<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-4
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COAST HOTELS AND CASINOS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 7011 88-0345706
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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COAST RESORTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 6719 88-0345704
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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4500 WEST TROPICANA AVENUE
LAS VEGAS, NEVADA 89103
(702) 365-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL J. GAUGHAN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
4500 WEST TROPICANA AVENUE
LAS VEGAS, NEVADA 89103
(702) 365-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
COPIES TO:
KAREN E. BERTERO, ESQ.
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 229-7000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the exchange offer pursuant to the registration rights agreement
described in the enclosed prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SECURITY OFFERING PRICE(1) REGISTRATION FEE(1)
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9 1/2% Senior Subordinated
Notes Due 2009.............. $175,000,000 100% $175,000,000 $48,650
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Guarantee of the 9 1/2% Senior
Subordinated Notes Due
2009........................ $175,000,000 None(2) None(2) None(2)
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(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(f) of the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
PROSPECTUS SUBJECT TO COMPLETION,
DATED MAY 28, 1999
$175,000,000
LOGO
Offer To Exchange
Our 9 1/2% Senior Subordinated Notes Due 2009
Which Have Been Registered Under The Securities Act Of 1933
For
Any And All Of Our Outstanding
9 1/2% Senior Subordinated Notes Due 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1999, UNLESS EXTENDED.
We are offering to exchange our 9 1/2% Senior Subordinated Notes Due 2009
which have been registered under the Securities Act of 1933, as amended, for any
and all of our outstanding 9 1/2% Senior Subordinated Notes Due 2009 issued on
March 23, 1999.
THE EXCHANGE NOTES
- The terms of the registered exchange notes to be issued are substantially
identical to the terms of the outstanding notes that we issued on March
23, 1999, except for transfer restrictions, registration rights and
liquidated damages provisions relating to the outstanding notes which will
not apply to the exchange notes.
- Interest on the exchange notes accrues at the rate of 9 1/2% per year,
payable in cash every six months on April 1 and October 1, with the first
payment on October 1, 1999.
- We may redeem any of the exchange notes beginning on April 1, 2004 at an
initial redemption price of 104.75% of their principal amount plus accrued
interest. In addition, before April 1, 2002, we may redeem up to 35% of
the exchange notes at a redemption price of 109.50% of their principal
amount plus accrued interest using proceeds from a public offering of our
capital stock or a capital contribution to us by Coast Resorts, Inc., our
parent company, of the proceeds of a public offering of its capital stock.
- The exchange notes will rank equally with all of our other unsecured
senior subordinated indebtedness and will be junior to our senior
indebtedness. The exchange notes are guaranteed on a senior subordinated
basis by Coast Resorts, Inc.
- We do not intend to list the exchange notes on any securities exchange.
MATERIAL TERMS OF THE EXCHANGE OFFER
- The exchange offer expires at 5 p.m., New York City time, on ,
1999, unless extended.
- All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged for an equal principal amount of exchange notes which
are registered under the Securities Act of 1933.
- Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.
- The exchange offer is not subject to any minimum tender condition, but is
subject to the terms of the registration rights agreement that we entered
into on March 23, 1999 with the placement agents for the outstanding notes
and Coast Resorts, Inc.
- We will not receive any proceeds from the exchange offer. We will pay the
expenses of the exchange offer.
-------------------------
FOR A DISCUSSION OF RISKS THAT SHOULD BE CONSIDERED BY HOLDERS
IN DECIDING WHETHER TO TENDER OUTSTANDING NOTES
IN THE EXCHANGE OFFER, SEE "RISK FACTORS"
BEGINNING ON PAGE .
-------------------------
NONE OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION, THE NEVADA GAMING COMMISSION OR THE NEVADA STATE GAMING CONTROL
BOARD HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDER FOR
EXCHANGE FROM, HOLDERS OF OUTSTANDING NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
-------------------------
The date of this prospectus is , 1999
<PAGE> 3
This prospectus incorporates important business and financial information
about us that is not included in or delivered with this prospectus. This
information is available without charge to investors in the notes upon written
or oral request. Requests should be made to :
Attn.: Chief Financial Officer
Coast Hotels and Casinos, Inc.
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
(702) 365-7000
The exchange offer is expected to expire on , 1999 and
investors must make their investment decisions by this expiration date.
Therefore, in order to obtain timely delivery of the requested information, we
must receive your request by , 1999, or the date that is no later
than five business days before the expiration date. See "Where You Can Find More
Information."
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More
Information................... ii
Special Note Regarding Forward-
Looking Statements............ iii
Summary......................... 1
Risk Factors.................... 14
The Exchange Offer.............. 27
Capitalization.................. 37
Selected Historical Financial
Data.......................... 38
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations.................... 40
Business........................ 48
Nevada Regulation and
Licensing..................... 58
Management...................... 63
Certain Transactions............ 67
Principal Stockholders.......... 70
Description of Our Other
Indebtedness.................. 71
Description of The Exchange
Notes......................... 72
Material Federal Tax
Considerations................ 127
Plan of Distribution............ 131
Legal Matters................... 131
Independent Accountants......... 131
Index To Financial Statements... F-1
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WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement with the Commission under the Securities
Act to register the exchange notes to be issued in this exchange offer. As
allowed by the Commission's rules, this prospectus does not contain all of the
information that you can find in the registration statement and its exhibits. As
a result, statements made in this prospectus concerning the contents of a
contract, agreement or other document are not necessarily complete. If we have
filed any contract, agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more complete
understanding of the document or matter involved.
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file at
the Commission's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. You can also obtain copies of these
materials from the public reference section of the Commission at 45 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission (http://www.sec.gov).
We are incorporating by reference additional documents we may file with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 after the date of this prospectus and before the exchange of the
outstanding notes for the exchange notes. This means that we are disclosing
important information to you by referring you to those documents. This
additional information is a part of this prospectus from the date of filing
those documents.
You may request a free copy of these filings by writing or telephoning us
at the following address:
Attn.: Chief Financial Officer
Coast Hotels and Casinos, Inc.
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
(702) 365-7000
The indenture governing the outstanding notes will also govern the exchange
notes. The outstanding notes and the exchange notes, together, are a single
series of debt securities. The indenture requires us to provide quarterly and
annual financial reports to holders of the exchange notes.
You should not assume that the information in this prospectus is accurate
as of any date other than the date of this prospectus, or the respective dates
of those documents we incorporate by reference, regardless of when you received
this prospectus. You should rely on the information incorporated by reference or
provided in the registration statement. We have not authorized anyone else to
provide you with different information. The exchange offer is being made to, and
we will accept surrender for exchange from, holders of outstanding notes only in
jurisdictions where the exchange offer is permitted.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements." All statements
regarding our expected financial position, business, strategies and financing
plans under the headings "Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this prospectus are forward-looking statements. The words
"anticipates," "believes," "estimates," "seeks," "expects," "plans," "intends"
and similar expressions identify forward-looking statements. Although we believe
that our expectations are reasonable based on our plans, beliefs and
assumptions, our expectations may prove to be incorrect. Important factors that
could cause actual results to be materially different include the following
factors:
- increased competition, both in Nevada and other states;
- dependence on the Las Vegas area and Southern California for a majority
of our customers;
- uncertainties associated with obtaining financing on acceptable terms for
the construction of our new hotel-casino, the Suncoast;
- substantial leverage and uncertainty that we will be able to service our
debt;
- uncertainties associated with the Suncoast and other construction
projects, including the related disruption of operations and the
availability of financing, if necessary; and
- changes in laws or regulations, third party relations and approvals,
decisions of courts, regulators and governmental bodies.
For information with respect to these and other factors that could cause
actual results to differ from the expectations stated in the forward-looking
statements, see the text under the caption "Risk Factors." Potential investors
in the exchange notes are urged to consider these factors carefully in
evaluating the forward-looking statements contained or incorporated by reference
in this prospectus.
All subsequent written and oral forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
our cautionary statements. The forward-looking statements included or
incorporated herein are made only as of the date of this prospectus, or as of
the date of the document incorporated by reference. We do not intend, and
undertake no obligation, to update these forward-looking statements.
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SUMMARY
This is a summary and it does not contain all the information that may be
important to you. You should read this entire prospectus carefully before you
decide whether to purchase any notes. In this prospectus, "we," "us," and "our"
refer to Coast Hotels and Casinos, Inc. Coast Resorts, Inc., a Nevada
corporation, is our sole stockholder.
OUR COMPANY
We own and operate three hotel-casinos in Las Vegas. Our two largest
casinos, The Orleans and the Gold Coast, are strategically located to capitalize
on the strong demographics of the Las Vegas local resident market. Our third
casino, the Barbary Coast, benefits from foot traffic at its prime location on
the Las Vegas Strip. Based on our success in the locals market with The Orleans
and the Gold Coast, we are currently planning to build the Suncoast, the first
locals-oriented hotel-casino near Summerlin in west Las Vegas, one of the
fastest growing areas of the Las Vegas Valley.
While the mega-resorts on the Las Vegas Strip draw visitors from around the
world, the Las Vegas locals gaming market is growing as a result of the rapid
population growth in the Las Vegas metropolitan area. According to the Bureau of
Business and Economic Research at the University of Nevada, Reno, as of July
1998, the Las Vegas metropolitan area had a population of approximately 1.2
million residents. From 1990 to 1998 the population of the Las Vegas
metropolitan area grew 61.8%, an average annual growth rate of 6.2%. The growth
was driven primarily by Nevada's favorable climate and tax structure, a strong
economy and a well-developed infrastructure. For example, the opening of new Las
Vegas Strip mega-resorts has created thousands of jobs which, together with the
increasing popularity of Las Vegas as a retirement community, have contributed
to population growth and enlarged the locals market. Because the locals market
depends to a lesser extent on attracting tourists or competing with other
destination leisure activities, it is less susceptible to market swings and
cycles that affect the Strip casinos. In addition, Nevada law imposes more
stringent requirements for approval of new hotel-casinos in Clark County that
are not located in the vicinity of the Strip or downtown Las Vegas. We believe
that this barrier to entry into the market will enable The Orleans and the Gold
Coast, along with our proposed Suncoast property, to benefit from the increasing
Las Vegas locals market.
The most recent Clark County Residents Study prepared by the Las Vegas
Convention and Visitors Authority in 1997-1998 found that gambling ranked third
among all activities in which residents said they participated most often.
Residents mentioned only "eating out" and "movies" as more frequent activities.
Approximately 73% of Clark County adult residents said they gamble at least
occasionally. Of those residents, 47% said they do so at least once a week and
44% budget $25 or more per visit. In addition, over 72% of Las Vegas resident
gamblers prefer locations that are off the Strip and away from downtown Las
Vegas. Based on the results of the Convention and Visitors Authority study,
researchers estimated the total amount budgeted annually for gambling by all
adult Las Vegas residents to be over $1.33 billion.
BUSINESS STRATEGY
Our business and marketing strategy is to attract gaming customers to our
casinos by offering consistently high quality gaming, hotel, entertainment and
dining experiences at
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affordable prices. We emphasize attracting and retaining repeat customers. Our
primary target market for The Orleans and the Gold Coast consists of
value-oriented local middle-market gaming patrons who gamble frequently. We
believe that our target customers return to our hotel-casinos because of their
convenient locations, friendly employees, higher slot machine and video poker
payout rates than are offered at casinos on the Las Vegas Strip and high quality
entertainment and amenities. Additionally, we offer Las Vegas visitors spacious,
well-appointed and competitively priced guest rooms.
We believe that the most important factors in successfully operating our
casinos are:
- Convenient locations with easy access. The Orleans and the Gold Coast are
located on major east-west arteries in Las Vegas and offer easy access
and ample parking, enabling customers to avoid traffic congestion on the
Strip. For visitors to Las Vegas, the Barbary Coast is conveniently
located at the "Flamingo Four Corners" in the center of the Strip.
- Friendly atmosphere. A key element of our strategy is to provide patrons
with friendly personal service that is designed to foster customer
loyalty and generate repeat business. Locals appreciate a friendly,
casual gaming environment where employees make them feel at home.
- Value. We offer value to our gaming patrons by providing video poker and
slot machines with better odds than those traditionally found at Strip
casinos. We also offer lower minimum wager limits on our table games than
Strip casinos. In order to appeal to our value-conscious customers, our
many restaurants and bars serve generous portions of quality food and
beverages at attractive prices.
- High quality entertainment and amenities. We believe we compete
effectively with other locals-oriented casinos by offering a number of
high quality amenities that generate foot traffic. These amenities
include movie theaters, bowling centers, "headliner" entertainment
theater, quality restaurants and entertainment lounges featuring popular
musical groups.
CASINO PROPERTIES
The Orleans. We designed The Orleans to differentiate it in the Las Vegas
market by combining an upscale, off-Strip experience with an exciting New
Orleans French Quarter-themed environment and a wide variety of non-gaming
amenities. The Orleans is strategically located on Tropicana Avenue, a short
distance from the Las Vegas Strip and McCarran International Airport. The
Orleans features an approximately 100,000 square foot casino, 840 hotel rooms,
12 "stadium seating" first-run movie theaters, a 70-lane bowling center,
approximately 40,000 square feet of banquet and meeting facilities, including an
approximately 17,000 square foot grand ballroom, a wedding chapel, five full-
service restaurants, specialty themed bars, a barber shop, a child care
facility, a video arcade, a beauty salon and approximately 4,000 parking spaces.
The Orleans also includes an 850-seat theater that features headliner
entertainment and other special events. The Orleans' slot club has over 200,000
members. We are currently in the process of expanding The Orleans by
approximately 65,000 square feet to include a new multi-station action buffet
restaurant, an Asian restaurant and additional casino gaming space. The Orleans
bowling center and movie theaters were chosen by the Las Vegas Review-Journal as
the "Best of Las Vegas" in 1999, enhancing The Orleans' reputation as a
multi-faceted entertainment facility.
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The Gold Coast. The Gold Coast is located on West Flamingo Road
approximately one mile west of the Las Vegas Strip near Interstate 15, the major
highway linking Las Vegas and Southern California, offering easy access from all
four directions in the Las Vegas Valley. The Gold Coast features an
approximately 70,000 square foot casino, a keno lounge, a race and sports book
and a 700-seat bingo parlor which was voted "Best of Las Vegas" in 1999 by the
readers of the Las Vegas Review-Journal. The Gold Coast also features 712 hotel
rooms and suites, a swimming pool with a covered bar, three full-service
restaurants, a 380-seat buffet restaurant, a fast-food restaurant, a snack bar
and ice cream parlor. Entertainment amenities include a 72-lane bowling center,
two movie theaters, banquet and meeting facilities, four bars, two entertainment
lounges and a showroom/ dance hall featuring live musical entertainment. The
Gold Coast's slot club has issued nearly 500,000 club cards to its members since
inception and currently has over 100,000 active members. In addition, the Gold
Coast is a sponsor of the annual National Finals Rodeo, which attracts thousands
of visitors to Las Vegas each December. The awards ceremonies for the Rodeo are
held nightly at the Gold Coast during the 10-day event.
The Barbary Coast. The Barbary Coast is located at the corner of Las Vegas
Boulevard and Flamingo Road, one of the busiest intersections on the Strip,
along with Caesars Palace, Bally's Las Vegas and Bellagio. Historically, the
Barbary Coast has relied on foot traffic on the Las Vegas Strip for a
significant amount of its revenues. As a result, the Barbary Coast's customer
base is primarily visitors to the Las Vegas area. In addition to its favorable
location on the Strip, the Barbary Coast has also benefited from its more
intimate gaming atmosphere, allowing it to develop a loyal base of table game
and slot customers. The Barbary Coast features 197 spacious hotel rooms and
suites, an approximately 30,000 square foot casino, race and sports books, three
bars and three restaurants, including two award-winning gourmet restaurants,
Michael's and Drai's on the Strip.
The Suncoast. We are currently designing and developing the Suncoast to
expand our presence in the growing Las Vegas locals market. The Suncoast will
serve one of the fastest growing areas of the Las Vegas valley and will be
located on approximately 50 acres in Peccole Ranch, a master-planned community
adjacent to Summerlin. We are designing the Suncoast with a Mediterranean theme.
It is expected to include an approximately 78,000 square foot casino, 232 hotel
rooms with an average size of approximately 550 square feet, approximately
15,000 square feet of banquet and meeting facilities, 16 "stadium seating" movie
theaters, four full-service restaurants and approximately 3,400 parking spaces.
We have an estimated construction and development budget of approximately $150.0
million and, subject to obtaining financing, we expect construction to begin in
mid-1999. We have assembled a construction team with substantial experience in
the development and construction of hotel-casinos in Las Vegas and with whom we
have worked successfully in the past, including J.A. Tiberti Construction Co.,
Inc. and Yates-Silverman, Inc.
FINANCING PLANS FOR THE SUNCOAST
We do not yet have financing in place to fund the construction of the
Suncoast. Our credit facility contains a provision that allows us to increase,
with lender approval, the available borrowing capacity under the facility to up
to $200.0 million. We intend to use this increased capacity in part to finance
the construction of the Suncoast. The increase in the facility remains subject
to a number of contingencies, including lender approval and the negotiation of
additional terms relating to the construction. We cannot assure you that
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we will be able to obtain the increase in the credit facility or that it will be
available on acceptable terms. See "Description of Our Other Indebtedness."
-------------------------
We are a Nevada corporation and a wholly owned subsidiary of Coast Resorts,
Inc. Our principal executive offices are located at 4500 West Tropicana Avenue,
Las Vegas, NV 89103, and our telephone number is (702) 365-7000. You may obtain
additional information about us at our website, www.coastcasinos.com.
4
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THE EXCHANGE OFFER
The Exchange Offer........... Up to $175,000,000 aggregate principal amount of
exchange notes registered under the Securities
Act are being offered in exchange for the same
principal amount of the outstanding notes. The
terms of the exchange notes and the outstanding
notes are substantially identical. Outstanding
notes may be tendered for exchange in whole or
in part in any integral multiple of $1,000. We
are making the exchange offer in order to
satisfy our and Coast Resorts' obligations under
the registration rights agreement relating to
the outstanding notes. For a description of the
procedures for tendering the outstanding notes,
see "The Exchange Offer -- Procedures for
Tendering Outstanding Notes."
Expiration Date.............. 5:00 p.m., New York City time, ,
1999, unless the exchange offer is extended, in
which case the expiration date will be the
latest date and time to which the exchange offer
is extended. See "The Exchange Offer -- Terms of
the Exchange Offer."
Conditions to the Exchange
Offer...................... The exchange offer is subject to customary
conditions described under "The Exchange
Offer -- Conditions to the Offer," some of which
we may waive in our sole discretion. The
exchange offer is not conditioned upon any
minimum principal amount of outstanding notes
being tendered. We reserve the right in our sole
and absolute discretion, subject to applicable
law, at any time and from time to time:
- to delay the acceptance of the outstanding
notes for exchange,
- to terminate the exchange offer if one or more
specific conditions have not been satisfied,
- to extend the expiration date of the exchange
offer and retain all outstanding notes
tendered pursuant to the exchange offer,
subject, however, to the right of holders of
outstanding notes to withdraw their tendered
outstanding notes, or
- to waive any condition or otherwise amend the
terms of the exchange offer in any respect.
See "The Exchange Offer -- Terms of the
Exchange Offer."
Withdrawal Rights............ Tenders of outstanding notes may be withdrawn at
any time on or prior to the expiration date by
delivering a written notice of withdrawal to the
exchange agent in conformity with the procedures
discussed under "The Exchange
Offer -- Withdrawal of Tenders."
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Procedures for Tendering
Outstanding Notes.......... Tendering holders of outstanding notes must
complete and sign a letter of transmittal in
accordance with the instructions contained in
the letter of transmittal. Tendering holders
must forward the completed letter of transmittal
by mail, facsimile or hand delivery, together
with any other required documents, to the
exchange agent, or must submit to the exchange
agent the outstanding notes you are tendering or
comply with the specified procedures for
guaranteed delivery of outstanding notes.
Brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer. If your
outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company
or other nominee, we urge you to contact your
nominee holder promptly if you wish to tender
outstanding notes pursuant to the exchange
offer. See "The Exchange Offer--Procedures for
Tendering Outstanding Notes."
Letters of transmittal and certificates
representing outstanding notes should not be
sent to us or to Coast Resorts. Those documents
should be sent only to the exchange agent. The
address, and telephone and facsimile numbers, of
the exchange agent are set forth in "The
Exchange Offer -- Exchange Agent" and in the
letter of transmittal.
Acceptance of Outstanding
Notes and Delivery of
Exchange Notes............. Upon consummation of the exchange offer, we will
accept any and all outstanding notes that are
properly tendered in the exchange offer and not
withdrawn prior to 5:00 p.m., New York City
time, on the expiration date. The exchange notes
issued pursuant to the exchange offer will be
delivered promptly after acceptance of the
outstanding notes. See "The Exchange
Offer -- Terms of the Exchange Offer."
Resales of Exchange Notes.... We believe that you will be able to offer for
resale, resell or otherwise transfer exchange
notes issued in the exchange offer without
compliance with the registration and prospectus
delivery provisions of the federal securities
laws, provided that:
- you are not a broker-dealer;
- you are not participating in a distribution of
the exchange notes; and
- you are not an "affiliate" of Coast Hotels and
Casinos, Inc., as the term is defined in Rule
144A under the Securities Act of 1933.
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Our belief is based on interpretations by the
staff of the Commission, as set forth in
no-action letters issued to third parties
unrelated to us. The staff has not considered
this exchange offer in the context of a
no-action letter, and we cannot assure you that
the staff would make a similar determination
with respect to this exchange offer.
If our belief is not accurate and you transfer
an exchange note without delivering a prospectus
meeting the requirements of the federal
securities laws or without an exemption from
these laws, you may incur liability under the
federal securities laws. We do not and will not
assume, or indemnify you against, this
liability.
Each broker-dealer that receives exchange notes
for its own account in exchange for outstanding
notes which were acquired by the broker-dealer
as a result of market-making or other trading
activities must agree to deliver a prospectus
meeting the requirements of the federal
securities laws in connection with any resale of
the exchange notes. See "The Exchange Offer --
Resales of the Exchange Notes."
Exchange Agent............... The exchange agent with respect to the exchange
offer is Firstar Bank of Minnesota, N.A. The
address, and telephone and facsimile numbers, of
the exchange agent are set forth in "The
Exchange Offer -- Exchange Agent" and in the
letter of transmittal.
Use of Proceeds.............. Neither we nor Coast Resorts will receive any
cash proceeds from the issuance of the exchange
notes offered hereby.
Certain United States Federal
Income Tax
Considerations............. You should review the information set forth
under "Material Federal Tax Considerations"
prior to tendering outstanding notes in the
exchange offer.
TERMS OF THE EXCHANGE NOTES
The exchange offer applies to an aggregate principal amount of $175,000,000
of the outstanding notes. The form and terms of the exchange notes will be
identical in all material respects to the form and terms of the outstanding
notes, except:
- The exchange notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer;
- holders of the exchange notes will not be entitled to any liquidated
damages under the registration rights agreement relating to the
outstanding notes; and
- holders of the exchange notes will not be, and upon consummation of the
exchange offer, holders of the outstanding notes will no longer be,
entitled to specific rights
7
<PAGE> 14
under the registration rights agreement for the outstanding notes
intended for the holders of unregistered securities.
The exchange notes will be our obligations entitled to the benefits of the
indenture. See "Description of the Exchange Notes."
Exchange Notes Offered....... $175.0 million aggregate principal amount of
9 1/2% Senior Subordinated Notes Due 2009.
Maturity..................... April 1, 2009.
Interest..................... Interest on the exchange notes is payable
semi-annually in cash on April 1 and October 1
of each year, commencing October 1, 1999. For a
description of the requirement to offer to
exchange the exchange notes and the possible
effect on the interest rate, see "Description of
the Exchange Notes -- Registration Rights."
Optional Redemption.......... The exchange notes are redeemable, at our
option, in whole or in part, at any time on or
after April 1, 2004, initially at 104.75% of
their principal amount, plus accrued interest
and declining ratably to 100% of their principal
amount, plus accrued interest, on or after April
1, 2007.
In addition, at any time and from time to time
before April 1, 2002, we may redeem up to 35% of
the principal amount of the exchange notes with
the proceeds of one or more sales of our capital
stock or of a capital contribution to us by
Coast Resorts of the proceeds of a public
offering of its capital stock, at a redemption
price of 109.50% of their principal amount, plus
accrued interest. We may complete these
redemptions only if at least $113.75 million
aggregate principal amount of exchange notes
remains outstanding after each redemption,
excluding exchange notes held by us or Coast
Resorts, and such redemption occurs within 45
days of the date of the closing of the sale of
capital stock. See "Description of the Exchange
Notes -- Optional Redemption."
Gaming Redemption............ If any state, federal or local body having
authority to regulate our gaming operations
notifies a holder or beneficial owner of the
exchange notes that the holder or owner must
obtain a license, qualification or finding of
suitability under an applicable gaming law and
either the person does not apply for the
license, qualification or finding of suitability
within 30 days or any shorter period required by
the gaming authority or the person will not be
licensed, qualified or found suitable under an
applicable gaming law, then we may require the
person to dispose of its exchange notes within a
specified period of time or redeem the person's
exchange notes at a price
8
<PAGE> 15
equal to 100% of the principal amount thereof,
plus accrued interest. See "Description of the
Exchange Notes -- Gaming Redemption."
Change of Control............ Upon the occurrence of a change of control, you
may require us to purchase your exchange notes
at 101% of the principal amount plus accrued
interest, if any. We cannot assure you that we
will have the financial resources necessary to
purchase the exchange notes at the time of the
change of control. The covenant requiring us to
repurchase the exchange notes upon a change of
control requires us to repay all senior
indebtedness, including indebtedness under our
credit facility, before we repurchase the
exchange notes. See "Description of the Exchange
Notes -- Repurchase of Notes upon a Change of
Control."
Parent and Subsidiary
Guarantees................. The exchange notes will be guaranteed on a
senior subordinated basis by our parent, Coast
Resorts, and by our future subsidiaries, if any,
that at any time have a fair market value of
more than $250,000. See "The Description of the
Exchange Notes -- Parent Guarantee and
Subsidiary Guarantee."
Ranking...................... The exchange notes are our unsecured, senior
subordinated indebtedness and are subordinated
to all our senior indebtedness, including
borrowings under our credit facility. The Coast
Resorts guarantee is subordinated in right of
payment to all its existing and future senior
indebtedness. The credit facility provides us
with $75.0 million of total borrowing
availability, all of which constitutes senior
indebtedness. At March 31, 1999, we had
approximately $64.8 million of senior
indebtedness, including approximately $47
million of borrowings outstanding under the
credit facility. As of that date, Coast Resorts
was obligated as guarantor of borrowings under
the credit facility. Coast Resorts' guarantee of
borrowings under the credit facility constitutes
senior indebtedness. See "Risk
Factors -- Leverage."
