Exhibit 10.16
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
MANAGER SUBORDINATION AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of October 29, 1998,
between XXXXXX'X NEW ORLEANS MANAGEMENT COMPANY, a Nevada corporation (the
"Manager"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION., in its capacity
as Trustee (the "Trustee") under the Indentures (as defined below). Except as
otherwise defined herein, terms used herein and defined in the Indentures
referred to below are used herein as so defined.
RECITALS
X. Xxxxxx'x Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted and the Bankruptcy Court has confirmed a
plan of reorganization (the "Plan") in connection with that certain voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code.
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, a Delaware corporation ("JCC Holding"), JCC
Development, L.L.C., CP Development, L.L.C., FP Development, L.L.C. and the
Trustee, as trustee, have entered into (i) that certain indenture, pursuant to
which the Company has issued $187,500,000 principal amount of its Senior
Subordinated Notes due 2009 with Contingent Payments (as may be amended,
modified, extended, renewed, restated, supplemented or refinanced from time to
time, the "New Bonds"), and (ii) that certain indenture (and together with the
indenture for the New Bonds, as each may be modified from time to time, the
"Indentures") pursuant to which the Company has issued its Senior Subordinated
Contingent Notes due 2009 (as may be amended, modified, extended, renewed,
restated, supplemented or refinanced from time to time, the "New Contingent
Bonds" and, together with the New Bonds, the "Senior Subordinated Notes" and,
together with the Indentures, the Collateral Documents (as defined in the
Indentures) and all other documents and agreements relating thereto, being
hereinafter called the "Senior Subordinated Notes Documents").
E. Contemporaneously herewith, the Company, JCC Holding
Company, a Delaware corporation, as guarantor, the lenders (the "Lenders") from
time to time party thereto, and Bankers Trust Company, as Administrative Agent
(together with any successor agent, the "Administrative Agent"), have entered
into that certain Credit Agreement (the "Credit Agreement") pursuant to the Plan
providing for senior secured term loans in the amount of Sixty
Million Dollars ($60,000,000), secured term loans in the amount of One Hundred
Fifty-One Million Five Hundred Thousand Dollars ($151,500,000), and a revolving
loan facility including Swingline Loans and Letters of Credit (each as defined
in the Credit Agreement) drawn under such revolving loan facility in an amount
not to exceed Twenty Five Million Dollars ($25,000,000) at any time outstanding.
F. As security, inter alia, for the full and prompt payment
when due (whether at the stated maturity, by acceleration, or otherwise) of (a)
the principal of, and premium, if any, and interest (including Contingent
Payments) on the New Bonds and the Contingent Payments due and payable in
accordance with the terms of the New Contingent Bonds and (b) all other
Obligations of the Company under the Indentures to the Holders of the New Bonds
and Holders of the New Contingent Bonds (each as defined in the Indentures) of
the Senior Subordinated Notes (collectively, the "Senior Subordinated
Noteholders") and/or to the Trustee or the Collateral Agent (the "Collateral
Agent" and, together with the Senior Subordinated Noteholders and the Trustee,
the "Senior Subordinated Notes Creditors") under the Intercreditor Agreement (as
defined in the Indentures), whether now existing or hereafter arising (all such
obligations and liabilities set forth in clauses (a) and (b) above being herein
collectively called the "Senior Subordinated Notes Obligations"), the Company is
pledging, delivering, and granting certain security interests to the Collateral
Agent.
G. The Collateral Agent is the holder of those certain Shared
Security Documents (as defined in that certain Intercreditor Agreement among
HET, HOCI, Bankers Trust Company, Norwest Bank Minnesota, National Association,
as trustee, and the other parties named therein (the "Intercreditor
Agreement")), which encumber, among other properties, the Company's leasehold
estate in the Casino and which is to be recorded in the Office of the Recorder
of Mortgages for Orleans Parish, Louisiana.
H. The Manager and the Company have entered into that certain
Second Amended and Restated Management Agreement pursuant to the Plan, (as
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, the "Management Agreement") with the Company, pursuant to which
the Manager will manage the Casino.
I. Pursuant to the Security Agreement entered into pursuant to
the Credit Agreement and the Indentures (the "Security Agreement"), the Company
has pledged and assigned to the Collateral Agent all of the Company's right,
title, and interest in, to, and under the Management Agreement.
