIA HOTEL FINANCE CORPORATION, a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
CALIFORNIA HOTEL AND CASINO, a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
Form of Guaranty
F-11
BOYD ATLANTIC CITY, INC.,
a New Jersey corporation
By: ______________________________
Name: __________________________
Title: ________________________
ECHELON RESORTS LLC,
a Nevada limited liability company
By: ______________________________
Name: __________________________
Title: ________________________
PAR-A-DICE GAMING CORPORATION,
an Illinois corporation
By: ______________________________
Name: __________________________
Title: ________________________
BOYD KENNER, INC.,
a Louisiana corporation
By: ______________________________
Name: __________________________
Title: ________________________
BOYD LOUISIANA L.L.C.,
a Nevada limited liability company
By: ______________________________
Name: __________________________
Title: ________________________
Form of Guaranty
F-12
M.S.W., INC.,
a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
TREASURE CHEST CASINO, L.L.C.,
a Louisiana limited liability company
By: ______________________________
Name: __________________________
Title: ________________________
BLUE CHIP CASINO, LLC, an Indiana limited liability company
By: ______________________________
Name: __________________________
Title: ________________________
BOYD LOUISIANA RACING, INC.,
a Louisiana corporation
By: ______________________________
Name: __________________________
Title: ________________________
BOYD RACING, L.L.C.,
a Louisiana limited liability company
By:
BOYD RACING, L.L.C., a
Louisiana corporation, its sole member
By: ______________________________
Name: __________________________
Title: ________________________
Form of Guaranty
F-13
BOYD SHREVEPORT, L.L.C., a Louisiana limited liability company
By: BOYD KENNER, INC., a Louisiana
corporation, its sole member
By: ______________________________
Name: __________________________
Title: ________________________
BOYD RED RIVER, L.L.C., a Louisiana limited liability company
By: BOYD GAMING CORPORATION, a
Nevada corporation, its sole member
By: ______________________________
Name: __________________________
Title: ________________________
RED RIVER ENTERTAINMENT OF SHREVEPORT PARTNERSHIP IN COMMENDAM, a Louisiana partnership in
commendam
By: BOYD SHREVEPORT, L.L.C., a Louisiana limited liability, its general partner
By: BOYD KENNER, INC., a Louisiana
corporation, its sole member
By: ______________________________
Name: __________________________
Title: ________________________
COAST CASINOS, INC., a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
Form of Guaranty
F-14
COAST HOTELS AND CASINOS, INC., a Nevada corporation
By: ______________________________
Name: __________________________
Title: ________________________
Form of Guaranty
F-15
AMENDMENT TO GENERAL CONTINUING GUARANTY
This Amendment to General Continuing Guaranty (this "
Amendment
"), dated as of __________,
200_, relates to the General Continuing Guaranty dated as of May 24, 2007 (as amended to date, the "
Guaranty
"),
among the Subsidiaries of Boyd Gaming Corporation parties thereto as Guarantors (collectively the "
Guarantors
") in favor of
the Lenders (as defined in the Credit Agreement (as hereinafter defined)) and Bank of America, N.A. ("
Bank of America
"), as
Administrative Agent (the "
Administrative Agent
").
In compliance with Section 6.13 of the First Amended and Restated Credit Agreement dated as of May 24,
2007 (as amended, supplemented, modified or restated from time to time, the "
Credit Agreement
") among Boyd Gaming
Corporation (the "
Borrower
"), the Administrative Agent, the L/C Issuer, the Swing Line Lender and the Lenders,
____________ (the "
Additional Guarantor
") and the Guarantors hereby agree as follows (capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement):
1.
Amendment
. The Guaranty is hereby amended to add as a party, and more specifically, as a Guarantor,
thereunder, the Additional Guarantor.
2.
Representations and Warranties
. The Additional Guarantor represents and warranties to the
Administrative Agent and the Lenders that each of the representations and warranties of a Guarantor contained in the Guaranty is hereby made
by the Additional Guarantor as of the date hereof and is true and correct as to the Additional Guarantor as of the date hereof.
3.
Additional Guarantor as Guarantor
. The Additional Guarantor assumes all of the obligations and liabilities
of a Guarantor under the Guaranty, agrees to be bound thereby as if the Additional Guarantor were an original party to the Guaranty and shall be
a Guarantor for all purposes under the Loan Documents.
4.
Effectiveness
. The Amendment shall become effective on the date hereof upon the execution hereof by
the Additional Guarantor and the Administrative Agent and delivery hereof to the Administrative Agent.
5.
Governing Law
. This Amendment shall be governed by, and construed in accordance with, the laws of
the State of Nevada, without regard to principles of conflicts of law.
[
Name of Additional Guarantor
]
By: ______________________________
Name: __________________________
Title: ________________________
Notice Address:
Attention: ___________________________
Form of Guaranty
F-16
BANK OF AMERICA, N.A.
