Exhibit 10.22
COMPLETION GUARANTOR SUBORDINATION AGREEMENT
(Convertible Junior Subordinated Debentures)
COMPLETION GUARANTOR SUBORDINATION AGREEMENT (as amended,
modified or supplemented from time to time, this "Agreement"), dated as of
October 30, 1998, among XXXXXX'X ENTERTAINMENT, INC., a Delaware corporation
("HET"), XXXXXX'X OPERATING COMPANY, INC., a Delaware corporation ("HOCI" and,
together with HET, the "Completion Guarantors" and each a "Completion
Guarantor"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
(together with any successor, the "Trustee") under the Indenture (as defined
below). Except as otherwise defined herein, terms used herein and defined in the
Indenture 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 and JCC Holding Company, a Delaware corporation ("JCC Holding"), and the
Trustee, have entered into that certain indenture (as from time to time amended,
modified, or supplemented, the "Indenture"), pursuant to which the Company has
issued $27,287,500 principal amount of its 8% Convertible Junior Subordinated
Debentures (the "Securities").
E. Pursuant to the Plan, the Completion Guarantors (a) have
entered into (i) that certain Notes Completion Guarantee in favor of the Trustee
as Trustee with respect to the New Bonds and New Contingent Bonds (each as
defined in the Plan) (as amended, modified or supplemented from time to time,
the "Notes Completion Guarantee"), (ii) that certain LGCB Completion Guarantee
in favor of the Louisiana Gaming Control Board (the "LGCB") (as amended,
modified or supplemented from time to time, the "LGCB Completion Guarantee"),
(iii) that certain Bank Completion Guarantee in favor of the Administrative
Agent (as amended, modified or supplemented from time to time, the "Bank
Completion Guarantee"), and (iv) that certain City/RDC Completion Guarantee in
favor of Rivergate Development Corporation ("RDC") and the City of New Orleans
(the "City") (as amended, modified or supplemented from time to time, the
"City/RDC Completion Guarantee"), and (b) may in the future enter into one or
more completion or other guarantees in support of the obligations of the Company
(with all
completion and other guarantees described in this paragraph being herein
collectively called the "Completion Guarantees").
F. Contemporaneously herewith the Company, JCC Holding, as
guarantor, Bankers Trust Company, as the Administrative Agent, and certain
lenders have entered into that certain Credit Agreement (the "Credit Agreement")
pursuant to the Plan providing for (i) a senior secured term loan in the amount
of Sixty Million Dollars ($60,000,000) [(the "A Term Loan")], (ii) a secured
term loan in the amount of One Hundred Fifty-One Million Dollars ($151,000,000)
[(the "B Term Loan")], and (iii) 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].
G. Any amounts advanced or paid pursuant to the Completion
Guarantees (such amounts are referred to herein as "Completion Guarantee
Payments") will be loans (together with all other amounts owing to the
Completion Guarantors under the Completion Loan Agreement (as defined below),
the "Completion Loans") from the Completion Guarantors to the Company under that
certain Amended and Restated Completion Loan Agreement entered into by and among
the Company, HET and HOCI pursuant to the Plan (as amended, modified or
supplemented from time to time and together with the exhibits thereto, the
"Completion Loan Agreement").
H. The Trustee desires that the Completion Guarantors enter
into this Agreement in respect of all Completion Loans and any other amounts
whatsoever at any time owing by the Company to either or both Completion
Guarantors in respect of the Completion Guarantees, together with all principal,
interest, fees, indemnities and other amounts owing with respect thereto, are
herein called the "Subordinated Obligations."
I. As a condition to the issuance of the Securities, the
parties hereto (including the Completion Guarantors) are required to execute and
deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Definitions. For purposes of this Agreement, the term
"Subordinated Debenture Noteholders" shall mean the Holders (as defined in the
Indenture) from time to time of the Securities, and the term "Subordinated
Debenture Notes Obligations" shall mean (a) the principal of, and premiums, if
any, and interest (including, without limitation, post-petition interest at the
rate provided in the Indenture whether or not such post-petition interest is an
allowed claim against the debtor in any bankruptcy or similar proceeding) and
(b) all other Obligations (as defined in the Indenture) of the Company under the
Indenture and the Securities to the Subordinated Debenture Noteholders and the
Trustee.
