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Exhibit 10.7
GUARANTEE
This GUARANTEE, dated as of May 11, 1999 (this "Guarantee"), is
executed by Horseshoe Entertainment, a Louisiana limited partnership (the
"Guarantor") for the benefit of Horseshoe Gaming Holding Corp., a Delaware
corporation (the "Company").
RECITALS:
WHEREAS, Horseshoe Gaming, L.L.C., a Delaware limited liability
company ("Horseshoe Gaming"), has executed a promissory note, of even date
herewith (the "Note"), in the principal amount of $240,349,125 to the order of
the Company; and
WHEREAS, Horseshoe Gaming has agreed to cause the Guarantor to
deliver a guarantee of its obligations under the Note pursuant to and in
accordance with this Guarantee.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:
1. The Guarantor hereby irrevocably and unconditionally guarantees:
(a) the full and prompt payment when due (whether at maturity,
by optional or mandatory prepayment, upon acceleration or otherwise) of the
principal and interest payable on the Note;
(b) the payment of all other obligations and indebtedness
(including, without limitation, all obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code and the operation of Sections
502(b) and 506(b) of the Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506 (b),
would become due) of Horseshoe Gaming now existing or hereafter incurred under,
arising out of, or in connection with the Note;
(c) the due performance and compliance by Horseshoe Gaming
with all of the terms, conditions and agreements contained in the Note; and
(d) all renewals, extensions, amendments and changes of, or
substitutions or replacements for, all or any part of the foregoing (all such
principal,
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interest, obligations, indebtedness, performance, compliance and payments,
collectively, the "Guaranteed Obligations").
All payments by the Guarantor under this Guarantee shall be made on
the same basis as payments by Horseshoe Gaming under the Note.
This guarantee is a primary obligation of the Guarantor and is a
guarantee of payment, and not merely of collection.
2. The Company may, at any time and from time to time, without the
consent of, or notice to, the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter the Guaranteed
Obligations, or any liability incurred directly or indirectly in respect
thereof, and the guarantee herein made shall apply to the Guaranteed Obligations
as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
(c) exercise or refrain from exercising any rights against
Horseshoe Gaming or others, or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations or
any liability (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and may subordinate the payment of all or any part
thereof to the payment of any liability (whether due or not) of Horseshoe Gaming
to creditors of Horseshoe Gaming other than the Company and the Guarantor;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of Horseshoe Gaming to the Company regardless of
what liabilities or liabilities of Horseshoe Gaming remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, the Note, or otherwise amend, modify or supplement the Note; or
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(g) act or fail to act in any manner referred to in this
Guarantee which may deprive the Guarantor of its right to subrogation against
Horseshoe Gaming to recover full indemnity for any payments made pursuant to
this Guarantee.
3. The liability of the Guarantor hereunder is exclusive and
independent of any security for or other guarantee of the indebtedness of
Horseshoe Gaming whether executed by the Guarantor or by any other person or
entity, and the liability of the Guarantor hereunder shall not be affected or
impaired by any circumstance or occurrence whatsoever, including, without
limitation: (a) any direction as to the application of payment by Horseshoe
Gaming or any other person or entity; (b) any other continuing or other
guarantee, undertaking or maximum liability of the Guarantor or of any other
person or entity as to the indebtedness of Horseshoe Gaming; (c) any payment on
or in reduction of any such other guarantee or undertaking; (d) any dissolution,
termination or increase, decrease or change in personnel by Horseshoe Gaming;
(e) any payment made to the Company in respect of the Guaranteed Obligations
which the Company repays to Horseshoe Gaming or the Guarantor pursuant to court
order in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and the Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding; (f)
any action or inaction by the Company as contemplated by Section 2 hereof; or
(g) any invalidity, irregularity or unenforceability of all or part of the
Guaranteed Obligations. Notwithstanding the foregoing, the Guarantor agrees that
this Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment (in whole or in part) of the Guaranteed
Obligations is rescinded or must otherwise be restored by the Company, upon the
insolvency, bankruptcy or reorganization of Horseshoe Gaming or otherwise, as
though such payment had not been made.
4. The obligations of the Guarantor hereunder are independent of the
obligations of Horseshoe Gaming, and a separate action or actions may be brought
and prosecuted against the Guarantor whether or not action is brought against
Horseshoe Gaming, and whether or not Horseshoe Gaming be joined in any such
action or actions.