, as Administrative Agent
By: ______________________________
Name: __________________________
Title: ________________________
Form of Guaranty
F-17
EXHIBIT G
OPINION MATTERS
The matters contained in the following Sections of the Credit Agreement should be covered by the legal
opinions:
-
Section 5.01(a)
,
(b)
and
(c)
-
Section 5.02
-
Section 5.03
-
Section 5.04
-
Section 5.06
-
Section 5.14(b)
Form of Security Agreement
G-1
EXHIBIT H
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (as amended, supplemented, amended and restated or otherwise modified from time to time, this
"
Pledge Agreement
"), dated as of May 24, 2007, is made by BOYD GAMING CORPORATION, a Nevada corporation
(the "
Borrower
"), each Subsidiary (as defined in the Credit Agreement referred to below) of the Borrower from time to time a
party hereto (together with the Borrower, individually a "
Pledgor
" and collectively, the "
Pledgors
"), in
favor of Bank of America, N.A. ("
Bank of America
"), as the administrative agent (together with any successor thereto in such
capacity, the "
Administrative Agent
") for each of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a First Amended and Restated Credit Agreement, dated as of even date herewith (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "
Credit Agreement
"), among the Borrower, the various
financial institutions (individually, a "
Lender
" and collectively, the "
Lenders
") as are, or may from time to
time become, parties thereto and the Administrative Agent for the Lenders, the Lenders have extended Commitments to make Credit Extensions
to the Borrower;
WHEREAS, as a condition precedent to the making of the Credit Extensions (including the initial Credit Extension) under the Credit
Agreement, the Pledgors are required to execute and deliver this Pledge Agreement;
WHEREAS, each of the Pledgors has duly authorized the execution, delivery and performance of this Pledge Agreement; and
WHEREAS, it is in the best interests of each of the Pledgors to execute this Pledge Agreement inasmuch as each of the Pledgors will derive
substantial direct and indirect benefits from the Credit Extensions made from time to time to the Borrower by the Lenders pursuant to the Credit
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to
induce the Lenders to make Credit Extensions (including the initial Credit Extension) to the Borrower pursuant to the Credit Agreement, and to
induce the Secured Parties to enter into Swap Contracts, the Pledgors agree, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1.
Certain Terms
. The following terms when used in this Pledge Agreement, including its preamble and recitals, shall
have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
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"
Administrative Agent
" is defined in the
preamble
.
"
Bank of America
" is defined in the
preamble
.
"
Borrower
" is defined in the
preamble
.
"
Collateral
" is defined in Section 2.1.
"
Credit Agreement
" is defined in the
first recital
.
"
Distributions
" means all non-cash distributions, non-cash dividends, liquidating dividends or securities resulting from (or
in connection with the exercise of) splits, reclassifications, warrants, options, non-cash dividends, mergers, consolidations, and all other
distributions (whether similar or dissimilar to the foregoing) on or with respect to the Collateral, but shall not include Dividends.
"
Dividends
" means cash dividends and cash distributions with respect to the Collateral made in the ordinary course of
business and not as a liquidating dividend.
"
Issuer
" means the issuer of any of the shares of stock or other securities representing all or any of the Collateral.
"
Lender
" and "
Lenders
" are defined in the
first recital
.
"
Obligations
" means, (a) with respect to the Borrower, (i) all obligations of the Borrower under or in connection with the
Credit Agreement or any other Loan Document (including this Pledge Agreement) and (ii) all obligations of the Borrower to any Lender or an
Affiliate thereof under any Swap Contract permitted under Section 7.03(d) of the Credit Agreement, and (b) with respect to any other Pledgor, all
obligations of such Pledgor under or in connection with the Guaranty, as the same may be amended, modified, extended or renewed from time to
time.
"
Pledge Agreement
" is defined in the
preamble
.
"
Pledgor
" and "
Pledgors
" are defined in the
preamble
.
"
Secured Obligations
" is defined in Section 2.2.
"
Securities Act
" is defined in Section 6.2.
"
Termination of All Future Commitments
" means the occurrence of all of the following: (a) the termination, expiration or
cash collateralization of all Letters of Credit in accordance with the terms of the Credit Agreement, (b) the termination of all Swap Contracts to
which a Secured Party is a party or the consent of each Secured Party that is a counterparty to a Swap Contract that has not been terminated to
the release of the Collateral and (c) the termination of all Commitments.
"
U.C.C
." means the Uniform Commercial Code, as in effect from time to time in the State of Nevada.
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SECTION 1.2.
Credit Agreement Definitions
. Unless otherwise defined herein or the context otherwise requires, terms used in this
Pledge Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3.
U.C.C. Definitions
. Unless otherwise defined herein or in the Credit Agreement or the context otherwise requires,
terms for which meanings are provided in the U.C.C. are used in this Pledge Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
PLEDGE
SECTION 2.1.
Grant of Security Interest
. To secure the due and prompt payment and performance of the Obligations, each
Pledgor hereby pledges, assigns, grants a continuing security interest in and lien on, and delivers to the Administrative Agent for the ratable
benefit of the Secured Parties, all right, title and interest of such Pledgor, whether now existing or hereafter arising, in all of the following:
A. All of the shares of stock and other securities described in Schedule I opposite the name of such Pledgor, all of the
certificates and/or instruments representing such shares of stock and other securities, and all cash, securities, dividends, rights and other
property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares
or other securities;
provided
,
however
, notwithstanding anything to the contrary herein, the Collateral shall not include more
than 65% of the total equity interests of any Foreign Subsidiary;
B. All additional shares of stock of any of the Issuers listed in Schedule I opposite the name of such Pledgor at any
time and from time to time acquired by such Pledgor in any manner, all of the certificates representing such additional shares, and all cash,
securities, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
provided
,
however
, notwithstanding anything to the contrary herein, the Collateral shall
not include more than 65% of the total equity interests of any Foreign Subsidiary;
C. All other property hereafter delivered to the Administrative Agent by such Pledgor in substitution for or in addition
to any of the foregoing, all certificates and instruments representing or evidencing such property, and all cash, securities, interest, dividends,
rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all
thereof; and
D. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "
Collateral
". By its acceptance of the pledges
hereunder, the Administrative Agent acknowledges that for purposes of this Pledge Agreement only, it accepts such pledges, and holds the
Collateral hereunder, for the benefit of all Secured Parties.
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SECTION 2.2.