J. The Indentures provides that the Company may enter into the
Management Agreement and, subject to certain restrictions set forth in the
Indentures and referred to below, may pay certain amounts payable to the Manager
under the Management Agreement so long as this Agreement has been executed and
delivered by the parties hereto (with all Management Fees, interest,
indemnities, other amounts, claims, demands, liabilities, causes of action and
other obligations owing or arising under, or with respect to, the Management
Agreement or otherwise arising or owing by the Company to the Manager, being
herein called the "Subordinated Obligations," including, without limitation, the
Base Fee, the Incentive Fee
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and the Termination Fee (each as defined in the Management Agreement), together
with the right to receive or collect, to the extent provided in the Management
Agreement and permitted by the Indentures and the Credit Agreement, any or all
(i) proceeds of condemnation awards, (ii) compensation for revocation of the
Casino Operating Contract, (iii) proceeds of the Company's title insurance,
property or hazard insurance, or other insurance proceeds, (iv) proceeds of the
Company's assets, (v) damages or compensation, however described, paid by the
State of Louisiana, the Louisiana Gaming Control Board (the "LGCB"), or any
other government entity in connection with prohibition of use for gaming
purposes of the Casino, and (vi) any and all other payments and proceeds,
whether the same are denominated under the Management Agreement as part of the
Termination Fee or otherwise; provided, however, that Subordinated Obligations
shall not include System Fees, Travel Fees and Accounting Fees (each as defined
in the Management Agreement), tax, insurance and other fees as described in
Article 9.03 of the Management Agreement, and other similar fees and
reimbursable expenses of the Manager, in each case to the extent that the
foregoing fees and expenses do not constitute compensation to the Manager for
managing the Casino (the "Unsubordinated Obligations").
K. The Trustee has requested that the Manager grant to the
Trustee and the Collateral Agent, their nominees, successors and assigns,
certain rights under the Management Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. COLLATERAL DOCUMENTS
1.1 Consent to Assignment. The Company hereby notifies the
Manager of, and the Manager hereby acknowledges and consents to, the pledge and
assignment by the Company to the Collateral Agent pursuant to the Security
Agreement, of all right, title and interest of the Company in, to and under (but
not its obligations, liabilities or duties with respect to) the Management
Agreement.
1.2 Collateral Agent. The rights granted by this Agreement and
by the Manager Subordination Agreement (Lenders) dated as of the date hereof
among the Company, the Manager and Bankers Trust Company as Administrative Agent
(the "Manager Subordination Agreement (Lenders)"), to the Collateral Agent are
granted to the Collateral Agent for the joint benefit of the Senior Subordinated
Noteholders and the Lenders (as defined in the Manager Subordination Agreement
(Lenders)) and the Collateral Agent shall act for the joint benefit of the
Senior Subordinated Noteholders and the Lenders pursuant to the Intercreditor
Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Company Representations. The Company hereby represents and
warrants that (i) the Management Agreement is in full force and effect and has
not been amended or modified, (ii) the Management Agreement is the only
agreement entered into by the Company
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with respect to the management of the Casino, (iii) there is no default by the
Company under the Management Agreement, (iv) except for the assignment described
in Section 1 hereof, the Company has not assigned, transferred, pledged, or
hypothecated the Company's interest in the Management Agreement, and (v) the
Company knows of no default by the Manager under the Management Agreement.
2.2 Manager Representations. The Manager hereby represents and
warrants that (i) the Management Agreement is in full force and effect and has
not been amended or modified, (ii) the Management Agreement is the only
agreement entered into by the Manager with respect to the management of the
Casino, (iii) there is no default by the Manager under the Management Agreement,
(iv) the Manager has not assigned, transferred, pledged or hypothecated the
Manager's interest in the Management Agreement, (v) the Manager knows of no
default by the Company under the Management Agreement, and (vi) there are no
sums currently due or owing to the Manager under the Management Agreement.
3. SUBORDINATION
3.1 Subordination of Liabilities, Management Fees and Other
Amounts
(a) The Manager, for itself, its successors and assigns,
covenants and agrees that (i) the payment of the Subordinated Obligations is
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash of all Senior Subordinated Notes
Obligations, and (ii) the Management Agreement is hereby expressly subordinated
in all respects to the Shared Security Documents (as defined in the
Intercreditor Agreement) in the manner and to the extent set forth herein;
provided that nothing herein shall require the Manager to relinquish or return
any Base Fees, Incentive Fees or Termination Fees paid to the Manager pursuant
to the Management Agreement (other than as set forth in the Management
Agreement) so long as such payments, at the time paid, were permitted to be paid
to the Manager in accordance with this Section 3. The provisions of this Section
3 shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become or continue to remain Senior Subordinated Noteholders, and
such provisions are made for the benefit of the Senior Subordinated Noteholders
and such Senior Subordinated Noteholders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of
them, may proceed to enforce such provisions.
(b) In the event of any payment default under Sections 7.1(1)
and (2) of the Indentures, any acceleration or declaration of an Event of
Default of the Senior Subordinated Notes under Section 7.2 of the Indentures, or
the bankruptcy of the Company, any accrued but unpaid Base Fees, Incentive Fees
or Termination Fees (including any Management Fees (as defined in the
Indentures) deferred pursuant to Article 9.01(c) of the Management Agreement
(the "Deferred Management Fees")) and any other Subordinated Obligations
existing at such time or accruing thereafter shall be subordinated to the Senior
Subordinated Notes Obligations with payments to be applied in the following
order, subject to the rights of the LGCB under the Casino Operating Contract (as
defined in the Indentures), the City of New Orleans or Rivergate Development
Corporation under the Ground Lease (as defined in the Indentures), and any other
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creditor, as their interests may appear: (i) reimbursement of all management
expenses incurred in accordance with the Management Agreement; (ii) amounts as
set forth in Section 11 of the Intercreditor Agreement; (iii) any credit
enhancement fee due and payable to HET or an Affiliate of HET pursuant to that
certain Credit Enhancement Fee Agreement entered into by and among the Company
and HOCI pursuant to the Plan; (iv) Base Fee and Termination Fee pursuant to and
as defined in the Management Agreement; (v) interest due on the Convertible
Junior Subordinated Debentures (as defined in the Plan); (vi) principal due on
the Convertible Junior Subordinated Debentures; (vii) interest due on any
amounts advanced under the Subordinated Credit Facility, the Indemnity Agreement
and the Completion Loan Agreement (each as defined in the Indentures) on a pari
passu basis; (viii) principal due on the Subordinated Credit Facility, the
Indemnity Agreement and the Completion Loan agreement on a pari passu basis; and
(ix) Incentive Fee pursuant to and as defined in the Management Agreement;
provided that the amounts described in clauses (iii) and (iv) above shall be
senior to any Contingent Payments on the New Bonds and the New Contingent Bonds.
