Exhibit 10.9
INTERCREDITOR AGREEMENT
Between
U.S. BANK NATIONAL ASSOCIATION,
a national banking association,
as Trustee
and
RANK AMERICA, INC.,
a Delaware corporation,
as Junior Creditor
JANUARY 23, 2004
EXECUTION VERSION
TABLE OF CONTENTS
1. DEFINITIONS...............................................................2
1.1 DEFINED TERMS.......................................................2
1.2 INDEX OF ADDITIONAL DEFINED TERMS...................................5
1.3 INTERPRETATION......................................................5
2. THE CREDIT DOCUMENTS......................................................5
2.1 LENDERS' CONFIRMATIONS..............................................5
2.2 LOSS PROCEEDS.......................................................5
3. SUBORDINATION PROVISIONS..................................................5
3.1 SUBORDINATION OF CLAIMS.............................................6
3.2 DISTRIBUTION OF ASSETS..............................................6
3.3 VOTING AND PROOFS OF CLAIM..........................................7
3.4 RECEIPT OF PAYMENTS.................................................7
3.5 NO ASSIGNMENT OR MODIFICATION.......................................9
3.6 NO CLAIM TO COLLATERAL BY JUNIOR CREDITOR...........................9
4. CONDITIONS TO REPAYMENT UNDER THE SUBORDINATED NOTE......................10
5. OWNERSHIP AND ASSIGNMENT OF SUBORDINATED NOTE............................10
6. LEGENDS..................................................................10
7. EVENTS OF DEFAULT AND STANDSTILL PERIOD..................................10
7.1 NOTIFICATION OF EVENT OF DEFAULT...................................10
7.2 STANDSTILL PERIOD..................................................11
8. OBLIGATIONS ABSOLUTE.....................................................11
9. BANKRUPTCY...............................................................12
10. TERMINATION OF AGREEMENT.................................................12
11. MISCELLANEOUS............................................................12
11.1 WAIVER.............................................................12
11.2 INVALIDITY.........................................................12
11.3 ASSIGNMENT.........................................................12
11.4 TIME...............................................................12
11.5 CHOICE OF LAW......................................................12
11.6 ENTIRE AGREEMENT; AMENDMENTS.......................................12
11.7 NOTICES............................................................13
11.8 COUNTERPARTS.......................................................13
11.9 RIGHT TO CONSULT COUNSEL...........................................13
11.10 THIRD PARTY BENEFICIARIES..........................................14
EXECUTION VERSION
i
INTERCREDITOR AGREEMENT
THIS
INTERCREDITOR AGREEMENT (the "AGREEMENT") is made as of January
23, 2004, by and among U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as trustee acting on behalf of itself and the Holders (as defined
below) pursuant to the Indenture (in such capacity, together with its successors
and assigns from time to time under the Indenture, the "TRUSTEE") and RANK
AMERICA, INC., a Delaware corporation (the "JUNIOR CREDITOR").
RECITALS
A. FIRST MORTGAGE NOTES. Concurrently herewith, Premier Entertainment
Biloxi LLC (d/b/a Hard Rock Hotel & Casino Biloxi), a Delaware limited liability
company ("PREMIER") and
Premier Finance Biloxi Corp., a Delaware corporation
("PFC" and together with Premier, the "COMPANY"), are issuing $160,000,000
aggregate principal amount of 10 3/4% First Mortgage Notes due 2012 (together
with all notes issued from time to time under the Indenture, including all notes
issued in exchange or replacement therefore, the "FIRST MORTGAGE NOTES").
B. SUBORDINATED NOTE. Concurrently herewith, Junior Creditor shall
purchase from the Issuer an unsecured subordinated note in an amount of
$10,000,000 (as amended, modified or supplemented from time to time in
accordance with SECTION 3.5, the "SUBORDINATED NOTE"), the proceeds of which
will be applied to finance Project Costs, as defined and more particularly
described in the Cash Collateral and Disbursement Agreement.
C. PROCEEDS OF THE FIRST MORTGAGE NOTES AND THE SUBORDINATED NOTE. The
Company will use the net proceeds from the sale of the First Mortgage Notes and
the proceeds of the Subordinated Note to develop, construct and operate the Hard
Rock Hotel and Casino Biloxi, a full service gaming, hotel and entertainment
resort and certain related amenities (the "FACILITY") upon approximately 8.5
acres along the Mississippi Gulf Coast in Biloxi, Mississippi.
D. COLLATERAL ARRANGEMENTS. The First Mortgage Notes are secured by all
of the Collateral, as set forth in the Indenture, pursuant to the Collateral
Documents. The Subordinated Note is not and will not be secured by any
collateral other than as permitted under SECTION 3.6.1.
E. SUBORDINATION. The Trustee, on behalf of the Holders, has agreed that
the Company may incur indebtedness under the Subordinated Note only if the
Junior Creditor shall join in this Agreement and subordinate, to the extent and
in the manner hereinafter set forth, all claims and rights in respect of the
Subordinated Note to all First Mortgage Notes Obligations (as defined below) to
the extent set forth in this Agreement.
F. PURPOSE. The parties have entered into this Agreement in order to (a)
provide for the subordination of the obligations and liabilities in respect of
the Subordinated Note to the obligations and liabilities in respect of the First
Mortgage Notes in favor of the Trustee (for the benefit of the Holders) and (b)
set forth certain conditions upon which payments shall be made on the
Subordinated Note.