Security for Obligations
. This Pledge Agreement secures the payment in full in cash of all Obligations of the
Borrower now or hereafter existing, whether for principal, interest, costs, fees, expenses, or otherwise, and all Obligations of the Pledgors
whether now or hereafter existing under the Guaranty, this Pledge Agreement and each other Loan Document to which a Pledgor is or may
become a party (all such obligations of the Borrower and the Pledgors being the "
Secured Obligations
").
SECTION 2.3.
Delivery of Collateral
. All certificates and instruments representing or evidencing the Collateral shall be delivered to
the Administrative Agent for the benefit of the Secured Parties contemporaneously with the execution of this Pledge Agreement, to be held in the
State of Nevada at a location designated to the Nevada State Gaming Control Board and must be made available for inspection by agents or
employees of the Nevada State Gaming Control Board immediately upon request during normal business hours. Subject to compliance with
Gaming Laws, additional Collateral may from time to time be delivered to the Administrative Agent for the benefit of the Secured Parties by
agreement between the Administrative Agent and the Pledgors. All share certificates at any time delivered to the Administrative Agent for the
benefit of the Secured Parties shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to the Administrative Agent. The Administrative Agent shall hold all certificates
pledged hereunder pursuant to this Pledge Agreement unless and until released in accordance with Section 2.5 hereof. If Collateral is in
the possession of a bailee, the Pledgors will join with the Administrative Agent in notifying the bailee of the interest of the Administrative Agent
and in obtaining from the bailee an acknowledgment that it holds the Collateral for the benefit of the Secured Parties.
SECTION 2.4.
Continuing Security Interest; Transfer of Note
. This Pledge Agreement shall create a continuing security interest in
the Collateral and shall
(a) remain in full force and effect until payment in full in cash of all Secured Obligations and the Termination of All Future
Commitments,
(b) be binding upon each Pledgor and its successors, transferees and assigns, and
(c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and each
other Secured Party.
Subject to applicable Gaming Laws and without limiting the foregoing
clause (c)
, any Lender may assign or
otherwise transfer (in whole or in part) any Loan held by it to any other Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to such Lender under any Loan Document (including this Pledge Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or transfer, and to the provisions of Section 10.07 and Article IX
of the Credit Agreement. Upon the payment in full in cash of all Secured Obligations and the Termination of All Future Commitments, the security
interests granted herein shall automatically terminate with respect to all Collateral. Upon any such sale, transfer, disposition or termination, the
Administrative Agent will, at the Pledgor's sole expense, deliver to each Pledgor, without any
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representations, warranties or recourse of any kind
whatsoever (other than the representation that all of the Collateral being delivered by the Administrative Agent is free and clear of any Lien
created by the Administrative Agent), all certificates and instruments representing or evidencing all Collateral (including all instruments of transfer
relating thereto) owned by such Pledgor, and execute and deliver to each Pledgor such documents as such Pledgor shall reasonably request to
evidence such termination. Notwithstanding anything to the contrary herein, the Administrative Agent shall not surrender possession of any
Collateral to any party other than the applicable Pledgor without the prior approval of the applicable Gaming Board or as otherwise permitted by
applicable Gaming Laws.
SECTION 2.5.
Security Interest Absolute
. Subject in each case to compliance by the Administrative Agent with all applicable
Gaming Laws, all rights of the Administrative Agent and the security interests granted to the Administrative Agent hereunder, and all obligations
of the Pledgors hereunder, shall be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement, any Note or any other Loan Document,
(b) the failure of any Secured Party
(i) to assert any claim or demand or to enforce any right or remedy against the Borrower, any other Obligor or any
other Person under the provisions of the Credit Agreement, any Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured
Obligations,
(c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Secured Obligation,
(d) any reduction, limitation, impairment or termination of any Secured Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and the Pledgors hereby waive any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise,
(e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document,
(f) any addition, exchange, release, surrender or non-perfection of any collateral (including the Collateral), or any amendment to or waiver
or release of or addition to or consent to departure from any guaranty, for any of the Secured Obligations, or
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(g) any other circumstances which might otherwise constitute a defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.6.
Postponement of Subrogation, etc.
No Pledgor will exercise any rights which it may acquire by reason of any
payment made hereunder, whether by way of subrogation, reimbursement or otherwise, until the prior payment, in full and in cash, of all Secured
Obligations and the Termination of All Future Commitments. Any amount paid to a Pledgor on account of any payment made hereunder prior to
the payment in full of all Secured Obligations shall be held in trust for the benefit of the Secured Parties and shall immediately be paid to the
Secured Parties and credited and applied against the Secured Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement;
provided
,
however
, that if
(a) a Pledgor has made payment to the Secured Parties of all or any part of the Secured Obligations, and
(b) all Secured Obligations have been paid in full, all Letters of Credit have been terminated or expired, all Swap Contracts with any
Secured Party have been terminated and all Commitments have been permanently terminated,
each Secured Party agrees that, at such Pledgor's request, the Secured Parties will execute and deliver to such Pledgor
appropriate documents (without recourse and without representation or warranty (other than the representation that the interest in the Secured
Obligations being transferred by subrogation is free and clear of any Lien created by such Secured Party)) necessary to evidence the transfer by
subrogation to such Pledgor of an interest in the Secured Obligations resulting from such payment by such Pledgor. In furtherance of the
foregoing, for so long as any Secured Obligations, Letters of Credit or Commitments remain outstanding or any Swap Contract with any Secured
Party remains in full force and effect, the Pledgors shall refrain from taking any action or commencing any proceeding against the Borrower or
any other Obligor (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in
respect of payments made under this Pledge Agreement to any Secured Party.
SECTION 2.7.
Waivers
.