3.2 Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Upon any Senior Subordinated Notes Obligations becoming
due and remaining unpaid (including interest thereon or fees or any other
amounts owing in respect thereof), whether at stated maturity, by acceleration
or otherwise, all Senior Subordinated Notes Obligations, to the extent due and
owing, shall first be paid in full in cash, before any payment of any kind or
character, whether in cash, property, securities or otherwise, is made on
account of the Subordinated Obligations.
(b) Until all Senior Subordinated Notes Obligations have been
repaid in full, no payment or distribution of any kind or character (whether in
cash, property, securities or otherwise) shall be made in respect of any
Subordinated Obligations, other than as any such payment may be permitted under
Section 5.19 of the Indentures.
(c) In the event that the Company shall make any payment on
account of the Subordinated Obligations which is not permitted by subsection (a)
or (b) of this Section 3.2, such payment shall be held by the Manager in trust
for the benefit of, and shall be paid forthwith over and delivered to the
Trustee for application to the payment of the Senior Subordinated Notes
Obligations remaining unpaid to the extent necessary to pay the Senior
Subordinated Notes Obligations in full in cash in accordance with the terms of
the Senior Subordinated Notes Documents, after giving effect to any concurrent
payment or distribution to or for the Senior Subordinated Noteholders.
3.3 Subordination to Prior Payment of All Senior Subordinated
Notes Obligations on Dissolution, Liquidation or Reorganization of Company. Upon
any distribution of assets of the Company upon dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise):
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(a) the Senior Subordinated Noteholders shall first be
entitled to receive payment in full in cash of all Senior Subordinated Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Senior Subordinated Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before the Manager is entitled to receive any payment of
any kind or character with respect to any Subordinated Obligations, except that
Manager shall be entitled to receive Base Management Fees prior to the payment
of any Make-Whole Amount as provided in the Indentures;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise, to
which the Manager would be entitled except for the provisions of this Section
3.3, shall be paid by the liquidating trustee or agent or other person making
such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the Senior
Subordinated Noteholders or their representative or representatives, or to the
Trustee, to the extent necessary to make payment in full in cash of all Senior
Subordinated Notes Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to the Senior Subordinated Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 3.3, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by the Manager on account of Subordinated
Obligations before all Senior Subordinated Notes Obligations are paid in full in
cash, which payment or distribution is not permitted by the preceding subsection
(a) of this Section 3.3, such payment or distribution shall be received and held
in trust for and shall be paid over to the Senior Subordinated Noteholders or
their representative or representatives, or to the Trustee, for application to
the payment of all Senior Subordinated Notes Obligations remaining unpaid or
unprovided for until all such Senior Subordinated Notes Obligations shall have
been paid in full in cash, after giving effect to any concurrent payment or
distribution to the Senior Subordinated Noteholders.
3.4 Effect of Subordination on Obligations Pursuant to
Management Agreement. The Manager hereby agrees for the benefit of the Company
and the Senior Subordinated Notes Creditors that, to the extent and for so long
as any payment of Subordinated Obligations is not permitted to be made pursuant
to the provisions of this Section 3 or the Indentures, such payment shall not be
made or be payable by the Company or any of its Subsidiaries (as defined in the
Indentures) until it is permitted to be paid in accordance with the terms of
this Section 3 and the Indentures. To the extent that any such Subordinated
Obligations are not payable by the Company or any of its Subsidiaries pursuant
to this Section 3, the Manager shall forbear from exercising any right to
terminate, or withhold performance of any of its obligations under, the
Management Agreement as a result thereof so long as the Indentures or this
Agreement shall continue to prohibit the Company from making such payments.
3.5 Subrogation. After the Senior Subordinated Notes
Obligations have been paid in full in cash, the Manager shall have and be
entitled to all rights of subrogation otherwise
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provided by law in respect of any payment it may make or be obligated to make
under this Agreement with respect to the claims of the Senior Subordinated Notes
Creditors against the Company or any other guarantor of the Senior Subordinated
Notes Obligations.