Basic Covenants of the
Indenture.................. The terms of the outstanding notes do, and of
the exchange notes will, restrict our ability
to, among other things:
- borrow money;
- pay dividends or make distributions of our
stock;
- make investments;
- create liens;
- enter into transactions with affiliates;
9
<PAGE> 16
- sell assets; and
- merge, consolidate or sell substantially all
of our assets.
RISK FACTORS
See "Risk Factors" for a discussion of factors that should be considered
with respect to an investment in the exchange notes.
10
<PAGE> 17
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
You should read the following selected historical and pro forma financial
and operating information in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and related notes included elsewhere in this prospectus. The income
statement data for each of the five years ended December 31, 1998 and the
balance sheet data as of December 31, 1998 are derived from our financial
statements which have been audited by PricewaterhouseCoopers. The income
statement data for the three months ended March 31, 1998 and 1999 and the
balance sheet data as of March 31, 1999 have been derived from our unaudited
financial statements. In the opinion of management, the unaudited financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the information contained in those
financial statements. The results for the three months ended March 31, 1999 are
not necessarily indicative of the results that may be expected for any other
interim period or for the full year.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- ------------------
1994 1995 1996(1) 1997 1998 1998 1999
-------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net revenues.......................................... $172,573 $174,756 $195,987 $293,883 $332,363 $81,014 $ 90,066
Departmental operating expenses(2).................... 118,697 118,534 121,628 197,200 209,104 50,785 52,832
General and administrative expenses................... 29,271 30,405 37,992 54,351 55,879 13,148 14,315
Guaranteed payments to former partners(3)............. 2,672 858 -- -- -- -- --
Land leases........................................... -- -- -- 2,100 3,190 525 1,110
Deferred (non-cash) rent.............................. -- -- -- 2,378 3,198 594 964
Pre-opening expenses.................................. -- -- 7,125 -- -- -- --
Depreciation and amortization......................... 6,766 7,280 7,883 18,278 20,607 4,881 5,210
-------- -------- -------- -------- -------- ------- --------
Operating income...................................... 15,167 17,679 21,359 19,576 40,385 11,081 15,635
Interest expense, net(4).............................. (227) (3,545) (9,981) (25,228) (26,570) (6,663) (6,299)
Other income.......................................... 23 92 58 919 168 25 --
-------- -------- -------- -------- -------- ------- --------
Net income (loss) before income taxes and
extraordinary item.................................. 14,963 14,226 11,436 (4,733) 13,983 4,443 9,336
Provision (benefit) for income taxes(5)............... -- -- 6,617 (1,401) 5,225 1,625 3,013
-------- -------- -------- -------- -------- ------- --------
Net income (loss) before extraordinary item........... 14,963 14,226 4,819 (3,332) 8,758 2,818 6,323
Extraordinary item -- loss on early retirement of
debt, net of applicable income tax benefit
($14,543)........................................... -- -- -- -- -- -- (27,007)
-------- -------- -------- -------- -------- ------- --------
Net income (loss)..................................... $ 14,963 $ 14,226 $ 4,819 $ (3,332) $ 8,758 $ 2,818 $(20,684)
======== ======== ======== ======== ======== ======= ========
OTHER DATA:
EBITDA(6)............................................. $ 21,933 $ 24,959 $ 36,367 $ 40,232 $ 64,190 $16,556 $ 21,809
Capital expenditures.................................. 5,514 32,187 125,722 57,736 15,492 4,794 6,532
Cash provided by operating activities................. 22,572 22,841 27,033 16,046 39,258 13,661 12,627
Cash used in investing activities..................... (5,509) (31,968) (125,702) (56,666) (15,324) (4,769) (6,532)
Cash provided by (used in) financing activities....... (14,884) 6,699 145,685 8,491 (11,765) (2,076) (11,993)
Ratio of total debt to EBITDA......................... 0.7x 3.4x 5.6x 5.4x 3.2x 12.9x 11.1x
Ratio of EBITDA to interest expense................... 63.6x 6.4x 1.6x 1.5x 2.3x 2.4x 3.3x
Ratio of earnings to fixed charges(7)................. 33.4x 4.0x 1.1x -- 1.5x 1.6x 2.3x
PRO FORMA DATA(8):
Pro forma ratio of total debt to EBITDA............... 3.8x 11.1x
Pro forma ratio of EBITDA to interest expense......... 2.9x 4.2x
Pro forma ratio of earnings to fixed charges.......... 1.8x 2.8x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
1998 1999
------------------ ---------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 41,595 $ 35,697
Total assets.............................................. 367,034 372,314
Total debt................................................ 207,859 241,798
Stockholder's equity...................................... 102,918 82,234
</TABLE>
See footnotes on following page
11
<PAGE> 18
OPERATING DATA:
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-------------------------------------------------------------
CASINO SLOTS AND
PROPERTY HOTEL ROOMS SQUARE FOOTAGE VIDEO POKER GAMING TABLES
-------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
The Orleans............................................... 840 100,000 2,241 54
Gold Coast................................................ 712 70,000 2,050 48
Barbary Coast............................................. 197 30,000 600 50
</TABLE>
- -------------------------
(1) The Orleans opened in December 1996.
(2) Includes casino, food and beverage, hotel and other expenses.
(3) Prior to our formation in 1995, the Gold Coast and the Barbary Coast were
operated by two affiliated partnerships which were consolidated into Coast
Hotels and Casinos and Coast Resorts effective January 1, 1996. The
partnership agreements for those partnerships required that guaranteed
payments be made to the partners.
(4) Includes interest income of $118,000 (1994), $106,000 (1995), $4,791,000
(1996), $98,000 (1997) and $695,000 (1998) and capitalized interest of $0
(1994), $235,000 (1995), $7,464,000 (1996), $1,016,000 (1997) and $58,000
(1998). Interest income for the three months ended March 31, 1998 and March
31, 1999 was $101,000 and $215,000, respectively. There was no capitalized
interest for the three months ended March 31, 1998 and March 31, 1999.
(5) The partnerships described in footnote 3 were not subject to federal income
taxes. We are a "C corporation" and, therefore, are subject to federal
income taxes. If these partnerships had been taxed as C corporations from
formation, they would have had combined income tax expense of $5,251,000
(1994), $4,979,000 (1995) and $4,117,000 (1996).
(6) "EBITDA" means earnings before interest, taxes, depreciation, amortization,
deferred (non-cash) rent expense and certain non-recurring items, including
pre-opening expenses. EBITDA should not be construed as an alternative to
operating income or net income (as determined in accordance with generally
accepted accounting principles) as an indicator of our company's operating
performance, or as an alternative to cash flows generated by operating,
investing and financing activities (as determined in accordance with
generally accepted accounting principles) as an indicator of cash flows or a
measure of liquidity. EBITDA is presented solely as supplemental disclosure
because management believes that it is a widely used measure of operating
performance in the gaming industry. All companies do not calculate EBITDA in
the same manner. As a result, EBITDA as presented here may not be comparable
to the similarly titled measures presented by other companies. The
computation of EBITDA for each of the respective periods shown is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------- -----------------
1994 1995 1996(1) 1997 1998 1998 1999
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes and extraordinary
item............................................... $14,963 $14,226 $11,436 $(4,733) $13,983 $ 4,443 $ 9,336
Add back:
Interest expense, net................................ 227 3,545 9,981 25,228 26,570 6,663 6,299
Depreciation and amortization........................ 6,766 7,280 7,883 18,278 20,607 4,881 5,210
Deferred (non-cash) rent expense..................... -- -- -- 2,378 3,198 594 964
Pre-opening expenses................................. -- -- 7,125 -- -- -- --
Non-recurring items (gain on equipment disposals).... (23) (92) (58) (919) (168) (25) --
------- ------- ------- ------- ------- ------- -------
EBITDA............................................... $21,933 $24,959 $36,367 $40,232 $64,190 $16,556 $21,809
======= ======= ======= ======= ======= ======= =======
</TABLE>
(7) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes and
extraordinary items, amortization of capitalized interest, and
12
<PAGE> 19
fixed charges less interest capitalized. "Fixed charges" consist of interest
expense, whether expensed or capitalized, amortization of debt financing
costs, and one-third of lease expense, which management believes is
representative of the interest component of lease expense (primarily
comprised of rent expense associated with The Orleans land lease). For
fiscal year 1997, earnings were insufficient to cover fixed charges by
$5,531,000. Accordingly, the ratio for that year has not been presented.
(8) The pro forma data for the year ended December 31, 1998 and the three months
ended March 31, 1999 give effect to the offering of the outstanding notes,
borrowings of $47 million under the credit facility, and the repurchase of
substantially all of the 13% first mortgage notes and all of the 10 7/8%
first mortgage notes. The pro forma data assume that these transactions
occurred on January 1, 1998 in the case of the year ended December 31, 1998,
and on January 1, 1999 in the case of the three months ended March 31, 1999,
and reflect a net reduction in interest expense and amortization of debt
issue costs.
13
<PAGE> 20
RISK FACTORS
You should carefully consider the following factors in addition to the
other information contained in this prospectus in connection with your
investment in the outstanding notes and exchange notes.
SUBSTANTIAL INDEBTEDNESS -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT
OUR FINANCIAL CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE
EXCHANGE NOTES.
We have a substantial amount of indebtedness. The following table shows
important credit statistics. The amounts reflect our refinancing by repurchasing
our 10 7/8% first mortgage notes and substantially all of our 13% first mortgage
notes, borrowing $47.0 million under our credit facility and completing the
offering of the outstanding notes as of the date specified below:
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1999
------------------
(IN THOUSANDS,
EXCEPT RATIO DATA)
<S> <C>
Total indebtedness.......................................... $241,798
Stockholder's equity........................................ 82,234
Debt to equity ratio........................................ 2.9x
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 MARCH 31, 1999
-------------------- --------------------
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Ratio of earnings to fixed charges......... 1.5x 1.8x 2.3x 2.8x
</TABLE>
In addition, we expect to seek to increase the maximum borrowing
availability under the credit facility from $75.0 million to $200.0 million. We
plan to use the additional amount available to finance the construction of the
Suncoast and capital improvements and expansions to our existing properties and
to provide for other corporate purposes. See "Description of Our Indebtedness."
We may not be able to increase availability under the credit facility in this
manner because the increase is subject to a number of conditions, including
lender approval. Assuming that as of January 1, 1999 we had amended the credit
facility and had made borrowings of an additional $146.0 million in connection
with the construction of the Suncoast, the credit statistics set forth above as
of March 31, 1999 and for the three months ended March 31, 1999 would have been
as follows: Total indebtedness -- $387.8 million, Stockholder's equity -- $82.2
million, Debt to equity ratio -- 4.7x, and Ratio of earnings to fixed
charges -- 1.8x.
The indenture for the outstanding and exchange notes also allows us to
borrow a significant amount of additional money. See "Description of the
Exchange Notes -- Certain Covenants."
Our substantial indebtedness could have important consequences to you. For
example, it could:
- make it more difficult for us to pay our debts, including these notes;
- increase our vulnerability to economic and industry conditions;
14
<PAGE> 21
- require us to dedicate a substantial portion of our cash flow to payments
on our indebtedness, thereby reducing amounts available for working
capital, capital expenditures, property development costs and other
general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit our ability to borrow additional funds.
See "Description of Our Other Indebtedness."
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE OUR SIGNIFICANT INDEBTEDNESS, WE MAY
STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER EXACERBATE
THE RISKS DESCRIBED ABOVE.
The terms of the indenture permit us to amend the credit facility to
increase the borrowing capacity available under the credit facility to up to
$200.0 million. This money may be used to provide for construction financing for
the Suncoast, capital improvements and expansions to existing properties,
working capital and general corporate purposes. The increase in availability is
subject to a number of contingencies including lender approval and the
negotiation of additional terms relating to the construction. All borrowings
under the credit facility will be senior to the exchange notes. In addition to
amounts that may be borrowed under the credit facility, the indenture also
allows us to borrow money for capital improvements and expansions to existing
properties. If new debt is added to our current debt levels, the related risks
that we now face could intensify.
See "Capitalization," "Selected Historical Financial Data," "Description of
Our Other Indebtedness" and "Description of the Exchange Notes."
ABILITY TO SERVICE DEBT AND LIQUIDITY -- WE WILL REQUIRE A SIGNIFICANT AMOUNT OF
CASH TO SERVICE OUR INDEBTEDNESS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY
FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our debt, including the
exchange notes and the credit facility, and to fund planned capital expenditures
and possible expansions will depend on our ability to generate cash in the
future. This is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control.
We cannot assure you that our business will generate sufficient cash flow
or that future borrowings will be available to us in an amount sufficient to
enable us to pay our indebtedness, including the exchange notes, or to fund our
other liquidity needs. We may need to refinance all or a portion of our
indebtedness, including the exchange notes and the credit facility, on or before
maturity. We cannot assure you that we will be able to refinance any of our
indebtedness on commercially reasonable terms or at all.
15
<PAGE> 22
SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THE EXCHANGE NOTES WILL BE
JUNIOR TO THE CREDIT FACILITY AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. COAST
RESORTS' GUARANTEE OF THE EXCHANGE NOTES WILL BE JUNIOR TO ALL OF ITS
INDEBTEDNESS AND POSSIBLY TO ALL OF ITS FUTURE BORROWINGS.
The exchange notes will be junior to all of our existing and future
indebtedness, other than trade payables and any future indebtedness that
expressly provides that it ranks equal with, or subordinated in right of payment
to, the exchange notes. Coast Resorts' guarantee will be junior to all of its
existing and future indebtedness, other than trade payables and any future
indebtedness that expressly provides that it ranks equal with, or subordinated
in right of payment to, the guarantee. As a result, upon any distribution to our
creditors in a bankruptcy, liquidation, reorganization or similar proceeding,
the holders of senior debt of our company will be entitled to be paid in full
before any payment will be made on the exchange notes. In addition, upon any
distribution to the creditors of Coast Resorts in a bankruptcy, liquidation,
reorganization or similar proceeding, the holders of senior debt of Coast
Resorts will be entitled to be paid in full before any payment will be made on
the guarantee.
In addition, all payments on the exchange notes and the guarantee will be
blocked in the event of a payment default under the credit facility or other
senior debt with a principal amount of $20.0 million or more. Payments may also
be blocked for up to 179 of 360 consecutive days in the event of certain
non-payment defaults on such senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or Coast Resorts, holders of the exchange notes will
participate with trade creditors and all other holders of our or Coast Resorts'
subordinated indebtedness in the assets remaining after we and Coast Resorts
have paid all of the senior debt. However, because the indenture requires that
amounts otherwise payable to holders of the exchange notes in a bankruptcy or
similar proceeding be paid to holders of senior debt instead, holders of the
exchange notes may receive less, ratably, than holders of trade payables. In any
of these cases, holders of exchange notes may not be paid in full.
At March 31, 1999, the exchange notes were subordinated to $64.8 million of
our senior debt, and approximately $28.0 million was available for borrowing as
additional senior debt under our credit facility. Also, the Coast Resorts
guarantee was subordinated to Coast Resorts' guarantee of amounts outstanding
under the credit facility. The indenture allows us to borrow substantial
additional indebtedness in the future, including senior debt. As noted above, we
intend to fund substantially all the construction cost of the Suncoast and
capital improvements to existing properties with borrowings under the proposed
amended credit facility or otherwise, all of which will be senior debt.
ENCUMBRANCES ON ASSETS -- IN ADDITION TO THE EXCHANGE NOTES BEING JUNIOR TO THE
CREDIT FACILITY AND POSSIBLY ALL OF OUR FUTURE BORROWINGS, THE EXCHANGE NOTES
WILL NOT BE SECURED BY ANY OF OUR ASSETS. FURTHER, OUR ASSETS SECURE THE CREDIT
FACILITY AND MAY POSSIBLY SECURE OTHER DEBT.
In addition to being subordinated to all of our existing and future
indebtedness, other than trade payables and any future indebtedness that
expressly provides that it ranks equal with, or subordinated in right of payment
to, the exchange notes, the exchange notes will not be secured by any of our or
Coast Resorts' assets. Our obligations under the credit facility are secured by
liens on substantially all of our assets, and the Coast Resorts guarantee is
secured by a pledge of our common stock. If we become insolvent or are
16
<PAGE> 23
liquidated, or if payment under the credit facility or another secured
obligation is accelerated, the lenders under the credit facility or the obligees
with respect to the other secured obligations will be entitled to exercise the
remedies available to a secured lender under applicable law and the relevant
agreements and instruments. This means that these lenders will have a prior
claim on our assets and there may not be sufficient assets remaining to pay
amounts due on the exchange notes then outstanding.
RESTRICTIVE LOAN COVENANTS -- RESTRICTIVE COVENANTS IN THE CREDIT FACILITY AND
THE INDENTURE MAY RESTRICT OUR ABILITY TO PURSUE OUR BUSINESS STRATEGIES. OUR
ABILITY TO COMPLY WITH THESE RESTRICTIONS DEPENDS ON MANY FACTORS BEYOND OUR
CONTROL.
The credit facility and the indenture include certain covenants that, among
other things, restrict our ability to:
- borrow money, including a covenant in the indenture that restricts our
ability to borrow money to finance the Suncoast if the lenders under the
credit facility decline to increase the amount available under it from
$75.0 million to $200.0 million to cover construction costs;
- pay dividends or make distributions on our stock;
- make investments;
- create liens;
- enter into transactions with affiliates;
- sell assets;
- merge, consolidate and sell substantially all of our assets; and
- make capital expenditures.
We are also required by the credit facility to maintain specific financial
ratios, including maximum debt to EBITDA ratios and minimum fixed charge
coverage ratios. All of these restrictive covenants may restrict our ability to
expand or to pursue our business strategies, including building the Suncoast and
refurbishing or expanding our existing casinos.
Our ability to comply with these and other provisions of the indenture and
the credit facility may be affected by:
- changes in the estimated budget for the Suncoast;
- potential cost overruns on the Suncoast;
- changes in business conditions or results of operations;
- adverse regulatory developments; or
- other events beyond our control.
The breach of any of these covenants could result in a default under our
indebtedness, which could cause those obligations to become due and payable. If
we default, we could be prohibited from making payments with respect to the
exchange notes until the default is cured or all indebtedness under the credit
facility or other senior debt is paid in full. If our
17
<PAGE> 24
indebtedness were to be accelerated, we cannot assure you that we would be able
to repay it.
MANAGEMENT OF GROWTH -- WE MAY FACE UNFORESEEN DIFFICULTIES DURING THE
DEVELOPMENT, CONSTRUCTION AND OPENING OF THE SUNCOAST THAT MAY ADVERSELY AFFECT
OUR ABILITY TO MANAGE OUR GROWTH AND EXPECT TO FACE INTENSIFIED COMPETITION IN
HIRING AND RETAINING QUALIFIED PERSONNEL.
We may encounter unforeseen difficulties developing, constructing and
opening the Suncoast while simultaneously operating our three existing
hotel-casinos. Presently, a relatively small number of our executives are
responsible for many management duties. These difficulties may require
disproportionate amounts of their time and attention as well as the unexpected
allocation of financial and other resources. This could adversely affect
operating results at our existing hotel-casinos. In addition, if one or more
members of our group of executives, including Michael J. Gaughan, our Chairman
of the Board and Chief Executive Officer, cease to be our employees, the
management and performance of our company and our ability to make payments on
the exchange notes may be adversely affected.
To open the Suncoast, complete our scheduled capital improvements and
manage our future growth, we will need to, among other things, hire and train
new personnel and evaluate and possibly change our management structure.
Competition for new personnel in Las Vegas is intense and we cannot assure you
that in the future we will be able to attract and retain qualified personnel.
The explosive growth of mega-resorts on the Strip in Las Vegas has intensified
competition for qualified casino employees and made it more difficult for us to
retain trained, quality casino employees. We expect this difficulty to continue
with the opening of additional large hotel-casinos on the Strip over the next
several years.
DEVELOPMENT OF THE SUNCOAST -- WE FACE SIGNIFICANT RISKS AND UNCERTAINTIES IN
FINANCING AND DEVELOPING THE SUNCOAST, WHICH COULD SIGNIFICANTLY AFFECT OUR
BUSINESS STRATEGY AND OUR ABILITY TO MEET OUR FINANCIAL OBLIGATIONS.
Risks of Inability to Finance the Suncoast. We do not yet have financing in
place to fund the construction of the Suncoast. Our credit facility and the
indenture allow us to increase, with lender approval, the available borrowing
capacity under the facility to up to $200.0 million. We intend to use this
increased capacity to finance the construction of the Suncoast. The increase in
the facility remains subject to a number of contingencies, including lender
consent and the negotiation of additional terms relating to the construction. We
cannot assure you that we will be able to obtain the increase in the credit
facility or that it will be available on acceptable terms. If we cannot amend
the credit facility or obtain timely alternative financing on acceptable terms,
we may not be able to develop, construct and open the Suncoast, which could
adversely impact our future operating results. See "Description of Our Other
Indebtedness."
18
<PAGE> 25
Risks of Delays and Cost Overruns. A key element of our business strategy
is the development and construction of the Suncoast. Subject to obtaining
financing, we currently anticipate beginning construction of the Suncoast in
mid-1999. Based on current construction schedules, we expect that the Suncoast
will be completed and be open for business in the second half of 2000. In
building and developing the Suncoast, we face significant risks and
uncertainties, including:
- general construction risks, including cost overruns, shortages of
materials or skilled labor, labor disputes, unforeseen environmental or
engineering problems, work stoppages, fire and other natural disasters,
construction scheduling problems and weather interferences;
- change orders and plan or specification modifications;
- changes and concessions required by governmental or regulatory
authorities; and
- delays in obtaining or inability to obtain all licenses, permits and
authorizations required to open the Suncoast.
Costs and delays due to any of the above factors, or any other factor,
could significantly affect our business strategy, operating results and ability
to fulfill our financial obligations, including our obligations under the
exchange notes. We cannot assure you that the Suncoast will ever become
operational or become operational within time frames and budgets currently
contemplated. See "Business -- The Suncoast."
Risk that Suncoast Budget will be Exceeded. Our estimated budget for the
Suncoast is approximately $150.0 million, including contingencies of
approximately $4.5 million, but excluding pre-opening costs, opening bankroll
and capitalized interest costs of approximately $8.1 million. We cannot
guarantee that the Suncoast can be developed within our current estimated budget
or that our plans to develop the Suncoast will not change significantly.
We expect that, prior to beginning construction of the Suncoast, we will
enter into a guaranteed maximum price construction contract with the general
contractor of the Suncoast, J.A. Tiberti Construction Co., Inc.. We cannot
assure you that Tiberti Construction will have the financial resources to fund
any significant cost overruns in excess of the guaranteed maximum contract
price. J. Tito Tiberti, a director and stockholder of Coast Resorts and a
director of Coast Hotels and Casinos, is the president, a director and
stockholder of Tiberti Construction. Mr. Tiberti, together with his immediate
family, control Tiberti Construction. Mr. Tiberti could have a potential
conflict of interest with us with respect to construction issues. See
"-- Control of Coast Resorts by Principal Stockholder" and "Certain
Transactions."
COMPETITION -- COMPETITION IN THE GAMING INDUSTRY MAY INTENSIFY FURTHER AS
GAMING CAPACITY IN THE MARKETPLACE IS INCREASED AND NEW COMPETITORS EMERGE. THIS
INCREASED COMPETITION COULD ADVERSELY AFFECT OUR BUSINESS AND OUR ABILITY TO
MEET OUR OBLIGATIONS UNDER THE EXCHANGE NOTES.
There is intense competition among companies in the gaming industry. The
Orleans and the Gold Coast compete, and when completed the Suncoast will
compete, primarily with Las Vegas hotel-casinos and non-hotel gaming facilities
which target local residents. Some of these competitors have recently completed
expansions or new projects. In addition, there are currently gaming facilities
that have been announced or are under
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construction in the immediate vicinity of our casinos. A hotel-casino has been
proposed for a location adjacent to the Gold Coast. Additionally, adjacent to
the Suncoast site, a luxury hotel-casino and spa called The Resort at Summerlin
is expected to open in the third quarter of 1999 and is anticipated to include a
50,000 square foot gaming facility and over 500 hotel rooms. Furthermore, there
are several undeveloped properties in the immediate vicinity of The Orleans, the
Gold Coast and the location of the Suncoast on which new gaming facilities could
be built. The construction of new properties and the expansion or enhancement of
existing properties near our casinos could have a negative impact on our
business.
In contrast to our other casinos, the Barbary Coast competes for customers
primarily with the hotel-casinos located on the Strip. Several large
hotel-casinos have either recently opened or are under construction on the
Strip, including Bellagio, Mandalay Bay, The Venetian, Paris and Aladdin. The
construction of new properties and the expansion or enhancement of existing
properties on the Strip by competitors could materially adversely affect the
Barbary Coast.
In addition, each of our properties competes, and when completed, the
Suncoast will compete, to a lesser extent with all other casinos and hotels in
the Las Vegas area. In addition to those mentioned above, several new
hotel-casino projects and expansions have been announced or are under
construction in Las Vegas. These projects and expansions will add substantial
additional gaming capacity and approximately 8,400 rooms to the Las Vegas area
by December 2000. This additional gaming and room capacity may have a negative
impact on our business.
We also compete with other legalized forms of gaming and gaming operations
in other parts of the state of Nevada and elsewhere. Some states have recently
legalized, and several other states are currently considering legalizing, casino
gaming in designated areas. We also face competition from casinos located on
Native American reservations. We believe that the development by Native
Americans and others of casino properties similar to those in Las Vegas in areas
close to Nevada, particularly California and Arizona, could have a material
adverse impact on our business and results of operations.
Gaming competition from Native American ventures in California may
intensify due to Proposition 5, a California ballot initiative passed by voters
in California on November 3, 1998. Proposition 5 permits Native American tribes
that enter into agreements with the State of California to conduct gaming
activities including operating gaming devices such as slot machines, banked card
games, horse race wagering and lotteries. Proposition 5 is subject to a legal
challenge and its enforcement has been blocked pending a decision by the
California Supreme Court. We are not certain when, or if, Proposition 5 will
become effective or how it will affect us. However, because visitors from
California make up Nevada's largest visitor market, if Proposition 5 is
implemented, increased competition from Native American gaming may cause a
decline in our revenues and may have a negative impact on our business.