(a) Each Pledgor hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or other financial accommodations
made or extended under the Credit Agreement, or the creation or existence of any Obligations; (iii) notice of the amount of the Obligations;
(iv) notice of any adverse change in the financial condition of the Borrower or of any other fact that might increase such Pledgor's risk
hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to the Notes or any other instrument;
(vi) notice of any Default or Event of Default under the Credit Agreement; and (vii) all other notices (except if such notice is
specifically required to be given to a Pledgor under this Pledge Agreement or any other Loan Document) and demands to which such Pledgor
might otherwise be entitled.
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(b) To the fullest extent permitted by applicable law, each Pledgor waives the right by statute or otherwise to require the Administrative
Agent to institute suit against the Borrower or to exhaust any rights and remedies which the Administrative Agent has or may have against the
Borrower. In this regard, each Pledgor agrees that it is bound to the payment of each and all Obligations, whether now existing or hereafter
accruing, as fully as if such Obligations were directly owing to the Administrative Agent by such Pledgor. Each Pledgor further waives any
defense arising by reason of any disability or other defense (other than the defense that the Obligations shall have been fully and finally
performed and indefeasibly paid) of the Borrower or by reason of the cessation from any cause whatsoever of the liability of the Borrower in
respect thereof.
(c) To the maximum extent permitted by law, each Pledgor hereby waives: (i) any rights to assert against the Administrative Agent
any defense (legal or equitable), set-off, counterclaim, or claim which such Pledgor may now or at any time hereafter have against the Borrower
or any other party liable to the Administrative Agent; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or
indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor;
(iii) any defense arising by reason of any claim or defense based upon an election of remedies by the Administrative Agent; and
(iv) to the fullest extent permitted by law, any defense or benefit that may be derived from or afforded by law which limits the liability of or
exonerates guaranties or sureties or requires the Administrative Agent to exhaust remedies against the Borrower prior to commencing any action
or foreclosure against the Collateral.
(d) Each Pledgor agrees that if all or a portion of the Obligations or this Pledge Agreement is at any time secured by a deed of trust or
mortgage covering interests in real property, the Administrative Agent, in its discretion, without notice or demand and without affecting the liability
of any Pledgor under this Pledge Agreement, may foreclose pursuant to the terms of the Credit Agreement or otherwise the deed of trust or
mortgage and the interests in real property secured thereby by non-judicial sale. Each Pledgor understands that the exercise by the
Administrative Agent of certain rights and remedies contained in the Credit Agreement and any such deed of trust or mortgage may affect or
eliminate such Pledgor's right of subrogation against the Borrower and that such Pledgor may therefore incur a partially or totally non-
reimbursable liability hereunder. Nevertheless, each Pledgor hereby authorizes and empowers the Administrative Agent to exercise, in its
discretion, any rights and remedies, or any combination thereof, which may then be available, since it is the intent and purpose of each Pledgor
that the obligations hereunder shall be absolute, independent and unconditional under any and all circumstances. Notwithstanding any
foreclosure of the lien of any deed of trust or security agreement with respect to any or all of any real or personal property secured thereby,
whether by the exercise of the power of sale contained therein, by an action for judicial foreclosure or by an acceptance of a deed in lieu of
foreclosure, each Pledgor shall remain bound under this Pledge Agreement.
(e) (1) Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan Document, until full and final
payment of the Obligations, each Pledgor hereby waives with respect to the Borrower and its respective successors
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and assigns (including any
surety) and any other party any and all rights at law or in equity, to subrogation, to reimbursement, to exoneration, to contribution, to setoff or to
any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against
the party accommodated, or to a holder or transferee against a maker and which such Pledgor may have or hereafter acquire against the
Borrower or any other party in connection with or as a result of the Borrower's execution, delivery and/or performance of the Credit Agreement or
any other Loan Document. Each Pledgor agrees that it shall not have or assert any such rights against the Borrower or the Borrower's
successors and assigns or any other Person (including any surety), either directly or as an attempted setoff to any action commenced against
such Pledgor by the Borrower (as borrower or in any other capacity) or any other Person until all Obligations have been fully and finally repaid to
the Administrative Agent. Each Pledgor hereby acknowledges and agrees that this waiver is intended to benefit the Administrative Agent and
shall not limit or otherwise affect any of the Borrower's liability hereunder, under any other Loan Document to which the Borrower is a party, or
the enforceability hereof or thereof.
(2) To the extent any waiver of subrogation contained in subparagraph (e)(1) is unenforceable, each Pledgor shall,
until the Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have expired or been
terminated or canceled, withhold exercise of (a) any claim, right or remedy, direct or indirect, that such Pledgor now has or may hereafter have
against the Borrower or any of its assets in connection with this Pledge Agreement or the performance by such Pledgor of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and
including without limitation (i) any right of subrogation, reimbursement or indemnification that such Pledgor now has or may hereafter have
against the Borrower, (ii) any right to enforce, or to participate in, any claim, right or remedy that the Administrative Agent or the Lenders now has
or may hereafter have against the Borrower, and (iii) any benefit of, and any right to participate in, any collateral or security now or hereafter held
by the Administrative Agent, and (b) any right of contribution such Pledgor may have against any Guarantor. Each Pledgor further agrees that, to
the extent the agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein
is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification
such Pledgor may have against the Borrower or against any collateral or security, and any rights of contribution such Pledgor may have against
any Guarantor, shall be junior and subordinate to any rights the Administrative Agent or Lenders may have against the Borrower, to all right, title
and interest the Administrative Agent may have in any such collateral or security, and to any right the Administrative Agent may have against
such Guarantor. The Administrative Agent, on behalf of Lenders, may use, sell or dispose of any item of collateral or security as it sees fit without
regard to any subrogation rights any Pledgor may have, and upon any such disposition or sale any rights of subrogation the Pledgors may have
shall terminate. If any amount shall be paid to any Pledgor on account of any such subrogation, reimbursement or indemnification rights at any
time when all Obligations shall not have been paid in full, such amount shall be held in trust for the Administrative Agent on
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behalf of the Lenders and shall forthwith be paid over to the Administrative Agent for the benefit of the Lenders to be credited and applied against the Obligations,
whether matured or unmatured, in accordance with the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Administrative Agent to enter into the Credit Agreement and to make Credit Extensions thereunder,
each Pledgor represents and warrants unto the Administrative Agent and each Lender as set forth in this
Article III
.