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1.2. Subordination of Liabilities
(a) Each Completion Guarantor, for itself, its successors and
assigns, covenants and agrees that 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 Subordinated Debenture
Notes Obligations. The provisions of this Section 1 shall constitute a
continuing offer to all Persons who, in reliance upon such provisions, become or
continue to remain Subordinated Debenture Noteholders and such provisions are
made for the benefit of the Subordinated Debenture Noteholders and such
Subordinated Debenture 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 6.01(1)
and (2) of the Indenture, any acceleration of the Securities or declaration of
an Event of Default under Section 6.02 of the Indentures, or the bankruptcy of
the Company, any payments by the Company or any representative of the Company
shall be applied in the following order, subject to the rights of the LGCB under
that certain Amended and Renegotiated Casino Operating Contract entered into by
and among the State of Louisiana by and through the Louisiana Gaming Control
Board, Xxxxxx'x Jazz Company and the Company (the "Casino Operating Contract"),
the RDC under that certain Amended and Restated Lease Agreement among RDC, the
Company and the City (the "Lease"): (i) reimbursement of all management expenses
incurred in accordance with that certain Second Amended and Restated Management
Agreement by and between the Company and Xxxxxx'x New Orleans Management Company
(the "Management Agreement"); (ii) amounts as set forth in Section 11 of that
certain Intercreditor Agreement among HET, HOCI, Bankers Trust Company, Trustee,
as trustee, pursuant to the indentures for each of the Senior Subordinated Notes
due 2009 with Contingent Payments and the Senior Subordinated Contingent Notes
due 2009 and the other parties named therein; (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 in respect of the Convertible
Junior Subordinated Debentures; (vi) principal due in respect of the Securities;
(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 (as
defined in the Plan) on the New Bonds and the New Contingent Bonds.
1.3. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances.
(a) Until all Subordinated Debenture Notes Obligations shall
have been paid in full in cash, 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, except that for
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any period that cash interest is being paid pursuant to the Indenture, cash
interest may be paid on the Subordinated Obligations for such period.
(b) In the event that, notwithstanding the provisions of the
preceding subsection (a) of this Section 1.3, (i) the Company or any of its
Subsidiaries shall make any payment or distribution to any Completion Guarantor
on account of the Subordinated Obligations which is not permitted by said
subsection (a) or (ii) any Completion Guarantor receives any payment or
distribution from any enforcement or other action in respect of the Company or
any of its Subsidiaries, such payment or other distribution, shall be held by
any such Completion Guarantor in trust for the benefit of, and shall be paid
forthwith over and delivered to, the Trustee, for application pro rata to the
Subordinated Debenture Notes Obligations remaining unpaid to the extent
necessary to pay all Subordinated Debenture Notes Obligations in full in cash in
accordance with the terms of the Subordinated Debenture Notes Obligations, after
giving effect to any concurrent payment or distribution to or for the
Subordinated Debenture Noteholders.
1.4. Subordination to Prior Payment of All Senior Indebtedness 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):
(a) the Subordinated Debenture Noteholders shall first be
entitled to receive payment in full in cash of all Subordinated Debenture Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Subordinated Debenture Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before any Completion Guarantor is entitled to receive
any payment of any kind or character with respect to any Subordinated
Obligations;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which any Completion Guarantor would be entitled except the provisions of this
Section 1.3, 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 Subordinated
Debenture Noteholders or to the Trustee to the extent necessary to make payment
in full in cash of all Subordinated Debenture Notes Obligations remaining
unpaid, after giving effect to any concurrent payment or distribution to the
Subordinated Debenture Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.3, 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 any Completion Guarantor on account of
Subordinated Obligations before all Subordinated Debenture Notes Obligations are
paid in full in cash, which payment or distribution is not permitted by
preceding subsections (a) and (b) of this Section 1.3, subject to any rights of
any senior indebtedness or obligations, such payment or distribution shall be
received and held in trust for and shall be paid over to the
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Subordinated Debenture Noteholders or to the Trustee for application to the
payment of such Subordinated Debenture Notes Obligations until all Subordinated
Debenture Notes Obligations shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the Subordinated Debenture
Noteholders.
1.5. Effect of Subordination on Obligations Pursuant to Completion Loan
Agreement. Each Completion Guarantor hereby agrees for the benefit of the
Company, the Trustee and Subordinated Debenture Noteholders that, to the extent
and for so long as any payment or distribution in respect of Subordinated
Obligations is not permitted to be made pursuant to the provisions of this
Agreement, then, and notwithstanding anything to the contrary contained in the
Completion Loan Agreement or any other agreement, the Subordinated Obligations
shall not be payable by the Company until they are permitted to be paid in
accordance with the terms of this Agreement. To the extent that any such
Subordinated Obligations are not payable by the Company pursuant to this
Agreement, the Completion Guarantors shall forbear exercising any right to
accelerate the Company's obligations under the Completion Loan Agreement as a
result thereof so long as this Agreement shall continue to prohibit the Company
from making any such payments or distributions. Without limiting the foregoing,
no action shall be taken by any Completion Guarantor to enforce the payment of
any Subordinated Obligations by the Company until all Subordinated Debenture
Notes Obligations shall have been paid in full in cash.