EXECUTION VERSION
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
1.1 DEFINED TERMS. The terms defined in this SECTION 1 shall have
the meanings herein specified:
"AA CAPITAL" means collectively, AA Capital Equity Fund, L.P., a
Delaware limited partnership and AA Capital Biloxi Co-Investment Fund, L.P., a
Delaware limited partnership.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BLOCKING EVENT" means:
(a) the occurrence of any uncured First Mortgage Notes Event
of Default;
(b) the occurrence of any uncured First Mortgage Notes Default
under SECTIONS 6.01(a) or (b) of the Indenture [PAYMENT DEFAULT];
(c) the receipt by Junior Creditor of a First Mortgage Notes
Default Notice with respect to the occurrence of any uncured First Mortgage
Notes Default under the Indenture (other than a First Mortgage Notes Default
under SECTIONS 6.01(a) or (b) of the Indenture), PROVIDED, HOWEVER, that a First
Mortgage Notes Default described in clause (c) shall be a Blocking Event if: (i)
such Event of Default has remained uncured for a period of less than 180 days
(it being understood that an uncured First Mortgage Notes Default described in
clause (c) that continues for more than 180 days shall not constitute a
"Blocking Event"); (ii) no other such Blocking Event has commenced within the
past 365 days; and (iii) no more than two other such Blocking Events have
occurred since the date of this Agreement;
PROVIDED, FURTHER, that any Blocking Event shall terminate upon the cure, or the
waiver by the Holders, of the First Mortgage Notes Default or Event of Default
under the Indenture that triggered such Blocking Event.
"CLOSING DATE" means the date on which this Agreement is executed.
"COLLATERAL" has the meaning ascribed thereto in the Indenture.
"COLLATERAL DOCUMENTS" has the meaning ascribed thereto in the
Indenture.
"CREDIT PARTIES" means the Trustee, the Holders and the Junior
Creditor.
EXECUTION VERSION
2
"EQUITY AGREEMENT" means that certain Equity Agreement entered into
among, Premier, AA Capital and GAR dated as of even date herewith.
"EXERCISE REMEDIES" or "EXERCISE OF REMEDIES" shall mean, with respect
to each Credit Party, the taking of any action to enforce its rights or remedies
against the Company following the occurrence of a First Mortgage Notes Event of
Default or a Subordinated Note Event of Default, including, without limitation,
the acceleration of all or a portion of the obligations under such agreement,
the filing or initiation of an Insolvency or Liquidation Proceeding against the
Company or any other Person within the Company, the commencement of any
foreclosure proceedings against any Collateral, the repossession of any
Collateral, or the appointment or institution of a receiver, custodian or
similar official to take custody of any assets of the Company or other members
of the Company; PROVIDED, HOWEVER, that the term "Exercise Remedies" shall
specifically exclude (a) the issuance of any notice of default, (b) any actions
by a Credit Party to suspend (i) any disbursements from any accounts of the
Company in which such Credit Party has a security interest or (ii) advances
under the particular Note and (c) the recording of a Notice of Default in the
County Recorder's Office of Xxxxxxxx County, Mississippi.
"FIRST MORTGAGE NOTES DEFAULT" means the occurrence and continuance of
a Default under the Indenture or the Collateral Documents.
"FIRST MORTGAGE NOTES DEFAULT NOTICE" shall mean a written notice from
the Trustee to the Junior Creditor pursuant to which the Junior Creditor is
notified of the occurrence of a First Mortgage Notes Default, which notice
incorporates a reasonably detailed description of such First Mortgage Notes
Default.
"FIRST MORTGAGE NOTES EVENT OF DEFAULT" means the occurrence and
continuance of an Event of Default under the Indenture or the Collateral
Documents.
"FIRST MORTGAGE NOTES OBLIGATIONS" means any principal, interest,
premium (if any), penalties, fees, expenses, indemnification, reimbursements,
damages (including liquidated damages, if any) and other liabilities payable
with respect to the First Mortgage Notes pursuant to the First Mortgage Notes,
the Indenture or the Collateral Documents. "First Mortgage Notes Obligations"
shall also include all amendments, modifications and refinancings of the
foregoing, provided such amendments, modifications or refinancings do not (i)
cause the principal amount (or accreted value, as appropriate) of the First
Mortgage Notes Obligations to exceed $180,000,000 plus accrued interest and
liquidated damages on the portion of the First Mortgage Notes Obligations to be
amended or refinanced, expenses and applicable premiums, or (ii) cause the final
maturity date of the First Mortgage Notes Obligations to be later than the
portion of the First Mortgage Notes Obligations to be amended or refinanced or
(iii) reduce the weighted average life to maturity of the First Mortgage Notes
Obligations.
"GAR" means GAR, LLC, a Mississippi limited liability company.
"HOLDERS" means the holders from time to time of the First Mortgage
Notes.
EXECUTION VERSION
3
"INDENTURE" means the Indenture dated as of the date hereof, among the
Company, PFC, and the Trustee for the benefit of the Holders (as amended,
modified or supplemented from time to time).
"INSOLVENCY OR LIQUIDATION PROCEEDING" means (a) any case commenced by
or against the Company under any Bankruptcy Law, any other proceeding for the
reorganization, recapitalization or adjustment or marshalling of the assets or
liabilities of the Company, any receivership or assignment for the benefit of
creditors relating to the Company or any similar case or proceeding relative to
the Company or its creditors, as such, in each case whether or not voluntary; or
(b) any other proceeding of any type or nature in which substantially all claims
of creditors of the Company are determined and any payment or distribution is or
may be made on account of such claims.
