Exhibit 10.3
Execution Version
INTERCREDITOR
AGREEMENT
This INTERCREDITOR
AGREEMENT (this “
Agreement ”), dated as of January 28, 2008 is by
and among Bank of America, N.A., in its capacity as administrative
agent and collateral agent for the Secured Parties under the
below-described Credit Agreement (the “ Agent
”), Citibank, N.A. (including any successor administrative
agent under the below-described Bridge Loan Agreement, the “
Bridge Agent ”), in its capacity as administrative
agent under the below-described Bridge Loan Agreement, each
Additional Contributing Agent (as defined below) from time to time
party hereto and, upon the execution of a counterpart to this
Agreement following the execution of the below-described Indenture,
U.S. Bank National Association (including any successor trustee
under the below-described Indenture, the “ Notes
Trustee ”), in its capacity as Trustee under the
below-described Indenture.
R E C I T A L S
A. Harrah’s Operating Company,
Inc., a Delaware corporation (the “ Borrower ”),
is a party to that certain Credit Agreement (as the same may be
amended, supplemented, restated or otherwise modified from time to
time, the “ Credit Agreement ”), dated as of the
date hereof, among the Borrower, Hamlet Merger Inc., a Delaware
corporation (to be merged with and into Harrah’s
Entertainment, Inc. (“ Holdings ”)), the Agent,
the lenders from time to time party thereto (the “
Lenders ”) and the other agents from time to time
party thereto, pursuant to which, among other things, the Lenders
have agreed, subject to the terms and conditions set forth in the
Credit Agreement, to make certain loans and financial
accommodations to the Borrower. Capitalized terms used herein but
not otherwise defined shall have the meanings set forth in the
Credit Agreement; provided that, after consummation of any
Refinancing, such terms shall have the meaning corresponding to any
analogous terms set forth in the Refinancing Loan
Documents.
B. The Borrower, certain domestic
subsidiaries of the Borrower (the “ Subsidiary
Guarantors ”) and the Notes Trustee are expected to enter
into an indenture, dated on or about February 4, 2008 (as the
same may be amended, supplemented, restated or otherwise modified
from time to time as permitted hereunder, the “
Indenture ”) pursuant to which the Borrower will issue
senior unsecured notes (the “ Notes ” as the
same may be amended, supplemented, restated or otherwise modified
from time to time as permitted hereunder and including any notes
issued in exchange or substitution therefor), and pursuant to which
Holdings and the Subsidiary Guarantors will guarantee the
Borrower’s obligations under the Notes (the guarantees issued
by the Subsidiary Guarantors being referred to as the “
Note Guarantees ”).
C. The Borrower has entered into
that certain Senior Unsecured Interim Loan Agreement (as the same
may be amended, supplemented, restated or otherwise modified from
time to time, the “ Bridge Loan Agreement ”),
dated as of the date hereof, among the Borrower, the Bridge Agent,
the lenders from time to time party thereto and the other agents
from time to time party thereto, pursuant to which, among other
things, the lenders have agreed, subject to the terms and
conditions set forth in the Bridge Loan Agreement, to make loans to
the Borrower. Holding and the Subsidiary Guarantors have guaranteed
the obligations of the Borrower under the Bridge Loan Agreement
pursuant to a Guarantee dated the dated hereof among the Subsidiary
Guarantors and the Bridge Agent (as the same may be amended,
supplemented, restated or otherwise modified from time to time, and
with respect to the Subsidiary Guarantors only, the “
Bridge Guarantee ” and, together with the Note
Guarantees, the “ Guarantees ”)
D. Pursuant to this Agreement, the
Borrower may, from time to time, designate certain additional
Indebtedness of the Borrower and the Subsidiary Guarantors as
“Additional Contributing Indebtedness” by executing and
delivering an Additional Contributing Indebtedness Designation and
by complying with the procedures set forth in Section 7, and
any Additional Contributing Agent therefor shall thereafter
constitute a Contributing Agent, for all purposes under this
Agreement.