5. The Guarantor represents and warrants to the Company as follows:
(a) The Guarantor (i) is a duly formed and validly existing
limited partnership in good standing under the laws of the jurisdiction of the
State of Mississippi and (ii) has the power and authority to own its property
and assets and to transact the business in which it is engaged.
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(b) The Guarantor has the power to execute, deliver and
perform the terms and provisions of this Guarantee and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Guarantee. The Guarantor has duly executed and delivered this Guarantee, and
this Guarantee constitutes the legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and by general equitable
principles (regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
(c) Neither the execution, delivery or performance by the
Guarantor of this Guarantee, nor compliance by it with the terms and provisions
hereof, (i) will contravene any provision of any law, statute, rule or
regulation or any order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any lien or encumbrance upon any of the property
or assets of the Guarantor pursuant to the terms of any material indenture,
mortgage, deed of trust, credit agreement, loan agreement or any other
agreement, contract or instrument to which such Guarantor is a party or by which
it or any of its property or assets is bound or to which it may be subject or
(iii) will violate any provision of the certificate of limited partnership,
partnership agreement or other organizational documents of the Guarantor,
excluding from the foregoing clauses (i) and (ii) such contraventions,
conflicts, breaches or defaults which could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
financial condition of the Guarantor or its ability to perform its obligations
under this Guarantee.
6. This Guarantee is a continuing one and all liabilities to which
it applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of the
Company in exercising any right, power or privilege hereunder and no course of
dealing between the Guarantor and the Company shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights, powers and remedies herein
expressly provided are cumulative and not exclusive of any rights, powers or
remedies which the Company would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the Company to any other or further action in any circumstances without notice
or demand.
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7. This Guarantee shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Company and its
permitted successors and assigns.
8. This Guarantee will terminate automatically upon the payment in
full of the principal of and interest on the Note. Neither this Guarantee nor
any provision hereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination shall be in a writing signed by
the Company.
9. Notices given pursuant to any provision of this Agreement shall
be deemed given when received and shall be addressed as follows: (i) if to the
Company to Horseshoe Gaming Holding Corp., 0000 X. Xxxxxxxxxx Xxxx, Xxx Xxxxx,
Xxxxxx 00000, with a copy to Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx,
Esq. and (ii) if to the Guarantor, c/o Horseshoe Gaming Holding Corp., 0000 X.
Xxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000, with a copy to Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxxxx, Esq., or in any case to such other address as the
person to be notified may have requested in writing.
10. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by Horseshoe Gaming or others
(including the Guarantor), with respect to the Guaranteed Obligations shall, if
the statute of limitations in favor of the Guarantor against the Company shall
have commenced to run, toll the running of such statute of limitations, and if
the period of such statute of limitations shall have expired, prevent the
operation of such statute of limitations.
11. The Guarantor confirms that neither the guarantee by the
Guarantor pursuant to this Guarantee nor any liability or payment by it
hereunder shall (i) render the Guarantor "insolvent," or (ii) constitute a
fraudulent transfer or conveyance, or (iii) constitute a transaction at an
undervalue or preference, or (iv) give rise to any similar or analogous event,
thing or circumstance, in each case, for purposes of the Bankruptcy Code, the
Uniform Fraudulent Conveyances Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the Company
and the Guarantor hereby irrevocably agree that the Guaranteed Obligations shall
be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of the Guarantor, result in the Guaranteed
Obligations hereunder neither rendering the Guarantor "insolvent" nor
constituting such fraudulent transfer or conveyance, such transaction at an
undervalue or preference or such other event, thing or circumstance, in each
case, under any such law.
12. This Guarantee and the rights and obligations of the Company and
the Guarantor hereunder shall be construed in accordance with and governed by
the
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law of the State of New York, including without limitation, Section 5-1401 of
The New York General Obligations Law.