"INVESTMENT AGREEMENT" means that certain Investment Agreement dated
as of January 13, 2004, entered into among the Issuer and Junior Creditor.
"NOTE" or "NOTES" means, as the context requires, any or all of the
First Mortgage Notes and the Subordinated Note.
"OTHER PAYMENTS RELEASE CONDITION" means 91 days have elapsed since
the date all First Mortgage Notes Obligations have been Paid in Full.
"PAID IN FULL" or "PAYMENT IN FULL" means the defeasance or other
payment in full in cash of the First Mortgage Notes in accordance with the
Indenture.
"PERSON" has the meaning ascribed thereto in the Indenture.
"SUBORDINATED NOTE CLAIMS" means (a) all principal of, and premium, if
any, and interest on, the Subordinated Note (including, without limitation, any
interest accruing thereon at the legal rate after the commencement of any
Insolvency or Liquidation Proceeding and any additional interest that would have
accrued thereon but for the commencement of such Insolvency or Liquidation
Proceeding) and (b) all other indebtedness, obligations and liabilities of the
Company to the Junior Creditor, whether now existing or hereafter incurred or
created, under or with respect to the Subordinated Note Financing Agreements.
For purposes of this Agreement, the parties agree that all indebtedness,
obligations or liabilities of the Company to the Junior Creditor under (i) that
certain License Agreement dated as of May 15, 2003 by and between Hard Rock
Hotel Licensing, LLC and Premier (the "LICENSE AGREEMENT"), (ii) the Hard Rock
Leases (as defined the License Agreement) and (iii) the Memorabilia Lease (as
defined the License Agreement), shall not, in any circumstance, constitute
Subordinated Note Claims.
"SUBORDINATED NOTE EVENT OF DEFAULT" means an "Event of Default", as
such term is defined in the Investment Agreement.
"SUBORDINATED NOTE FINANCING AGREEMENTS" means the Subordinated Note,
the Investment Agreement and the related documents executed in connection
therewith. "SUBORDINATED NOTE FINANCING AGREEMENTS" shall also include all
amendments and modifications of the foregoing permitted under SECTION 3.5.
"SUBORDINATED NOTE FINANCING
EXECUTION VERSION
4
AGREEMENTS" shall not include the License Agreement, the Hard Rock Leases (as
defined the License Agreement) and the Memorabilia Lease (as defined the License
Agreement).
1.2 INDEX OF ADDITIONAL DEFINED TERMS. In addition, the terms
listed in the left column below shall have the respective meanings ascribed to
such terms in the Section of this Agreement listed opposite such terms in the
right column below:
DEFINED TERM SECTION
------------ -------
AGREEMENT.................................................Introduction
AGREEMENT TO BE BOUND (SUBORDINATED NOTE)............................5
COMPANY..................................................A of Recitals
FACILITY.................................................C of Recitals
FIRST MORTGAGE NOTES.....................................A of Recitals
FIRST MORTGAGE NOTES FINANCING AGREEMENTS..........................2.1
JUNIOR CREDITOR...........................................Introduction
PFC......................................................A of Recitals
PREMIER..................................................A of Recitals
STANDSTILL PERIOD..................................................7.2
SUBORDINATED NOTE........................................B of Recitals
SUBORDINATED NOTE FINANCING AGREEMENTS.............................2.1
SUBORDINATED NOTE REPAYMENT OBLIGATIONS............................3.2
TRUSTEE...................................................Introduction
1.3 INTERPRETATION. Unless otherwise required by the context in
which any term appears, the singular shall include the plural and the masculine
shall include the feminine and neuter. All references to "Sections" or
"Exhibits" shall be to Sections of or Exhibits to this Agreement, and references
to paragraphs shall be to separate paragraphs of the section or subsection in
which the reference occurs. The titles of the Sections herein have been inserted
as a matter of convenience of reference only, and shall not control or affect
the meaning or construction of any of the terms or provisions hereof.
2. THE CREDIT DOCUMENTS
2.1 LENDERS' CONFIRMATIONS. The Junior Creditor has reviewed the
Indenture, the First Mortgage Notes and the Collateral Documents and hereby
approves of and consents to the Indenture, the First Mortgage Notes and the
Collateral Documents and the related documents executed in connection therewith
(collectively, and together with this Agreement, the "FIRST MORTGAGE NOTES
FINANCING AGREEMENTS").
2.2 LOSS PROCEEDS. If and to the extent that the Trustee releases
or consents to the release of insurance or condemnation proceeds pursuant to the
Indenture for the purpose of restoring the Facility, the Junior Creditor shall
also release or authorize the release of such funds for such purpose, to the
extent, if any, that such party's consent to such release is necessary under the
Subordinated Note Financing Agreements.
3. SUBORDINATION PROVISIONS.
EXECUTION VERSION
5
3.1 SUBORDINATION OF CLAIMS. The Junior Creditor agrees on its own
behalf, that any and all Subordinated Note Claims shall be subordinate and
subject in right of payment to all First Mortgage Notes Obligations to the
extent and in the manner provided in these subordination provisions, each holder
of any such Subordinated Note Claim (or of any instrument evidencing the same)
by acceptance thereof agrees to be bound by these subordination provisions,
until the Other Payment Release Condition has been satisfied; PROVIDED that the
Company may make payments to, or for the benefit of, Junior Creditor in respect
of payments due the Subordinated Note (which the Junior Creditor is hereby
specifically authorized to receive and retain) only under the circumstances and
in the amounts set forth in SECTION 4 below. If the Company fails because of
this Agreement to pay principal of, premium or interest or any other amounts on
the Subordinated Note on the due date, the failure is still a Subordinated Note
Event of Default under the Subordinated Note (subject to the expiration of any
applicable grace period, in accordance with the terms of the Subordinated Note
Financing Agreements).