3.6 Subordination Rights Not Impaired by Acts or Omissions of
Company or Senior Subordinated Notes Creditors. No right of any present or
future Senior Subordinated Notes Creditors to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act by any
such Senior Subordinated Notes Creditors, or by any noncompliance by the Company
with the terms and provisions of the Management Agreement, regardless of any
knowledge thereof which any such Senior Subordinated Notes Creditor may have or
be otherwise charged with. The Senior Subordinated Notes Creditors may, without
in any way affecting the obligations of the Manager with respect hereto, at any
time or from time to time and in their absolute discretion, change the manner,
place or terms of payment of, change or extend the time of payment of, or renew
or alter, any Senior Subordinated Notes Obligations or amend, modify or
supplement any agreement or instrument governing or evidencing such Senior
Subordinated Notes Obligations or any other document referred to therein, or
exercise or refrain from exercising any other of their rights under the Senior
Subordinated Notes Obligations including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Subordinated Notes Obligations, all without notice to or assent from the Manager
(except as described in the following sentence). The Company will not agree to
any modification to the Senior Subordinated Notes Documents which would directly
reduce the amount of the Management Fee which the Company is permitted to pay to
the Manager under Section 5.19 of the Indentures, without the prior written
consent of the Manager. Notwithstanding anything to the contrary contained in
this Agreement, if the consent of the Manager is required for an amendment to
the Indentures as provided in the immediately preceding sentence but is not
obtained, then the only effect of such failure shall be that, for purposes of
this Agreement, effect shall not be given to the respective amendment to the
extent same so reduces the amount of the Management Fee which the Company is
permitted to pay to the Manager under the Indentures for purposes of making
determinations pursuant to this Agreement.
4. FORECLOSURE
4.1 Termination After Succession Date. As of the date (the
"Succession Date") that (i) the Collateral Agent, or any nominee or designee of
the Collateral Agent or the Senior Subordinated Notes Creditors, takes
possession of or acquires a leasehold interest in the Casino, or succeeds to the
interests of the Company under the Management Agreement by operation of the
Security Agreement or otherwise or (ii) a receiver or keeper (a "Receiver") of
the Casino is appointed pursuant to the Shared Security Documents, and at any
time during a period ending on the date that is one hundred eighty (180) days
after the Succession Date (the "Lender Termination Date"), the Collateral Agent
(or its nominee or designee) shall have the right to terminate the Management
Agreement upon at least one hundred twenty (120) days' prior written notice to
the Manager (which notice must be given on or prior to the Lender Termination
Date, although the one hundred twenty (120) day period may extend beyond such
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date) whether or not any default then exists on the part of the Manager under
the Management Agreement.
4.2 Termination After Manager Default. In addition to the
termination right set forth in Section 4.1 hereof, on any date following the
occurrence of (i) the Succession Date and (ii) the filing of any foreclosure
proceeding by the Collateral Agent, or any nominee or designee of the Collateral
Agent or the Senior Subordinated Notes Creditors, with respect to the Casino,
and at any time thereafter during the pendency of such foreclosure (whether or
not a Lender Termination Date has occurred), the Collateral Agent (or its
nominee or designee) shall have the right to terminate the Management Agreement
by written notice to the Manager to be effective as of the date set forth in
such notice and without any other action on the part of the Collateral Agent (or
its nominee or designee) if an Event of Default (under and as defined in the
Management Agreement) has occurred by the Manager, the applicable cure periods
have expired, and the Company has the right to terminate the Management
Agreement pursuant to Article 17.02(a) thereof; provided that the effective date
of any such termination shall not occur prior to forty five (45) days after the
date of such notice unless (a) a successor manager has been obtained to manage
the Casino and maintain continuous and uninterrupted operations of the Casino or
(b) the Manager fails to perform its obligations in accordance with Section 4.5
hereof during said period.
4.3 Termination On Manager Disqualification or Appointment of
Receiver or New Manager. In addition to the termination rights set forth in
Sections 4.1 and 4.2 hereof, on any date following the occurrence of the
Succession Date and prior to the Lender Termination Date, (i) if at any time the
Manager ceases to be authorized to act as such under applicable Gaming
Regulations (as defined in the Indentures), or (ii) if a casino management
company other than the Manager is appointed to become receiver, or (iii) if a
casino management company other than the Manager is appointed to become the
manager of the Casino as a result of any order, decree, judgment or ruling of
the LGCB or any court of competent jurisdiction, the Collateral Agent (or its
nominee or designee) shall have the right to terminate the Management Agreement
by written notice to the Manager to be effective on the date set forth in such
notice; provided that the effective date of any such termination shall not occur
prior to forty five (45) days after the date of such notice unless (a) a
successor manager has been obtained to manage the Casino and maintain continuous
and uninterrupted operations of the Casino or (b) the Manager fails to perform
its obligations in accordance with Section 4.5 hereof during said period.
4.4 Notice and Petition. The Collateral Agent (or its nominee
or designee) agrees to give notice to the Manager of any foreclosure petition
filed by the Collateral Agent (or its nominee or designee) with a copy of such
foreclosure petition within two (2) Business Days (as defined in the Indentures)
of the filing of such petition. The Collateral Agent (or its nominee or
designee) shall include in such petition a request that such Receiver continue
operations by Manager pursuant to the Management Agreement for forty five (45)
days after the appointment of such Receiver unless a successor manager has been
obtained to manage the Casino and maintain continuous and uninterrupted
operations of the Casino.