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DEPENDENCE ON CERTAIN MARKETS -- OUR HOTEL-CASINOS ARE HIGHLY DEPENDENT ON LOCAL
RESIDENTS OF THE LAS VEGAS AREA AND ON CUSTOMERS FROM OTHER PARTS OF NEVADA AND
SOUTHERN CALIFORNIA. WEAKER ECONOMIES IN THESE KEY AREAS COULD ADVERSELY AFFECT
OUR BUSINESS AND OUR ABILITY TO MEET OUR OBLIGATIONS UNDER THE EXCHANGE NOTES.
All of our hotel-casinos are located in Las Vegas and we believe that a
significant portion of our customers are Las Vegas residents. Although the
economy and population of Las Vegas have grown substantially, we cannot assure
you that it will continue to do so or that any growth will be at the same rate
experienced in recent years or will result in improved financial performance for
us. We also depend upon and draw a significant number of our customers from the
rest of Nevada and Southern California. Any economic downturn in the areas from
which we draw our customers could materially adversely affect our business and
results of operations and our ability to pay interest and principal on the
exchange notes.
NEIGHBORHOOD CASINO ACT -- NEVADA LAW MAY RESTRICT OUR ABILITY TO DEVELOP AND
OPERATE THE SUNCOAST AND ANY FUTURE GAMING PROJECTS IN CLARK COUNTY.
Nevada's Senate Bill 208, also known as SB 208 and the Neighborhood Casino
Act, was enacted in 1997 and affects the development of our Suncoast location as
well as other potential locations for casinos targeting Las Vegas residents. The
Neighborhood Casino Act, among other things, imposes more stringent requirements
for approval of new hotel-casinos in Clark County that are not located in the
vicinity of the Strip or downtown Las Vegas. Sites that were designated a gaming
overlay or gaming enterprise district prior to December 31, 1998 and that
receive approval from the Nevada Gaming Commission for a nonrestricted gaming
license no later than December 31, 2002 will not be subject to the more
stringent requirements of the Neighborhood Casino Act.
The site on which the Suncoast will be constructed has been designated as a
gaming overlay or gaming enterprise district by the City of Las Vegas, which is
the zoning designation necessary to construct and operate a hotel-casino. We
must receive approval for a nonrestricted gaming license, which is generally not
available until immediately prior to beginning gaming operations, by December
31, 2002, or we will be required to successfully petition the City of Las Vegas
to designate the Suncoast site as a gaming overlay or gaming enterprise district
in order to obtain a nonrestricted gaming license pursuant to the more stringent
standards of SB 208. These and other restrictions may limit our ability to
develop and operate the Suncoast and any future development projects in Clark
County, including the land we own in North Las Vegas. See "Business --
Properties."
GUARANTEE -- COAST RESORTS' GUARANTEE OF THE EXCHANGE NOTES DOES NOT PROVIDE
SIGNIFICANT ADDITIONAL ASSURANCE OF PAYMENT TO THE HOLDERS OF THE EXCHANGE
NOTES.
The exchange notes are guaranteed on a senior subordinated basis by Coast
Resorts. Coast Resorts does not have any income from operations. Coast Resorts
has no material assets other than our stock. Coast Resorts is not expected to
generate income from operations or acquire additional assets in the near future
and no assurance can be given that it will ever do so. Accordingly, the
guarantee does not provide any significant additional assurance of payment to
the holders of the exchange notes.
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Enforcement of the guarantee against Coast Resorts or any future guarantors
would be subject to certain defenses available to guarantors generally, and
would also be subject to defenses available to us regarding enforcement of the
exchange notes. These defenses include, without limitation, the right to force
the Trustee to exercise its remedies prior to commencement of any action on the
guarantee. Coast Resorts will waive, with respect to the exchange notes, all
defenses to the extent it may legally do so. See "Description of the Exchange
Notes -- Parent Guarantee and Subsidiary Guarantees."
FRAUDULENT CONVEYANCE MATTERS -- FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER
SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN
PAYMENTS RECEIVED FROM GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, the guarantee could be voided, or claims in respect of
the guarantee could be subordinated to all other debts of the guarantor if,
among other things, the guarantor, at the time it incurred the indebtedness
evidenced by the guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of the guarantee and was insolvent or rendered insolvent
by reason of such incurrence;
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by the guarantor pursuant to the guarantee could
be voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, the guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, were greater than
the fair salable value of all of its assets;
- if the present fair salable value of its assets were less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
The indenture may require that future subsidiaries guarantee the exchange
notes. These considerations will also apply to these guarantees.
RISK ASSOCIATED WITH LEASED PROPERTY -- MOST OF OUR HOTEL-CASINOS ARE LOCATED ON
LEASED PROPERTY. IF WE DEFAULT ON ANY OF THESE LEASES, THE LESSOR COULD
TERMINATE THE LEASE AND WE MAY LOSE POSSESSION OF THE HOTEL-CASINO.
We lease the land on which The Orleans and the Barbary Coast are located
and the land on which the Suncoast will be developed. If we were to default on
any lease, the lessor could terminate the lease and we could lose possession of
the affected land and any
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improvements on the land, including the hotel-casinos. This would have a
significant negative impact on us as we would then be unable to operate The
Orleans, the Barbary Coast or the Suncoast. The land leases for the Barbary
Coast and the Suncoast are with non-related third parties. The land lease for
The Orleans is with The Tiberti Company, a related party. For a description of
the leases, see "Business -- Properties."
GAMING REGULATION -- GAMING AUTHORITIES REQUIRE THAT WE RECEIVE AND CONTINUE TO
RECEIVE GAMING LICENSES AND OTHER APPROVALS IN ORDER TO CONDUCT GAMING
OPERATIONS. IN ORDER TO COMPLY WITH GAMING REGULATIONS, WE MAY REQUIRE CERTAIN
HOLDERS TO DISPOSE OF THEIR EXCHANGE NOTES BEFORE MATURITY.
Our gaming operations are subject to the licensing and regulatory control
of the Nevada Gaming Commission, the Nevada State Gaming Control Board and the
Clark County Liquor and Gaming Licensing Board. The Nevada Commission, the
Nevada Board and the Clark County Board are collectively referred to as the
Nevada gaming authorities. The Nevada gaming authorities have broad authority
regarding licensing and registration of entities and individuals involved in
gaming operations, including certain of our voting security holders. The Nevada
gaming authorities may, among other things, revoke the license of any entity
licensed as a gaming corporation or the registration of any entity registered as
a holding company of a gaming corporation, and they may also revoke the license
of any individual licensed as an officer, director, control person or
stockholder of a licensed or registered entity. If our gaming licenses were
revoked for any reason, the Nevada gaming authorities could require the closing
of any or all of our casinos, which would materially adversely affect our
business and results of operations. We and some of our officers, directors and
key employees have been licensed by the Nevada gaming authorities.
Prior to beginning gaming activities at the Suncoast, we must apply for and
obtain gaming licenses from the Nevada gaming authorities, in addition to
approvals from other applicable governmental or administrative state or local
agencies involved in the regulation of gaming and gaming activities in the State
of Nevada through the establishment of standards for construction, design, and
operational features of the casinos. We intend to apply for gaming licenses for
the Suncoast at the appropriate time before we begin operating the Suncoast.
We need not obtain any additional orders and approvals of the Nevada Gaming
Commission to complete this exchange offer because we obtained prior approval
from the Nevada Gaming Commission. However, if we intend to use the proceeds
from any future public offering of debt or equity securities to pay for
construction of, or to acquire an interest in, any gaming facilities in Nevada,
to finance the gaming operations of an affiliated company or to retire or extend
obligations incurred for any such purposes, we may be required to obtain prior
approval from the Nevada Gaming Commission.
Each holder of the exchange notes will be deemed to have agreed, to the
extent permitted by law, that if a relevant gaming authority determines that a
holder or beneficial owner of exchange notes must be found suitable under
applicable law, whether as a result of a foreclosure of our casinos or for any
other reason, and if such holder or beneficial owner is not found suitable, such
holder shall, upon our request, dispose of such holder's exchange notes within
30 days after receipt of such request or such earlier date as may be ordered by
the relevant gaming authority. We also will have the right to call for the
redemption of exchange notes held by any holder who is not found suitable at a
price
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equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and additional interest, if any, thereon to the date of redemption or such
earlier date as may be required by the relevant gaming authority or applicable
law. See "Description of the Exchange Notes -- Gaming Redemption."
There is no established trading market for the exchange notes. Therefore,
the price at which a holder of exchange notes may be required to dispose of such
holder's exchange notes cannot be predicted. See "-- Absence of Public Market,"
"Nevada Regulation and Licensing" and "Description of the Exchange
Notes -- Gaming Redemption."
POTENTIAL INABILITY TO FUND A CHANGE OF CONTROL OFFER -- THE CREDIT FACILITY
PROHIBITS US FROM PURCHASING ANY EXCHANGE NOTES. FURTHER, WE MAY NOT HAVE
SUFFICIENT ASSETS TO SATISFY OUR OBLIGATIONS.
The indenture requires us to offer to repurchase the exchange notes upon
the occurrence of specific kinds of change of control events. Some important
corporate events that would increase the level of our indebtedness, such as
leveraged recapitalizations, would not constitute a change of control under the
indenture. The credit facility generally prohibits us from purchasing any
exchange notes and also provides that specific change of control events will be
a default under that agreement. Any future credit or other debt agreements to
which we become a party may contain similar restrictions and provisions. If a
change of control occurs at a time when we are prohibited from purchasing
exchange notes, we could seek the consent of our lenders to purchase the
exchange notes or we could attempt to refinance the debt that contains that
prohibition. However, we cannot assure you that we will be able to obtain lender
consent or refinance those borrowings. Even if such a consent were obtained or
the debt is refinanced, we cannot assure you that we would have the funds
necessary to repurchase the exchange notes. Our failure to purchase the exchange
notes would be a default under the indenture which would, in turn, be a default
under the credit facility and, potentially, other senior debt. If the senior
debt were to be accelerated, we may be unable to repay these amounts and make
the required repurchase of exchange notes.
CONTROL OF COAST RESORTS BY PRINCIPAL STOCKHOLDERS -- OUR PARENT COMPANY, COAST
RESORTS, IS CONTROLLED BY A SMALL GROUP OF INDIVIDUALS WHO HAVE THE ABILITY TO
CONTROL THE OUTCOME OF STOCKHOLDER VOTES.
Coast Resorts is the sole stockholder of our company. Michael J. Gaughan,
the Chairman of the Board and Chief Executive Officer of Coast Resorts and our
company, is the beneficial owner of approximately 30.1% of the outstanding
shares of Coast Resorts common stock. Mr. Gaughan, together with Jerry Herbst,
J. Tito Tiberti and Franklin Toti, each of whom is a director and/or officer of
Coast Resorts and our company, own in the aggregate approximately 61.0% of the
outstanding shares of Coast Resorts common stock. These individuals, if acting
together, would have the collective ability to elect all of the directors of
Coast Resorts and approve or disapprove any other matter submitted to a vote of
the stockholders of Coast Resorts. See "Certain Transactions" and "Principal
Stockholders."
Tiberti Construction is the general contractor for the Suncoast. Mr.
Tiberti is a stockholder, a director and the president of, and together with his
immediate family members controls Tiberti Construction. Potential conflicts of
interest between us and Tiberti Construction could arise as a result of Tiberti
Construction serving as the general
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contractor for the construction of the Suncoast. Additionally, we lease the land
on which The Orleans is located from The Tiberti Company, a Nevada general
partnership of which Mr. Tiberti is managing partner. See "Business -- The
Orleans" and "Certain Transactions."
POSSIBLE FEDERAL LEGISLATION -- FUTURE FEDERAL LEGISLATION MAY ADVERSELY AFFECT
OUR BUSINESS AND THE OVERALL GAMING INDUSTRY.
The U.S. Congress has created the National Gambling Impact and Policy
Commission to conduct a comprehensive study of all matters relating to the
economic and social impact of gaming in the United States. This commission is
scheduled to release a report on its findings, together with recommended
legislation and administrative action, in June 1999. Any such recommendations or
actions, if enacted into law, could adversely impact the gaming industry and
have a material adverse effect on our business, financial condition or results
of operations.
From time to time, certain legislators have proposed the imposition of a
federal tax on gross gaming revenues. In March 1996, tax legislation was
introduced in Congress which included a proposal to impose a 15 percent federal
tax on taxable gaming services which is defined as gross gaming receipts less
total gaming payoffs. The tax, if enacted, would be applicable to us. Although
no action has been taken on such legislation, we cannot assure you that such tax
or any similar tax will not be imposed in the future. Any such tax or similar
tax could have a material adverse effect on our business or results of
operations.
ABSENCE OF PUBLIC MARKET -- NO PUBLIC MARKET EXISTS FOR THE EXCHANGE NOTES. THE
OFFERING OR SALE OF THE EXCHANGE NOTES IS SUBJECT TO SIGNIFICANT LEGAL
RESTRICTIONS AS WELL AS UNCERTAINTIES REGARDING THE LIQUIDITY OF THE TRADING
MARKET FOR THE EXCHANGE NOTES.
No public market exists for the exchange notes, and a market offering
liquidity may not develop. The exchange notes will not be listed on any
securities exchange, but are expected to be eligible for trading in the PORTAL
market. If the exchange notes are traded after their initial issuance, they may
trade at a discount from their price at the time the exchange offer is
consummated, depending upon prevailing interest rates, the market for similar
securities, our performance and other factors. We have been advised by the
Placement Agents that they intend to make a market in the exchange notes after
consummation of the exchange offer, as permitted by applicable laws and
regulations. However, the Placement Agents are not obligated to do so and these
market making activities may be discontinued at any time without notice.
General declines in the market for similar securities may also adversely
affect the liquidity of, and trading market for, the exchange notes. These a
declines may adversely affect liquidity and trading markets independent of our
financial performance and prospects.
RISKS ASSOCIATED WITH YEAR 2000 COMPUTER COMPLIANCE -- OUR BUSINESS AND OUR
SUPPLIERS' BUSINESSES ARE HIGHLY DEPENDENT ON COMPUTER SYSTEMS. ANY COMPUTER
PROBLEMS DUE TO THE YEAR 2000 MAY ADVERSELY AFFECT OUR BUSINESS.
We use computer systems in virtually all areas of our operations. Should we
or one or more of our vendors not be Y2K compliant, the operations of our
hotel-casinos could be
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disrupted for an indeterminate period of time, potentially having a material
adverse impact on results of operations. Possible consequences of our not being
Y2K compliant include, but are not limited to, problems with:
- hotel reservations operations;
- hotel check-in/check-out procedures;
- point-of-sale transactions in food, beverage and retail areas;
- race and sports book wagering; or
- updating and accumulation of slot machine player marketing information.
Additionally, disruptions could occur to the compiling of financial
information in our back-office accounting, purchasing, inventory and payroll
systems. Embedded microchips in certain systems such as elevators, escalators
and the heating, ventilation and air conditioning could lead to interruptions in
service. All of these problems could inconvenience hotel and casino customers,
resulting in a loss of business.
We could also be exposed to Y2K problems if our suppliers have disruptions
to their operations due to Year 2000 problems. We do not consider these problems
to be as significant as those with our own systems because in most instances we
believe we could find alternate vendors for our supplies. However, Y2K problems
for some suppliers, such as utility providers, could result in disruptions to
our hotel-casino operations for an indeterminate period of time. Additionally,
should providers of financial services such as ATM's, credit card processing and
credit card cash advance experience Y2K problems, our operations could be
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Impact of the Year 2000 Issue."
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On March 23, 1999 we sold $175.0 million in principal amount at maturity of
the outstanding notes in a private placement through Morgan Stanley & Co.
Incorporated and NationsBanc Montgomery Securities LLC to a limited number of
"Qualified Institutional Buyers," as defined under the Securities Act of 1933,
and to limited persons outside the United States. In connection with the sale of
the outstanding notes, we, Morgan Stanley & Co. Incorporated and NationsBanc
Montgomery Securities LLC entered into a registration rights agreement, dated as
of March 23, 1999. Under that agreement, we must, among other things, use our
best efforts to file with the Commission a registration statement under the
Securities Act of 1933 covering the exchange offer and to cause that
registration statement to become effective under the Securities Act of 1933.
Upon the effectiveness of that registration statement, we must also offer each
holder of the outstanding notes the opportunity to exchange its securities for
an equal principal amount of exchange notes. You are a holder with respect to
the exchange offer if you are a person in whose name any outstanding notes are
registered on our books or any other person who has obtained a properly
completed assignment of outstanding notes from the registered holder.
We are making the exchange offer to comply with our obligations under the
registration rights agreement. A copy of the registration rights agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part.
In order to participate in the exchange offer, you must represent to Coast
Hotels and Casinos, among other things, that:
- you are not a broker-dealer;
- you are not participating in a distribution of the exchange notes; and
- you are not an "affiliate" of Coast Hotels and Casinos, Inc., as the term
is defined in Rule 144A under the Securities Act of 1933.
RESALE OF THE EXCHANGE NOTES
Based on previous interpretations by the staff of the Commission set forth
in no-action letters issued to third parties, we believe that the exchange notes
issued in the exchange offer may be offered for resale, resold and otherwise
transferred by you, except if you are our affiliate, without compliance with the
registration and prospectus delivery provisions of the Securities Act of 1933,
provided that the representations set forth in "Purpose and Effect of the
Exchange Offer" apply to you.
If you tender in the exchange offer with the intention of participating in
a distribution of the exchange notes, you cannot rely on the interpretation by
the staff of the Commission as set forth in the no-action letters and you must
comply with the registration and prospectus delivery requirements of the
Securities Act of 1933 in connection with a secondary resale transaction. In the
event that our belief regarding resale is inaccurate, those who transfer
exchange notes in violation of the prospectus delivery provisions of the
Securities Act of 1933 and without an exemption from registration under the
federal securities laws may incur liability under these laws. We do not assume,
nor will we indemnify you against, this liability.
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The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of the particular jurisdiction. Each broker-dealer
that receives exchange notes for its own account in exchange for outstanding
notes, where the outstanding notes were acquired by that broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of the exchange
notes. In order to facilitate the disposition of exchange notes by
broker-dealers participating in the exchange offer, we have agreed, subject to
specific conditions, to make this prospectus, as it may be amended or
supplemented from time to time, available for delivery by those broker-dealers
to satisfy their prospectus delivery obligations under the Securities Act of
1933.
TERMS OF THE EXCHANGE OFFER
Upon the terms and conditions in this prospectus, and in the accompanying
letter of transmittal, we will accept all outstanding notes validly tendered
prior to 5:00 p.m., New York City time, on the expiration date. We will issue
$1,000 in principal amount of exchange notes in exchange for an equal principal
amount of outstanding notes tendered and accepted in the exchange offer. You may
tender some or all of your outstanding notes pursuant to the exchange offer in
any denomination of $1,000 or in integral multiples thereof.
In addition, in connection with any resales of exchange notes, any
broker-dealer who acquired outstanding notes for its own account as a result of
market-making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the exchange notes. The Commission has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements for the
exchange notes, other than a resale of an unsold allotment from the original
sales of outstanding notes, with the prospectus contained in the exchange offer
registration statement. Under the registration rights agreement, we are required
to allow participating broker-dealers, and other persons, if any, subject to
similar prospectus delivery requirements, to use the prospectus contained in the
exchange offer registration statement in connection with the resale of exchange
notes. However, we are not required to amend or supplement this prospectus for a
period exceeding 90 days after the date of the last expiration date. "Expiration
Date" means 5:00 p.m. New York City time, on , 1999 unless we, in
our sole discretion, extended the exchange offer. If we do, the "expiration
date" will be 5:00 p.m. New York City time on the latest date to which the
exchange offer is extended. The expiration date will be at least 20 business
days from the date that this prospectus is mailed to the holders of the
outstanding notes. We have also agreed that in the event that either we do not
consummate the exchange offer or a shelf registration statement is not declared
effective on or prior to September 23, 1999, the interest rate of the
outstanding notes will be increased by one-half of one percent (.5%) per annum
until the earlier of the consummation of the exchange offer or the effectiveness
of the shelf registration statement.
If we consummate the exchange offer on or before September 23, 1999, we
will not be required to file a shelf registration statement to register any
outstanding notes, and the interest rate on any outstanding notes will remain at
the initial level of 9 1/2% per annum. The exchange offer will be deemed to have
been consummated upon our having exchanged, pursuant to the exchange offer,
exchange notes for all outstanding notes that
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have been properly tendered and not withdrawn by the expiration date. In this
event, holders of outstanding notes not participating in the exchange offer who
are seeking liquidity in their investment would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act.
The form and terms of the exchange notes will be the same as the form and
terms of the outstanding notes except that the exchange notes will not bear
legends restricting the transfer thereof. The exchange notes will evidence the
same debt as the outstanding notes. The exchange notes will be issued under and
entitled to the benefits of the indenture.
As of the date of this prospectus, $175,000,000 aggregate principal amount
of the outstanding notes are outstanding and there is one registered holder
thereof. In connection with the issuance of the outstanding notes, we arranged
for the outstanding notes to be eligible for trading in the Private Offering,
Resale and Trading through Automated Linkages Market. The PORTAL market is the
National Association of Securities Dealers' screen based, automated market
trading of securities eligible for resale under Rule 144A. The exchange notes
will also be issuable and transferable in book-entry form through DTC.
We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice of acceptance to the exchange
agent. See "-- Exchange Agent." The exchange agent will act as agent for the
tendering holders of outstanding notes for the purpose of receiving exchange
notes from us and delivering exchange notes to the holders.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender or the occurrence of certain other events described in this
prospectus, certificates for the unaccepted outstanding notes will be returned,
without expense, to the tendering holder as promptly as practicable after the
expiration date.
Holders of outstanding notes who tender in the exchange offer will not be
required to pay:
- brokerage commissions or fees; or
- transfer taxes with respect to the exchange of outstanding notes pursuant
to the exchange offer, subject to the instructions in the accompanying
letter of transmittal.
We will pay all charges and expenses, other than specified taxes, in
connection with the exchange offer. See "-- Fees and Expenses."
Holders of outstanding notes do not have any appraisal or dissenters'
rights in connection with the exchange offer. We intend to conduct the exchange
offer in accordance with the provisions of the registration rights agreement and
the applicable requirements of the Exchange Act and the rules and regulations of
the Commission interpreting the Exchange Act. Outstanding notes that are not
tendered for exchange in the exchange offer will remain outstanding and be
entitled and continue to accrue interest, but will not be entitled to any rights
or benefits under the registration rights agreement.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m. New York City time, on
, 1999 unless we, in our sole discretion, extend the exchange
offer. If we do, the "expiration
29
<PAGE> 36
date" will be 5:00 p.m. New York City time on the latest date to which the
exchange offer is extended.
If we extend the expiration date, we will:
- notify the exchange agent of any extension by oral or written notice; and
- mail an announcement of the extension to the record holders of
outstanding notes prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
Any announcement may state that we are extending the exchange offer for a
specified period of time.
If any of the conditions listed under "Conditions to the Offer" occur and
are not waived by us, by giving oral or written notice to the exchange agent, we
reserve the right:
- to delay acceptance of any outstanding notes;
- to extend the exchange offer;
- to terminate the exchange offer;
- to refuse to accept outstanding notes not previously accepted, and
- to amend the terms of the exchange offer in any manner we deem to be
advantageous to the holders of the outstanding notes.
Any delay in acceptance, extension, termination or amendment will be
followed as promptly as possible by oral or written notice to the exchange
agent. If the exchange offer is amended in a manner we determine constitutes a
material change, we will promptly disclose the amendment in a way reasonably
calculated to inform you of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise, or otherwise
communicate any public announcement, other than by making a timely release to
the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from the last interest payment date
on which interest was paid on the outstanding notes. If interest has not yet
been paid, the outstanding notes will bear interest from March 23, 1999.
Interest will be paid with the first interest payment on the exchange notes.
Interest on the outstanding notes accepted for exchange will cease to accrue
upon issuance of the exchange notes.
The exchange notes will bear interest at a rate of 9 1/2% per annum.
Interest on the exchange notes will be payable semi-annually, in arrears, on
each April 1 and October 1 following the consummation of the exchange offer.
Untendered outstanding notes that are not exchanged for exchange notes pursuant
to the exchange offer will bear interest at a rate of 9 1/2% per annum after the
expiration date.
30
<PAGE> 37
PROCEDURES FOR TENDERING OUTSTANDING NOTES
To tender in the exchange offer, you must do the following:
- complete, sign and date the letter of transmittal, or a facsimile of it;
- have the signatures guaranteed, if required by the letter of transmittal;
and
- mail or deliver the letter of transmittal, or the facsimile, together
with the outstanding notes and any other required documents, to the
exchange agent.
The exchange agent must receive these documents by 5:00 p.m., New York City
time, on the expiration date.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the outstanding notes
by causing DTC to transfer the outstanding notes into the exchange agent's
account via the ATOP system in accordance with DTC's transfer procedure.
Although delivery of outstanding notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal, or
its facsimile, with any required signature guarantees and documents, must, in
any case, be transmitted to and received or confirmed by the exchange agent at
its addresses in this prospectus prior to 5:00 p.m., New York City time, on the
expiration date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Your tender of outstanding notes will constitute an agreement between you
and us in accordance with the terms and subject to the conditions in this
prospectus and in the letter of transmittal.
Delivery of all documents must be made to the exchange agent at its address
listed in this prospectus. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect tender
for them.
The method of delivery of outstanding notes and the letter of transmittal
and all other required documents to the exchange agent is up to you. However,
you also bear the risks of non-delivery. Instead of delivery by mail, we
recommend that you use an overnight or hand delivery service. In all cases, you
should allow sufficient time to assure timely delivery. No letter of transmittal
should be sent to us.
Only a holder of outstanding notes may tender outstanding notes in the
exchange offer. The term "holder" with respect to the exchange offer means any
person in whose name outstanding notes are registered on our books or any other
person who has obtained a properly completed bond power from the registered
holder or any person whose outstanding notes are held of record by DTC who
desires to deliver the outstanding notes by book-entry transfer at DTC.
Any beneficial holder whose outstanding notes are registered in the name of
the holder's broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact the registered holder promptly and instruct
the registered holder to tender on the holder's behalf. If the beneficial holder
wishes to tender on the holder's own behalf, the beneficial holder must, prior
to completing and executing the letter of transmittal and delivering the
outstanding notes, either make appropriate arrangements to register ownership of
the outstanding notes in the holder's name or obtain a properly
31
<PAGE> 38
completed bond power from the registered holder. The transfer of record
ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an "eligible institution" unless the
outstanding notes tendered are:
- tendered by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
- tendered for the account of an "eligible institution."