3.2 DISTRIBUTION OF ASSETS.
(a) If all or any part of the assets of the Company, or the
proceeds thereof, are subject to any distribution, division or application to
the creditors of the Company, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of the Company is dissolved or if (except as
expressly permitted by the Indenture) all or substantially all of the assets of
the Company are sold, and if as a result of the foregoing the First Mortgage
Notes are then due to be Paid in Full by the Company in accordance with the
Indenture (without regard to any provision of any Bankruptcy Law that might
prevent the First Mortgage Notes from becoming due to be Paid in Full), then,
and in any such event, any payment or distribution of any kind or character,
whether in cash, securities, other investment property or otherwise, which shall
be payable or deliverable upon or with respect to any repayment obligations of
the Company to the Junior Creditor under the Subordinated Note or the
Subordinated Note Financing Agreements, including without limitation any
penalties, fees, expenses, indemnifications, reimbursements or damages (the
"SUBORDINATED NOTE REPAYMENT OBLIGATIONS") shall be paid or delivered directly
to the Trustee for application to the First Mortgage Notes, due, until the Other
Payment Release Condition has been satisfied.
(b) Following the satisfaction of the Other Payment Release
Condition and the Trustee's and Company's receipt of a written notice from the
Junior Creditor specifying the amount necessary to pay in full in cash the
Subordinated Note Repayment Obligations, the Trustee shall promptly pay any
amounts in excess of the amounts required to Pay in Full the First Mortgage
Notes Obligations to the Junior Creditor for application to the Subordinated
Note Repayment Obligations in accordance with the terms thereof; PROVIDED,
HOWEVER, that if the amount of such excess is greater than the amount necessary
to pay in full in cash the Subordinated Note Repayment Obligations as specified
in such written notice from the Junior Creditor, then the Trustee shall pay the
amount specified in such notice to the Junior Creditor and shall retain the
excess in a segregated account as provided below to be released to the
appropriate party pursuant to this Section. Promptly after the payment in full
in cash of the Subordinated Note Repayment Obligations, the Trustee shall pay
any amounts in excess of the amounts required to Pay in Full the First Mortgage
Notes Obligations and to pay in full in cash the Subordinated Note Repayment
Obligations as follows: (1) if the Trustee shall have
EXECUTION VERSION
6
foreclosed upon the pledge of the membership interests in the Company pursuant
to the "Collateral Documents" (as defined in the Indenture), then the Trustee
shall pay such amounts directly to AA Capital to be distributed in accordance
with the Equity Agreement, or to the persons legally entitled thereto as
directed by a court of competent jurisdiction; and (2) if the Trustee shall not
have foreclosed upon the pledge of the membership interests in the Company
pursuant to the "Collateral Documents" (as defined in the Indenture), then the
Trustee shall pay such amounts directly to Premier, or to the persons legally
entitled thereto as directed by a court of competent jurisdiction.
(c) Notwithstanding anything to the contrary contained in this
SECTION 3.2, the Junior Creditor shall be entitled to retain any distributions
of equally subordinated debt or equity securities to the extent permitted under
SECTION 9. Excess amounts not immediately applied by the Trustee to Pay In Full
the First Mortgage Notes Obligations or to pay in full the Subordinated Note
Repayment Obligations shall be held by the Trustee in a segregated account and
invested in "Governmental Securities" (as defined in the Indenture) until such
funds are released to the appropriate party in accordance with this SECTION 3.2.
Any investment income earned on such excess amounts shall be released to the
appropriate party when such excess amounts are released in accordance with this
SECTION 3.2.
3.3 VOTING AND PROOFS OF CLAIM. At any meeting of creditors or in
the event of any Insolvency or Liquidation Proceeding involving the Company, the
Junior Creditor shall retain the right to vote, file a proof of claim and
otherwise act with respect to the Subordinated Note Repayment Obligations
(including the right to vote to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition, or extension), provided
that the Junior Creditor shall not initiate or prosecute any claim or action in
such Insolvency or Liquidation Proceeding challenging the enforceability of the
First Mortgage Notes Obligations, this Agreement, or any liens and security
interests securing the First Mortgage Notes Obligations. In the event the Junior
Creditor fails to execute, verify, deliver and file any proofs of claim in
respect of the Subordinated Note Repayment Obligations in connection with any
such Insolvency or Liquidation Proceeding prior to 15 days before the expiration
of the time to file any such proof or fails to vote any such claim in any such
Insolvency or Liquidation Proceeding prior to five days before the expiration of
the time to vote any such claim, the Junior Creditor hereby irrevocably
authorizes, empowers and appoints the Trustee its agent and attorney-in-fact to
execute, verify, deliver and file such proofs of claim and vote such claim in
any such Insolvency or Liquidation Proceeding; provided (i) if following the
filing of any such proof of claim, the Junior Creditor timely files a proper
proof of claim, then such filing by the Junior Creditor shall be deemed to
control and supercede any such previous filing by the Trustee and, upon the
written request of the Junior Creditor, the Trustee will withdraw such previous
filing and (ii) the Trustee shall have no obligation to exercise any such
authority with respect to the Junior Creditor's claim.