SECTION 3.1.
Organization, etc.
Such Pledgor is validly organized and existing and in good standing under the laws of the state or
jurisdiction of its organization, is duly qualified to do business and is in good standing in each jurisdiction where the nature of its business requires
such qualification and where failure to do so would have a Material Adverse Effect; and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its obligations under this Pledge Agreement and each of the other
Loan Documents to which it is a party and to own, hold and, if applicable, lease its property and to conduct its business substantially as currently
conducted by it the absence of which would have a Material Adverse Effect.
SECTION 3.2.
Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by such Pledgor of this
Pledge Agreement and each of the other Loan Documents to which it is a Party, are in each case within its powers, have been duly authorized by
all necessary action, and do not
(a) contravene any of such Pledgor's Organization Documents;
(b) contravene any contractual restriction binding on or affecting such Pledgor which contravention would have a Material Adverse
Effect;
(c) except where such contravention is not reasonably expected to have a Material Adverse Effect, contravene (i) any court decree
or order binding on or affecting any such Person or (ii) any Law binding on or affecting such Pledgor; or
(d) except where such Lien is not reasonably expected to have a Material Adverse Effect, result in, or require the creation or imposition
of, any Lien on any of such Pledgor's properties (except as contemplated by this Pledge Agreement).
SECTION 3.3.
Government Approval, Regulation, etc.
Except as required by Gaming Law, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or regulatory body (other than those that have been, or on the Effective Date
will be, duly obtained or made and which are, or on the Effective Date will be, in full force and effect) is required for the due execution, delivery or
performance by such Pledgor of this Pledge Agreement.
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SECTION 3.4.
Validity, etc.
This Pledge Agreement will, upon the due execution and delivery hereof, constitute, the legal, valid
and binding obligation of such Pledgor, enforceable against such Pledgor in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and by principles of equity).
SECTION 3.5.
Ownership, No Liens, etc.
Such Pledgor is the legal and beneficial owner of, and has good and marketable title to
(and has full right and authority to pledge and assign) the Collateral identified on Schedule 1, free and clear of all liens, security interests, options,
or other charges or encumbrances, except Liens permitted by the Credit Agreement that are not for borrowed money.
SECTION 3.6.
Valid Security Interest.
Upon the filing of the UCC-1 financing statements in the locations specified in Schedule 2
listing the Administrative Agent as the secured party, the applicable Pledgor as debtor and describing the Collateral, the Administrative Agent will
have a valid, perfected, first priority security interest in the Collateral and all proceeds thereof securing the Secured Obligations. Other than such
filing, no other action will be necessary to perfect such security interest.
SECTION 3.7.
Authorization, Approval, etc.
No authorization, approval, or other action by, and no notice to or filing with, any
governmental authority, regulatory body or any other Person is required
(a) for the pledge by such Pledgor of any Collateral pursuant to this Pledge Agreement or for the execution, delivery, and performance of
this Pledge Agreement by such Pledgor, except for such authorizations, approvals, actions, notices and filings as have been obtained, taken or
made,
(b) for the exercise by the Administrative Agent of the voting or other rights provided for in this Pledge Agreement except as may be
required by Gaming Laws, or
(c) for the disposition of Collateral and exercise of other remedies under this Pledge Agreement, except as may be required by Gaming
Laws and by laws affecting the offering and sale of securities generally.
ARTICLE IV
COVENANTS
SECTION 4.1.
Affirmative Covenants
. Each Pledgor agrees with the Administrative Agent and each Lender that until all
Obligations have been indefeasibly paid and performed in full, in cash and the Termination of All Future Commitments, such Pledgor will perform
or cause to be performed the obligations set forth in this Section 4.1.
SECTION 4.1.1.
Protect Collateral; Further Assurances, etc.
Such Pledgor agrees and covenants that, except as permitted by
the Credit Agreement, it will not sell, assign, transfer, pledge, or encumber in any other manner the Collateral (except in favor of the
Administrative Agent hereunder). Such Pledgor will warrant and defend the right and title herein granted unto
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the Administrative Agent in and to
the Collateral (and all right, title, and interest represented by the Collateral) against the claims and demands of all other Persons whomsoever.
Such Pledgor agrees that at any time, and from time to time, at the expense of such Pledgor, such Pledgor will promptly execute and deliver all
further instruments, and take all further action, that may be necessary or desirable, or that the Administrative Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Administrative Agent to exercise and
enforce its rights and remedies hereunder in accordance with the terms hereof, with respect to any Collateral. Without limitation of the foregoing,
each Pledgor agrees to assist the Administrative Agent in obtaining all approvals of any Gaming Board or other Governmental Authority that are
required by Law for or in connection with any action or transaction contemplated by this Pledge Agreement and, at the Administrative Agent's
request after and during the continuance of an Event of Default, to prepare, sign and file with the appropriate Gaming Board the transferor's
portion of any application or applications for consent to the transfer of control thereof necessary or appropriate under applicable Gaming Laws for
approval of any sale or transfer of the Collateral pursuant to the exercise of the Administrative Agent's remedies hereunder and under the Loan
Documents.
SECTION 4.1.2.