An eligible institution is:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent in
the United States, or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act; or
- an "eligible institution" that is a participant in a recognized medallion
signature guarantee program.
If the letter of transmittal is signed by a person other than the
registered holder of any outstanding notes listed therein, the outstanding notes
tendered must be endorsed or accompanied by appropriate bond powers which
authorize that person to tender the outstanding notes on behalf of the
registered holder, in either case signed as the name of the registered holder or
holders appears on the outstanding notes.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, the person should indicate this when signing, and unless waived by us,
submit evidence satisfactory to us of that person's authority to so act with the
letter of transmittal.
We will determine, in our sole discretion, all questions as to the
validity, form, and eligibility, including time of receipt, acceptance and
withdrawal of the tendered outstanding notes. Our determination will be final
and binding. We reserve the absolute right to reject any and all outstanding
notes not properly tendered or any outstanding notes of which our acceptance
would, in the opinion of our counsel, be unlawful. We also reserve the absolute
right to waive any irregularities or conditions of tender as to particular
outstanding notes. Our interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of transmittal, will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of outstanding notes must be cured within the time as
we determine. Neither we, the exchange agent nor any other person is under any
duty to give notification of defects or irregularities with respect to tenders
of outstanding notes. Additionally, none of them will incur any liability for
failure to give this notification. Tenders of outstanding notes will not be
deemed to have been made until these irregularities have been cured or waived.
Any outstanding notes received by the exchange agent that have defects or
irregularities not cured or waived by us will be returned to you without cost by
the exchange agent, unless otherwise provided in the letter of transmittal as
soon as practicable after the expiration date.
32
<PAGE> 39
In addition, we reserve the right in our sole discretion to:
- purchase or make offers for any outstanding notes that remain outstanding
subsequent to the expiration date;
- terminate the exchange offer according to the terms in "-- Conditions to
the Offer"; and
- to the extent permitted by applicable law, purchase outstanding notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any of these purchases or offers may differ from the terms of
the exchange offer.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your outstanding notes and either your outstanding
notes are not immediately available, or you cannot deliver your outstanding
notes, the letter of transmittal or any other required documents to the exchange
agent prior to the expiration date, or if you cannot complete the procedure for
book-entry transfer on a timely basis, you may effect a tender if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from an
eligible institution a properly completed and duly executed notice of
guaranteed delivery, by facsimile transmission, mail or hand delivery,
stating the name and address of the holder of the outstanding notes, the
certificate number or numbers of such outstanding notes and the principal
amount of outstanding notes tendered, stating that the tender is being
made, and guaranteeing that, within three business days after the
expiration date, the letter of transmittal, or facsimile thereof,
together with the certificate(s) representing the outstanding notes,
unless the book-entry transfer procedures are to be used, to be tendered
in proper form for transfer and any other documents required by the
letter of transmittal, will be deposited by the eligible institution with
the exchange agent; and
- the properly completed and executed letter of transmittal, or facsimile
thereof, together with the certificates representing all tendered
outstanding notes in proper form for transfer, or confirmation of a
book-entry transfer into the exchange agent's account at DTC of
outstanding notes delivered electronically, and all other documents
required by the letter of transmittal are received by the exchange agent
within three business days after the expiration date.
If you wish to tender your outstanding notes according to the guaranteed
delivery procedures, make your request to the exchange agent and a notice of
guaranteed delivery will be sent to you.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.
33
<PAGE> 40
To withdraw a tender of outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the exchange
agent at the address given in this prospectus prior to 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
- identify the outstanding notes to be withdrawn, including the certificate
number or numbers and principal amount of the outstanding notes;
- be signed by the depositor in the same manner as the original signature
on the letter of transmittal by tendering the outstanding notes,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to permit the trustee of the outstanding
notes to register the transfer of the outstanding notes into the name of
the depositor withdrawing the tender; and
- specify the name in which any outstanding notes are to be registered, if
different from that of the depositor.
All questions as to the validity, form and eligibility, including time of
receipt, of any withdrawal notices will be determined by us, and will be final
and binding on all parties. Any outstanding notes so withdrawn will be deemed
not to have been validly tendered for purposes of the exchange offer, and no
exchange notes will be issued unless the outstanding notes previously withdrawn
are validly retendered. Any outstanding notes that have been tendered but which
are not accepted for exchange will be returned to the holder without cost to the
holder as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn outstanding notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering Outstanding Notes" at any time prior to the expiration date.
CONDITIONS TO THE OFFER
Regardless of any other term of the exchange offer, we are not required to
accept for exchange or to exchange any outstanding notes that are not accepted
for exchange according to the terms of the exchange offer. Additionally, we may
terminate or amend the exchange offer as provided in this prospectus before
accepting the outstanding notes if:
- any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer,
which, in our judgment, might materially impair our ability to proceed
with the exchange offer; or
- any law, statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule or regulation is interpreted by the staff
of the Commission in a manner, which, in our judgment, might materially
impair our ability to proceed with the exchange offer.
These conditions are for our sole benefit. We may assert them in whole or
in part at any time and from time to time, in our sole discretion. Our failure
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any right and the right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
34
<PAGE> 41
In addition, we will not accept for exchange any outstanding notes
tendered, and no exchange notes will be issued in exchange for any outstanding
notes, if at the time of tender:
- a stop order is threatened by the Commission or is in effect for the
registration statement that this prospectus is a part of, or
- a stop order is threatened or in effect regarding qualification of the
indenture under the Trust Indenture Act of 1939, as amended.
If we determine that we may terminate or amend the exchange offer, we may:
- refuse to accept any outstanding notes and return any tendered
outstanding notes to the holder;
- extend the exchange offer and retain all outstanding notes tendered prior
to the expiration of the exchange offer, subject to the rights of the
holders of tendered outstanding notes to withdraw their tendered
outstanding notes;
- waive the termination event with respect to the exchange offer and accept
all properly tendered outstanding notes that have not been withdrawn; or
- amend the exchange offer at any time prior to 5:00 p.m. New York City
time on the expiration.
If the waiver or amendment constitutes a material change in the exchange
offer, we will disclose the change by means of a supplement to this prospectus
that will be distributed to each registered holder of outstanding notes, and we
will extend the exchange offer for a period of five to ten business days, if the
exchange offer would otherwise expire during that period, depending on the
significance of the waiver or amendment and the manner of disclosure to the
registered holders of the outstanding notes.
The exchange offer is not conditioned on any minimum principal amount of
outstanding notes being tendered for exchange.
EXCHANGE AGENT
Firstar Bank of Minnesota, N.A. has been appointed as exchange agent for
the exchange offer. Questions and requests for assistance and requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to the exchange agent addressed as follows:
BY MAIL, OVERNIGHT COURIER OR HAND DELIVERY:
Firstar Bank of Minnesota, N.A.
101 East 5th Street
12th Floor
St. Paul, Minnesota 55101
Telephone number: (651) 229-2600
Facsimile transmission: (651) 229-6415
FEES AND EXPENSES
We will bear the expenses of soliciting tenders pursuant to the exchange
offer. The principal solicitation for tenders pursuant to the exchange offer is
being made by mail.
35
<PAGE> 42
Additional solicitations may be made by our officers and regular employees and
our affiliates in person, by telegraph or by telephone.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the exchange
agent reasonable customary fees for its services and will reimburse the exchange
agent for its reasonable out-of-pocket expenses in connection with this exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses they incur in forwarding
copies of this prospectus, letters of transmittal and related documents to the
beneficial owners of the outstanding notes and in handling or forwarding tenders
for exchange.
We will pay the fees and expenses incurred in connection with the exchange
offer, for the following:
- the exchange agent;
- the trustee;
- accounting; and
- legal services.
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes pursuant to the exchange offer. The amount of these transfer
taxes, whether imposed on the registered holder or any other persons, will be
payable by the tendering holder if:
- certificates representing exchange notes or outstanding notes not
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered
holder of the outstanding notes tendered;
- tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
outstanding notes pursuant to the exchange offer.
If satisfactory evidence of payment of, or exemption from, these taxes is
not submitted with the letter of transmittal, the amount of these transfer taxes
will be billed directly to the tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in our accounting records
on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized by us upon the consummation of the exchange offer.
The expenses of the exchange offer will be amortized by us over the term of the
exchange notes under generally accepted accounting principles.
36
<PAGE> 43
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999.
Please read this table in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
and notes included in this prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------
(IN THOUSANDS)
<S> <C>
Cash and cash equivalents........................... $ 35,697
========
Current maturities of long-term debt................ $ 7,817
========
Long-term debt:
Credit facility(1)................................ 47,000
Notes............................................. 175,000
13% first mortgage notes (net of original issue
discount of $45)............................... 1,960
Subordinated notes payable to related parties..... 1,975
Other note payable, less current portion.......... 8,046
--------
Total long-term debt...................... 233,981
--------
Stockholder's equity:
Common stock, $1.00 par value; 25,000 shares
authorized, 1,000 shares issued and
outstanding.................................... 1
Additional paid-in capital........................ 86,903
Retained earnings (deficit)(2).................... (4,670)
--------
Total stockholder's equity................ 82,234
--------
Total capitalization...................... $316,215
========
</TABLE>
- -------------------------
(1) We made initial borrowings of approximately $47.0 million under the credit
facility in part to fund the refinancing of our 10 7/8% first mortgage notes
and our 13% first mortgage notes. Amounts available for future borrowing
under the credit facility are approximately $28.0 million, subject to
certain borrowing conditions, for a total availability of $75.0 million. See
"Description of Our Other Indebtedness."
(2) Retained earnings (deficit) reflects the following extraordinary charges
associated with the early retirement of our 13% first mortgage notes and our
10 7/8% first mortgage notes: (a) a $4.5 million write-off of deferred
financing costs, (b) a $3.8 million write-off of the remaining original
issue discount on the 13% first mortgage notes and (c) the $33.1 million of
repurchase premiums for the 13% first mortgage notes and the 10 7/8% first
mortgage notes. These amounts are reflected net of a 35% tax benefit.
37
<PAGE> 44
SELECTED HISTORICAL FINANCIAL DATA
You should read the following Selected Historical Financial Data in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and related notes
included elsewhere in this prospectus. The income statement data for each of the
five years ended December 31, 1998 and the balance sheet data as of December 31,
1994, 1995, 1996, 1997 and 1998 are derived from our financial statements, which
have been audited by PricewaterhouseCoopers LLP. The income statement data for
the three months ended March 31, 1998 and 1999 and the balance sheet data as of
March 31, 1998 and 1999 have been derived from our unaudited financial
statements. In the opinion of management, the unaudited financial statements
reflect all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the information contained in those financial
statements. The results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for any other interim
period or for the full year.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
---------------------------------------------------- -------------------
1994 1995 1996(1) 1997 1998 1998 1999
-------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Operating Revenues:
Casino....................................... $129,086 $129,675 $148,509 $211,026 $242,992 $59,179 $ 66,057
Food and beverage............................ 36,824 38,468 39,517 61,724 66,503 16,578 17,775
Hotel........................................ 12,232 13,233 14,700 28,095 28,443 6,937 7,877
Other........................................ 9,386 9,968 10,635 19,994 26,421 6,093 7,046
-------- -------- -------- -------- -------- ------- --------
Gross Operating Revenues....................... 187,528 191,344 213,361 320,839 364,359 88,787 98,755
Less: promotional allowances................. (14,955) (16,588) (17,374) (26,956) (31,996) (7,773) (8,689)
-------- -------- -------- -------- -------- ------- --------
Net revenues................................... 172,573 174,756 195,987 293,883 332,363 81,014 90,066
-------- -------- -------- -------- -------- ------- --------
Operating Expenses:
Casino....................................... 65,376 67,782 74,169 114,932 127,512 31,512 32,046
Food and beverage............................ 34,461 31,242 31,680 50,129 47,278 11,734 11,776
Hotel........................................ 6,934 6,692 7,428 12,623 11,856 2,712 3,041
Other........................................ 8,257 8,537 8,351 19,516 22,458 4,827 5,969
General and administrative expenses.......... 32,940 34,686 37,992 54,351 55,879 13,148 14,315
Guaranteed payments to former partners(2).... 2,672 858 -- -- -- -- --
Land leases.................................. -- -- -- 2,100 3,190 525 1,110
Deferred (non-cash) rent..................... -- -- -- 2,378 3,198 594 964
Pre-opening expenses......................... -- -- 7,125 -- -- -- --
Depreciation and amortization.................. 6,766 7,280 7,883 18,278 20,607 4,881 5,210
-------- -------- -------- -------- -------- ------- --------
Operating income............................... 15,167 17,679 21,359 19,576 40,385 11,081 15,635
-------- -------- -------- -------- -------- ------- --------
Interest expense, net(3)..................... (227) (3,545) (9,981) (25,228) (26,570) (6,663) (6,299)
Other income................................... 23 92 58 919 168 25 --
-------- -------- -------- -------- -------- ------- --------
Net income (loss) before income taxes and
extraordinary item........................... 14,963 14,226 11,436 (4,733) 13,983 4,443 9,336
Provision (benefit) for income taxes(4)...... -- -- 6,617 (1,401) 5,225 1,625 3,013
-------- -------- -------- -------- -------- ------- --------
Net income (loss) before extraordinary item.... 14,963 14,226 4,819 (3,332) 8,758 2,818 6,323
Extraordinary item -- loss on early retirement
of debt, net of applicable income tax benefit
($14,543).................................... -- -- -- -- -- -- (27,007)
-------- -------- -------- -------- -------- ------- --------
Net income (loss).............................. $ 14,963 $ 14,226 $ 4,819 $ (3,332) $ 8,758 $ 2,818 $(20,684)
======== ======== ======== ======== ======== ======= ========
</TABLE>
38
<PAGE> 45
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
---------------------------------------------------- --------------------
1994 1995 1996(1) 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 16,967 $ 14,539 $ 61,555 $ 29,426 $ 41,595 $ 36,242 $ 35,697
Total assets.................................. 134,295 152,216 374,122 366,861 367,034 372,045 372,314
Total debt.................................... 14,876 84,948 202,545 215,249 207,859 213,371 241,798
Stockholder's equity.......................... 87,781 43,334 100,678 97,346 102,918 100,164 82,234
</TABLE>
- -------------------------
(1) The Orleans opened in December 1996.
(2) Prior to our formation in 1995, the Gold Coast and the Barbary Coast were
operated by two affiliated partnerships, which were consolidated into us and
Coast Resorts, Inc. effective January 1, 1996. The partnership agreements
for those partnerships required that guaranteed payments be made to the
partners.
(3) Includes interest income of $118,000 (1994), $106,000 (1995), $4,791,000
(1996), $98,000 (1997) and $695,000 (1998) and capitalized interest of $0
(1994), $235,000 (1995), $7,464,000 (1996), $1,016,000 (1997) and $58,000
(1998). Interest income for the three months ended March 31, 1998 and 1999
was $101,000 and $215,000, respectively. There was no capitalized interest
for the three months ended March 31, 1998 and 1999.
(4) The partnerships described in footnote 2 were not subject to federal income
taxes. We are a "C corporation" and, therefore, are subject to federal
income taxes. If these partnerships had been taxed as C corporations from
formation, they would have had combined income tax expense of $5,251,000
(1994), $4,979,000 (1995) and $4,117,000 (1996).
39
<PAGE> 46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
financial information regarding our results of operations:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------ ------------------
1996(1) 1997 1998 1998 1999
-------- -------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Hotel-casino operations:
Net operating revenues....... $195,987 $293,883 $332,363 $81,014 $90,066
Operating expenses........... 168,716 267,148 283,839 68,216 71,774
-------- -------- -------- ------- -------
Operating income from hotel-
casino operations............ 27,271 26,735 48,524 12,798 18,292
Corporate expenses(3).......... 5,912 7,159 8,139 1,717 2,657
-------- -------- -------- ------- -------
Total operating income......... $ 21,359 $ 19,576 $ 40,385 $11,081 $15,635
======== ======== ======== ======= =======
EBITDA, hotel-casino
operations(2)................ $ 41,078 $ 45,976 $ 70,000 $17,897 $23,739
======== ======== ======== ======= =======
EBITDA, total (including
corporate)(2)................ $ 36,367 $ 40,232 $ 64,190 $16,556 $21,809
======== ======== ======== ======= =======
</TABLE>
- -------------------------
(1) The Orleans opened in December 1996.
(2) "EBITDA" means earnings before interest, taxes, depreciation, amortization,
certain non-cash items including deferred, non-cash, rent expense and
pre-opening expenses. EBITDA should not be construed as an alternative to
operating income or net income, as determined in accordance with generally
accepted accounting principles, as an indicator of our operating
performance, or as an alternative to cash provided by operating activities,
as determined in accordance with generally accepted accounting principles,
as an indicator of cash flows or a measure of liquidity. EBITDA is presented
solely as supplemental disclosure because management believes that it is a
widely used measure of operating performance in the gaming industry. All
companies do not calculate EBITDA in the same manner. As a result, EBITDA as
presented here may not be comparable to similarly titled measures presented
by other companies.
(3) Corporate expenses include corporate general and administrative expenses,
depreciation and amortization and land lease expenses, both cash and
deferred, on the Suncoast land.
QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998
Net revenues in the quarter ended March 31, 1999 were $90.1 million
compared to $81.0 million in the same quarter in 1998, an increase of $9.1
million, or 11.2%. Revenues were higher at all three of our hotel-casino
properties. First quarter operating income was $15.6 million compared to 1998
first quarter operating income of $11.1 million, an increase of $4.5 million, or
40.5%. Our operating margins, which reflect operating income as a
40
<PAGE> 47
percentage of revenues, improved at all three of our hotel-casino properties.
Due to a one-time, net of income tax benefit charge of $27.0 million as a result
of the early retirement of $189.9 million in first mortgage notes, there was a
net loss of $20.7 million in the first quarter of 1999 compared to net income of
$2.8 million in the first quarter of 1998.
Casino. Casino revenues in the quarter ended March 31, 1999 were $66.1
million, an increase of $6.9 million, or 11.6% compared to the same quarter in
1998. The increase was primarily due to the continued improvement in slot
revenues at The Orleans, up 28.1% over the first quarter in 1998 as a result of
increased customer volume. Casino revenues also improved at the Gold Coast and
the Barbary Coast, increasing by 5.8% and 9.3%, respectively, due primarily to
increases in customer volume in both slots and table games areas. Casino
expenses in the quarter ended March 31, 1999 increased by 1.7% over the same
quarter in 1998. This modest increase, coupled with the 11.6% increase in casino
revenues discussed above, resulted in a casino operating margin of 51.5%
compared to 46.8% in the first quarter of 1998.
Food and Beverage. Food and beverage revenues were $17.8 million in the
first quarter of 1999 compared to $16.6 million in 1998, an increase of 7.2%.
Each of our hotel-casino properties showed increases that were consistent with
overall increases in customer volume. Food and beverage expenses were $11.8
million in the first quarter of 1999 compared to $11.7 million in the first
quarter of 1998, an increase of 0.4%. The food and beverage operating margin
improved to 33.7% from 29.2% in the prior year, primarily as a result of a
continued focus on food cost control.
Hotel. Hotel room revenues were $7.9 million in the three months ended
March 31, 1999, an increase of 13.6% over 1998 revenues of $6.9 million. Each of
our three hotel properties experienced increases in room occupancy percentages
as well as average daily room rates. For the first quarter, our combined room
occupancy was 95.7% compared to 88.7% in the first quarter of 1998. The average
daily room rate increased to $53 from $51 in 1998.
Other. Other revenues were $7.0 million for the three months ended March
31, 1999, an increase of 15.6% over 1998 other revenues of $6.1 million. The
increase was primarily due to improved showroom and special events revenues at
The Orleans. Costs related to those increased revenues caused a 23.7% increase
in other expenses to $6.0 million in 1999, compared to $4.8 million in 1998.
General and Administrative. General and administrative expenses were $15.4
million in the first quarter of 1999, an increase of 12.8% over 1998 expenses of
$13.7 million. The increase was primarily due to wage and benefit increases at
our three hotel-casinos and higher property taxes.
Deferred Rent. Deferred rent increased from $594,000 in 1998 to $964,000 in
1999 due to the Coast West lease expenses being included in Coast Hotels'
consolidated financial statements as a result of Coast West becoming a
subsidiary of Coast Hotels in July 1998.
Depreciation and Amortization. Depreciation and amortization expense was
$5.2 million in the first quarter of 1999 compared to $4.9 million in 1998. The
increase was due primarily to the addition of new equipment at each of our
hotel-casino properties.
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FISCAL 1998 COMPARED TO 1997
Net revenues, operating income and net income all improved in the year
ended December 31, 1998, primarily due to improved revenues at The Orleans. Net
revenues in 1998 were $332.4 million compared to $293.9 million in the year
ended December 31, 1997, an increase of 13.1%. Operating income in the year
ended December 31, 1998 was $40.4 million compared to $19.6 million in the prior
year, an increase of 106.1% primarily due to the increased revenues. Operating
expenses increased $17.7 million, mainly as a result of higher casino expenses
due to increased business at our hotel-casinos. Additionally, land lease and
deferred non-cash rent expenses increased due to the Coast West lease expenses,
which became consolidated expenses of Coast Hotels and Casinos in July 1998 as a
result of Coast West becoming a subsidiary. Despite an increase in interest
expense due to the issuance of the 10 7/8% first mortgage notes in November 1997
and an increase in income tax expense, net income increased $12.1 million to
$8.8 million in 1998 compared to a net loss of $3.3 million in 1997.
The Orleans. The Orleans opened in December 1996 and generated lower than
expected revenues in the first half of 1997. During the second half of 1997, the
property expanded its customer base through increased promotional activities,
featuring headliner entertainment in its showroom and, in December 1997, the
opening of 12 new movie theaters. For the year ended December 31, 1998, net
revenues were $160.2 million compared to $122.8 million in 1997, an increase of
30.5%. Casino revenues increased 34.3% for the year, primarily as a result of
increased slot machine play. Growth in customer volume led to an increase in
food and beverage revenues of 22.9%. Hotel revenues increased 4.6% for the year
due to increased occupancy and other revenues increased 63.2% in 1998, due
primarily to higher showroom revenues. Operating expenses increased 15.8% in
1998, primarily due to increased casino promotional activities. Other expenses
were up 47.6% for the year due principally to the higher-priced headliner
entertainers in the showroom. Depreciation and amortization expense increased by
$1.9 million due to the opening in December 1997 of the movie theaters, video
arcade, child care facility and additional gaming space. Despite the increase in
operating expenses, operating income increased to $21.6 million in 1998 compared
to $3.1 million in 1997.
Gold Coast. For the year ended December 31, 1998, net revenues were $128.5
million, an increase of $2.0 million, or 1.6% over 1997 revenues of $126.5
million. Casino revenues accounted for most of the increase, up 4.8% over 1997
casino revenues, primarily due to increased slot machine play. Operating income
in the year ended December 31, 1998 was $24.9 million, an increase of $2.3
million, or 10.4%, over 1997 operating income, as operating expenses were
relatively flat, increasing by 0.3% over the previous year.
Barbary Coast. Net revenues for the year ended December 31, 1998 decreased
2.2% to $43.6 million compared to $44.6 million in the year ended December 31,
1997, primarily as a result of a decrease in table game wagering volume, a lower
table games win percentage, the removal of live keno and lower wagering volume
in the race book. Despite the lower revenues in 1998, operating income increased
to $2.0 million compared to $1.0 million in 1997, primarily due to lower casino
promotional expenses.
FISCAL 1997 COMPARED TO 1996
Net revenues were $293.9 million for the year ended December 31, 1997, an
increase of 50.0% over 1996 net revenues of $196.0 million. The increase was due
primarily to the
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opening of The Orleans on December 18, 1996. Operating income declined $1.8
million, or 8.4%, to $19.6 million in 1997 compared to $21.4 million in 1996.
The decline was primarily due to lower than expected revenues in 1997 at our
newest property, The Orleans, as well as decreased revenues at our other two
hotel-casinos, the Gold Coast and the Barbary Coast (discussed below). The lower
operating income as well as increased interest expense contributed to a net loss
of $3.3 million in 1997 compared to net income of $4.8 million in 1996.
The Orleans. The year ended December 31, 1997 was the first full year of
operations for The Orleans, which opened on December 18, 1996. Net revenues for
the fourteen days in 1996 were $6.0 million. Operating income before pre-opening
expenses of $7.1 million was $1.3 million in 1996.
For 1997, net revenues for The Orleans were $122.8 million. Net revenues
were $27.4 million for the quarter ended March 31, 1997, the first full quarter
of operations. Net revenues were $30.7 million in the second quarter, $29.6
million in the third quarter and $35.1 million in the quarter ended December 31,
1997. Operating income for 1997 was $3.1 million, including a first-quarter
operating loss of $2.5 million, operating income of $1.3 million in the second
quarter, operating income of $245,000 in the third quarter and operating income
of $4.1 million in the fourth quarter ended December 31, 1997. The increase in
revenues and operating income since the first quarter is due primarily to
increased casino activity, which management attributes to successful promotions
and an increasing target market familiarity with the property. Table games
customer wagering volume was 9.2% higher in the fourth quarter than in the first
quarter and slot machine customer wagering volume was 31.0% higher in the fourth
quarter than in the first.
In the first quarter of 1997, we began construction on a series of
improvements at The Orleans which included twelve movie theaters, a child care
facility, arcade and additional slot machines. The related construction traffic
reduced access to the property, adversely affecting operating results at The
Orleans. Management believes that, upon completion in December 1997, the
improvements and lack of disruption from construction positively affected
operating results in the fourth quarter.
Gold Coast. Net revenues for the year ended December 31, 1997 decreased 10%
to $126.5 million compared to $140.5 million in 1996. Management attributes the
decrease primarily to competition from the opening of The Orleans approximately
one mile from the Gold Coast. Casino revenues declined 10.6% to $93.1 million in
1997 compared to $104.2 million in 1996, due to lower customer wagering volume.
Food and beverage business decreased as a result of the reduced customer
traffic, causing revenues to decline 12.1% to $25.1 million in 1997 compared to
$28.6 million in 1996. In 1997 an increased number of rooms in the Las Vegas
market led to a total room occupancy rate at the Gold Coast of 81.7% compared to
92.3% in 1996, contributing to a $239,000, or 2.3%, decline in hotel revenues.