3.4 RECEIPT OF PAYMENTS.
(a) If any payment, distribution, security or other investment
property or instrument or any proceeds thereof is received by the Junior
Creditor, upon or with respect to the Subordinated Note Repayment Obligations in
violation of this Agreement, the Junior Creditor shall receive and hold the same
in trust, as trustee, for the benefit of the Trustee and the
EXECUTION VERSION
7
Holders, and shall forthwith deliver the same to the Trustee, for the benefit of
the Holders, in precisely the form received (except for the endorsement or
assignment of the Junior Creditor where necessary or advisable in the Trustee's
judgment), for application to any of the First Mortgage Notes, due or to become
due, and, until so delivered, the same shall be segregated from the other assets
of the Junior Creditor and held in trust by the Junior Creditor as the property
of the Trustee, for application to the First Mortgage Notes due or to become due
until the Other Payment Release Condition has been satisfied. If such Junior
Creditor fails to make any such endorsement or assignment to the Trustee, the
Trustee or any of its officers, employees or representatives are hereby
irrevocably authorized to make the same.
(b) Following the satisfaction of the Other Payment Release
Condition and the Trustee's and Company's receipt of a written notice from the
Junior Creditor specifying the amount necessary to pay in full in cash the
Subordinated Note Repayment Obligations, the Trustee shall pay any amounts in
excess of the amounts required to Pay in Full the First Mortgage Notes
Obligations to the Junior Creditor for application to the Subordinated Note
Repayment Obligations in accordance with the terms thereof; PROVIDED, HOWEVER,
that if the amount of such excess is greater than the amount necessary to pay in
full in cash the Subordinated Note Repayment Obligations as specified in such
written notice from the Junior Creditor, then the Trustee shall pay the amount
specified in such notice to the Junior Creditor and shall retain the excess in a
segregated account as provided below to be released to the appropriate party
pursuant to this Section. Promptly after the payment in full in cash of the
Subordinated Note Repayment Obligations, the Trustee shall pay any amounts in
excess of the amounts required to Pay in Full the First Mortgage Notes
Obligations and to pay in full in cash the Subordinated Note Repayment
Obligations as follows: (1) if the Trustee shall have foreclosed upon the pledge
of the membership interests in the Company pursuant to the "Collateral
Documents" (as defined in the Indenture), then the Trustee shall pay such
amounts directly to AA Capital to be distributed in accordance with the Equity
Agreement, or to the persons legally entitled thereto as directed by a court of
competent jurisdiction; and (2) if the Trustee shall not have foreclosed upon
the pledge of the membership interests in the Company pursuant to the
"Collateral Documents" (as defined in the Indenture), then the Trustee shall pay
such amounts directly to Premier, or to the persons legally entitled thereto as
directed by a court of competent jurisdiction. Excess amounts not immediately
applied by the Trustee to Pay In Full the First Mortgage Notes Obligations or to
pay in full the Subordinated Note Repayment Obligations shall be held by such
party in a segregated account and invested in "Governmental Securities" (as
defined in the Indenture) until such funds are released to the appropriate party
in accordance with this SECTION 3.4. Any investment income earned on such excess
amounts shall be released to the appropriate party when such excess amounts are
released in accordance with this SECTION 3.4.
(c) Notwithstanding anything to the contrary in this
SECTION 3.4, the Junior Creditor shall be entitled to retain any distributions
of equally subordinated debt or equity securities to the extent permitted under
SECTION 9. The First Mortgage Notes Obligations shall continue to be treated as
First Mortgage Notes Obligations and the provisions of this Agreement shall
continue to govern the relative rights and priorities of the Trustee and the
Junior Creditor even if all or part of the First Mortgage Notes Obligations or
the security interests securing the First Mortgage Notes Obligations are
subordinated or set aside, avoided, invalidated or disallowed in connection with
any such Insolvency or Liquidation Proceeding, and this
EXECUTION VERSION
8
Agreement shall be reinstated if at any time any payment of any of the First
Mortgage Notes Obligations is rescinded or must otherwise be returned by any
holder of the First Mortgage Notes or any representative of such holder.
3.5 NO ASSIGNMENT OR MODIFICATION. The Junior Creditor agrees that
until the Other Payment Release Condition has been satisfied, the Junior
Creditor will not (a) assign or transfer, or agree to assign or transfer, to any
Person (other than in favor of the Trustee for the benefit of the Holders) any
claim such party has or may have against the Company, except as expressly
permitted under SECTION 5; or (b) otherwise amend, modify, supplement, waive or
fail to enforce any provision of this Agreement except as permitted by Article 4
of the Indenture. The Junior Creditor shall be entitled to amend, modify or
supplement any provisions of the Subordinated Note Financing Agreements without
the prior written consent of the Trustee so long as such amendments,
modifications or supplements do not: (i) cause the principal amount (or accreted
value, as appropriate) of the Subordinated Note to exceed $10,000,000 plus
accrued interest on the portion of the Subordinated Note to be amended and
expenses; or (ii) cause the final maturity date of the Subordinated Note to be
earlier than 91 days after the final maturity date of the First Mortgage Notes
Obligations; or (iii) change circumstances upon which Premier is required to
make mandatory prepayments of the Subordinated Note; or (iv) modify the interest
rate (unless such increase does not increase the amount of cash portion of debt
service associated with the Subordinated Note Claims payable prior to the
Payment in Full of the First Mortgage Notes Obligations); or (v) modify the
interest or principal payment dates under the Subordinated Note Financing
Agreements, except for changes in payment dates corresponding to changes to
principal or interest payment dates under the Indenture or the First Mortgage
Notes; or (vi) otherwise violate or conflict with SECTIONS 4.09 and 4.07 of the
Indenture [PERMITTED INDEBTEDNESS; RESTRICTED PAYMENT COVENANT]. Notwithstanding
anything to the contrary in this SECTION 3.5, the Junior Creditor shall be
entitled to retain any distributions of equally subordinated debt or equity
securities to the extent permitted under SECTION 9.