Continuous Pledge
. Such Pledgor will, at all times, keep pledged to the Administrative Agent pursuant hereto
all Collateral owned by it, all Dividends (other than dividends permitted to be paid pursuant to Section 2.4) and Distributions with respect thereto
and all other Collateral and other securities, instruments, proceeds, and rights from time to time received by or distributable to such Pledgor in
respect of any Collateral and will not permit any Issuer to issue new interests which shall not have been immediately duly pledged hereunder on a
first priority perfected basis.
SECTION 4.1.3.
Voting Rights and Distributions
. Unless and until an Event of Default shall have occurred and be continuing,
such Pledgor shall be entitled (i) to receive and apply for its own account distributions or other amounts paid on account of the Collateral and (ii)
to vote its Collateral and to otherwise exercise its ownership right pursuant to the applicable Organization Documents;
provided
,
however
, that no vote shall be cast or action taken which would be inconsistent with or violate any provision of the Credit Agreement, or
this Pledge Agreement.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1.
Administrative Agent Appointed Attorney-in-Fact
. Each Pledgor hereby irrevocably appoints the Administrative
Agent as such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time in the Administrative Agent's discretion, after the occurrence and during the continuance of an Event of Default, to take any
action and to execute any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes of this
Pledge Agreement, including, without limitation,
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(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any proceedings which the Administrative Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the
Collateral.
Each Pledgor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is
irrevocable and coupled with an interest.
SECTION 5.2.
Administrative Agent May Perform
. If any Pledgor fails to perform any agreement contained herein, the
Administrative Agent may itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall be payable by such Pledgor pursuant to Section 6.5.
SECTION 5.3.
Administrative Agent Has No Duty
. The powers conferred on the Administrative Agent hereunder are solely to
protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for
reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent
shall have no duty as to any Collateral or responsibility for
(a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
SECTION 5.4.
Reasonable Care
. The Administrative Agent is required to exercise reasonable care in the custody and preservation
of any of the Collateral in its possession; provided, however, the Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any of the Collateral, if it takes such action for that purpose as any Pledgor reasonably requests in writing at times
other than upon the occurrence and during the continuance of any Event of Default, but failure of the Administrative Agent to comply with any
such request at any time shall not in itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1.
Certain Remedies
. Subject to applicable Gaming Laws, if an Event of Default shall have occurred and be
continuing:
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(a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on default under the U.C.C. (whether or not the U.C.C. applies to the
affected Collateral) and also may, without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Administrative Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as
the Administrative Agent may deem commercially reasonable. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' prior notice to such Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security interest hereunder,
(ii) notify the parties obligated on any of the Collateral to make payment to the Administrative Agent of any amount
due or to become due thereunder,
(iii) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any
party with respect thereto,
(iv) endorse any checks, drafts, or other writings in any Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of any Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of the Collateral.
The Administrative Agent acknowledges and agrees that the prior approval of the Nevada Gaming Commission must be
obtained before any foreclosure or transfer (except back to the applicable Pledgor) of the possessory security interest in Collateral consisting of
equity securities of a Person licensed by the Nevada Gaming Commission and before any other resort to such equity securities or other
enforcement of the security interest in such equity securities may occur.
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SECTION 6.2.
Securities Laws
. If the Administrative Agent shall determine to exercise its right to sell all or any of the Collateral
pursuant to Section 6.1, each Pledgor agrees that, upon request of the Administrative Agent, such Pledgor will, at its own
expense:
(a) execute and deliver, and cause its Subsidiaries and their directors and officers thereof to execute and deliver, all such instruments
and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Administrative Agent,
advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the "
Securities
Act
"), and to cause the registration statement relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in
the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by the Administrative Agent;
(c) cause each such issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
SECTION 6.3.
Compliance with Restrictions; Compliance with Gaming Laws
. Each Pledgor agrees that in any sale of any of the
Collateral whenever an Event of Default shall have occurred and be continuing, the Administrative Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to persons who will represent and agree
that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to
obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and such Pledgor further agrees
that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor
shall the Administrative Agent be liable nor accountable to such Pledgor for any discount allowed by the reason of the fact that such Collateral is
sold in compliance with any such limitation or restriction. Notwithstanding any other provisions of this Pledge Agreement, the Administrative
Agent shall not foreclose on, sell, transfer or otherwise dispose of or exercise any right to vote or consent with respect to any of the Collateral or
take any other action that would affect the operational, voting or other control of the Collateral, unless such action is taken in accordance with all
applicable Gaming Laws.
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SECTION 6.4.
Application of Proceeds
. All cash proceeds, together with liquidated damages paid pursuant to Section 6.2, if
any, received by the Administrative Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral may,
in the discretion of the Administrative Agent, be held by the Administrative Agent as additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Administrative Agent pursuant to Section 9.07 of the Credit Agreement
and Section 6.5) in whole or in part by the Administrative Agent against, all or any part of the Secured Obligations in accordance with the
provisions of the Credit Agreement.
Any surplus of such cash or cash proceeds held by the Administrative Agent and remaining after payment in full in cash of all the Secured
Obligations and the Termination of All Future Commitments, shall be paid over to the Borrower, or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 6.5.
Indemnity and Expenses
. Each Pledgor hereby agrees to indemnify and hold harmless the Administrative Agent
from and against any and all claims, losses, and liabilities arising out of or resulting from this Pledge Agreement (including enforcement of this
Pledge Agreement), except claims, losses, or liabilities resulting from any Secured Party's gross negligence or wilful misconduct. Upon demand,
the Pledgors will pay to the Administrative Agent the amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Administrative Agent may incur in connection with:
(a) the administration of this Pledge Agreement;
(b) the custody, preservation, use, or operation of, or the sale of, collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the Administrative Agent hereunder; or
(d) the failure by such Pledgor to perform or observe any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1.
Loan Document
. This Pledge 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.
SECTION 7.2.
Amendments, etc.