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4.5 Manager Cooperation During Transition. In the event of any
termination of Manager pursuant to Section 4 hereof, the Manager agrees to
cooperate with the Collateral Agent, the Receiver and any successor manager
during any transition period pursuant to Section 4 hereof of forty five (45)
days or any shorter period selected by the Collateral Agent pursuant to Section
4 hereof to effect an orderly transition of the management of the Casino without
interruption of operations, including, without limitation, providing to, and
allowing access by the Collateral Agent, Receiver and/or successor manager to,
all of the books and records of the Casino to allow and enable the Collateral
Agent, Receiver and/or successor manager to fully operate and manage the Casino,
and, at the request of the Collateral Agent, allow and authorize the removal of
signs and any Xxxxxx'x brand identified furniture, fixtures, equipment, signs or
other movable property which is used or useful for Casino operations at the
Casino, transfers of books and records, changes of computer systems, and other
transfers, replacements and changes necessary for continuous and uninterrupted
operations of the Casino throughout the transition to a successor manager;
provided, that in respect of any provision of or access to books and records,
the Manager may exclude any Confidential and Proprietary Information (as defined
in the Management Agreement), including without limitation, the Proprietary
Systems (as defined in the Management Agreement).
4.6 Termination Fee. If at the time of the giving of any
notice pursuant to Section 4 hereof, no default exists on the part of the
Manager under the Management Agreement, the Manager shall be entitled to payment
from the Company of the Termination Fee on the terms set forth in the Management
Agreement; provided that (i) such payment shall remain subject to Section 3
hereof, and (ii) non-payment of such Termination Fee shall have no effect on the
effectiveness of any termination of the Management Agreement under Section 4
hereof. In no event shall the Senior Subordinated Notes Creditors or any of
their nominees or designees be obligated for any losses or damages of the
Company or the Manager as a result of a termination of the Management Agreement
pursuant to Section 4 hereof, or have any liability for any amounts payable
pursuant to said Management Agreement as a result of the termination thereof;
provided, however, (a) the Company shall remain liable to the Manager, subject
to the subordination provisions of this Agreement, in respect of the
Subordinated Obligations and Unsubordinated Obligations, and (b) while the
Manager's claims against the Company for Subordinated Obligations or
Unsubordinated Obligations are subject and subordinate to the security interests
of the Collateral Agent pursuant to the Shared Security Documents and as
provided in Section 3 hereof, such claims shall not be limited or impaired as a
result of any termination of the Management Agreement pursuant to Section 4
hereof except to the extent of the subordination pursuant to Section 3 hereof.
4.7 Court Filings. Prior to the delivery of any notice of
termination pursuant to Section 4 hereof, the Collateral Agent (or its nominee
or designee) may indicate in any filing or petition with the LGCB or any court
or otherwise its intention to (a) name any Person other than the Manager as a
receiver with respect to the Casino or (b) terminate the Management Agreement,
and the Manager acknowledges that (i) no such filing or petition shall
constitute a notice of termination unless expressly designated as such by the
Collateral Agent (or its nominee or designee) to the Manager, and (ii) the
Manager shall have no rights to terminate the
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Management Agreement or withhold performance of any of its obligations
thereunder as a result of any such filing or petition.
4.8 Replacement Agreement. Following the occurrence of a
Succession Date, for so long as the Management Agreement has not been terminated
pursuant to Section 4.1, 4.2 or 4.3 hereof, then on the day following the Lender
Termination Date or such earlier date as the Collateral Agent (or its nominee or
designee) may elect, the Management Agreement shall be continued, or be replaced
by a substantially identical management agreement (in each case, the
"Replacement Agreement"), as a direct agreement between the Manager and the
Collateral Agent (or its nominee or designee), although no Termination Fee shall
be payable pursuant thereto. Thereafter such Replacement Agreement will, subject
to the terms of this Agreement (which shall remain fully applicable to such
Replacement Agreement) and the terms thereof, be recognized as a direct
management agreement between the Manager and the Collateral Agent (or its
nominee or designee), except that, subject to Section 5.2 hereof and unless
otherwise agreed by the Manager and the other party thereto, the Collateral
Agent (or its nominee or designee) shall not (i) be liable for any previous act
or omission of the Company under the Management Agreement accruing, occurring or
existing prior to the Succession Date, (ii) be subject to any offset of amounts
owed to the Manager by the Company prior to the Succession Date, (iii) be bound
by any previous modification of the Management Agreement, unless such
modification shall have been expressly approved in writing by the Collateral
Agent, (iv) be required in any circumstance to pay any Termination Fee, or (v)
have any obligation for any other amounts which accrue or become due under the
Management Agreement prior to the Succession Date. Neither the Collateral Agent
(nor its nominee or designee) nor any other Senior Subordinated Notes Creditor
shall have any personal liability to the Manager for any obligations of the
Company under the Management Agreement (or of the equivalent of such Company
under any Replacement Agreement). Nothing contained in this Agreement shall
limit or impair the rights of the Collateral Agent or its nominees, its
successors or assigns, or any other parties to the Management Agreement or
Replacement Agreement to terminate the Management Agreement or Replacement
Agreement in accordance with the terms thereof or pursuant to Section 4 hereof
or pursuant to any other provision of this Agreement. Upon the effectiveness of
the Replacement Agreement, the Manager shall have no further obligations to the
Company pursuant to the Management Agreement; provided that the Manager and the
Company shall remain liable to each other (subject to the subordination
provisions of this Agreement) for obligations or liabilities arising prior to
the effectiveness of the Replacement Agreement.