3.6 NO CLAIM TO COLLATERAL BY JUNIOR CREDITOR.
3.6.1 NO CLAIM; NO ACQUISITION OF INTEREST IN COLLATERAL. The
Junior Creditor confirms that it has absolutely no lien, claim, right, title or
interest in or to the Collateral or any portion thereof, and shall not at any
time directly or indirectly acquire any interest in any Collateral other than
judgment liens obtained pursuant to the Junior Creditor's Exercise of Remedies
in accordance with, and as permitted under, this Agreement. If the Junior
Creditor ever obtains any right, title, interest or lien in the Collateral, the
Junior Creditor shall, within ten days after written demand by the Trustee,
terminate and release such interest or assign it to the Trustee as directed by
the Trustee to the extent that such Collateral is being sold and the proceeds of
such sale are to be used to permanently reduce the First Mortgage Notes
Obligations.
3.6.2 PRIORITY. The Trustee on behalf of the Holders and the
Junior Creditor acknowledges that (a) the Subordinated Note and the Subordinated
Note Repayment Obligations are not and will not be secured by any Collateral and
the Junior Creditor shall have no lien, charge or interest in the Collateral
other than judgment liens permitted under SECTION 3.6.1; (b) until the Other
Payment Release Condition has been satisfied, any lien, charge, and interest
that the Junior Creditor may acquire in the Collateral by operation of law or
otherwise in violation of clause (a) above is subject and subordinate to the
rights of the Trustee and the
EXECUTION VERSION
9
Holders in the Collateral and (c) the Junior Creditor shall have no right to
possession of any such assets or to foreclose upon, or exercise any other remedy
in respect of, any such assets, whether by judicial action or otherwise, unless
and until the Other Payment Release Condition has been satisfied. If the
Trustee, the Holders, or a purchaser at a foreclosure sale held by the Trustee
acquires title to the Collateral, then such title shall be free and clear of,
and absolutely not subject to, any claim, right, title or interest of the Junior
Creditor, except as provided above.
4. CONDITIONS TO REPAYMENT UNDER THE SUBORDINATED NOTE. All payments with
respect to the Subordinated Note shall be subject to the terms and conditions of
the Investment Agreement and the Subordinated Note, provided that, the Company
may: (a) make payments to the Junior Creditor as permitted by SECTION 4.07 of
the Indenture [RESTRICTED PAYMENTS COVENANT] so long as no Blocking Event has
occurred and is then continuing; and (b) make any other payments under or with
respect to the Subordinated Note Financing Agreements (including principal
payments) only if the Other Payments Release Condition is satisfied immediately
before such payment is made.
5. OWNERSHIP AND ASSIGNMENT OF SUBORDINATED NOTE.The Junior Creditor
represents and warrants that it is the lawful owner of the Subordinated Note,
and no part thereof has been assigned to or subordinated or subjected to any
other security interest in favor of anyone other than the Trustee (for the
benefit of the Holders). The Trustee agrees that the Junior Creditor may assign
all or any portion of the Subordinated Note only if (a) Junior Creditor has, or
has caused its assignee to, pay the Trustee's attorney's fees and costs in
connection therewith; (b) such assignment is made in compliance with the terms
of the Investment Agreement and (c) such assignee executes and delivers to the
Trustee an agreement to be bound by the terms of this Agreement (including
provisions relating to assignment), in form and substance substantially similar
(as determined by the Trustee) to EXHIBIT A attached hereto (an "AGREEMENT TO BE
BOUND (SUBORDINATED NOTE)").
6. LEGENDS. Each instrument evidencing any Subordinated Note Claim,
shall contain the following legend conspicuously noted on the face thereof:
"THIS NOTE AND THE RIGHTS OF THE HOLDER(S) OF THIS NOTE ARE SUBJECT TO THE TERMS
OF THE
INTERCREDITOR AGREEMENT (AS DEFINED BELOW) PURSUANT TO WHICH THIS NOTE
AND SUCH RIGHTS ARE MADE EXPRESSLY SUBORDINATE TO THE RIGHTS OF THE TRUSTEE
UNDER THE INDENTURE AND THE HOLDERS OF THE FIRST MORTGAGE NOTES (EACH AS DEFINED
THEREIN) AND CERTAIN OTHER PARTIES. EACH HOLDER OF THIS NOTE, BY ACCEPTANCE
HEREOF, AGREES TO BE SUBJECT TO THE TERMS OF THE
INTERCREDITOR AGREEMENT" and
shall specifically state that a copy of this Agreement is on file with the
Junior Creditor and is available for inspection at the Junior Creditor's
offices.