No amendment to or waiver of any provision of this Pledge Agreement nor consent to any
departure by the Pledgor herefrom shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (on
behalf of the Lenders or the Required Lenders, as the case may be), and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given; provided, however, that any amendment to this Agreement that is in substantially the
same form
Form of Pledge Agreement
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as Exhibit A hereto shall be effective when signed by only the Administrative Agent and the Additional Grantor (as defined therein).
SECTION 7.3.
Protection of Collateral
. The Administrative Agent may from time to time, at its option, perform any act which the
Pledgors agree hereunder to perform and which any Pledgor shall fail to perform after being requested in writing so to perform (it being
understood that no such request need be given after the occurrence and during the continuance of an Event of Default) and the Administrative
Agent may from time to time take any other action which the Administrative Agent reasonably deems necessary for the maintenance,
preservation or protection of any of the Collateral or of its security interest therein.
SECTION 7.4.
Addresses for Notices
. All notices and other communications provided for hereunder shall be in writing (including
telegraphic communication) and, if to a Pledgor, mailed or telecopied or delivered to it, addressed to it at the address of such Pledgor specified in
Item B of Attachment I hereto, if to the Administrative Agent, mailed or telecopied or delivered to it, addressed to it at the address of the
Administrative Agent specified in the Credit Agreement. All such notices and communications shall be deemed to have been properly given (i) if
hand delivered with receipt acknowledged by the recipient, upon receipt; (ii) 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 (iii) 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's machine with the 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 Section shall not invalidate the effectiveness of such facsimile notice.
SECTION 7.5.
Section Captions
. Section captions used in this Pledge Agreement are for convenience of reference only, and shall
not affect the construction of this Pledge Agreement.
SECTION 7.6.
Severability
. Wherever possible each provision of this Pledge Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Pledge 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 Pledge Agreement.
SECTION 7.7.
Counterparts
. This Pledge Agreement may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but one and the same agreement.
SECTION 7.8.
Regulatory Matters
. The Administrative Agent, on behalf of the Secured Parties, acknowledges and agrees that:
Form of Pledge Agreement
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(a) In the event that the Administrative Agent exercises one or more of the remedies set forth in Article IV of this Pledge Agreement,
including but not limited to reregistration of the Collateral pursuant to applicable Gaming Laws, such exercise of remedies would be deemed a
separate transfer of the Collateral and would require the separate and prior approval of the applicable Gaming Board pursuant to applicable
Gaming Laws as in effect on the date hereof.
(b) The approval by the applicable Gaming Boards of this Pledge Agreement shall not act or be construed as the approval, either express
or implied, for the Administrative Agent to take actions or steps provided for in this Pledge Agreement for which prior approval of any Gaming
Board is required, without first obtaining such prior and separate approval of such Gaming Board to the extent then required by applicable Law.
SECTION 7.9.
Integration
. This Pledge Agreement, together with the other Loan Documents, comprises the complete and
integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject
matter. In the event of any conflict between the provisions of this Pledge Agreement and those of the Credit Agreement, the provisions of the
Credit Agreement shall control;
provided
that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in this Pledge Agreement shall not be deemed a conflict with the Credit Agreement.
SECTION 7.10.
Governing Law
. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
the LAW OF THE STATE OF NEVADA applicable to agreements made and to be performed entirely within such State;
PROVIDED
THAT THE ADMINISTRATIVE Agent AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
SECTION 7.11.
Waiver of Jury Trial
. EACH PARTY TO THIS PLEDGE AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS PLEDGE AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the day and year first above written.
BOYD GAMING CORPORATION,
a Nevada corporation
By: _____________________________
Name: Paul J. Chakmak
Title: Executive Vice President, Treasurer and
Chief Financial Officer
CALIFORNIA HOTEL AND CASINO,
a Nevada corporation
By: _____________________________
Name: Paul J. Chakmak
Title: Executive Vice President and
Chief Financial Officer
COAST CASINOS, INC.,
a Nevada corporation
By: _____________________________
Name: Paul J. Chakmak
Title: Executive Vice President and
Chief Financial Officer
BOYD LOUISIANA, L.L.C.,
a Nevada limited liability company
By: _____________________________
Name: Paul J. Chakmak
Title: Authorized Signer
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BOYD KENNER, INC.,
a Louisiana corporation
By: _____________________________
Name: Paul J. Chakmak
Title: Executive Vice President and
Chief Financial Officer
BOYD SHREVEPORT, L.L.C.,
a Louisiana limited liability company
By: BOYD KENNER, INC., a Louisiana corporation, its sole member
By: _____________________________
Name: Paul J. Chakmak
Title: Executive Vice President and Chief Financial Officer
BOYD RED RIVER, L.L.C.,
a Louisiana limited liability company
By: BOYD GAMING CORPORATION, a Nevada corporation, its sole member
By: _____________________________
Name: Paul J. Chakmak
Title: Executive Vice President and Chief Financial Officer
BANK OF AMERICA, N.A., as Administrative Agent
By: _____________________________
Name: __________________________
Title: ___________________________
Form of Pledge Agreement
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EXHIBIT A
AMENDMENT NO. __ TO PLEDGE AGREEMENT
This Amendment No. __ to Pledge Agreement (this "
Amendment
"),
dated as of __________, 20__, relates to the Security Agreement dated as of
May 24, 2007 (as amended to
date, the "
Agreement
") executed by Boyd Gaming Corporation (the "
Borrower
") and the Subsidiaries of
the Borrower parties thereto as Pledgors (collectively, the "
Pledgors
") in favor of Bank of America, N.A. (the
"
Administrative Agent
"), as agent for the benefit of the Administrative Agent and the Secured Parties (as defined in the Credit
Agreement as hereinafter defined).