Gold Coast operating expenses were $103.9 million in 1997, down $7.7 million, or
6.9%, from $111.6 million in 1996 primarily due to a $9.8 million, or 16.5%,
reduction in salaries and related costs as management reacted to the reduced
customer volume. Food and beverage expenses declined $3.2 million (13.3%) and
general and administrative expenses declined $3.0 million, or 11.6%. Despite
lower operating expenses, the reduced revenues contributed to a 22.0% decrease
in operating income to $22.6 million in 1997 compared to $29.0 million in 1996.
Barbary Coast. Net revenues for the year ended December 31, 1997 decreased
9.7% to $44.6 million compared to $49.4 million in 1996. Casino revenues
declined 13.1% to
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$34.6 million in 1997 compared to $39.8 million in 1996, primarily as a result
of decreased customer wagering volume and a lower-than-expected win percentage
on table games and decreased wagering volume in the race book. We attribute the
decline to a reduction in foot traffic since January 1997 due to the opening of
New York-New York Hotel and Casino one mile south of the Barbary Coast on the
Las Vegas Strip as well as to increased competition from other recently opened
or expanded hotel-casinos, including The Orleans. Food and beverage revenues
increased $837,000, or 8.6%, in 1997 primarily as a result of higher drink
prices in the bars. The increase in food and beverage revenues was partially
offset by an increase of $664,000, or 11.3%, in food and beverage expenses.
Hotel room revenues declined $367,000, or 9.1%, due primarily to lower average
room rates as management reacted to increasing competition. Operating income at
the Barbary Coast declined 75.1% to $1.0 million in 1997 compared to $4.2
million in 1996, primarily as a result of the decreased revenues discussed
above.
Depreciation and amortization expense increased by 132.0% in 1997 compared
to 1996, principally due to the opening of The Orleans in December 1996. Net
interest expense increased 152.8% in 1997 primarily due to decreases in
capitalized interest and interest income. Capitalized interest was $7.5 million
in 1996 during the construction of The Orleans, but was only $1.0 million in
1997 during the construction of phase two of The Orleans. Additionally, the
proceeds from the sale of $175 million in 13% first mortgage notes earned
interest income of $4.8 million in 1996, but were substantially utilized by the
end of 1996.
Gain on disposal of equipment was approximately $919,000 in 1997 compared
to $58,000 in 1996, primarily due to a crash of our Beechcraft Super King Air
aircraft which, after receipt of insurance proceeds, resulted in a gain of
$785,000.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity have consisted of cash provided by
operating activities and debt financing. Cash provided by operating activities
was $12.6 million in the three months ended March 31, 1999, compared to $13.7
million in the same period in 1998.
Our cash requirements for 1999, in addition to interest payments on
outstanding indebtedness, include principal payments of approximately $7.8
million on equipment notes payable, land lease payments of approximately $4.4
million, capital expenditures of approximately $10.2 million in connection with
an expansion of The Orleans and ongoing maintenance capital expenditures of
approximately $11.0 million. For 1998, maintenance capital expenditures were
approximately $13.0 million. We believe that existing cash balances, operating
cash flow and borrowings from our new $75.0 million credit facility will provide
sufficient resources to meet our debt and lease payment obligations and
foreseeable capital expenditure requirements at our existing properties.
In January 1996, we issued $175.0 million principal amount of the 13% first
mortgage notes. Additionally, in November 1997, we issued $16.8 million
principal amount of the 10 7/8% first mortgage notes. In March 1999, we issued
$175.0 million principal amount of outstanding notes and entered into the credit
facility to facilitate our March 1999 refinancing. The credit facility can be
increased to $200 million with lender approval. Borrowings under the credit
facility bear interest, at our option, at a premium over the one-, two-, three-
or six-month London Interbank Offered Rate ("LIBOR"). As of
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March 31, 1999 the interest rate was 6.93%. We incur an annual commitment fee on
the unused portion of the credit facility.
With the proceeds from those notes and borrowings under the credit
facility, we repurchased substantially all of the outstanding 13% first mortgage
notes and all of the 10 7/8% first mortgage notes and amended the indenture
under which the 13% first mortgage notes were issued to eliminate substantially
all of its restrictive covenants. Approximately $2.0 million in principal amount
of the 13% first mortgage notes remain outstanding and are governed by the terms
of the amended indenture. In connection with the repurchase of the 13% first
mortgage notes and the 10 7/8% first mortgage notes, we incurred repurchase
premiums of $31.0 million and $2.1 million, respectively. The repurchase
premiums and the write-offs of unamortized debt issuance costs and original
issue discount resulted in an extraordinary loss of $27.0 million, net of the
applicable income tax benefit of $14.5 million.
The availability under the credit facility will be reduced in quarterly
amounts beginning in the fiscal quarter ending June 30, 2001. The initial
advance of $47.0 million under the new credit facility was used in connection
with the repurchase of the 13% first mortgage notes and the 10 7/8% first
mortgage notes. Subsequent advances under the new credit facility may be used
for working capital, general corporate purposes, construction of our new
property (the Suncoast) and certain improvements to our existing properties.
We are currently developing and intend to construct and open the Suncoast
Hotel and Casino. We do not yet have adequate financing in place to fund the
complete construction of the Suncoast. Subject to obtaining adequate financing,
we currently anticipate that construction of the Suncoast will begin in
mid-1999. Our new credit facility contains a provision that would allow us to
increase, with lender approval, the available borrowing capacity under the
facility to up to $200.0 million. We intend to use this increased capacity to
finance construction costs. The availability of the additional $125.0 million
will be reduced in quarterly amounts beginning the fiscal quarter ending June
30, 2001. The increase in the facility remains subject to a number of
contingencies, including lender approval and the negotiation of additional terms
relating to the construction. We cannot assure you that we will be able to
obtain the increase in the new credit facility or that it will be available on
acceptable terms.
Except as described in this prospectus, we have no agreements, arrangements
or understandings with respect to financing the future development of additional
properties or capital improvements to existing properties. Any future
development or capital improvements would be subject to, among other things, our
ability to obtain necessary financing.
IMPACT OF INFLATION
Absent changes in competitive and economic conditions or in specific prices
affecting the industry, we do not expect that inflation will have a significant
impact on our operations. Change in specific prices, such as fuel and
transportation prices, relative to the general rate of inflation may have a
material adverse effect on the hotel and casino industry.
REGULATION AND TAXES
We are subject to extensive regulation by the Nevada gaming authorities.
Changes in applicable laws or regulations could have a significant impact on our
operations. In 1996,
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legislation was enacted which established a federal commission to study the
gaming industry. See "Risk Factors -- Possible Federal Legislation."
The gaming industry represents a significant source of tax revenues,
particularly to the State of Nevada and its counties and municipalities. From
time to time, various state and federal legislators and officials have proposed
changes in tax law, or in the administration of these laws, affecting the gaming
industry. See "Risk Factors -- Possible Federal Legislation." Proposals in
recent years that have not been enacted included a federal gaming tax and
increases in state or local taxes.
Management believes that our recorded tax balances are adequate. However,
it is not possible to determine with certainty the likelihood of possible
changes in tax law or in the administration of these laws. These changes, if
adopted, could have a material adverse effect on our operating results.
During 1997, we recorded a tax benefit of $1.4 million in relation to our
loss before income taxes of $4.7 million. This benefit represents the amount to
be carried-back to prior taxable income.
IMPACT OF THE YEAR 2000 ISSUE
Many currently installed computer systems and other equipment with embedded
computer chips cannot recognize dates after December 31, 1999. Beginning in the
year 2000, companies with these systems, software or equipment may experience
difficulties due to their reliance on them. This situation involving the year
2000 is commonly referred to as the "Y2K" problem.
We utilize computer systems in virtually all areas of our hotel-casino
operations. Should we or certain of our vendors not be "Y2K compliant" the
operations of our hotel-casinos could be disrupted for an indeterminate period
of time, potentially having a material adverse impact on our results of
operations. Possible consequences of our not being Y2K compliant include, but
are not limited to, problems with the compiling of financial information in our
back-office accounting, purchasing, inventory and payroll systems. Additionally,
disruptions could occur to hotel reservations operations, hotel
check-in/check-out procedures, point-of-sale transactions in food, beverage and
retail areas, race and sports book wagering and the updating and accumulation of
slot machine player marketing information. Additionally, embedded microchips in
certain systems such as elevators, escalators and the heating, ventilation and
air conditioning could lead to interruptions in service. All of these problems
could inconvenience hotel and casino customers, resulting in a loss of business.
We could also be exposed to Y2K problems should certain of our suppliers
have disruptions to their operations due to Y2K problems. We do not consider
these problems to be as significant as those with our own systems because in
most instances we could find alternate vendors for our supplies, but Y2K
problems for certain suppliers, such as utility providers, could result in
disruptions to hotel-casino operations for an indeterminate period of time.
Additionally, should providers of financial services such as ATM's, credit card
processing and credit card cash advance experience Y2K problems, our operations
could be adversely affected.
We recognize the need to ensure our operations will not be adversely
affected by Y2K and have taken steps to update our systems, where necessary,
including replacing or updating software and equipment. Since 1997, our
Management Information Systems
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department has attempted to identify all areas where Y2K could pose a problem.
To assist them in their effort and to further help identify potential problem
areas, in October 1998 we retained the services of an advisor to review our Y2K
program.
As of March 31, 1999, we have identified and updated or are in the process
of updating those systems and programs that we deem most critical to the
day-to-day operations of our hotel-casinos. We currently use Year 2000 compliant
software for our accounting, human resources, payroll, inventory and purchasing
systems. Based on representations from our vendors, we anticipate that our other
essential computer systems, including our hotel front desk and reservations,
retail point of sale, bowling center, race and sports wagering and casino player
tracking and marketing systems, will be Y2K compliant by July 1999, although no
assurances can be made to that effect. We estimate that the total cost to
identify and correct potential Y2K problems will be approximately $1.6 million,
approximately $400,000 of which had been spent as of March 31, 1999. All costs
related to software modification, as well as all costs associated with our Y2K
project, are being expensed as incurred and are included in the cost estimate
referred to above. We are currently developing contingency plans for specific
areas of our operations. These plans include the training of employees in the
implementation of manual procedures for gaming operations, the selection of
alternative vendors and the testing of back-up electrical power generators. We
will continue to assess Y2K risk and develop contingency plans.
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BUSINESS
We own and operate three Las Vegas hotel-casinos, The Orleans, the Gold
Coast and the Barbary Coast. Our primary target customers for The Orleans and
the Gold Coast are local Las Vegas residents. The Barbary Coast benefits from
foot traffic at its prime location on the Las Vegas Strip. Our growth strategy
includes expanding our existing facilities, as well as identifying and
developing new gaming opportunities, primarily in Las Vegas. We are currently
developing and intend to construct, a fourth hotel-casino, the Suncoast, on a 50
acre site in west Las Vegas near Summerlin, a rapidly-growing master-planned
community. We also own an approximately 29 acre gaming site adjacent to the
Texas Station Hotel and Casino and the Fiesta Hotel and Casino in North Las
Vegas that we may develop in the future.
BUSINESS AND MARKETING STRATEGY
Our business and marketing strategy is to attract gaming customers to our
casinos by offering consistently high quality gaming, hotel, entertainment and
dining experiences at affordable prices. We emphasize attracting and retaining
repeat customers. Our primary target market for The Orleans and Gold Coast
consists of value-oriented local middle-market gaming patrons who gamble
frequently. We believe that our target customers return to our hotel-casinos
because of their convenient locations, friendly employees, higher slot machine
and video poker payout rates than are offered at casinos on the Las Vegas Strip
and high quality entertainment and amenities. Additionally, visitors to Las
Vegas find that our guest rooms are spacious, well-appointed and competitively
priced.
Our operating strategy with respect to gaming revenue focuses on slot and
video poker machines because these games account for approximately 70% of our
gaming revenues and approximately 48% of our total revenues. It is customary in
the gaming industry to include video poker and other gaming machines when using
the term "slots" or "slot machines." Our marketing efforts include many high
profile programs, including slot clubs and frequent prize drawings for slot
players. Other promotions include the original "Pick the Pros" $1,000,000
football contest, check cashing promotions and direct mail campaigns.
Las Vegas Locals Market. The Orleans and Gold Coast are designed to
capitalize on the large and rapidly growing Las Vegas local resident market. We
believe that a significant portion of our customers are Las Vegas residents.
While the mega-resorts on the Strip draw visitors from around the world, the Las
Vegas locals gaming market is growing as a result of the rapid population growth
in the Las Vegas metropolitan area. According to the Bureau of Business and
Economic Research at the University of Nevada, Reno, the Las Vegas metropolitan
area has a population of approximately 1.2 million residents. From 1990 to 1998,
the population of the Las Vegas metropolitan area grew 61.8%, an average annual
growth rate of 6.2%. The growth was driven primarily by Nevada's favorable
climate and tax structure, a strong economy and a well-developed infrastructure.
For example, the opening of new Las Vegas Strip mega-resorts has created
thousands of jobs which, together with the increasing popularity of Las Vegas as
a retirement community, have contributed to population growth and enlarged the
locals market. Because the locals market depends to a lesser extent on
attracting tourists or competing with other destination leisure activities, it
is less susceptible to market swings and cycles that affect the Strip casinos,
although a significant downturn in the Strip market could reduce Las Vegas area
employment and therefore negatively impact the locals market. In addition,
Nevada law imposes more stringent requirements for approval of new hotel-casinos
in Clark County
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that are not located in the vicinity of the Strip or downtown Las Vegas. We
believe that this barrier to entry into the market will enable The Orleans and
the Gold Coast, along with our proposed Suncoast property, to benefit from the
increasing Las Vegas locals market.
The Clark County Residents Study prepared by the Las Vegas Convention and
Visitors Authority, or the "LVCVA," in 1997 - 1998 found that gambling ranked
third among all activities in which residents said they participated most often.
Residents mentioned only "eating out" and "movies" as more frequent activities.
Approximately 73% of Clark County adult residents said they gamble at least
occasionally. Of those residents, 47% said they do so at least once a week and
44% of whom budget $25 or more per visit. In addition, over 72% of Las Vegas
resident gamblers prefer locations that are off the Strip and away from
downtown. Based on the results of the LVCVA study, researchers estimate the
total amount budgeted annually for gambling by all adult Las Vegas residents to
be over $1.33 billion.
We believe that the most important factors in successfully operating our
casinos are convenient locations with easy access, a friendly atmosphere, a
value-oriented approach and high quality entertainment and amenities. We believe
that our casinos strongly appeal to Las Vegas residents who gamble.
Additionally, we offer Las Vegas visitors spacious, well-appointed and
competitively price guest rooms.
- CONVENIENT, STRATEGIC LOCATIONS. We believe that our two locals-oriented
properties, The Orleans and the Gold Coast offer our target customers
easily accessible, convenient locations for gaming and entertainment.
According to the LVCVA study, approximately 72% of wagering Las Vegas
resident gamblers prefer locations that are away from both the Strip and
downtown Las Vegas. The Orleans and the Gold Coast are both located one
to two miles west of the Strip in high traffic areas close to
fast-growing segments of the western Las Vegas valley. According to the
Nevada Department of Transportation, approximately 68,000 vehicles travel
by The Orleans and approximately 77,500 vehicles pass the Gold Coast each
day. The Suncoast will have a suburban location conveniently located
adjacent to the fast-growing Summerlin master-planned community with
strong demographics, approximately nine miles from the Strip. The Orleans
and Gold Coast are easily accessible and offer ample parking, providing
our customers with convenient alternatives to the congestion on the
Strip. As described under "Risk Factors -- Neighborhood Casino Act,"
recent legislation passed by the Nevada legislature will make the
construction of new, competing locals casinos in Las Vegas more
difficult.
- FRIENDLY ATMOSPHERE. A key element of our strategy is to provide patrons
with friendly personal service that is designed to foster customer
loyalty and generate repeat business. Locals appreciate a friendly,
casual gaming environment where employees make them feel at home.
- VALUE. We offer value to our gaming patrons by providing video poker and
slot machines with better odds than those traditionally found at Strip
casinos due to lower hold percentages on our slot machines. Locals'
perception of value is also influenced by such things as slot clubs that
reward frequent gamblers. The Orleans and Gold Coast slot clubs offer
customers an opportunity to earn cash and prizes based on their winnings.
Because locals and repeat visitors demand variety and quality in their
slot machine play, our casinos offer the latest slot and video poker
technology, including several games designed exclusively for us. In
addition, in
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order to appeal to our value-conscious customers, our many restaurants
and bars serve generous portions of quality food and beverages at
attractive prices.
- ENTERTAINMENT, MOVIE THEATERS AND AMENITIES. We believe we compete
effectively with other locals-oriented casinos by offering amenities and
entertainment that our customers demand and that accentuate the
perception of value for our customers. Our properties offer a number of
amenities that generate significant foot traffic through our casinos,
including movie theaters, bowling centers, quality restaurants and a
variety of musical entertainment.
- Entertainment. The Orleans features headliner entertainers in its
850-seat theater, attracting both local customers and tourists alike.
Among the entertainers who have appeared are Willie Nelson, Ray Charles
and the Righteous Brothers. The entertainment lounges at our
hotel-casinos feature many popular lounge acts.
- Movie Theaters. The Gold Coast was the first hotel-casino in Las Vegas
to offer first-run movies in its twin theaters. In the 1999 Las Vegas
Review-Journal readers' poll, The Orleans' twelve "stadium-seating" movie
theaters were selected as the best theaters in Las Vegas. Our theaters
are operated through a long-term joint venture with Century Theaters, one
of Las Vegas' leading theater operators, allowing us to offer a wide
variety of first-run movies in our state-of-the-art facilities.
- Restaurants. We believe that the value offered by the many restaurants
at our casino properties is a major factor in attracting local gaming
customers, as we believe dining is a primary motivation for casino visits
by many locals. All of the restaurants located in our casino properties
offer generous portions of quality food at reasonable prices. In
addition, the Barbary Coast features two award-winning gourmet
restaurants, Michael's and Drai's on the Strip.
- Other Amenities. In addition to the restaurants and theaters mentioned
above, we offer a variety of amenities directed to the locals market,
including our bowling centers at the Gold Coast and The Orleans, which
are among the most popular in Las Vegas. In the 1999 Las Vegas
Review-Journal readers' poll, the bowling center at The Orleans was voted
the "Best of Las Vegas." Other amenities include banquet and meeting
rooms, wedding chapels and child care facilities.
Tourist Customers. While a significant portion of our customers at The
Orleans and the Gold Coast are local residents, the same factors that appeal to
local residents also appeal to visitors to Las Vegas, including better odds than
those traditionally found at Strip casinos and lower minimum wager limits on our
table games than Strip casinos. Additionally, our casinos are strategically
situated to benefit from a growing visitor market, with the Gold Coast and The
Orleans each located within two miles of the Strip and the Barbary Coast located
at one of the busiest corners on the Strip. In addition to the growing local
resident market, Las Vegas is one of the fastest growing entertainment markets
in the United States. The number of visitors traveling to Las Vegas has
increased from 12.8 million in 1984 to 30.6 million in 1998, representing a
compound annual growth rate of 6.4%, while aggregate expenditures by visitors
increased 10.2% annually during the same period.
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THE ORLEANS
We designed The Orleans to differentiate it in the Las Vegas market by
combining an upscale, off-Strip experience in an exciting themed environment
reflecting the architectural heritage of the New Orleans French Quarter with a
wide variety of non-gaming amenities. The Orleans primarily targets middle to
upper-middle income gaming customers, both local residents and visitors to Las
Vegas. We believe that The Orleans is an attractive alternative for local
residents and Las Vegas visitors, offering a full-service hotel-casino and
entertainment experience complemented with a value-oriented pricing strategy.
The Orleans is strategically located on Tropicana Avenue, a short distance from
the Las Vegas Strip and McCarran International Airport. According to the Nevada
Department of Transportation 1997 Annual Traffic Report, approximately 68,000
vehicles travel by The Orleans each day. With easy access and ample parking, The
Orleans has quickly become a popular destination for locals.
The Orleans features an approximately 100,000 square foot casino, a
22-story tower with 840 hotel rooms, 12 "stadium seating" first-run movie
theaters, a 70-lane bowling center, approximately 40,000 square feet of banquet
and meeting facilities, including an approximately 17,000 square foot grand
ballroom, a wedding chapel, five full-service restaurants, specialty themed
bars, a barber shop, a child care facility, a video arcade, a beauty salon and
approximately 4,000 parking spaces. The casino includes 2,241 slot machines, 54
table games, a keno lounge, a poker parlor and race and sports books. The
Orleans also includes an 850-seat theater that features headliner entertainment
and other special events. Among the performers at The Orleans' theater during
the past year have been Willie Nelson, Ray Charles and the Righteous Brothers.
We believe that the high-quality entertainment at the theater distinguishes us
from most other locals casinos in Las Vegas and allows us to attract more
tourists who would otherwise gamble at Strip casinos.
The Orleans features five restaurants including the Canal Street Grille,
serving steaks and seafood in a gourmet atmosphere, Vito's Ristorante, an
Italian restaurant, Don Miguel's, a Mexican restaurant, the Courtyard Cafe, a
coffee shop featuring New Orleans favorites as well as Chinese and American
fare, and the French Market Buffet, an all-you-can-eat buffet. Each of our
restaurants serves generous portions of quality food and beverage at competitive
prices. For customers desiring a quick meal or snack, we offer Terrible Mike's,
a hamburger and sandwich restaurant, Kate's Korner, an ice cream parlor, and a
snack bar in our bowling center.
The Orleans employs a number of marketing programs, including a slot club
with over 200,000 members, football contests and grand prize drawings. The
bowling center and twelve-plex movie theaters were chosen by the Las Vegas
Review-Journal as the "Best of Las Vegas" in 1999, adding to The Orleans'
reputation as a multi-faceted entertainment facility.
We are currently in the process of expanding The Orleans by approximately
65,000 square feet, including a new multi-station action buffet restaurant, an
Asian restaurant and additional casino gaming space with approximately 200 more
slot machines and 14 table games. We expect that this expansion will be
completed in the second quarter 1999. Our budget for this expansion is
approximately $13 million, which we are funding from cash on hand. Through
December 31, 1998 we had spent approximately $2.8 million on the expansion.
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In order to capitalize on our strong presence in the locals market, we are
considering further expansion of The Orleans by adding additional movie
theaters, a restaurant, a new hotel tower and a parking garage. No definitive
plans for an expansion of this type have been made, nor have we arranged for the
financing of such a project. Because the proposed expansion is subject to a
number of factors, including financing capacity and continued growth of revenues
at The Orleans, we cannot assure you that all or any aspects of this expansion
will be commenced or completed.
THE GOLD COAST
The Gold Coast, which opened in 1986, is located on West Flamingo Road
approximately one mile west of the Las Vegas Strip near Interstate 15, the major
highway linking Las Vegas and Southern California, offering easy access from all
four directions in the Las Vegas Valley. The Gold Coast is located in a high-
traffic area and, according to the Nevada Department of Transportation, an
average of approximately 77,500 vehicles travel by the Gold Coast each day. The
Gold Coast features an approximately 70,000 square foot casino, including
approximately 2,050 slot machines, 48 table games, a keno lounge, a 160-seat
race and sports book and a 700-seat bingo parlor which was voted "Best of Las
Vegas" in 1999 by the readers of the Las Vegas Review-Journal. The Gold Coast
also features an 11-story tower with 712 hotel rooms and suites and a swimming
pool with a covered bar.
The Gold Coast features three full-service restaurants, a 380-seat buffet
restaurant, a fast-food restaurant, a snack bar and ice cream parlor.
Entertainment amenities include a 72-lane bowling center, two movie theaters,
approximately 10,000 square feet of banquet and meeting facilities, four bars,
two entertainment lounges and a showroom/dance hall featuring live musical
entertainment. Other amenities include a gift shop, a liquor store, a travel
agency, an American Express office, a Western Union office, a beauty salon, a
barber shop, a child care facility and over 3,000 parking spaces.
The Gold Coast primarily targets middle-market gaming customers, catering
to local residents as well as repeat visitors to Las Vegas who desire an
alternative to the hotel-casino properties located on the Strip. Our operating
strategy is to maximize customer visitation and thereby increase casino revenues
at the Gold Coast by offering value-conscious customers a combination of
friendly service, generous portions of quality food at competitive prices and
clean, comfortable and inexpensive hotel rooms. We believe this value-oriented
approach generates a high level of customer satisfaction, fostering customer
loyalty and repeat business. We have periodically renovated and upgraded the
Gold Coast in order to maintain its appeal to our target customers.
The Gold Coast has developed a number of innovative campaigns designed to
promote its business and attract local residents. The Gold Coast's slot club has
issued nearly 500,000 club cards to its members since inception and currently
has over 100,000 active members. We established the slot club in 1987 to
encourage repeat business by rewarding frequent slot players with cash and
prizes. Our other Gold Coast marketing programs have included the original "Pick
the Pros" football contest, a $250,000 paycheck cashing contest and live
entertainment in the showroom/dance hall. In addition, the Gold Coast is a
sponsor of the annual National Finals Rodeo, which attracts thousands of
visitors to Las Vegas each December. The awards ceremonies for the Rodeo are
held nightly at the Gold Coast during the 10-day event.
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THE BARBARY COAST
The Barbary Coast, which opened in 1979, is located at the intersection of
Flamingo Road and Las Vegas Boulevard. The Barbary Coast is located on one of
the busiest intersections on the Strip, along with Caesars Palace, Bally's Las
Vegas and Bellagio. Historically, the Barbary Coast has relied on foot traffic
on the Las Vegas Strip for a significant amount of its revenues. As a result,
the Barbary Coast's customer base is primarily visitors to the Las Vegas area.
In addition to its favorable location on the Strip, the Barbary Coast has also
benefited from its more intimate gaming atmosphere, allowing it to develop a
loyal base of table games and slot customers. Our marketing efforts toward table
games customers include complimentary rooms, food and beverage, as well as
programs such as blackjack tournaments and golf outings. Slot players may also
receive complimentary rooms, food and beverage, as well as cash and prizes as
members of our slot club. The slot players' "Fun Club" has over 100,000 members
who are rewarded for their frequent play.
The Barbary Coast features an approximately 30,000 square foot casino,
including approximately 600 slot machines, 50 table games, race and sports books
and other amenities. Our eight-story tower includes 197 spacious rooms and
suites. The Barbary Coast is furnished and decorated in an elegant turn-of-the-
century Victorian theme and includes three bars and three restaurants: Michael's
gourmet restaurant, Drai's on the Strip, leased to and operated by a third
party, and the Victorian Room. Michael's has received an award from the
Distinguished Restaurants of North America for the past six consecutive years
and in 1998, received an "Extraordinary" rating from the Zagat Survey of
America's Top Restaurants. Drai's specializes in French and California cuisine
served in an elegant setting. The Victorian Room features both American and
Chinese cuisine served in an atmosphere of stained glass and turn-of-the-century
decor.