E. As an inducement to and as one of
the conditions precedent to the agreement of the Agent, the Lenders
and the other agents party thereto to consummate the transactions
contemplated by the Credit Agreement, such parties required the
execution and delivery of this Agreement by the Notes Trustee and
the Bridge Agent.
NOW, THEREFORE, in order to induce
the Agent and the Lenders to consummate the transactions
contemplated by the Credit Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereto hereby agree as
follows:
1. Definitions
. The following terms
shall have the following meanings in this Agreement:
“ Additional Contributing
Agent ” shall mean any one or more agents, trustees or
other representatives for or of any one or more Additional
Contributing Creditors, and shall include any successor thereto, as
well as any person designated as an “Agent” under any
Additional Contributing Facility.
“ Additional Contributing
Creditors ” shall mean one or more holders of Additional
Contributing Indebtedness (or commitments therefor) that is or may
be incurred under one or more Additional Contributing
Facilities.
“ Additional Contributing
Facilities ” shall mean any one or more agreements,
instruments and documents under which any Additional Contributing
Indebtedness is or may be incurred, including without limitation
any credit agreements, loan agreements, indentures or other
financing agreements, in each case as the same may be amended,
modified or supplemented from time to time, together with any other
agreement extending the maturity of, consolidating, restructuring,
refunding, replacing or refinancing all or any portion of
the
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Additional Contributing
Indebtedness, whether by the same or any other lender, debtholder
or group of lenders or debtholders, or the same or any other agent,
trustee or representative therefor, and whether or not increasing
the amount of any Indebtedness that may be incurred
thereunder.
“ Additional Contributing
Indebtedness ” shall mean any Indebtedness that is
designated as “Additional Contributing Indebtedness” by
the Borrower pursuant to an Additional Contributing Indebtedness
Designation and in compliance with the procedures set forth in
Section 7.
“ Additional Contributing
Indebtedness Designation ” shall mean a certificate of
the Borrower with respect to Additional Contributing Indebtedness,
substantially in the form of Exhibit A .
“ Additional Contributing
Indebtedness Joinder ” shall mean a joinder agreement
executed by one or more Additional Contributing Agents in respect
of any Additional Contributing Indebtedness subject to an
Additional Contributing Indebtedness Designation on behalf of one
or more Additional Contributing Creditors in respect of such
Additional Contributing Indebtedness, substantially in the form of
Exhibit B .
“ Additional Effective
Date ” shall have the meaning ascribed to such term in
Section 7(b) hereof.
“ Agent ” shall
have the meaning ascribed to such term in the preamble of this
Agreement; provided , that, after the consummation of any
Refinancing, the term “Agent” shall refer to any Person
appointed by the Secured Parties, as agent for themselves for the
purposes of this Agreement pursuant to the terms of the Refinancing
Loan Documents.
“ Bankruptcy Code
” shall mean Title 11 of the United States Code, as
amended.
“ Bankruptcy Law
” shall mean the Bankruptcy Code and any similar Federal,
state or foreign law for the relief of debtors.
“ Borrower ”
shall have the meaning ascribed to such term in the recitals
hereto.
“ Bridge Agent ”
shall mean the Bridge Agent which is signatory to this Agreement
and any other successor Bridge Agent pursuant to the terms of the
Bridge Loan Agreement.
“ Bridge Guarantee
” shall have the meaning ascribed to such term in the
recitals hereto.
“ Bridge Loan Agreement
” shall have the meaning ascribed to such term in the
recitals hereto.
“ Contributing Agents
” shall mean the Notes Trustee, the Bridge Agent and any
Additional Contributing Agents.
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“ Contributing
Creditors ” shall mean the Notes Trustee, the holders of
the Notes, the Bridge Agent, the lenders and other agents under the
Bridge Loan Agreement, any Additional Contributing Agents and any
Additional Contributing Creditors.