7. EVENTS OF DEFAULT AND STANDSTILL PERIOD.
7.1 NOTIFICATION OF EVENT OF DEFAULT. The Company hereby agrees,
for the benefit of the Trustee on behalf of the Holders, to provide written
notice to the Trustee within 10 Business Days after obtaining actual knowledge
of the occurrence or assertion of a Subordinated Note Event of Default. The
Junior Creditor, may, but shall not be required to, provide written notice to
the Trustee of the occurrence of a Subordinated Event of Default. Until such
notice
EXECUTION VERSION
10
(from either the Company or the Junior Creditor) has been delivered to the
Trustee and the Standstill Period has expired in accordance with and subject to
the provisions of SECTION 7.2, the Junior Creditor shall refrain from the
Exercise of Remedies.
7.2 STANDSTILL PERIOD. The delivery by the Junior Creditor or the
Company to the Trustee of the notice of a Subordinated Note Event of Default
referred to in SECTION 7.1 with respect to the occurrence of a Subordinated Note
Event of Default, which notice references the commencement of the Standstill
Period, shall commence a Standstill Period of 180 days ("STANDSTILL PERIOD").
Until the expiration of such Standstill Period:
(a) unless otherwise agreed in writing by the Credit Parties, the
Junior Creditor agrees not to Exercise Remedies (except (i) to the extent that
such Exercise of Remedies is necessary to prevent the expiration of any
applicable statute of limitations; or (ii) for seeking specific performance or
other injunctive relief to compel the Company to comply with an obligation under
the Subordinated Note Financing Agreements, so long as (1) it is not accompanied
by a claim for monetary damages, (2) it does not have a material adverse effect
on the Collateral and (3) it does not, and is not likely to, require the Company
incur any material expense) unless (x) the Trustee Exercises Remedies (except
and to the extent that such Exercise of Remedies is necessary to prevent the
expiration of any applicable statute of limitations); (y) an Insolvency or
Liquidation Proceeding has commenced or been initiated with respect to the
Company; or (z) there occurs (1) a sale, assignment, transfer or other
disposition of all or substantially all of the assets of the Company, (2) a
merger or consolidation of the Company with another Person where the Company is
not the surviving or successor entity, (3) a change in the equity ownership of
the Company such that one or more Persons (other than the equity holders of the
Company as of the date hereof) either (i) own in the aggregate in excess of 50%
of the then outstanding equity interests of the Company or (ii) are able to
elect a majority of the board of directors of the Company or (4) a distribution
of the Company's assets as described in SECTION 3.2 above; and
(b) the Junior Creditor shall reinstate the Subordinated Note
Financing Agreements and recommence funding thereunder in accordance with the
terms of such Subordinated Note Financing Agreement only: (i) if all
Subordinated Note Events of Default are cured (or waived to the satisfaction of
the Junior Creditor), (ii) all First Mortgage Notes Events of Default under the
First Mortgage Notes Financing Agreements are cured (or waived to the
satisfaction of the Trustee) and (iii)(A) the Trustee notifies the Junior
Creditor that the First Mortgage Notes Financing Agreements will be reinstated
and that funding under the First Mortgage Notes Financing Agreements will
recommence; or (B) the First Mortgage Notes Financing Agreements are otherwise
reinstated under applicable law.
8. OBLIGATIONS ABSOLUTE. Nothing contained herein shall: (a) impair,
except during a Blocking Event or as expressly provided herein, the obligation
of the Company to pay to the Junior Creditor all amounts payable in respect of
such Subordinated Note Claim as and when the same shall become due and payable
in accordance with the terms thereof; or (b) prevent, except during a Standstill
Period or as expressly provided herein, the Junior Creditor from exercising all
rights, powers and remedies otherwise permitted by applicable law or upon a
default or Subordinated Note Event of Default or any documents or agreements
related thereto, all subject to the rights of the Trustee and the Holders.
EXECUTION VERSION
11
9. BANKRUPTCY. Notwithstanding any other provision of this Agreement to
the contrary, the Trustee shall be entitled, at any time and upon its sole
discretion, to initiate or join as a petitioning creditor in an involuntary
Insolvency or Liquidation Proceeding against the Company. The Junior Creditor
shall not hinder, delay, limit or prohibit the exercise or enforcement of any
right or remedy otherwise available to the Trustee and the Holders, PROVIDED,
HOWEVER, the Junior Creditor shall: (a) subject to SECTION 3.3, retain its right
to vote its proof of claim in any Insolvency of Liquidation Proceeding; and (b)
retain any distributions of equally subordinated debt or equity securities up to
the amount of the Subordinated Note Repayment Obligations.
10. TERMINATION OF AGREEMENT. This Agreement shall terminate automatically
upon on the 91st day after the date all First Mortgage Notes Obligations have
been Paid in Full; PROVIDED, HOWEVER, that if the Trustee is holding excess
proceeds to be released to the Junior Creditor, AA Capital, Premier or such
other persons legally entitled thereto pursuant to SECTIONS 3.2 OR 3.4 of this
Agreement, then the provisions of SECTIONS 3.2 AND 3.4 of this Agreement shall
survive and shall not terminate until the date the Trustee has made the final
disbursement of all remaining excess proceeds as provided in such SECTION 3.2 OR
3.4.
11. MISCELLANEOUS.
11.1 WAIVER. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designates the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
11.2 INVALIDITY. If, for any reason whatsoever, any one or more of
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
11.3 ASSIGNMENT. This Agreement is personal to the parties hereto
and, except as expressly permitted under SECTION 5, the rights and duties of any
party hereunder shall not be assignable except with the prior written consent of
the other parties. In any event, this Agreement shall inure to and be binding
upon the parties and their successors and permitted assigns.