At the Barbary Coast, we have historically generated most of our gaming
revenue from the table games operations. In 1998, we reconfigured the gaming
floor of the Barbary Coast to enhance its appeal to gaming customers walking on
the Strip and to provide more focus on our slot operations. Approximately 100
machines were added and approximately 40% of the existing machines were replaced
by many of the newest innovations in slot technology. Additionally, as part of
the reconfiguration of the casino, we added live music in our new entertainment
lounge.
THE SUNCOAST
We are currently designing and developing the Suncoast to expand our
presence in the growing Las Vegas locals market. The Suncoast will serve one of
the fastest growing areas of the Las Vegas valley and will be located on
approximately 50 acres in Peccole Ranch, a master-planned community adjacent to
Summerlin.
According to the Bureau of Business and Economic Research at the University
of Nevada, Reno, the population within five miles of the Suncoast site was
approximately 272,000 in April 1998. Our new hotel-casino will be strategically
located at the intersection of Rampart Boulevard and Alta Drive, readily
accessible from most major points in the city, including downtown Las Vegas,
approximately eight miles, and the Strip, approximately nine miles.
Accessibility will be further enhanced by the expected connection of the Las
Vegas beltway to Summerlin Parkway in 2000. The site will be approximately 1/4
mile from the Resort at Summerlin, a new luxury resort that is currently under
construction and expected to open in the third quarter of 1999. We believe that
the Suncoast site is a prime
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location for a locals casino, with the nearest other locals-oriented casino
approximately five miles away.
We are designing the Suncoast with a Mediterranean theme and it is expected
to include an approximately 78,000 square foot casino, 232 hotel rooms, with an
average size of approximately 550 square feet, approximately 15,000 square feet
of banquet and meeting facilities, 16 "stadium seating" movie theaters, four
full-service restaurants and approximately 3,400 parking spaces. We expect the
casino to include approximately 2,000 slot machines, 34 table games, a keno
lounge, a poker parlor, race and sports books and a 60 lane bowling alley. The
Suncoast is master-planned to double the number of hotel rooms, when necessary,
by adding an additional wing.
We have an estimated construction and development budget of approximately
$150.0 million, including contingencies, but excluding pre-opening expenditures,
opening bankroll and capitalized interest costs. Construction is expected to
cost approximately $105.0 million, including contingencies, and, subject to
obtaining financing, we expect construction to begin in mid-1999. The budget
also includes $40.0 million for equipment and $5.0 million for architecture and
design fees. We have assembled a construction team with substantial experience
in the development and construction of hotel-casinos in Las Vegas and with whom
we have worked successfully in the past, including Tiberti Construction and
Yates-Silverman, Inc. Tiberti Construction served as general contractor for the
construction of The Orleans and the Gold Coast, as well as several other
successful hotel-casinos in Las Vegas. Yates-Silverman, Inc., a leading designer
of hotels and casinos, specializes in developing theme-oriented interiors and
exteriors, and is known for creating imaginative and elaborate hotel, resort and
gaming property interiors. Yates-Silverman's completed projects include The
Orleans, New York-New York, Excalibur, Circus Circus, Luxor, the Trump Taj
Mahal, Trump Castle and Atlantic City Showboat. We cannot assure you that we
will obtain the financing necessary to develop the Suncoast or will, in fact,
develop the Suncoast.
COMPETITION
There is intense competition among companies in the gaming industry. The
Orleans and the Gold Coast compete, and, when completed, the Suncoast will
compete, primarily with Las Vegas hotel-casinos and non-hotel gaming facilities
which target local residents. Some of these competitors have recently completed
expansions or new projects. In addition, there are currently gaming facilities
that have been announced or are under construction in the immediate vicinity of
our casinos. A hotel-casino has been proposed for a location adjacent to the
Gold Coast. Additionally, adjacent to the Suncoast site, a luxury hotel-casino
and spa called The Resort at Summerlin is expected to open in the third quarter
of 1999 and is anticipated to include a 50,000 square foot gaming facility and
over 500 hotel rooms. Furthermore, there are several undeveloped properties in
the immediate vicinity of The Orleans, the Gold Coast and the location of the
Suncoast on which new gaming facilities could be built. The construction of new
properties and the expansion or enhancement of existing properties near our
casinos could have a negative impact on our business.
In contrast to our other casinos, the Barbary Coast competes for customers
primarily with the hotel-casinos located on the Strip. Several large
hotel-casinos have either recently opened or are under construction on the
Strip, including Bellagio, Mandalay Bay, The Venetian, Paris and Aladdin. The
construction of new properties and the expansion or
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enhancement of existing properties on the Strip by competitors could materially
adversely affect the Barbary Coast.
In addition, each of our properties compete, and, when completed, the
Suncoast will compete, to a lesser extent with all other casinos and hotels in
the Las Vegas area. In addition to those mentioned above, several new
hotel-casino projects and expansions have been announced or are under
construction in Las Vegas. These projects and expansions will add substantial
additional gaming capacity and approximately 8,400 rooms to the Las Vegas area
by December 2000. This additional gaming and room capacity may have a negative
impact on our business.
Furthermore, we compete with other legalized forms of gaming and gaming
operations in other parts of the state of Nevada and elsewhere. Certain states
have recently legalized, and several other states are currently considering
legalizing, casino gaming in designated areas. We also face competition from
casinos located on Native American reservations. We believe that the development
by Native Americans and others of casino properties similar to those in Las
Vegas in areas close to Nevada, particularly California and Arizona, could have
a material adverse effect on our business and results of operations.
Gaming competition from Native American ventures in California may
intensify due to Proposition 5, a California ballot initiative passed by voters
in California on November 3, 1998. Proposition 5 permits Native American tribes
that enter into agreements with the State of California to conduct gaming
activities including operating gaming devices, including slot machines, banked
card games, horse race wagering and lotteries. Proposition 5 is subject to a
legal challenge, and its enforcement has been blocked pending a decision by the
California Supreme Court. We are not certain when, or if, Proposition 5 will
become effective or how it will affect us. However, because visitors from
California make up Nevada's largest visitor market, if Proposition 5 is
implemented, increased competition from Native American gaming may cause a
decline in our revenues and may have a negative impact on our business.
POTENTIAL FUTURE DEVELOPMENTS
From time to time in our ordinary course of business we review proposals
for new developments, joint ventures and other strategic transactions. We cannot
assure you that any new developments, ventures or transactions will be pursued
or, if pursued, will be successful.
EMPLOYEES
At March 31, 1999, we had approximately 4,900 employees. We have not
experienced any significant work stoppages and believe our labor relations are
good. The Las Vegas job market for qualified employees is very competitive.
Except for approximately 350 employees at the Barbary Coast who are covered by a
collective bargaining agreement, none of our other employees are covered by a
collective bargaining agreement.
PROPERTIES
The Orleans occupies a portion of an approximately 80 acre site located on
West Tropicana Avenue, approximately one mile south of the Gold Coast. We lease
the real property under a ground lease entered into by the Company and the
Tiberti Company, a Nevada general partnership of which J. Tito Tiberti, a
director of the Company, is
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managing partner. See "Certain Transactions." The lease had an effective
commencement date of October 1, 1995, an initial term of 50 years, and includes
an option, exercisable by us, to extend the initial term for an additional 25
years. The lease provides for monthly rental payments of $175,000 per month
through February 1999, $200,000 per month during the 36-month period thereafter,
$225,000 per month during the 48-month period thereafter and $250,000 per month
during the 60-month period thereafter. In March 2011, annual rental payments
will increase on a compounding basis at a rate of 3.0% per annum. In addition,
we have been granted an option to purchase the real property during the two-year
period commencing in February 2016. The lease provides that the purchase price
will be the fair market value of the real property at the time we exercise the
option, provided that the purchase price will not be less than 10 times, nor
more than 12 times, annual rent at that time.
We own the approximately 26 acres that the Gold Coast occupies on West
Flamingo Road. We also own an 8.33 acre site across the street from the Gold
Coast that contains an approximately 100,000 square foot warehouse. The
warehouse is used by the Gold Coast, the Barbary Coast and The Orleans primarily
as a storage facility.
The Barbary Coast occupies approximately 1.8 acres at the intersection of
Flamingo Road and the Strip and occupies real property that we lease pursuant to
a lease that expires on May 1, 2003. The lease provides for rental payments of
$175,000 per year. The lease contains two options, exercisable by us, to extend
the term of the lease for 30-years each, with the rent to be readjusted as
provided in the lease during those renewal periods. We have an option to
purchase the leased property at any time during the six month period prior to
the expiration of the lease, provided that certain conditions are met, at a
purchase price equal to the greater of $3.5 million or the then appraised value
of the real property. We also have a right of first refusal in the event the
landlord desires to sell the real property during the initial term of the lease.
We also lease approximately 2.5 additional acres of real property located
adjacent to the Barbary Coast. The lease expires on December 31, 2003. The lease
provides for rental payments of $125,000 per annum. We use the 2.5 acre property
as a parking lot for our employees and for valet parking. The landlord has the
right to terminate the lease upon six months prior notice to us if it requires
the use of the property for its own business purposes, which excludes leaving
the property vacant or leasing it to third parties prior to January 1, 2003.
We lease the approximately 50 acre Suncoast site located at the corner of
Rampart Boulevard and Alta Drive in the west Las Vegas valley pursuant to a
Ground Lease Agreement dated as of October 28, 1994. The initial term of the
lease expires on December 31, 2055. The lease contains three options,
exercisable by us, to extend term of the lease for 10 years each. The lease
provided for monthly rental payments of $166,667 for the year ended December 31,
1995. Thereafter, the monthly rent increases by the amount of $5,000 in January
of each year. The landlord has the option to require us to purchase the property
at the end of 2014, 2015, 2016, 2017 and 2018, at the fair market value of the
real property at the time the landlord exercises the option, provided that the
purchase price will not be less than 10 times nor more than 15 times the annual
rent at that time. Based on the terms of the lease, the potential purchase price
commitment ranges from approximately $31.0 million to approximately $51.0
million in the years 2014 through 2018. We have a right of first refusal in the
event the landlord desires to sell the property at any time during the lease
term.
We own an approximately 29 acre parcel of undeveloped land that is zoned
for gaming located at the corner of Rancho Drive and Carey Avenue in North Las
Vegas,
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close to the Fiesta Hotel and Casino and the Texas Station Hotel and Casino. Any
future development on this site would be subject to, among other things, our
ability to obtain necessary financing and compliance with SB 208 as discussed in
"Risk Factors -- Neighborhood Casino Act."
LEGAL PROCEEDINGS
We are currently, and are from time to time, involved in litigation arising
in the ordinary course of our business. We are currently subject to three
lawsuits in which the plaintiffs have sought punitive damages. We intend to
continue to defend the lawsuits vigorously. We do not believe that this
litigation, including the foregoing proceedings, will, individually or in the
aggregate, have a material adverse effect on our financial position or results
of operations.
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NEVADA REGULATION AND LICENSING
The ownership and operation of casino gaming facilities in Nevada are
subject to:
- the Nevada Gaming Control Act and the regulations promulgated under the
Nevada Act, and
- various local regulations.
Our gaming operations are subject to the licensing and regulatory control
of the Nevada Gaming Commission, the Nevada State Gaming Control Board and the
Clark County Liquor and Gaming Licensing Board. The Nevada Commission, the
Nevada Board and the Clark County Board are collectively referred to as the
Nevada gaming authorities.
The laws, regulations and supervisory procedures of the Nevada gaming
authorities are based upon declarations of public policy which, among other
things, seek to:
- prevent unsavory or unsuitable persons from having any direct or indirect
involvement with gaming at any time or in any capacity,
- establish and maintain responsible accounting practices and procedures,
- maintain effective control over the financial practices of licensees,
including establishing minimum procedures for internal fiscal affairs and
the safeguarding of assets and revenues, providing reliable record
keeping and requiring the filing of periodic reports with the Nevada
gaming authorities,
- prevent cheating and fraudulent practices, and
- provide a source of state and local revenues through taxation and
licensing fees.
Changes in these laws, regulations and procedures could have an adverse effect
on our gaming operations.
Coast Hotels and Casinos, which operates the Gold Coast, the Barbary Coast
and The Orleans, is licensed by the Nevada gaming authorities and is a corporate
licensee under the terms of the Nevada Act. The gaming licenses require the
periodic payment of fees and taxes and are not transferable. We are registered
with the Nevada Commission as a publicly traded corporation and has been found
suitable to own the stock of Coast Hotels. As a Registered Corporation, we are
required periodically to submit detailed financial and operating reports to the
Nevada Commission and furnish any other information that the Nevada Commission
may request. No person may become a stockholder of, or receive any percentage of
the profits from, Coast Hotels without first obtaining licenses and approvals
from the Nevada gaming authorities. Coast Hotels and Casinos and Coast Resorts
have obtained the various registrations, approvals, permits and licenses from
the Nevada gaming authorities that are required in order to engage in gaming
activities at our hotel-casinos.
The Nevada gaming authorities may investigate any individual who has a
material relationship to, or material involvement with, us or Coast Resorts in
order to determine whether the individual is suitable or should be licensed as a
business associate of a Corporate Licensee or a Registered Corporation. Our
officers, directors and certain key employees must file applications with the
Nevada gaming authorities and may be required to be licensed or found suitable
by the Nevada gaming authorities. Our officers, directors and key employees who
are actively and directly involved in our gaming activities may be required to
be licensed or found suitable by the Nevada gaming authorities. The Nevada
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gaming authorities may deny an application for licensing for any cause which
they deem reasonable. A finding of suitability is comparable to licensing, and
both require submission of detailed personal and financial information followed
by a thorough investigation. The applicant for licensing or a finding of
suitability must pay all the costs of the investigation. Changes in licensed
positions must be reported to the Nevada gaming authorities and, in addition to
their authority to deny an application for a finding of suitability or
licensure, the Nevada gaming authorities have jurisdiction to disapprove a
change in a corporate position.
If the Nevada gaming authorities were to find any of our or Coast Resorts'
officers, directors or key employees unsuitable for licensing or unsuitable to
continue having a relationship with us or Coast Resorts, we and Coast Resorts
would have to sever all relationships with this person. In addition, the Nevada
Commission may require us and Coast Resorts to terminate the employment of any
person who refuses to file appropriate applications. Determinations of
suitability or of questions pertaining to licensing are not subject to judicial
review in Nevada.
We and Coast Resorts are required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all our material
loans, leases, sales of securities and similar financing transactions must be
reported to, or approved by, the Nevada Commission.
If it were determined that we violated the Nevada Act, the gaming licenses
we hold could be limited, conditioned, suspended or revoked, subject to
compliance with certain statutory and regulatory procedures. In addition, we,
Coast Resorts and the persons involved could be subject to substantial fines for
each separate violation of the Nevada Act at the discretion of the Nevada
Commission. Further, a supervisor could be appointed by the Nevada Commission to
operate our gaming properties and, under certain circumstances, earnings
generated during the supervisor's appointment, except for the reasonable rental
value of our gaming properties, could be forfeited to the State of Nevada.
Limitation, conditioning or suspension of any gaming license or the appointment
of a supervisor, and revocation of any gaming license would, could materially
adversely affect our gaming operations.
Any beneficial holder of a Registered Corporation's voting securities,
regardless of the number of shares owned, may be required to file an
application, be investigated, and have his suitability as a beneficial holder of
a Registered Corporation's voting securities determined if the Nevada Commission
has reason to believe that this ownership would otherwise be inconsistent with
the declared policies of the State of Nevada. The applicant must pay all costs
of investigation incurred by the Nevada Gaming Authorities in conducting any
investigation.
The Nevada Act requires any person who acquires beneficial ownership of
more than 5% of a Registered Corporation's voting securities to report the
acquisition to the Nevada Commission. The Nevada Act requires that beneficial
owners of more than 10% of a Registered Corporation's voting securities apply to
the Nevada Commission for a finding of suitability within 30 days after the
Chairman of the Nevada Board mails the written notice requiring a filing. Under
certain circumstances, an "institutional investor," as defined in the Nevada
Act, which acquires more than 10%, but not more than 15% of a Registered
Corporation's voting securities may apply to the Nevada Commission for a waiver
of a finding of suitability if the institutional investor holds the voting
securities for investment purposes only. An institutional investor will not be
deemed to hold voting securities for
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investment purposes unless the voting securities were acquired and are held in
the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the board of directors of a Registered Corporation, any change in a
Registered Corporation's corporate charter, bylaws, management, policies or
operations, or any of its gaming affiliates, or any other action which the
Nevada Commission finds to be inconsistent with holding the Registered
Corporation's voting securities for investment purposes only. Activities which
are not deemed to be inconsistent with holding voting securities for investment
purposes only include:
- voting on all matters voted on by stockholders;
- making financial and other inquiries of management of the type normally
made by securities analysts for informational purposes and not to cause a
change in its management policies or operations; and
- such other activities as the Nevada Commission may determine to be
consistent with the investment intent.
If the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
the Chairman of the Nevada Board, may be found unsuitable. The same restrictions
apply to a record owner if the owner, after request, fails to identify the
beneficial owner. Any stockholder found unsuitable and who holds, directly or
indirectly, any beneficial ownership of the voting securities of a Registered
Corporation beyond that period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense. We are subject to disciplinary
action if, after we receive notice that a person is unsuitable to be a
stockholder or to have any other relationship with us or Coast Resorts, we:
- pay that person any dividend or interest upon voting securities of the
Company,
- allow that person to exercise, directly or indirectly, any voting right
conferred through securities held by that person,
- pay remuneration in any form to that person for services rendered or
otherwise, or
- fail to pursue all lawful efforts to require the unsuitable person to
relinquish his voting securities, including, if necessary, the immediate
purchase of those voting securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Corporate Licensee or a Registered Corporation to file
applications, be investigated and be found suitable to own the debt security. If
the Nevada Commission determines that a person is unsuitable to own the
security, then pursuant to the Nevada Act, the Corporate Licensee or the
Registered Corporation can be sanctioned, including the loss of its licenses, if
without the prior approval of the Nevada Commission, it:
- pays to the unsuitable person any dividend, interest or any distribution
whatsoever;
- recognizes any voting right by an unsuitable person in connection with
these securities;
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- pays the unsuitable person remuneration in any form; or
- makes any payment to the unsuitable person by way of principal,
redemption, conversion, exchange, liquidation or similar transaction.
We are required to maintain a current stock ledger in Nevada which may be
examined by the Nevada Gaming Authorities at any time. If any securities are
held in trust by an agent or by a nominee, the record holder may be required to
disclose the identity of the beneficial owner to the Nevada Gaming Authorities.
A failure to make this disclosure may be grounds for finding the record holder
unsuitable. We are also required to render maximum assistance in determining the
identity of the beneficial owner. The Nevada Commission has the power to require
our stock certificates to bear a legend indicating that the securities are
subject to the Nevada Act.
Licensed Corporations and Registered Corporations such as our company and
Coast Resorts may not make public offerings of their securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to require or extend obligations incurred for these purposes. The
exchange offer described under "Description of the Notes -- Registration Rights"
will qualify as a public offering, as the term is defined in the Nevada Act. The
Nevada Commission has previously granted exemptions from this prior approval
process to the Company and Coast Resorts which will apply to the exchange offer.
However, the pledge of the Company's equity securities by Coast Resorts in
connection with the credit facility, and the placement of restrictions upon the
transfer of, and the agreement not to encumber, the equity securities of the
Company as security for the exchange notes will require the approval of the
Nevada Commission in connection with the approval of the exchange offer in order
to remain effective. Approval of a public offering, if given, will not
constitute a finding, recommendation or approval by the Nevada Commission or the
Nevada Board as to the accuracy or adequacy of the prospectus or the investment
merits of the securities. Any representation to the contrary is unlawful.
Changes in control of a Registered Corporation through merger,
consolidation, stock or asset acquisitions, management or consulting agreements,
or any act or conduct by a person whereby he obtains control, may not occur
without the prior approval of the Nevada Commission. Entities seeking to acquire
control of a Registered Corporation must satisfy the Nevada Board and Nevada
Commission with respect to a variety of stringent standards prior to assuming
control of the Registered Corporation. The Nevada Commission may also require
controlling stockholders, officers, directors and other persons having a
material relationship or involvement with the entity proposing to acquire
control, to be investigated and licensed as a part of the approval process
relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to:
- assure the financial stability of corporate gaming operators and their
affiliates;
- preserve the beneficial aspects of conducting business in the corporate
form; and
- promote a neutral environment for the orderly governance of corporate
affairs.
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Approvals are, in certain circumstances, required from the Nevada Commission
before a Registered Corporation can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by a Registered
Corporation's Board of Directors in response to a tender offer made directly to
the Registered Corporation's stockholders for the purposes of acquiring control
of the Registered Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either:
- a percentage of the gross revenues received;
- the number of gaming devices operated; or
- the number of table games operated.
A casino entertainment tax is also paid by casino operations where entertainment
is furnished in connection with the selling of food or refreshments. Nevada
licensees that hold a license as an operator of a slot route, or a
manufacturer's or distributor's license, also pay certain fees and taxes to the
State of Nevada.
Any person who is a Licensee, and who proposes to become involved in a
gaming venture outside of Nevada is required to deposit with the Nevada Board,
and thereafter maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their participation in the
foreign gaming. "A Licensee" is any person who is licensed, required to be
licensed, registered, required to be registered, or is under common control with
these persons. The revolving fund is subject to increase or decrease at the
discretion of the Nevada Commission. Thereafter, Licensees are required to
comply with the reporting requirements imposed by the Nevada Act. Licensees are
also subject to disciplinary action by the Nevada Commission if they knowingly:
- violate any laws of the foreign jurisdiction pertaining to the foreign
gaming operation,
- fail to conduct the foreign gaming operation in accordance with the
standards of honesty and integrity required of Nevada gaming operations,
- engage in activities that are harmful to the State of Nevada or its
ability to collect gaming taxes and fees, or
- employ a person in the foreign operation who has been denied a license or
finding of suitability in Nevada on the ground of personal unsuitability.
We may pursue development opportunities in other jurisdictions and expect
that if it we do so we will be subject to similar rigorous regulatory standards
in each other jurisdiction in which we seek to conduct gaming operations. There
can be no assurance that regulations adopted, permits required or taxes imposed,
by other jurisdictions will permit profitable operations by our company in those
jurisdictions.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names and ages of the directors and
executive officers of our company and their respective positions as of March 31,
1999.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
---- --- --------------
<S> <C> <C>
Michael J. Gaughan................. 56 Director, Chairman of the Board and
Chief Executive Officer
Harlan D. Braaten.................. 48 Director, President and Chief
Operating Officer
Jerry Herbst....................... 61 Director, Vice President, Treasurer
and Assistant Secretary
J. Tito Tiberti.................... 54 Director, Vice President and
Secretary
Gage Parrish....................... 45 Director, Vice President, Chief
Financial Officer and Assistant
Secretary
Franklin Toti...................... 60 Director and Vice President of
Casino Operations
F. Michael Corrigan................ 63 Director
Charles Silverman.................. 66 Director
Joseph Blasco...................... 55 Director
</TABLE>
MICHAEL J. GAUGHAN. Mr. Gaughan has been a director of our company since
its formation in September 1995 and is the Chairman of the Board and Chief
Executive Officer. His current term as a director expires in 2000. He is also a
director and Chairman of the Board and Chief Executive Officer of Coast Resorts,
Inc. Mr. Gaughan was a general partner of the Barbary Coast Partnership from its
inception in 1979 until January 1, 1996, the effective date of the
reorganization in which the Barbary Coast Partnership and the Gold Coast
Partnership consolidated with Coast Resorts and our company. Mr. Gaughan served
as the managing general partner of the Gold Coast Partnership from its inception
in December 1986 until the effective date of the Reorganization. Mr. Gaughan and
Mr. Herbst were the sole stockholders of Gaughan-Herbst, Inc., which was the
sole corporate general partner of the Gold Coast Partnership prior to the
Reorganization. Mr. Gaughan has been involved in the gaming industry since 1960
and has been licensed as a casino operator since 1967.
HARLAN D. BRAATEN. Mr. Braaten joined our company as the President, Chief
Financial Officer and a director in October 1995, and was appointed Chief
Operating Officer in February 1996. His current term as a director expires in
2000. Mr. Braaten is also the President and Chief Operating Officer of Coast
Resorts. Prior to joining our company, Mr. Braaten was employed in various
capacities, including the general manager and, most recently, senior vice
president, treasurer and chief financial officer of Rio Hotel and Casino, Inc.
in Las Vegas. From March 1989 to February 1991, Mr. Braaten was vice president,
finance of MGM/Marina Hotel and Casino in Las Vegas, Nevada. Prior thereto, from
November 1983 to March 1989, Mr. Braaten was property controller for Harrah's in
Reno, Nevada. Mr. Braaten has over 20 years of experience in the Nevada gaming
industry.
JERRY HERBST. Mr. Herbst has been a director, Vice President, Treasurer and
Assistant Secretary of our company since its formation in September 1995. His
current
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term as a director expires in 1999. Mr. Herbst has been the president of
Terrible Herbst Oil Company, an owner and operator of gas stations and car
washes, since 1959. Mr. Herbst and Mr. Gaughan were the sole stockholders of
Gaughan-Herbst, Inc., which was the sole corporate general partner of the Gold
Coast Partnership prior to the formation of our company. Mr. Herbst has served
as a member of the board of directors of Bank of America -- Nevada since 1977
and of Nevada Power Company since 1990 and of Edelbrook Corporation since 1994.
J. TITO TIBERTI. Mr. Tiberti has been a director, Vice President and
Secretary of our company since its formation in September 1995. His current term
as a director expires in 1999. He is also a director and Vice President and
Secretary of Coast Resorts. Mr. Tiberti is the president, a director and a
stockholder of, and together with his immediate family, controls Tiberti
Construction, a construction company which served as the general contractor for
the construction of The Orleans and is also serving as general contractor for
the Suncoast. He has also served as managing general partner of The Tiberti
Company, a real estate rental and development company, since 1971. The Tiberti
Company is the lessor of the real property site for The Orleans. Mr. Tiberti has
been involved in the gaming industry for 19 years and was a general partner of
the Barbary Coast Partnership prior to the formation of our company.