“ Contributing
Indebtedness ” shall mean all of the obligations of the
Borrower and the Subsidiary Guarantors under the Notes, the Note
Guarantees, the Indenture, the Bridge Loan Agreement, the Bridge
Guarantee and any Additional Contributing Facilities and all other
amounts and other obligations now or hereafter owed by the Borrower
or the Subsidiary Guarantors to the Contributing Creditors pursuant
to any Contributing Indebtedness Documents.
“ Contributing Indebtedness
Documents ” shall mean the Notes, the Note Guarantees,
the Indenture, the Bridge Loan Agreement, the Bridge Guarantee, any
Additional Contributing Facilities and all other documents,
agreements and instruments evidencing, securing or pertaining to
any portion of the Contributing Indebtedness, in each case as
amended, supplemented, restated or otherwise modified from time to
time.
“ Credit Agreement
” shall have the meaning ascribed to such term in the
recitals hereto, it being understood that following a Refinancing,
all references to the Credit Agreement shall be deemed to refer to
any Refinancing Loan Documents.
“ Credit Agreement
Indebtedness ” shall mean the “Obligations,”
as such term is defined in the Collateral Agreement or any such
analogous term in the Refinancing Loan Documents; provided
that any such Obligations were permitted to be incurred pursuant to
the terms of the Contributing Indebtedness Documents.
“ Guarantees ”
shall have the meaning ascribed to such term in the recitals hereto
and shall also include any other guarantee by any Subsidiary
Guarantor of the Notes, the obligations under the Bridge Loan
Agreement or any other Contributing Indebtedness.
“ Holdings ”
shall have the meaning ascribed to such term in the recitals
hereto.
“ Indenture ”
shall have the meaning ascribed to such term in the recitals
hereto.
“ Insolvency or Liquidation
Proceeding ” shall mean:
(1) any case commenced by or against
any Subsidiary Guarantor under any Bankruptcy Law, any other
proceeding for the reorganization, recapitalization or adjustment
or marshalling of the assets or liabilities of any Subsidiary
Guarantor, any receivership or assignment for the benefit of
creditors relating to any Subsidiary Guarantor or any similar case
or proceeding relative to any Subsidiary Guarantor or its
creditors, as such, in each case whether or not
voluntary;
(2) any liquidation, dissolution,
marshalling of assets or liabilities or other winding up of or
relating to any Subsidiary Guarantor, in each case whether or not
voluntary and whether or not involving bankruptcy or insolvency;
or
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(3) any other proceeding of any type
or nature in which substantially all claims of creditors of any
Subsidiary Guarantor are determined and any payment or distribution
is or may be made on account of such claims.
“ Lender or Lenders
” shall have the meaning ascribed to such term in the
Recitals hereto.
“ Note Guarantees
” shall have the meaning ascribed to such term in the
recitals hereto.
“ Notes ” shall
have the meaning ascribed to such term in the recitals
hereto.
“ Notes Trustee ”
shall mean the Notes Trustee which is signatory to this Agreement
and any other successor Notes Trustee pursuant to the terms of the
Indenture.
“ Paid in Full ”
or “ Payment in Full ” shall mean the
indefeasible payment in full in cash of the Credit Agreement
Indebtedness and termination of all commitments under the Loan
Documents or Refinancing Loan Documents, as applicable.
“ Recovery ”
shall have the meaning set forth in Section 19
hereof.
“ Refinancing ”
shall mean any refinancing of the Credit Agreement Indebtedness
under the Loan Documents (and, for the avoidance of doubt, shall
include any refinancing of the Credit Agreement Indebtedness under
the Refinancing Loan Documents) pursuant to Refinancing Loan
Documents.
“ Refinancing Loan
Documents ” shall mean any financing documentation which
replaces the Loan Documents and pursuant to which the Credit
Agreement Indebtedness under the Loan Documents is refinanced, as
such financing documentation may be amended, supplemented, restated
or otherwise modified from time to time.
“ Subsidiary Guarantors
” shall have the meaning ascribed to such term in the
recitals hereto and shall also include any other Subsidiary of the
Borrower which at any time has provided a guarantee of the Notes,
the obligations under the Bridge Loan Agreement or any other
Contributing Indebtedness.