4.9 Limitation on Rights Against Collateral Agent. Subject to
Section 5.2 hereof, after the Succession Date, the Manager's right to receive or
set off any monies or obligations owed or accrued or to be performed by the
Company prior to the Succession Date shall not be enforceable against the
Collateral Agent (or its nominee or designee), and the Collateral Agent (or its
nominee or designee) shall have no obligation to remedy any act or omission of
the Company or any default or event of default on the part of the Company
accruing, occurring or existing under the Management Agreement prior to the
Succession Date.
4.10 Manager's Rights. No default under the Shared Security
Documents and no proceeding to foreclose on the Casino will disturb the
Manager's rights under the
10
Management Agreement, and the Management Agreement will not be affected or cut
off thereby (except to the extent otherwise provided in Section 3 hereof and
this Section 4); provided that (i) the Manager complies with this Agreement,
(ii) the Manager at all times remains authorized to act as such pursuant to
applicable Gaming Regulations, and (iii) there does not exist on the part of the
Manager a default under the Management Agreement; provided further, that
notwithstanding the recording of the Shared Security Documents prior to
recording that certain Memorandum of Management Agreement attached to the
Management Agreement as Exhibit "E" in the Parish of Orleans, the right and
obligations of the Manager under the Management Agreement upon a foreclosure by
the Collateral Agent shall be as set forth in this Agreement.
4.11 Assignment or Delegation By Collateral Agent. The
Collateral Agent may, upon written notice to the Manager, assign, delegate or
otherwise transfer its rights under this Section 4 and any Replacement Agreement
to (i) any affiliate of the Collateral Agent or the Trustee, or any financial
institution that would qualify as a successor Collateral Agent under the
Intercreditor Agreement, (ii) subject to the consent of the Manager not to be
unreasonably withheld, any nationally-recognized firm of accountants, management
consultants or investment advisors (provided that such firm is not otherwise
engaged in the gaming business), or (iii) any Person designated as a Receiver by
the Collateral Agent or as a keeper in any foreclosure proceeding. In the event
of any such transfer, such transferee shall have the rights of the Collateral
Agent under this Section 4 (except to the extent any of such rights are
expressly retained by the Collateral Agent in connection with such transfer).
The Manager, the Trustee, the Company and the Collateral Agent hereby
acknowledge and agree that the authority of the receiver to succeed to the
rights of the Collateral Agent hereunder is subject to applicable Gaming
Regulations from time to time in effect, and that in the event of any conflict
between this Agreement and applicable Gaming Regulations that affects the rights
and powers of the receiver, the applicable Gaming Regulations shall control.
4.12 Transfer of Interest in Replacement Agreement. In
addition to the rights described in Section 4.11 hereof, following the
Succession Date, the Collateral Agent (or its nominee or designee) may sell,
transfer, assign or otherwise convey its right, title and interest in the
Replacement Agreement to any Person upon one hundred twenty (120) days' prior
written notice to the Manager. The Manager may elect, within sixty (60) days of
receipt of such notice, to terminate the Replacement Agreement (in which case no
Termination Fee will be payable), or to continue the Replacement Agreement as a
direct agreement between the Manager and such transferee (subject to the terms
of this Agreement) on the terms of the Management Agreement in effect
immediately prior to the Succession Date, in which case the right of the Manager
to receive the Termination Fee on a prospective basis (but not as a result of
any prior defaults) will be restored (subject to the terms of this Agreement).
After the Collateral Agent (or its nominee or designee) has acquired a leasehold
interest in the Casino, the Collateral Agent (or its nominee or designee) may in
connection with a sale or transfer of such leasehold interest, upon one hundred
twenty (120) days' prior written notice to the Manager, elect to terminate the
Replacement Agreement, in which case the Replacement Agreement shall terminate
concurrently with the effectiveness of such sale or transfer (but not sooner
than one hundred twenty (120) days after the respective notice was given to the
Manager), with no payment of any Termination Fee owing by the Company or the
Collateral Agent (or its nominee or designee) in connection
11
therewith. In addition, the Collateral Agent (or its nominee or designee) shall
have the right to terminate the Replacement Agreement (i) on the same basis as
set forth in Section 4.1 hereof, or (ii) in the event that the Casino is sold to
a third party at a foreclosure sale.