GAGE PARRISH. Mr. Parrish was named Vice President, Finance, Assistant
Secretary and a director of our company and Coast Resorts in October 1995 and
was promoted to Chief Financial Officer in February 1996. His current term as a
director expires in 2000. Since 1986, he had been the Controller and Chief
Financial Officer of the Gold Coast Partnership prior to the formation of our
company. From 1981 to 1986, Mr. Parrish served as Assistant Controller of the
Barbary Coast Partnership. Mr. Parrish is a certified public accountant and has
approximately 20 years of experience in the gaming industry.
FRANKLIN TOTI. Mr. Toti has been a director of our company and Coast
Resorts since October 5, 1998. His current term expires in 1999. He has been
Vice President of Casino Operations for our company since January 1, 1996. Mr.
Toti was a general partner and Casino Manager of the Barbary Coast Partnership
from its inception in 1979 until January 1, 1996, the effective date of the
reorganization. Mr. Toti has 38 years of experience in the gaming industry.
F. MICHAEL CORRIGAN. Mr. Corrigan was elected as a director of our company
and Coast Resorts effective as of March 1, 1996. His current term as a director
expires in 2001. Since July 1989, Mr. Corrigan has served as the chief executive
officer of Corrigan Investments, Inc., which owns and manages real estate in
Nevada and Arizona. In addition, Mr. Corrigan is the Chief Executive Officer of
Corstan, Inc., a mortgage banking company, and was previously the owner,
President and Chief Operating Officer of Stanwell Mortgage, a Las Vegas mortgage
company.
CHARLES SILVERMAN. Mr. Silverman was elected as a director of our company
and Coast Resorts effective as of March 1, 1996. His current term as a director
expires in 2001. Mr. Silverman is the President and sole stockholder of
Yates-Silverman, Inc., which specializes in developing theme-oriented interiors
and exteriors and is a leading designer of hotels and casinos. Completed
projects of Yates-Silverman, Inc. include New York-New York, Excalibur, Circus
Circus, Luxor, the Trump Taj Mahal, Trump Castle and Atlantic City Showboat.
Yates-Silverman, Inc. also served as the primary designer for The Orleans and is
serving in the same capacity for the Suncoast. Mr. Silverman has served as the
president of Yates-Silverman, Inc. since its inception in 1971.
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<PAGE> 71
JOSEPH BLASCO. Mr. Blasco was elected as a director of our company and
Coast Resorts effective as of December 16, 1996. His current term as a director
expires in 2001. Since 1984, Mr. Blasco has been a partner in the real estate
development partnership which developed the Spanish Trail community in Las
Vegas, a project which includes over 1,200 homes, a 27-hole golf course and a
country club. Mr. Blasco is currently the managing General Partner of United
Realty Investments, a real estate development and management company in Las
Vegas. He is also general partner in two real estate development partnerships,
Summer Trail LLC and Trop-Edmond Ltd.
Directors of our company who are also employees of our company or Coast
Resorts receive no compensation for service on our company's Board of Directors
or its committees. All other directors receive an annual director's fee of
$24,000, payable quarterly in arrears. Directors may also be reimbursed for
out-of-pocket expenses incurred in connection with attending Board of Director
or committee meetings.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned by or paid by the
Predecessor Partnerships and the Company during 1996, 1997 and 1998 to each
named executive officer whose compensation exceeded $100,000 in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
Michael J. Gaughan.................... 1998 $300,000 $ -- $5,000
Chairman of the Board and Chief 1997 300,000 -- 4,750
Executive Officer of our company; 1996 300,000 195,000 4,750
Harlan D. Braaten..................... 1998 250,000 125,000 5,000
President and Chief Operating Officer 1997 250,000 250,000(3) 4,750
of our company(2) 1996 250,000 162,500 --
Gage Parrish.......................... 1998 200,000 -- 5,000
Vice President, Chief Financial 1997 200,000 -- 4,750
Officer and Assistant Secretary of
our company(4)........................ 1996 150,000 52,500 3,040
</TABLE>
- -------------------------
(1) The amounts reflect matching contributions paid to our 401(k) Profit Sharing
Plan and Trust.
(2) Mr. Braaten joined us in October 1995 as President and Chief Financial
Officer of our company and Coast Resorts. Mr. Braaten was appointed as Chief
Operating Officer of our company and Coast Resorts in February 1996.
(3) Pursuant to his previous employment agreement, Mr. Braaten received a bonus
of $250,000 because Coast Resorts had not made a public offering of its
common stock by December 31, 1997. Mr. Braaten entered into a new employment
agreement effective as of January 1, 1999.
(4) Mr. Parrish served as Vice President, Finance and Controller of our company
and Coast Resorts from September 1995 to February 1996, when Mr. Parrish was
named Chief Financial Officer of our company and Coast Resorts.
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EMPLOYMENT AGREEMENT
Effective as of January 1, 1999, we entered into an employment agreement
with Harlan Braaten, President and Chief Operating Officer. The agreement has a
term of three years and provides for Mr. Braaten to receive a base annual salary
of $250,000 during 1999. The base annual salary increases to $300,000 on January
1, 2000. In addition, the agreement provides for a bonus of at least 50% of the
base annual salary if a specified earnings target is met for each year of the
agreement. The agreement may be terminated upon 30 days notice by Mr. Braaten
and at any time by us. In addition, in the event of a termination of Mr.
Braaten's employment other than for failure to comply with Nevada gaming
regulations, failure to perform his duties, medical incapacity or his arrest on
a felony offense, Mr. Braaten will be entitled to receive a severance payment in
the amount of $300,000 plus any pro rata bonus payment and unvested stock
options to which he is entitled. Pursuant to the arrangement, we granted Mr.
Braaten options to purchase 30,415 shares of Coast Resorts, Inc. for $100 per
share. The options vested as to one-third of the shares on the grant date,
January 1, 1999, and will vest with respect to half of the remaining shares, on
each of the first and second anniversaries of the grant date.
BONUS PLAN
In 1996, we established a bonus plan designed to reward executive officers
and other key employees for their contributions to our company's business
objectives and operating results. Bonuses may be awarded in the discretion of
the Board of Directors based upon achievement of financial targets established
by the Board of Directors on an annual basis, and generally will be equal to a
percentage of the recipient's base salary, depending on the target achieved.
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CERTAIN TRANSACTIONS
We maintain numerous racetrack dissemination contracts with Las Vegas
Dissemination Company, Inc. Michael J. Gaughan's son is the president and sole
stockholder of LVD. LVD provides certain dissemination and pari-mutuel services
to The Orleans, the Gold Coast and Barbary Coast. LVD has been granted a license
by the Nevada Gaming Authorities to disseminate live racing for those events and
tracks for which it contracts and has been granted the exclusive right to
disseminate all pari-mutuel services and race wire services in the State of
Nevada. Under these dissemination contracts, we pay to LVD an average of 3% of
the wagers accepted for races held at the racetracks covered by the respective
contracts. We also pay to LVD a monthly fee for race wire services. For the
fiscal years ended December 31, 1996, 1997 and 1998 and for the three months
ended March 31, 1999, we incurred expenses payable to LVD of approximately
$889,000, $1.1 million, $3.1 million and $361,000, respectively. The terms on
which these services are provided are regulated by the Nevada gaming
authorities.
Tiberti Construction served as the general contractor for the original
construction of the Gold Coast and for certain expansions thereof, and for the
original construction of the Barbary Coast and all expansions thereof. Tiberti
Construction was also the general contractor for the original construction of
The Orleans and for the expansions in 1997 and 1999. J. Tito Tiberti owns
approximately 6.4% of the outstanding common stock of Coast Resorts, and is a
director, Vice President and Secretary of Coast Hotels and Casinos and Coast
Resorts. Mr. Tiberti is the president, a director and stockholder of, and
together with his immediate family members, controls Tiberti Construction. For
the years ended December 31, 1996, 1997 and 1998 and for the three months ended
March 31, 1999, we incurred expenses payable to Tiberti Construction of
approximately $80.3 million, $26.2 million, $3.7 million and $2.3 million,
respectively.
We have entered into a ground lease with The Tiberti Company, a Nevada
general partnership, with respect to the real property on which The Orleans is
located. Mr. Tiberti, a director of our company and a director and stockholder
of Coast Resorts, is the managing partner of The Tiberti Company. For the fiscal
years ended December 31, 1996, 1997 and 1998 and for the three months ended
March 31, 1999, we paid rental expenses to The Tiberti Company of approximately
$3.0 million, $2.1 million, $2.4 million and $550,000, respectively.
Michael J. Gaughan, Franklin Toti and Leo Lewis are the owners of LGT
Advertising, which serves as our advertising agency. LGT Advertising purchases
advertising for our casinos from third parties and passes any discounts directly
through to us. LGT Advertising receives no compensation or profit for these
activities, and invoices us for actual costs incurred. LGT Advertising uses our
facilities and employees in rendering its services, but does not pay any
compensation to us for their use. None of Messrs. Gaughan, Toti or Lewis
receives any compensation from LGT Advertising. Advertising expenses amounted to
approximately $3.8 million, $7.5 million, $6.0 million and $1.5 million for the
years ended December 31, 1996, 1997 and 1998 and for the three months ended
March 31, 1999, respectively.
We have purchased certain of our equipment and inventory for our respective
operations from RJS Inc., a Nevada corporation, that is owned by Michael J.
Gaughan's father and Steven Delmont, our restaurant manager. RJS invoices us for
actual costs incurred. For the fiscal years ended December 31, 1996, 1997 and
1998 and for the
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three months ended March 31, 1999, we incurred expenses payable to RJS of
approximately $4.1 million, $1.4 million, $829,000 and $982,000, respectively.
Michael J. Gaughan is the majority stockholder of Nevada Wallboards, Inc.,
a Nevada corporation, which prints wallboards and parlay cards for use in our
race and sports books. Mr. Gaughan receives no compensation from Nevada
Wallboards. We expect to continue to purchase wallboards and parlay cards from
Nevada Wallboards. For the fiscal years ended December 31, 1996, 1997 and 1998
and for the three months ended March 31, 1999, we incurred expenses payable to
Nevada Wallboards of approximately $145,000, $198,000, $186,000 and $40,000,
respectively.
Charles Silverman, a director of our company and Coast Resorts, is the
president of Yates-Silverman, Inc., which served as the designer of The Orleans
and is serving as the designer for the Suncoast. For the fiscal years ended
December 31, 1996, 1997 and 1998 and for the three months ended March 31, 1999,
we incurred expenses payable to Yates-Silverman of $508,000, $177,000, $500,000
and $230,000, respectively.
The partnership that owned the Barbary Coast prior to 1997 had from time to
time borrowed funds from Exber, Inc., a Nevada corporation, which owns the El
Cortez Hotel & Casino. Exber is controlled by Jackie Gaughan, Michael J.
Gaughan's father. Jackie Gaughan, Jr., Michael J. Gaughan's brother, serves on
the Board of Directors of Exber. Irving Kenneth Epstein, a stockholder of Coast
Resorts and Vice President of the Company, is a stockholder of Exber. Michael J.
Gaughan has no ownership interest in Exber.
In February 1991, the Barbary Coast Partnership borrowed $7.5 million from
Exber, the proceeds of which were used to purchase slot machines and for working
capital purposes. The Barbary Coast Partnership repaid all outstanding principal
and interest on this indebtedness in January 1995. Also in January 1995, the
Barbary Coast Partnership borrowed an additional $3.0 million from Exber. The
proceeds from the 1995 Exber Loan were used to purchase slot machines, to
refinance approximately $465,000 outstanding under the 1991 indebtedness and for
working capital purposes. As of December 31, 1996, nothing was owed to Exber,
Inc. During the fiscal year ended December 31, 1996, we paid to Exber total
principal of $1.3 million and interest of $37,000.
In addition, Exber provided laundry services to the Gold Coast and the
Barbary Coast. We terminated our laundry services contract with Exber effective
October 31, 1996. During the fiscal year ended December 31, 1996, we incurred
total expenses payable to Exber of approximately $864,000.
In July 1995, the Barbary Coast Partnership borrowed an aggregate amount of
$1.5 million from Michael J. Gaughan which is evidenced by demand promissory
notes. The proceeds of the demand notes were used by the Barbary Coast
Partnership for working capital purposes. The demand notes accrued interest at
6% per annum, commencing August 1, 1995, and were payable on demand. In the
Reorganization, Coast Resorts assumed the demand notes in exchange for 14,118
shares of Coast Resorts common stock.
From July 1991 through December 1996, we leased the main sign at the
Barbary Coast from Desert Ltd., a Nevada general partnership. Michael J.
Gaughan, J. Tito Tiberti and Franklin Toti own 50%, 25% and 25%, respectively,
of Desert Ltd. The lease provided for monthly rental payments of $13,700 through
July 1998. The lease also provided us with an option to purchase the sign at any
time prior to the end of the lease term or within
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thirty days thereafter for a purchase price equal to its fair market value. We
exercised the option to purchase the sign in December 1996 for $233,000. For the
year ended December 31, 1996, we made rental payments to Desert Ltd. of
approximately $164,000.
We expect to promote The Orleans by advertising The Orleans name on a
NASCAR race car operated by Brendan Gaughan on the Winston West Circuit. We
expect to spend approximately $300,000 in connection with this promotion.
Brendan Gaughan is the son of Michael Gaughan.
We believe these transactions are on terms no less favorable to us than we
could have been from unaffiliated third parties. Each of the transactions was
approved by a majority of our disinterested directors. Any future transactions
between us and our officers, directors, principal stockholders or affiliates
will be on terms no less favorable to us than we could obtain from unaffiliated
third parties, and will be approved by a majority of our disinterested
directors.
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PRINCIPAL STOCKHOLDERS
All of our common stock is owned by Coast Resorts. The following table sets
forth certain information regarding the beneficial ownership of Coast Resorts
common stock as of May 27, 1999 by:
- each person who, to the knowledge of Coast Resorts, owns more than 5% of
the outstanding Coast Resorts common stock,
- each director of our company,
- named executive officers, and
- all directors and executive officers of our company as a group.
<TABLE>
<CAPTION>
NAME(1) NUMBER OF SHARES PERCENT
------- ---------------- -------
<S> <C> <C>
Michael J. Gaughan..................................... 452,103.97 30.1%
Jerry Herbst........................................... 265,388.08 17.8
Jimma Lee Beam......................................... 104,529.41 7.0
Franklin Toti.......................................... 99,776.47 6.7
J. Tito Tiberti........................................ 95,151.47 6.4
Harlan D. Braaten(2)................................... 10,138.33 *
F. Michael Corrigan.................................... 5,263.24 *
Joseph Blasco.......................................... 500 *
Charles Silverman...................................... 500 *
Gage Parrish........................................... -- --
All directors and executive officers as a group (nine
persons)............................................. 928,821.56 61.9
</TABLE>
- -------------------------
* Less than one percent.
(1) The address of Messrs. Gaughan and Herbst is 4500 West Tropicana Avenue, Las
Vegas, Nevada 89103. The address of Mr. Toti is 3595 Las Vegas Boulevard
South, Las Vegas, Nevada 89109. The address of Mr. Tiberti is 1806 South
Industrial Road, Las Vegas, Nevada 89102. The address of Ms. Beam is 2409
Windjammer Way, Las Vegas, Nevada 89107.
(2) Reflects shares that may be purchased upon exercise of a stock option.
Pursuant to his employment agreement, Mr. Braaten was granted an option to
purchase 30,415 shares of Coast Resorts, Inc. for $100 per share. One third
of the options vested on the grant date, January 1, 1999, one third vest
January 1, 2000 and the remaining third vest on January 1, 2001.
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DESCRIPTION OF OUR OTHER INDEBTEDNESS
The following is a summary of important terms of our material indebtedness.
CREDIT FACILITY
Credit Facility. As part of the refinancing transactions completed in
connection with the issuance of the outstanding notes, we entered into a senior
secured revolving bank credit facility with Bank of America National Trust and
Savings Association and certain other lenders. Under the credit facility, we may
borrow up to $75.0 million. The $75.0 million facility will be reduced in
quarterly amounts ranging from $2.1 million to $4.3 million per quarter,
beginning the fiscal quarter ending June 30, 2001. The credit facility has a
term of five years. The initial advances of $47 million under the credit
facility were used in connection with the repurchase of our 13% first mortgage
notes and our 10 7/8% first mortgage notes described below. Subsequent advances
under the credit facility may be used for working capital, general corporate
purposes, and certain improvements to our existing properties. We closed the
credit facility concurrently with the outstanding notes offering.
The credit facility is secured by liens on substantially all our assets and
is guaranteed by Coast Resorts and any of our future subsidiaries. The Coast
Resorts guarantee is secured by a pledge of all of our common stock and by liens
on substantially all its other assets. The credit facility also contains
customary representations and warranties and affirmative and negative covenants,
including, among others, covenants relating to financial and compliance
reporting, capital expenditures, restricted payments, maintenance of certain
financial ratios, incurrence of liens, sale or disposition of assets and
incurrence of other debt.
At our option, interest for advances under the credit facility will accrue
at either:
- the Interbank Offered Rate for 1, 2, 3 or 6 month dollar deposits as
offered by Bank of America NT&SA to prime international banks in the
offshore dollar market, LIBOR, plus a spread ranging from 1.25% to 2.75%;
or
- the higher of (1) the rate as publicly announced from time to time by
Bank of America NT&SA as its reference rate or (2) the Federal Funds Rate
plus one-half of one percent per annum, such base rate, plus a spread
ranging from 0% to 1.50%.
The credit facility provides that interest on LIBOR advances will be
payable at the end of each applicable interest period or quarterly, if earlier.
Interest on base rate advances will be payable quarterly. Upon default, interest
will accrue at the base rate plus 2.00%.
The credit facility contains a provision that, with lender approval, will
increase the maximum capacity under the credit facility to $200.0 million. The
$200.0 million commitment, if obtained, will be reduced in quarterly amounts
ranging from $6.0 million to $11.5 million per quarter, beginning the fiscal
quarter ending June 30, 2001. We anticipate using advances under the proposed
amended credit facility to fund the construction of the Suncoast, make capital
improvements to existing properties and to provide for other working capital and
general corporate purposes. The increase in the facility remains subject to a
number of contingencies, including lender approval and the negotiation of
additional terms relating to the construction. We cannot assure you that we will
be able to obtain the increase in the credit facility or that it will be
available on acceptable terms. If we cannot amend the credit facility or obtain
timely alternative
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financing on acceptable terms, we may not be able to develop, construct and open
the Suncoast, which could adversely impact our operating results.
At March 31, 1999, we had $47.0 million outstanding under the credit
facility.
FIRST MORTGAGE NOTES
13% First Mortgage Notes due 2002. In January 1996, we issued $175.0
million principal amount of 13% first mortgage notes due 2002. At March 31,
1999, $2.0 million principal amount of the 13% first mortgage notes remained
outstanding. The 13% first mortgage notes are unconditionally guaranteed by
Coast Resorts, and are secured by, among other things, a first priority security
interest in substantially all of our assets. The 13% first mortgage notes are
redeemable at our option any time on or after December 15, 2000, and we are
required by the terms of the outstanding notes and our credit facility to redeem
all outstanding 13% first mortgage notes on December 15, 2000.
In connection with our repurchase of 13% first mortgage notes, we amended
the indenture pursuant to which the 13% first mortgage notes were issued to
eliminate substantially all restrictive covenants pursuant to the consent of the
holders of approximately 99% of the outstanding principal amount of the 13%
first mortgage notes received in the consent solicitation.
DESCRIPTION OF THE EXCHANGE NOTES
Except as otherwise indicated below, the following summary applies to both
the outstanding notes and the exchange notes. For this section, the term "Notes"
means both the outstanding notes and the exchange notes unless otherwise
indicated.
The outstanding notes were, and the exchange notes will be, issued under
the indenture dated as of March 23, 1999 among ourself, as issuer, Coast
Resorts, as guarantor, and Firstar Bank of Minnesota, N.A., as trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939.
The terms of the exchange notes are nearly identical to the outstanding
notes in all material respects, including interest rate and maturity, except
that the exchange notes will not be subject to:
- the restrictions on transfer; and
- the registration agreement covenants regarding registration.
The outstanding notes remain subject to all of these terms. The following
description is a summary of the material provisions of the Indenture. It does
not restate the Indenture in its entirety. You can find the definitions of some
capitalized terms used in this description under the subheading "Certain
Definitions" below. We urge you to read the Indenture because it, and not this
description, defines your rights as holders of the exchange notes.
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BRIEF DESCRIPTION OF THE EXCHANGE NOTES AND THE GUARANTEES
THE EXCHANGE NOTES
The exchange notes are:
- general, unsecured obligations;
- subordinated in right of payment to all of our existing and future Senior
Debt;
- ranked equally in right of payment with any of our future senior
subordinated Indebtedness, and with any of our other obligations that are
not Senior Debt and are not expressly subordinated to the exchange notes;
and
- unconditionally guaranteed by the Guarantor.
THE PARENT AND SUBSIDIARY GUARANTEE
The Guarantees of the exchange notes are:
- general unsecured obligations of each Guarantor;
- subordinated in right of payment to all existing and future Senior Debt
of each Guarantor; and
- ranked equally in right of payment with any future senior subordinated
Indebtedness of each Guarantor, and with any other obligations of such
Guarantor that are not Senior Debt and are not expressly subordinated to
the notes.
Assuming we had completed the refinancing transactions prior to December
31, 1998, including the outstanding note offering, we would have had total
Senior Indebtedness of approximately $65.0 million as of December 31, 1998. The
Indenture permits us to incur additional Indebtedness, including additional
Senior Indebtedness, in specific circumstances.
In connection with the refinancing transactions, we merged Coast West, Inc.
into our company. Presently, we do not have any subsidiaries. However, under
specific circumstances, we will be permitted to designate future subsidiaries as
"Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the Indenture.
Our payment obligations under the Notes will be jointly and severally
guaranteed by our parent, Coast Resorts, and any future Restricted Subsidiaries
of our company that have at any time a Fair Market Value of more than $250,000;
provided that the aggregate Fair Market Value of Restricted Subsidiaries that
are not Subsidiary Guarantors will not at any time exceed $1.0 million. The
Parent Guarantee will be subordinated to the prior payment in full of all Senior
Indebtedness of Coast Resorts on the same basis as the Notes are subordinated to
Senior Indebtedness of our company. Each Subsidiary Guarantee will be
subordinated to the prior payment in full of all Senior Indebtedness of such
Subsidiary Guarantor on the same basis as the notes are subordinated to Senior
Indebtedness of our company. The obligations of Coast Resorts under its Parent
Guarantee and each Subsidiary Guarantor under its Subsidiary Guarantee will be
limited so as not to constitute a fraudulent conveyance under applicable law.
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No Guarantor is permitted to consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person), another Person whether
or not affiliated with such Guarantor unless:
- subject to the provisions of the following paragraph, the Person formed
by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor under the Parent
Guarantee or Subsidiary Guarantee, as applicable, and the Indenture
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; and
- immediately after giving effect to such transaction, no Default or Event
of Default exists.
The Indenture provides that in the event of a (a) sale or other disposition
of all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, (b) a sale or other disposition of all of the capital stock of any
Guarantor or (c) the designation of any Subsidiary Guarantor as an Unrestricted
Subsidiary in accordance with the Indenture then the Guarantor (in the event of
a sale or other disposition, by way of such a merger, consolidation or
otherwise, of all of the capital stock of such Guarantor or in the event of its
designation as an Unrestricted Subsidiary) or the corporation acquiring the
property (in the event of a sale or other disposition of all of the assets of
the Guarantor) will be released and relieved of any obligations under its Parent
Guarantee or Subsidiary Guarantee; provided that the Net Cash Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. See "Covenants -- Asset Sales."
PRINCIPAL, MATURITY AND INTEREST
The exchange notes will be initially limited in aggregate principal amount
to $175.0 million and will mature on April 1, 2009. Subject to the covenants
described below and applicable law, we may issue additional notes under the
Indenture.
Interest on the exchange notes will accrue at the rate of 9 1/2% per annum
and will be payable semi-annually in arrears on April 1 and October 1,
commencing on October 1, 1999, to the Holders of record on the immediately
preceding March 15 and September 15.
Interest on the exchange notes will accrue from the date of original
issuance or, if interest has already been paid, from the date it was most
recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. If a Holder has given wire transfer
instructions to us, we will make all principal, premium, interest and Additional
Interest payments on those exchange notes in accordance with those instructions.
All other payments on the exchange notes will be made at the office or agency of
the Trustee within the City and State of New York unless we elect to make
interest payments by check mailed to the Holders at their address set forth in
the register of Holders. The exchange notes will be issued in denominations of
$1,000 and integral multiples of $1,000.
SUBORDINATION
The payment of principal of and premium, interest and Additional Interest,
if any, on the exchange notes will be subordinated to the prior payment in full
in cash of all of our Senior Indebtedness. The payment of any amounts pursuant
to the Parent Guarantee or
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any Subsidiary Guarantee will be subordinated to the prior payment in full in
cash of all Senior Indebtedness.
The holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all Obligations due in respect of Senior Indebtedness, including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Indebtedness whether or not allowed or allowable in such
proceeding, before the Holders will be entitled to receive any payment with
respect to the exchange notes, the Parent Guarantee or a Subsidiary Guarantee,
as applicable, upon any distribution to creditors of Coast Resorts, our company
or any Subsidiary Guarantor:
- in a liquidation or dissolution of such entity;
- in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the such entity or its property;
- in an assignment for the benefit of creditors of such entity; or
- in any marshaling of the assets and liabilities of such entity;
In addition, until all Obligations due with respect to Senior Indebtedness are
paid in full in cash, any distribution to which Holders would be entitled will
be made to the holders of such Senior Indebtedness, except that Holders may
receive Permitted Junior Securities and payments made from the trust described
under "-- Legal Defeasance and Covenant Defeasance".
We also may not make any payment in respect of the exchange notes nor may
Parent Guarantor or any Subsidiary Guarantor make any payment with respect to
the Parent Guarantee or a Subsidiary Guarantee, except in Permitted Junior
Securities or from the trust described under "-- Legal Defeasance and Covenant
Defeasance" if:
- a payment default on Designated Senior Indebtedness occurs and is
continuing beyond any applicable grace period, including any acceleration
of the Designated Senior Indebtedness; or
- any other default occurs and is continuing on Designated Senior
Indebtedness that permits holders of such Designated Senior Indebtedness
to accelerate its maturity and the Trustee receives a notice of such
default, a "Payment Blockage Notice," from us, a Representative for, or
the holders of a majority of the outstanding principal amount of, any
issue of Designated Senior Indebtedness.