2. Turnover of
Payments. If any
payment (whether made in cash, securities or other property) is
received by any Contributing Creditor from any Subsidiary Guarantor
on account of the Contributing Indebtedness (including any payment
in any Insolvency or Liquidation Proceeding received on account of
any Guarantee) at any time prior to the Payment in Full of the
Credit Agreement Indebtedness, such payment shall not be commingled
with any asset of such Contributing Creditor, shall be held in
trust by such Contributing Creditor for the benefit of the Secured
Parties and shall be applied as follows:
(a) any portion of such payment
representing Collateral or proceeds of Collateral shall be
distributed as follows: first , to the Agent, for the
benefit of the
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Secured Parties, for application (in
accordance with the Credit Agreement) to the payment of the Credit
Agreement Indebtedness then remaining unpaid, until the Credit
Agreement Indebtedness is Paid in Full and second , to the
Contributing Agents, for the benefit of the Contributing Creditors,
to the payment of the Contributing Indebtedness (on a pro rata
basis in accordance with the outstanding amounts of Contributing
Indebtedness under the various Contributing Indebtedness Documents)
in accordance with the terms of the Contributing Indebtedness
Documents; and
(b) any portion of such payment not
representing Collateral or proceeds of Collateral shall be
distributed to the Agent, for the benefit of the Secured Parties,
and the Contributing Agents, for the benefit of the Contributing
Creditors, on a pro rata basis in accordance with the outstanding
amounts of Credit Agreement Indebtedness and Contributing
Indebtedness for application (in accordance with the Credit
Agreement and the Contributing Indebtedness Documents) to the
payment of the Credit Agreement Indebtedness and Contributing
Indebtedness then remaining unpaid.
Without limiting the generality of
the foregoing, if any Contributing Agent receives any payment that
the other Contributing Creditors would not be entitled to retain in
accordance with the foregoing, such Contributing Agent shall not
distribute such payment to such other Contributing Creditors, but
shall instead pay it over to the Agent as described
above.
Notwithstanding anything to the
contrary in this Agreement, each Contributing Agent shall retain
all rights to payment of its fees and expenses, and the priority
with respect thereto, in accordance with the provisions of the
applicable Contributing Indebtedness Documents.
Determinations as to whether a
payment or any portion thereof represents Collateral or proceeds of
Collateral shall be made by the Agent in its reasonable
judgment.
For the avoidance of doubt, nothing
in this Section 2 shall prevent the holders of Contributing
Indebtedness from receiving amounts paid from the Borrower as a
result of any distribution from the Subsidiary Guarantors that is
not directly or indirectly in connection with the enforcement of
any Guarantee or an Insolvency or Liquidation
Proceeding.
Each holder of a Note or any other
Contributing Indebtedness, by purchasing or accepting a Note issued
pursuant to the Indenture or any other Contributing Indebtedness
Documents will automatically be bound by the provisions of this
Section 2 and the other provisions of this
Agreement.
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In furtherance of the foregoing, the
Indenture, the Bridge Loan Agreement, the Guarantees and any other
applicable Contributing Indebtedness Documents shall contain a
legend to substantially the following effect:
“ The terms of this
agreement are subject to the terms of the Intercreditor Agreement,
dated as of January 28, 2008, by and among Bank of America,
N.A., U.S. Bank National Association, Citibank, N.A. and the other
parties thereto from time to time. ”
3. Continued Effectiveness of
this Agreement; Modifications to Credit Agreement Indebtedness
.
(a) The terms of this Agreement, and
the rights and the obligations of the Contributing Creditors and
the Secured Parties arising hereunder, shall not be affected,
modified or impaired in any manner or to any extent by:
(i) any amendment, modification or waiver of or supplement to
any Loan Document, Refinancing Loan Document or Contributing
Indebtedness Document; (ii) the validity or enforceability of
any of such documents; or (iii) any exercise or non-exercise
of any right, power or remedy under o