In compliance with Section 6.13 of the Credit Agreement dated as of May 24,
2007 (as amended
, modified, supplemented or restated
from time to time, the "
Credit
Agreement
") among the Borrower, the Administrative Agent and the Lenders, [and in conjunction with the execution by the parties
hereto of the Amendment to Guaranty dated of even date herewith,] _________________ (the "
Additional Pledgor
") and the
Administrative Agent hereby agree as follows (capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them
in the Credit Agreement):
1.
Amendment
. The Agreement is hereby amended to add as a party, and
more specifically, as a Pledgor, thereunder, the Additional Pledgor.
2.
Representations and Warranties
. The Additional Pledgor represents and
warrants to the Administrative Agent and the Lenders that each of the representations and warranties of a Pledgor contained in the Agreement
(a) is hereby made by the Additional Pledgor as of the date hereof except to the extent such representations and warranties relate to an earlier
date, and (b) is true and correct as to the Additional Pledgor as of the date hereof except to the extent such representations and warranties relate
to an earlier date. Attached hereto are all appropriate Schedules to the Agreement reflecting information relating to the Additional Pledgor.
3.
Grant of Security Interest
. The Additional Pledgor, to secure the complete
and timely payment, observance and performance of all of its Obligations at any time arising under or in connection with the Guaranty, the
Agreement and each other Loan Document to which it is a party, hereby assigns and pledges to the Administrative Agent, and hereby grants to
the Administrative Agent for its benefit and the benefit of the Lenders, a
security interest and lien under the
Agreement, in all of the Additional Pledgor's right, title and interest in and to the Collateral (as defined in the Agreement), subject to Permitted
Liens, whether now owned or existing or hereafter arising or acquired and wheresoever located together in each instance, with all accessions and
additions thereto, substitutions therefor, and replacements, proceeds and products thereof.
4.
Assumption of Rights, Obligations and Liabilities
. The Additional Pledgor
assumes all of the rights, obligations and liabilities of a Pledgor under the Agreement and agrees to be bound thereby as if the Additional Pledgor
were an original party to the Agreement.
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5.
Effectiveness
. This Amendment shall become effective on the date hereof
upon the execution hereof by the Additional Pledgor and the Administrative Agent and delivery hereof to the Administrative Agent.
6.
Governing Law
. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Nevada, without regard to principles of conflicts of laws.
By:
Title:
Notice Address:
Attention:
BANK OF AMERICA, N.A., as Administrative Agent
By:
Title:
Form of Pledge Agreement
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SCHEDULE 1
|
Pledgor
|
Issuer
|
Certificate No.
|
No. of Shares
|
|
Boyd Gaming Corporation
|
California Hotel and Casino, a Nevada corporation
|
164
|
1,000
|
|
Coast Casinos, Inc., a Nevada corporation
|
1
|
1,000
|
|
Boyd Louisiana L.L.C., a Nevada limited liability company
|
1
|
99.0%
|
|
Par-A-Dice Gaming Corporation, an Illinois corporation
|
38
|
9,308,535
|
|
Boyd Tunica, Inc., a Mississippi corporation
|
2
|
5,000
|
|
Blue Chip Casino, LLC, an Indiana limited liability company
|
3
|
100 Units
|
|
Boyd Kenner, Inc., a Louisiana corporation
|
1
|
1,000
|
|
Boyd Louisiana Racing, Inc., a Louisiana corporation
|
1
|
1,000
|
|
Boyd Red River, L.L.C., a Louisiana limited liability company
|
1
|
100 Units
|
|
California Hotel and Casino, a Nevada corporation
|
Echelon Resorts LLC, a Nevada limited liability company
|
1
|
100%
|
|
M.S.W., Inc., a Nevada corporation
|
1
|
1,000
|
|
Sam-Will, Inc., a Nevada corporation
|
1
|
2,500
|
|
California Hotel Finance Corporation, a Nevada corporation
|
1
|
2,500
|
|
Coast Casinos, Inc., a Nevada corporation
|
Coast Hotels and Casinos, Inc., a Nevada corporation
|
3
|
1,000
|
|
Boyd Louisiana L.L.C., a Nevada limited liability company
|
Treasure Chest Casino, L.L.C., a Louisiana limited liability company
|
18
|
8,500 (85%)
|
|
Boyd Kenner, Inc., a Louisiana corporation
|
Boyd Shreveport, L.L.C., a Louisiana limited liability company
|
1
|
100 Units
|
|
|
Boyd Louisiana L.L.C., a Nevada limited liability company
|
2
|
1.0%
|
|
Treasure Chest Casino, L.L.C., a Louisiana limited liability company
|
3
|
1,500 (15%)
|
Schedule 1
H-22
|
Boyd Shreveport, L.L.C., a Louisiana limited liability company
|
Red River Entertainment of Shreveport Partnership in Commendam, a Louisiana partnership in commendam
|
1
|
99%
|
|
Boyd Red River, L.L.C., a Louisiana limited liability company
|
Red River Entertainment of Shreveport Partnership in Commendam, a Louisiana partnership in commendam
|
3
|
1.0%
|
|
Boyd Louisiana Racing, Inc., a Louisiana corporation
|
Boyd Racing, L.L.C., a Louisiana limited liability company
|
1
|
100 Units
|
Schedule 1
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SCHEDULE 2
To Pledge Agreement
Financing Statement Filing Locations
Secretary of State of Nevada
Boyd Gaming Corporation
California Hotel and Casino
Coast Casinos, Inc.
Boyd Louisiana L.L.C.
Secretary of State of Louisiana
Boyd Kenner, Inc.
Boyd Shreveport, L.L.C.
Boyd Red River, L.L.C.
Boyd Louisiana Racing, Inc.
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