5. CURE PERIOD
5.1 Notice and Cure. The Manager hereby agrees that from and
after the date hereof, within five (5) days after the Manager becomes aware of
the existence of any event, act or omission by the Company under the Management
Agreement which would give the Manager the right, either immediately or after
the giving of notice or the lapse of a period of time, or both, to terminate the
Management Agreement, the Manager shall give written notice of such event, act
or omission to the Trustee and the Collateral Agent. Furthermore, the Manager
hereby agrees that it shall give to each of the Trustee and the Collateral Agent
at least forty five (45) Business Days' prior written notice of any proposed
termination by the Manager of the Management Agreement, which notice shall
specify the basis for the termination and any defaults then existing pursuant to
the Management Agreement. During the forty five (45) Business Day period
referenced in the immediately preceding sentence (the "Cure Period"), the
Company, the Trustee, and/or any Senior Subordinated Notes Creditors may remedy
the defaults specified in the notice delivered pursuant to the preceding
sentence and, if all such defaults are cured during the Cure Period, the
termination shall not take effect. Furthermore, if such default is capable of
being cured and the Trustee notifies the Manager that it (or any Senior
Subordinated Notes Creditors or their or its designee or nominee) is proceeding
to remedy the defaults, but that the remedy will take longer than the Cure
Period, the termination will be delayed for so long as the Trustee (or any
Senior Subordinated Notes Creditors or their or its nominee or designee) is
proceeding to cure the default and such termination shall not occur if the
defaults are cured. In the event that a default under the Management Agreement
cannot be cured without obtaining the legal right to possession of the Casino,
the Trustee (or any Senior Subordinated Notes Creditors or their or its designee
or nominee) agrees to cooperate with the Company and the Manager to the extent
reasonably feasible to enable the Company and the Manager to cure such default
and, upon request of the Trustee (or its nominee or designee), the Manager
agrees to cooperate with the Trustee (or any Senior Subordinated Notes Creditor
or their or its nominee or designee) to the extent reasonably feasible to enable
the Trustee (or any Senior Subordinated Notes Creditor or their or its nominee
or designee) to cure such default.
5.2 Manager's Obligations to Continue Performance. It is the
intention of the Manager and the Senior Subordinated Notes Creditors that the
Senior Subordinated Notes Creditors shall not be obligated to remedy or cure any
existing default of the Company under the Management Agreement accruing,
occurring or existing prior to the Succession Date and that the Manager shall
continue performance under the Management Agreement for the benefit of the
Senior Subordinated Notes Creditors or their or its designee or nominee, so long
as the Senior Subordinated Notes Creditors or their or its designee or nominee,
after the Succession Date, (i) pay or cause to be paid all payments due to the
Manager arising under the Management Agreement after the Succession Date, (ii)
perform or cause to be performed all non-monetary obligations of the Company
arising under the Management Agreement after the Succession Date, and (iii) cure
any continuing non-monetary defaults under the Management Agreement that are
12
reasonably capable of being cured by the Senior Subordinated Notes Creditors,
whether such defaults first arose before the Succession Date. The Manager shall
look solely to the Company (and not to the Senior Subordinated Notes Creditors
or their or its designee or nominee, agent in possession or successors or
assigns) for payment of any fees, costs, expenses, and other sums that shall
have become due and payable or that shall have accrued under the Management
Agreement prior to the Succession Date.
5.3 No Waiver By Manager. Except as otherwise expressly set
forth in this Agreement, including without limitation the limitation on the
Manager's rights as set forth in Sections 3.4 and 6.2 hereof, the Manager shall
not be deemed to have waived any of its rights to declare a default by the
Company under the Management Agreement or to terminate the Management Agreement
prior to the Succession Date after the expiration of all applicable cure
periods. Any failure by the Manager to provide notice to the Trustee or the
Collateral Agent pursuant to Section 5.1 hereof shall not be deemed to be a
waiver by the Manager of any such default under the Management Agreement as
against the Company or to create any liability of the Manager to the Trustee or
the Collateral Agent.
6. AGREEMENTS OF MANAGER. The Manager covenants and agrees
that on and after the date hereof and until the Lender Termination Date occurs:
6.1 Assignment by Manager. Other than as permitted in Article
21.01 of the Management Agreement, the Manager will not assign, pledge, encumber
or hypothecate any right, title or interest of the Manager in, to or under (i)
the Management Agreement or (ii) any of the Manager's rights, fees (earned or
unearned), interest in insurance, condemnation awards, indemnities, or other
proceeds under or of the Management Agreement, in either case without the prior
written consent of the Trustee, which consent may be withheld for any reason
whatsoever.
6.2 Termination. The Manager will not exercise its rights and
remedies under the Management Agreement (i) with respect to any default under
Article 17.01(d) thereof, (ii) with respect to any default under Article
17.01(c) thereof, (iii) with respect to any failure to complete reconstruction
of the Casino under Article 16.02(b) thereof, at any time prior to the
occurrence of a Flip Event (as defined in the Restated Certificate of
Incorporation of JCC Holding as of the date hereof) or after the occurrence of a
Cure Event (as defined in the Restated Certificate of Incorporation of JCC
Holding as of the date hereof) in respect of any uncured Flip Events, or (iii)
arising as a result of any suspension of construction or renovation, as the case
may be, of the Casino for any period of time beyond the Completion Deadline (as
defined in the Management Agreement), or any failure to fulfill the Completion
Deadline.