11.4 TIME. Time is of the essence of each provision of this
Agreement.
11.5 CHOICE OF LAW. This Agreement shall be governed by the laws of
State of
New York of the United States of America and shall for all purposes be
governed by and construed in accordance with the laws of such state without
regard to the conflict of law rules thereof other than SECTION 5-1401 of the
New
York General Obligations Law.
11.6 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement among the parties with respect to the subject matter hereof and
supersedes any and all
EXECUTION VERSION
12
prior agreements, understandings and commitments, whether oral or written. This
Agreement may be amended only by a writing signed by duly authorized
representatives of all parties.
11.7 NOTICES. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either: (a) on the day of hand delivery; or (b) on the day sent, when
sent by United States certified mail, postage and certification fee prepaid,
return receipt requested, or via facsimile, addressed as follows:
To the Trustee:
U.S. BANK NATIONAL ASSOCIATION
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Junior Creditor:
RANK AMERICA, INC.
Xxxxx 000, X.X. Xxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
XXXXX XXXXXXX LLP
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section to the others.
11.8 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.
11.9 RIGHT TO CONSULT COUNSEL. The Trustee may, if it deems
necessary or appropriate, consult with and be advised by counsel in respect of
their duties hereunder. The Trustee shall be entitled to rely upon the advice of
its counsel in any action taken in its capacity as the Trustee hereunder and
shall be protected from any liability of any kind for actions taken in
reasonable reliance upon such opinion of its counsel. The Company, pursuant to
the Indenture, has agreed to pay all such reasonable counsel fees.
EXECUTION VERSION
13
11.10 THIRD PARTY BENEFICIARIES. The provisions of this Agreement are
intended for the sole benefit of the Trustee, the Holders and the Junior
Creditor and there are no intended third party beneficiaries hereof, except for
AA Capital, GAR and Premier solely with respect to their rights to receive
excess proceeds (if any) to the extent set forth in SECTIONS 3.2(b) AND 3.4(b)
of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXECUTION VERSION
14
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized officers, all as of the day and year
first above written.
Trustee:
U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as Trustee on behalf
of the Holders
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
Junior Creditor:
RANK AMERICA, INC.,
a Delaware corporation
By: /s/ Xxxxxxxx Xxxx
-------------------------
Name: Xxxxxxxx Xxxx
Title: Treasurer
ACKNOWLEDGED AND AGREED
PREMIER ENTERTAINMENT BILOXI LLC,
a Delaware limited liability company
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
PREMIER FINANCE BILOXI CORP.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
ACKNOWLEDGED AND AGREED
EXECUTION VERSION
as to SECTION 3.2(b) and 3.4(b) hereof:
AA CAPITAL EQUITY FUND, L.P.,
a Delaware limited partnership
By: AA Private Equity Investors Management LLC,
a Delaware limited liability company
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
---------------------------
Title: President
--------------------------
AA CAPITAL BILOXI CO-INVESTMENT FUND, L.P.,
a Delaware limited partnership
By: AA Private Equity Investors Management LLC,
a Delaware limited liability company
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
---------------------------
Title: President
--------------------------
GAR, LLC,
a Mississippi limited liability company
By: /s/ Xxx Xxxxxxxx, III
------------------------------
Name: Xxx Xxxxxxxx, III
Title: Authorized Member
EXECUTION VERSION
EXHIBIT A
FORM OF AGREEMENT TO BE BOUND
This AGREEMENT TO BE BOUND is executed by [INSERT NAME OF ASSIGNEE]
(the "ASSIGNEE").
Reference is made to that certain
Intercreditor Agreement dated as of
January 23, 2004 between U.S. Bank National Association, a national banking
association, as trustee under the Indenture (together with its successors and
assigns from time to time under the Indenture, the "TRUSTEE") and Rank America,
Inc., a Delaware corporation (the "JUNIOR CREDITOR") (the "
INTERCREDITOR
AGREEMENT"). Capitalized terms used but not otherwise defined herein shall have
the meaning set forth in the
Intercreditor Agreement.
On ____________, 20__ (the "TRANSFER DATE"), Junior Creditor
transferred [INSERT AMOUNT OF INTEREST TRANSFERRED] of the Subordinated Note
held by it to the Assignee.
Therefore, and pursuant to SECTION 5 of the
Intercreditor Agreement, the
Assignee hereby executed this AGREEMENT TO BE BOUND, WHEREBY Assignee
acknowledges that, as of the Transfer Date, it has become a "Junior Creditor"
under the
Intercreditor Agreement. The Assignee also hereby agrees to assume all
of the obligations of a "Junior Creditor" under the Intercreditor Agreement and
be otherwise bound by all of the terms thereunder, including without limitation
the provisions relating to assignment. The Assignee further agrees to execute
all documents necessary to carry out the purpose of this AGREEMENT TO BE BOUND
and to cooperate with the Trustee for the expeditious filing of any and all
documents and the fulfillment of the terms of this AGREEMENT TO BE BOUND. The
Assignee recognizes that a security interest has been granted in the
Subordinated Note to the Trustee, that such security interest shall be
unaffected by assignment of the Subordinated Note to the Assignee, and that the
Assignee shall be bound by all covenants with respect thereto, set forth in the
Intercreditor Agreement and the Investment Agreement.
Executed on this ___ day of ______, 20__.
[INSERT NAME OF ASSIGNEE],
as Assignee
---------------------------------------
Name:
Title:
Page 1 of 1
EXHIBIT A
EXECUTION VERSION