13. The Guarantor hereby:
(a) waives any right to require the Company to proceed against
Horseshoe Gaming or any other party, or pursue any other remedy in the Company'
power whatsoever;
(b) waives any defense based on or arising out of any defense
of Horseshoe Gaming or any other party other than payment in full of the
Guaranteed Obligations, including, without limitation, any defense based on or
arising out of the disability of Horseshoe Gaming or any other party, the
absence of any other party in any proceeding or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of Horseshoe Gaming other than payment in full of the
Guaranteed Obligations;
(c) agrees that the Company may, at its election, exercise any
right or remedy the Company may have against Horseshoe Gaming or any other
party, without affecting or impairing in any way the liability of the Guarantor
hereunder, and waives any defense arising out of any such election by the
Company, even though such election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of the Guarantor against
Horseshoe Gaming or any other party;
(d) waives all presentments, demands for performance, protests
and notices, including, without limitation, notices of nonperformance, notices
of protest, notices of dishonor, notices of acceptance of this Guarantee, and
notices of the existence, creation or incurring of new or additional
indebtedness;
(e) assumes all responsibility for being and keeping itself
informed of the financial condition and assets of Horseshoe Gaming, and of all
other circumstances bearing upon the risk of non-payment of the Guaranteed
Obligations and the nature, scope and extent of the risks the Guarantor assumes
and incurs hereunder, and agrees that the Company shall have no duty to advise
the Guarantor of information known to it regarding such circumstances or risks;
(f) so long as the Guaranteed Obligations remain unpaid, the
Guarantor hereby agrees that it will not claim and hereby irrevocably waives for
such period all rights of subrogation it may at any time otherwise have as a
result of this Guarantee (whether contractual, under Section 509 of the United
States Bankruptcy Code, or otherwise) to the claims of the Company against
Horseshoe Gaming; and
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(g) waives all claims (as such term is defined in the United
States Bankruptcy Code) it may at any time otherwise have against Horseshoe
Gaming arising from any transaction whatsoever, including without limitation,
its right to assert or enforce any such claims.
The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from this Guarantee, the Note and the transactions
contemplated in connection therewith and the waivers set forth herein are
knowingly made in contemplation of such benefits. The Guarantor warrants and
agrees that each of the waivers set forth in this Guarantee is made with full
knowledge of its significance and consequences and that if any of such waivers
are determined to be contrary to any applicable law or public policy, such
waivers shall be effective only to the maximum extent permitted by law.
14. Any rights of the Guarantor, whether now existing or later
arising, to receive payment on account of any indebtedness (including interest)
owed to it by Horseshoe Gaming or to receive any payment from Horseshoe Gaming
shall at all times be subordinate as to lien and time of payment and in all
other respects to the full and prior repayment of the Guaranteed Obligations.
The Guarantor shall not be entitled to enforce or receive payment of any sums
hereby subordinated until the Guaranteed Obligations have been paid and
performed in full and any such sums received in violation of this Guarantee
shall be received by the Guarantor in trust for the Company.
15. The Guarantor hereby consents to the Company's pledge of this
Guarantee and the other Pledged Collateral (under and as defined in that certain
Horseshoe Note Pledge and Security Agreement, of even date herewith (the "Pledge
Agreement"), among the Company, Horseshoe Gaming and U.S. Trust Company,
National Association, as trustee (the "Trustee") under the Indenture, of even
date herewith, between the Company and the Trustee relating to the Company's
8 5/8% Senior Subordinated Notes due 2009) to the Trustee and to all other terms
of the Pledge Agreement. Notwithstanding the terms of this Guarantee or any
other agreement or any instructions from the Company or any other entity to the
contrary, the Guarantor agrees to make all payments that become due under this
Guarantee to the Trustee (1) if the Trustee delivers written notice to the
Guarantor that an Event of Default (as defined in the Indenture) has occurred
and is continuing and (2) on and after the Maturity Date (as defined in the
Note). Once the Guarantor becomes obligated to make payments hereunder to the
Trustee, it shall remain so obligated until otherwise instructed by the Trustee.
The Guarantor shall not enter into any agreement with any other Person that is
inconsistent with its obligations under this paragraph 15. The Guarantor
acknowledges that no amendment, modification, or waiver of any provision of this
Guarantee will be valid without the Trustee's prior written consent.
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
executed and delivered as of the date first above written.
GUARANTOR:
HORSESHOE ENTERTAINMENT
By: New Gaming Capital Partnership,
its General Partner
By: Horseshoe GP, Inc.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer and
Treasurer