7. FURTHER ASSURANCES. Upon request by any party hereto, the
Company and the Manager will, by instrument in writing, recognize and attorn to
each other as the Manager and as the Company, respectively, under the Management
Agreement, subject to and as affected and modified by this Agreement for the
balance of the term and any renewals thereof.
13
8. CAPITAL REPLACEMENT FUND. To the extent that any conflict
exists between any requirement or provision of the Management Agreement
pertaining to the Capital Replacement Fund (as defined in the Management
Agreement) and any requirement or provision of the Ground Lease regarding the
Capital Replacement Fund, the Manager acknowledges that compliance with the
terms of the Ground Lease will be deemed compliance with the Management
Agreement for this purpose. For purposes of this Agreement, such a conflict
shall be deemed to exist when (i) compliance with any requirement or provision
of the Ground Lease would result in a default or breach of the Management
Agreement or (ii) compliance with any requirement or provision of the Management
Agreement would result in a default or breach of the Ground Lease.
9. SATISFACTION OF MANAGEMENT AGREEMENT. The Manager agrees
that this Agreement, together with the Manager Subordination Agreement
(Lenders), satisfies the conditions or requirements under Article 4.03 of the
Management Agreement and that the Shared Security Documents constitute and are
an Authorized Mortgage (as defined in the Management Agreement).
10. AMENDMENT. No modification, amendment, waiver or release
of any provision of this Agreement or of any right, obligation, claim or cause
of action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Manager and the Trustee.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PRINCIPLES.
12. TERMINATION. This Agreement shall terminate on the first
to occur of (i) the termination of the Indentures and satisfaction of all
obligations to the Senior Subordinated Noteholders thereunder or (ii) the
termination of the Management Agreement and satisfaction of all obligations of
the Company and the Manager under the Management Agreement and all obligations
of the Manager under this Agreement (so long as, in the case of both clauses (i)
and (ii) above, the satisfaction of said obligations does not violate the terms
of this Agreement).
13. THIRD PARTY BENEFICIARIES. This Agreement is entered into
for the benefit of the Senior Subordinated Noteholders and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee or
that percentage of the Senior Subordinated Noteholders required to amend the
Indentures pursuant to the terms of the Indentures. The provisions of this
Agreement are continuing provisions and all Senior Subordinated Notes
Obligations to which they apply shall conclusively be presumed to have been
created in reliance thereon. Except to the extent provided in Section 3.4
hereof, this Agreement is not entered into for the benefit of the Company, and
the Company shall not be a third party beneficiary of this Agreement. Except as
otherwise expressly set forth herein (including by reference to the Indentures),
no provision of this Agreement shall be deemed to modify, or release the Company
from, any of the Subordinated Obligations (except to the extent payment thereof
is deferred or prohibited pursuant to the Indentures or this Agreement),
14
including, without limitation, the obligation to pay the Termination Fee under
the Management Agreement or to grant the Company any additional rights against
the Manager under the Management Agreement.
14. NOTICES. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to the Manager, at:
Xxxxxx'x New Orleans Management Company
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
(b) if to the Collateral Agent, at:
Norwest Bank Minnesota, N.A.
Norwest Center
6th and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxx XxXxxxx - Corporate Trust Department
(c) if to the Company, at:
Jazz Casino Company, L.L.C.
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: President
(d) if to the Trustee at:
Norwest Bank Minnesota, National Association
Norwest Center
6th and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
15
IN WITNESS WHEREOF, the Company, the Manager and the Trustee
have caused this Agreement to be duly executed and delivered as of the date
first written above.
WITNESSES: XXXXXX'X NEW ORLEANS MANAGEMENT
COMPANY, a Nevada corporation
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx, XX
--------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxxxx, XX
------------------------------
/s/ Xxxxx X. Xxxxxxxx Title: Vice President
--------------------------- -----------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
------------------------------
/s/ Xxxxx X. Xxxxxxxx Title: Vice President
--------------------------- -----------------------------
Acknowledged and agreed by:
JAZZ CASINO COMPANY, L.L.C., a WITNESSES:
Louisiana limited liability company
By: /s/ Xxxxxxxxx X. Xxxxxxx /s/ S. Xxx Xxxxxxxx
---------------------------------- ------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
--------------------------------
Title: President /s/ Xxxxx Xxxxx
------------------------------- ------------------------------
THE BANK OF NEW YORK
By: /s/ R. Xxxxxxx Xxxx /s/ illegible
---------------------------------- ------------------------------
Name: R. Xxxxxxx Xxxx
--------------------------------
Title: Agent /s/ illegible
------------------------------- ------------------------------
SIGNATURE PAGE TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Xxxxxx X. Xxxxxxxx XX, who
acknowledged himself to be Authorized Representative of Xxxxxx'x New Orleans
Management Company, a Nevada corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxxxx Xxxxx Xxxx
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Xxxxxxx X. Xxxxxxxxxx, who
acknowledged himself to be Vice President of Norwest Bank Minnesota, National
Association, and that he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxx X. Xxxxxxx
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Xxxxxxxxx X. Xxxxxxx, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer on behalf such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