1.6. Subrogation. After all Subordinated Debenture Notes Obligations
have been paid in full in cash, each Completion Guarantor shall have and be
entitled to all rights of subrogation otherwise 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 Subordinated Debenture Noteholders against the
Company or any other guarantor of the Subordinated Debenture Notes Obligations.
1.7. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness. No right of any Subordinated Debenture
Noteholder or the Trustee 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 Subordinated
Debenture Noteholder, or by any noncompliance by the Company with the terms and
provisions of the Completion Loan Agreement regardless of any knowledge thereof
which any such Subordinated Debenture Noteholder may have or be otherwise
charged with. The Subordinated Debenture Noteholders may, without in any way
affecting the obligations of any Completion Guarantor with respect hereto, at
any time and 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 Subordinated Debenture Notes Obligations or amend, modify
or supplement any agreement or instrument governing or evidencing such
Subordinated Debenture Notes Obligations or any other document referred to
therein, or exercise or refrain from exercising any other of their rights under
the Subordinated Debenture Notes Obligations, including, without limitation, the
waiver of default thereunder and the release of any collateral securing such
Subordinated Debenture Notes Obligations, all without notice to or assent from
any Completion Guarantor.
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2. 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 Trustee (with the consent of
Subordinated Debenture Noteholders holding 66-2/3% in principal amount of the
Subordinated Debenture Notes Obligations) and each Completion Guarantor.
3. 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.
4. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the Subordinated Debenture Noteholders, and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee as
directed by Subordinated Debenture Noteholders holding 66-2/3% in principal
amount of the Subordinated Debenture Notes Obligations. The provisions of this
Agreement are continuing provisions and all Subordinated Debenture Notes
Obligations to which they apply shall conclusively be presumed to have been
created in reliance thereon. 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. No provision of this Agreement shall be deemed to modify, or release
the Company from, any of its obligations pursuant to the Completion Loan
Agreement or to grant the Company any additional rights under the Completion
Loan Agreement. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and the Subordinated Debenture Noteholders, and the
respective successors and assigns of the foregoing.
5. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Indenture and satisfaction of all obligations to the
Subordinated Debenture Noteholders thereunder or (ii) the termination of the
Completion Guarantees and the Completion Loan Agreement and satisfaction of all
obligations to HET, HOCI and the Trustee thereunder and the obligations of the
Completion Guarantors under this Agreement (so long as the satisfaction of said
obligations does not violate the terms of this Agreement).
6. COMPLETION LOAN AGREEMENT
6.1. Notwithstanding anything to the contrary contained in the
Completion Loan Agreement, the Completion Guarantors hereby waive all rights to
take any action in respect of a default by the Company under Section 9 of the
Completion Loan Agreement, during any period in which the payment of the
Subordinated Obligations is prohibited under the terms of this Agreement.
6.2. The subordination and other provisions of this Agreement apply
only to the Subordinated Obligations and shall have no effect on the rights of
HET and HOCI pursuant to the HET/JCC Agreement (as defined in the Indenture).
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7. 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 HET or HOCI, at:
Xxxxxx'x Entertainment, Inc.
Xxxxxx'x Operating Company, Inc.
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
with a copy to the Corporate Secretary at the same address
(b) if to the Company, at:
Jazz Casino Company, L.L.C.
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: President
(c) 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]
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IN WITNESS WHEREOF, the Trustee and each Completion Guarantor
have caused this Agreement to be duly executed and delivered as of the date
first written above.
XXXXXX'X ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Vice President and Assistant Secretary
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XXXXXX'X OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Title: Vice President and Assistant Secretary
---------------------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
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Title: Vice President
---------------------------------------------
Acknowledged and agreed to by:
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company
By: /s/ L. Xxxxxxx Xxxxxx
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Name: L. Xxxxxxx Xxxxxx
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Title: Vice President-Finance, Secretary and Treasurer
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STATE OF NEW YORK
COUNTY 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. Xxxxxxxx, who
acknowledged himself to be Authorized Representative of Xxxxxx'x Entertainment,
Inc., a Delaware 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:
STATE OF NEW YORK
COUNTY 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 company 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:
STATE OF NEW YORK
COUNTY 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. Xxxxxxxx, who
acknowledged himself to be Authorized Representative of Xxxxxx'x Operating
Company, Inc., a Delaware 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:
STATE OF NEW YORK
COUNTY 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 L. Xxxxxxx Xxxxxx, who
acknowledged himself to be Vice President-Finance, Secretary and Treasurer
of Jazz Casino Company, L.L.C., aLouisiana 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 of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxxxx Xxxxx Xxxx
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
