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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
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TABLE OF CONTENTS
<Table>
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<C>
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
</Table>
EXECUTION VERSION
i
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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
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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
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"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 Harrison
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
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"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
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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:
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<Caption>
DEFINED TERM
SECTION
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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
</Table>
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
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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) F