Payments on the exchange notes, the Parent Guarantees and the Subsidiary
Guarantees may and will be resumed:
- in the case of a payment default, upon the date on which such default is
cured or waived; and
- in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Indebtedness has been accelerated.
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No new Payment Blockage Notice may be delivered unless and until:
- 360 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice; and
- all scheduled payments of principal, premium, interest and Additional
Interest, if any, on the exchange notes that have come due have been paid
in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee will be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default will have
been cured or waived for a period of not less than 180 days.
We must promptly notify holders of Senior Indebtedness if payment of the
exchange notes is accelerated because of an Event of Default, but our failure to
provide such notice will not affect the subordination of the exchange notes.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency of Coast Resorts, our company or a Subsidiary
Guarantor, Holders may recover less ratably than other creditors of such
entities, including creditors who are holders of Senior Indebtedness. See "Risk
Factors -- Subordination."
OPTIONAL REDEMPTION
Prior to April 1, 2002, we may on any one or more occasions redeem up to
35% of the aggregate principal amount of the exchange notes issued under the
Indenture at a redemption price of 109.5% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to the redemption
date, with the Net Cash Proceeds to us of one or more Public Equity Offerings or
the capital contributions to us by Coast Resorts with the Net Cash Proceeds to
Coast Resorts of one or more Public Equity Offerings; provided that
- at least $113.75 million in aggregate principal amount of the exchange
notes remains outstanding immediately after the occurrence of such
redemption, excluding the exchange notes held by us and our Subsidiaries;
and
- the redemption occurs within 45 days of the date of the closing of the
Public Equity Offering.
Except pursuant to the preceding paragraph, the exchange notes will not be
redeemable at our option prior to April 1, 2004.
In addition, after April 1, 2004, we may redeem all or a part of the
exchange notes upon not less than 30 nor more than 60 days' notice, at the
redemption prices, expressed as percentages of principal amount, set forth below
plus accrued and unpaid interest and Additional Interest, if any, thereon to the
applicable redemption date, subject to the rights of Holders on the relevant
record date that is prior to the Redemption Date to receive
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interest due on an Interest Payment Date, if redeemed during the twelve-month
period beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004................................................ 104.750%
2005................................................ 103.167%
2006................................................ 101.583%
2007 and thereafter................................. 100.000%
</TABLE>
GAMING REDEMPTION
If any Gaming Authority notifies a holder or beneficial owner of the
exchange notes that:
(1) the holder or beneficial owner must obtain a license,
qualification or finding of suitability under an applicable gaming law and
the holder or beneficial owner does not apply for such license,
qualification or finding of suitability within 30 days, or such shorter
period required by the Gaming Authority; or
(2) the holder or beneficial owner will not be licensed, qualified or
found suitable under an applicable gaming law;
then we may:
(1) require that the holder or beneficial owner dispose of the
holder's or beneficial owner's exchange notes within 30 days, or such
earlier date as required by the Gaming Authority, of (A) the termination of
the 30 day period described above for the holder or beneficial owner to
apply for a license, qualification or finding of suitability or (B) the
receipt of the notice from the Gaming Authority that the holder or
beneficial owner will not be licensed, qualified or found suitable; or
(2) redeem the holder's or beneficial owner's exchange notes at a
price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Additional Interest, if any, to the date of redemption,
or such earlier date as required by the Gaming Authority or applicable
gaming laws.
Immediately upon a determination that a holder or beneficial owner will not
be licensed, qualified or found suitable, the holder or beneficial owner will
have no further rights (1) to exercise any right conferred by the exchange
notes, directly or indirectly, through any trustee, nominee or any other Person
or entity, or (2) to receive any interest or other distribution or payment with
respect to the exchange notes or any remuneration in any form from us for
services rendered or otherwise, except the redemption price of the exchange
notes.
The holder or beneficial owner applying for a license, qualification or
finding of suitability must pay all related costs.
SELECTION AND NOTICE
If less than all of the exchange notes are to be redeemed at any time, the
Trustee will select the exchange notes for redemption as follows:
(1) if the exchange notes are listed, in compliance with the
requirements of the principal national securities exchange on which the
exchange notes are listed; or
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(2) if the exchange notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee will deem fair and appropriate.
No exchange notes of $1,000 or less will be redeemed in part. Notices of
redemption will be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of the exchange notes to be
redeemed at its registered address. Notices of redemption may not be
conditional.
If any exchange note is to be redeemed in part only, the notice of
redemption that relates to that exchange note will state the portion of the
principal amount thereof to be redeemed. A new exchange note in principal amount
equal to the unredeemed portion of the original exchange note will be issued in
the name of the Holder thereof upon cancellation of the original exchange note.
The exchange notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on
exchange notes or portions of them called for redemption.
CERTAIN DEFINITIONS
The following is a glossary of some defined terms used in the Indenture.
Reference is made to the Indenture for the full definition of all terms as well
as any other capitalized term used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition from such Person by a Restricted Subsidiary and not Incurred
by such Person in connection with, or in anticipation of, such Person becoming a
Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness of
such Person which is redeemed, defeased, retired or otherwise repaid at the time
of or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition will not be Acquired
Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income or loss of our company and its Restricted Subsidiaries and the net income
of any Unrestricted Subsidiary to the extent distributed to us or one of our
Restricted Subsidiaries for such period determined on a consolidated basis in
conformity with GAAP less, if and for as long as we are a Pass-through Entity,
the Tax Amount; provided that the following items will be excluded in computing
Adjusted Consolidated Net Income, without duplication:
(1) the net income of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting, except to the extent of
the amount of dividends or other distributions actually paid to us or any
of our Restricted Subsidiaries by such Person during such period;
(2) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (3) of the first paragraph of
the "Limitation on Restricted Payments" covenant described below, and in
such case, except to the extent includable pursuant to clause (1) above,
the net income or loss of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with us or any of
our Restricted Subsidiaries or all or substantially all of the property and
assets of such Person are acquired by us or any of our Restricted
Subsidiaries;
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(3) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income to us or any Restricted Subsidiary
is not at the time of such determination permitted by the operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary;
(4) any gains or losses, on an after-tax basis, attributable to Asset
Sales;
(5) all extraordinary gains and extraordinary losses;
(6) the cumulative effect of a change in accounting principles; and
(7) the fees, expenses and other costs incurred in connection with the
repurchase of the Old First Mortgage Notes (including premium paid upon,
original issue discount or accruals on, and deferred financing costs
written off in connection with the repurchase of the Old First Mortgage
Notes), the issuance of the Notes, the initial establishment of the
Indebtedness described under each of clauses (1) and (2) of the definition
of "Credit Facility" below.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control,"
including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with," as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise; provided that the beneficial ownership of
10% or more of the voting securities of a Person will be deemed to be control.
"Asset Acquisition" means (1) an investment by us or any of our Restricted
Subsidiaries in any other Person pursuant to which such Person will become a
Restricted Subsidiary or will be merged into or consolidated with us or any of
our Restricted Subsidiaries; provided that such Person's primary business is
related, ancillary or complementary to the businesses of our company and our
Restricted Subsidiaries on the date of such investment or (2) an acquisition by
our company or any of our Restricted Subsidiaries of the property and assets of
any Person other than us or any of our Restricted Subsidiaries that constitute
substantially all of a division or line of business, including any casino or
hotel facility, of such Person; provided that the property and assets acquired
are related, ancillary or complementary to the businesses of our company and our
Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition or discontinuation
of use by our company or any of our Restricted Subsidiaries, other than to us or
another Restricted Subsidiary, of (1) all or substantially all of the Capital
Stock of any Restricted Subsidiary of our company or (2) assets that constitute
a business or operation of our company or any of our Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition, including by
way of merger, consolidation or sale-leaseback transaction, in one transaction
or a series of related transactions by our company or any of our Restricted
Subsidiaries to any Person other than us or any of our Restricted Subsidiaries
of (1) all or any of the Capital Stock of any Restricted Subsidiary, (2) all or
substantially all of the property and assets of our company or any of our
Restricted Subsidiaries or (3) any other property and assets of our company
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or any of our Restricted Subsidiaries, other than the Capital Stock or other
Investment in an Unrestricted Subsidiary, outside the ordinary course of
business of our company or such Restricted Subsidiary and, in each case, that is
not governed by the provisions of the Indenture applicable to mergers,
consolidations and sales of assets of our company; provided that "Asset Sale"
will not include:
(1) sales or other dispositions of inventory, receivables and other
current assets;
(2) sales, transfers or other dispositions of assets with a Fair
Market Value not in excess of $1.0 million in any transaction or series of
related transactions;
(3) sales, transfers or other dispositions of (i) assets constituting
a Restricted Payment permitted to be made under the "Restricted Payments"
covenant or (ii) Investments permitted pursuant to clause (6) of the
definition of "Permitted Investments;"
(4) sales, transfers or other dispositions of property or equipment
that has become worn out, obsolete or damaged or otherwise unsuitable for
use in connection with the business of our company or our Restricted
Subsidiaries;
(5) the sale, transfer or other disposition of any property or assets
by any Restricted Subsidiary to us or any of our Restricted Subsidiary;
(6) the sale, transfer or other disposition of any Designated Asset;
and
(7) any exchange of property or assets, other than property or assets
comprising The Orleans, the Gold Coast or the New Casino, by us or a
Restricted Subsidiary in exchange for property or assets with a fair market
value at least equal to the fair market value of the property or assets
disposed of and which are to be used or are useful in any business in which
we are permitted to engage pursuant to the covenant described under
"-- Covenants -- Line of Business."
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (1) the sum of the products of (A)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (B) the amount
of such principal payment by (2) the sum of all such principal payments.
"Barbary Coast" means the Barbary Coast Hotel and Casino.
"Barbary EBITDA" means the earnings before interest, taxes, depreciation
and amortization of the Barbary Coast, calculated in the same manner as
Consolidated EBITDA is calculated for our company and our Restricted
Subsidiaries pursuant to the definition of "Consolidated EBITDA;" provided that
for such calculations, an appropriate allocation will be made for overhead that
is properly allocable to the Barbary Coast.
"Barbary Excess Net Cash Proceeds" means the Net Cash Proceeds of the
Barbary Sale minus an amount equal to the Barbary EBITDA for the then most
recent four fiscal quarters prior to the date of the Barbary Sale multiplied by
five.
"Barbary Sale" means a sale, transfer or disposition or the Barbary Coast.
"Borrowing Facilities" means one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing,
including through the sale of receivables to
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such lenders or to special purpose entities formed to borrow from such lenders
against such receivables, or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents, however designated, whether
voting or non-voting, in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property, whether real, personal or mixed, of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Casino" means any gaming establishment and other property or assets
directly ancillary thereto or used in connection therewith, including any
buildings, restaurants, hotels, theaters, parking facilities, retail shops,
land, golf courses and other recreation and entertainment facilities, vessels,
barges, ships and equipment.
"Change of Control" means such time as:
(1) Coast Resorts sells, transfers, conveys or otherwise disposes of,
other than by way of a merger or consolidation, in one or a series of
related transactions, of all or substantially all of its assets to any
"person," as such term is used in Section 13(d)(3) of the Exchange Act,
other than to (A) us or any of our wholly owned Subsidiaries or (B) Michael
J. Gaughan or his Related Parties;
(2) Coast Hotels and Casinos and our Subsidiaries, taken as a whole,
sell, transfer, convey or otherwise dispose of, other than by way of a
merger or consolidation, in one or a series of related transactions, of all
or substantially all of their assets to any "person," as such term is used
in Section 13(d)(3) of the Exchange Act, other than Coast Resorts or
Michael J. Gaughan or his Related Parties;
(3) a plan relating to the liquidation or dissolution of Coast Resorts
or Coast Hotels and Casinos is adopted;
(4) the liquidation or dissolution of Coast Resorts or Coast Hotels
and Casinos;
(5) individuals who on the Closing Date constituted the Board of
Directors of Coast Resorts or Coast Hotels and Casinos, together with any
new or replacement directors whose election by the Board of Directors or
whose nomination by the Board of Directors for election by Coast Resorts'
or our stockholders, as applicable, was approved by a vote of at least a
majority of the members of the Board of Directors then still in office who
either were members of the Board of Directors on the Closing Date or whose
election or nomination for election was so approved, cease for any reason
to constitute a majority of the members of the Board of Directors of Coast
Resorts or Coast Hotels and Casinos, as applicable, then in office;
(6) prior to the consummation of Coast Resorts' first Public Equity
Offering, (A) Michael J. Gaughan and his Related Parties cease to be the
"beneficial owners,"
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as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, in the aggregate at least 20% of the Voting Stock of Coast Resorts or
(B) any "person" as defined above or "group" as such term is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, including any
group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act,
becomes the "beneficial owner," as defined above, directly or indirectly,
more of the Voting Stock of Coast Resorts than is "beneficially owned" by
the Principals and their Related Parties;
(7) after the consummation of Coast Resorts' first Public Equity
Offering, a transaction is consummated, including, without limitation, any
merger or consolidation, which results in:
(A) any "person," as defined above, or "group," as such term is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act, other than the Principals and their Related Parties,
becoming the "beneficial owner," as defined above, directly or
indirectly, of more than 40% of the Voting Stock of Coast Resorts; and
(B) any "person," as defined above, or "group," as defined above,
becoming the "beneficial owner," as defined above, directly or
indirectly, of more of the Voting Stock of Coast Resorts than is at the
time "beneficially owned," as defined above, by Principals and their
Related Parties in the aggregate;
but, in the case of both clauses (A) and (B) of this clause (7),
excluding from the percentage of Voting Stock held by any person
consisting of a group the Voting Stock owned by any Principal and his
Related Parties who are deemed to be members of the group; provided that
such Principal and his Related Parties beneficially own a majority of
the total Voting Stock of Coast Resorts held by such group; or
(8) Coast Resorts ceases to own 100% of the outstanding Capital Stock
of Coast Hotels and Casinos, other than pursuant to a merger of Coast
Hotels and Casinos into Coast Resorts.
For purposes of this definition, any transfer of an equity interest of an
entity that was formed for the purpose of acquiring our Voting Stock will be
deemed to be a transfer of such portion of such Voting Stock as corresponds to
the portion of the equity of such entity that has been so transferred.
"Closing Date" means the date on which the Notes are originally issued
under the Indenture.
"Coast Resorts" means Coast Resorts, Inc., a Nevada corporation.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents, however designated, whether
voting or non-voting, of such Person's common equity, whether outstanding on the
Closing Date or issued thereafter.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted
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Consolidated Net Income, (1) Consolidated Interest Expense, (2) income taxes
(other than income taxes (either positive or negative) attributable to
extraordinary gains or losses or sales of assets) or, so long as we are a
Pass-through Entity, the Tax Amount, (3) depreciation expense, (4) amortization
expense, (5) any preopening expenses to the extent that such preopening expenses
were deducted in computing Consolidated Net Income on a consolidated basis and
determined in accordance with GAAP, and (6) all other non-cash items including
deferred non-cash rent expense, reducing Adjusted Consolidated Net Income less
all non-cash items increasing Adjusted Consolidated Net Income; provided, that
if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA will be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (A) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(B) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by us or any of our
Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of
(1) interest, including capitalized interest, in respect of
Indebtedness, including, without limitation, amortization of original issue
discount on any Indebtedness and the interest portion of any deferred
payment obligation, calculated in accordance with the effective interest
method of accounting; all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing;
the net costs associated with Interest Rate Agreements; and Indebtedness
that is Guaranteed or secured by the assets of our company or any of our
Restricted Subsidiaries;
(2) all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to
be accrued by us and our Restricted Subsidiaries during such period; and
(3) the product of (a) all dividend payments, whether or not in cash,
on any series of Disqualified Stock of our company, other than dividend
payments on Capital Stock payable solely in Capital Stock of our company,
other than Disqualified Stock, or to one of our Restricted Subsidiaries,
times (b) a fraction, the numerator or which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate or such Person, expressed as a decimal, in each case, on
a consolidated basis and in accordance with GAAP;
excluding, however, (A) any amount of such interest of any Restricted Subsidiary
if the net income of such Restricted Subsidiary is excluded in the calculation
of Adjusted Consolidated Net Income pursuant to clause (3) of the definition
thereof, but only in the same proportion as the net income of such Restricted
Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income
pursuant to clause (3) of the definition thereof, and (B) original issue
discount written off in connection with the repurchase of the Old First Mortgage
Notes.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of our company and our Restricted Subsidiaries which
will be as of a date not more than 135 days prior to the date of such
computation, and which will not take into account Unrestricted Subsidiaries
except as investments, less any amounts attributable to Disqualified Stock or
any equity security convertible into or exchangeable for Indebtedness,
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the cost of treasury stock and the principal amount of any promissory notes
receivable from the sale of the Capital Stock of our company or any of our
Restricted Subsidiaries, each item to be determined in conformity with GAAP,
excluding the effects of foreign currency exchange adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52.
"Construction and Design Contract" means any contract for the construction,
design, development or equipping, including any capital addition, improvement,
extension or repair, for any of our Casinos existing now or in the future, as
finalized, amended, supplemented or otherwise modified from time to time.
"Credit Agreement" means the Loan Agreement dated as of March 18, 1999,
among us, and Bank of America NT&SA, as administrative agent, and the lenders
referred to therein, together with any agreements, instruments and documents
executed or delivered pursuant to or in connection with such Loan Agreement,
including, without limitation, any Guarantees and security documents, in each
case as such Loan Agreement or such agreements, instruments or documents may be
amended, supplemented, extended, renewed, refinanced or otherwise modified from
time to time.
"Credit Facility" means:
(1) the Credit Agreement; provided that the aggregate principal amount
of all Indebtedness outstanding under the Credit Agreement, including all
Indebtedness incurred to refinance or replace any Indebtedness incurred
pursuant to this clause (1), does not exceed $75.0 million less permanent
reductions in the available Indebtedness under the Credit Agreement
resulting from the application of Asset Sale proceeds; and
(2) any other agreement evidencing Indebtedness; provided that:
(A) prior to the time that the New Casino is Operating, at least
75% of the proceeds of such Indebtedness are used exclusively to finance
the Project Costs for the New Casino;
(B) either (i) such Indebtedness is incurred under the Credit
Agreement or an amendment or supplement to the Credit Agreement, in
either case with the existing lenders under the Credit Agreement or
other Eligible Lenders or (ii) if we are unable to incur Indebtedness
pursuant to clause (i) above on terms reasonably acceptable to us, (a)
all of the initial lenders or purchasers of such Indebtedness are
Permitted Lenders, (b) after giving pro forma effect to the issuance of
all Indebtedness which is outstanding as of the date of determination
pursuant to the Credit Agreement and which may otherwise be incurred
under such Credit Facility, the Interest Coverage Ratio would be at
least 1.5 to 1 and (c) such Indebtedness is not issued with any equity
or cash flow participations;
(C) prior to the time that the New Casino is Operating, the
aggregate principal amount of such Indebtedness outstanding at any time,
including any refinancings or replacements thereof, will not exceed the
lesser of (A) $125.0 million and (B) 85% of the Project Costs for the
New Casino, less permanent reductions in such Indebtedness resulting
from the application of Asset Sale Proceeds; and
(D) after the New Casino is Operating, the aggregate principal
amount of such Indebtedness outstanding at any time, including any
refinancings or
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replacements thereof and including any Indebtedness which was previously
incurred and is outstanding under this clause (2), will not exceed
$125.0 million less permanent reductions in such Indebtedness resulting
from the application of Asset Sale proceeds; and
provided, further, that the lenders under the Credit Facility will be
conclusively entitled to rely on a certificate of our company as to
compliance with the requirements of this definition.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Asset" means the Rancho Road Property and the aircraft we owned
on the date of the Indenture.
"Designated Senior Indebtedness" means (1) any Indebtedness under the
Credit Agreement and any amendments, restatements, modifications, renewals or
replacements thereof and (2) any other Indebtedness constituting Senior
Indebtedness that, at the date of determination, has commitments for or an
aggregate principal amount outstanding of at least $20.0 million and that is
specifically designated by us, in the instrument creating or evidencing such
Senior Indebtedness, as "Designated Senior Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (1) required to be redeemed or is
redeemable at the option of the holder of such class or series of Capital Stock
at any time on or prior to the date that is 91 days after the Stated Maturity of
the exchange notes or (2) convertible into or exchangeable for Capital Stock
referred to in clause (1) above or Indebtedness having a scheduled maturity on
or prior to the date that is 91 days after the Stated Maturity of the exchange
notes; provided that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the Stated Maturity of
the exchange notes will not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions contained in
"Asset Sales" and "Repurchase of Exchange Notes Upon a Change of Control"
covenants described below and such Capital Stock specifically provides that such
Person will not repurchase or redeem any such stock pursuant to such provision
prior to our repurchase of the exchange notes as are required to be repurchased
pursuant to the "Asset Sales" and "Repurchase of Exchange Notes upon a Change of
Control" covenants described below.
"Eligible Lenders" means (1) the lenders under the Credit Agreement, (2)
any affiliate of any lender under the Credit Agreement, (3) any commercial bank,
savings bank or loan association having a combined capital and surplus of at
least $100.0 million and (4) any other financial institution, including a mutual
fund or other fund, having total assets of at least $250.0 million.
"Existing Casino" means any of our casinos in existence on the Closing Date
and the New Casino.
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"Fair Market Value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, which in the case
of a transaction involving $5.0 million or more, will be as determined in good
faith by the Board of Directors, whose determination will be conclusive if
evidenced by a resolution of the Board of Directors.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture will be computed in conformity with GAAP applied on a consistent
basis.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of the United States or foreign
government, any state province or any city or other political subdivision, or
any officer of official thereof, including the Nevada Gaming Commission, the
Nevada State Gaming Control Board, the City of Las Vegas and any other agency
with authority to regulate any gaming operation, or proposed gaming operation,
owned, managed or operated by us or any of our Subsidiaries.
"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct the present and future
gaming activities of our company and our Subsidiaries.
"Gold Coast" means the Gold Coast Hotel and Casino.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person:
(1) to purchase or pay or advance or supply funds for the purchase or
payment of such Indebtedness of such other Person whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, unless such purchase arrangements
are on arm's-length terms and are entered into in the ordinary course of
business, to take-or-pay, or to maintain financial statement conditions or
otherwise; or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof, in whole or in part; provided that
the term "Guarantee" will not include endorsements for collection or
deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
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"Guarantors" means Coast Resorts together with any Subsidiary Guarantors.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that the accrual of
interest or accretion of principal will not be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination, without duplication:
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all obligations of such Person in respect of letters of credit,
banker's acceptances or other similar instruments, including reimbursement
obligations with respect thereto, other than obligations with respect to
letters of credit securing obligations, other than obligations described in
this definition, entered into in the ordinary course of business of such
person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the
third business day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit;
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services,
except Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness will be the lesser of (A) the
Fair Market Value of such asset at such date of determination and (B) the
amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date will be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation for the payment of
principal (with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of our company and our Restricted
Subsidiaries thereunder), provided (A) that the amount outstanding at any time
of any Indebtedness issued with original issue discount is the face amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP, (B) that money borrowed and set aside at the time of the Incurrence of any
Indebtedness in order to prefund the payment of the interest on such
Indebtedness will not be deemed
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to be "Indebtedness" so long as such money is held to secure the payment of such
interest and (C) that Indebtedness will not include (i) any liability for
federal, state, local or other taxes or the obligation to make payments pursuant
to a Tax Agreement or (ii) obligations arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently, except in the case of day-light overdrafts, drawn against
insufficient funds in the ordinary course of business; provided, however, that
such obligations are extinguished within three business days of incurrence.
"Independent Directors" means any members of our Board of Directors other
than (1) Michael J. Gaughan, J. Tito Tiberti, Jerry Herbst, Harlan D. Braaten,
Gage Parrish, (2) any spouses, siblings, parents or lineal descendants of any
person set forth in clause (1) above and any spouse of any such sibling or
lineal descendant and (3) any officer or other employee of Coast Resorts or any
Affiliate of Coast Resorts, including our company.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of (1)
the aggregate amount of Consolidated EBITDA for the then most recent four fiscal
quarters prior to such Transaction Date for which reports have been filed with
the Commission or provided to the Trustee pursuant to the "Commission Reports
and Reports to Holders" covenant (the "Four Quarter Period") to (2) the
aggregate Consolidated Interest Expense during such Four Quarter Period. In
making the foregoing calculation:
(A) pro forma effect will be given to any Indebtedness Incurred or
repaid during the period (the "Reference Period") commencing on the first
day of the Four Quarter Period and ending on the Transaction Date other
than Indebtedness Incurred under a revolving credit or similar arrangement
to the extent of the commitment thereunder, or under any predecessor
revolving credit or similar arrangement, in effect on the last day of such
Four Quarter Period except to the extent any portion of such Indebtedness
is projected, in the reasonable judgment of the senior management of the
Company, to remain outstanding for a period in excess of 12 months from the
date of the Incurrence thereof, in each case as if such Indebtedness had
been Incurred or repaid on the first day of such Reference Period and pro
forma effect will be given to the purchase of any U.S. government
securities required to be purchased with the proceeds of any such
Indebtedness and set aside to prefund the payment of interest on such
Indebtedness at the time such Indebtedness is Incurred;
(B) Consolidated Interest Expense attributable to interest on any
Indebtedness whether existing or being Incurred computed on a pro forma
basis and bearing a floating interest rate will be computed as if the rate
in effect on the Transaction Date taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months or, if shorter, at least equal
to the remaining term of such Indebtedness had been the applicable rate for
the entire period;
(C) pro forma effect will be given to Asset Dispositions and Asset
Acquisitions, including giving pro forma effect to the application of
proceeds of any Asset Disposition and to any discharge of or other relief
from Indebtedness to which our company and our continuing Restricted
Subsidiaries are not liable following any Asset Disposition and the
reduction of any associated Consolidated Interest Expense and the change in
Consolidated EBITDA resulting therefrom, and the designation of
Unrestricted Subsidiaries as Restricted Subsidiaries that occur during such
Reference Period as if they had occurred and such proceeds had been applied
and such discharge or relief had occurred on the first day of such
Reference Period; and
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(D) pro forma effect will be given to asset dispositions and asset
acquisitions, including giving pro forma effect to the application of
proceeds of any asset disposition and to any discharge of or other relief
from Indebtedness to which our company and our continuing Restricted
Subsidiaries are not liable following any asset disposition, that have been
made by any Person that has become a Restricted Subsidiary or has been
merged with or into us or any of our Restricted Subsidiaries during such
Reference Period and that would have constituted Asset Dispositions or
Asset Acquisitions had such transactions occurred when such Person was a
Restricted Subsidiary as if such asset dispositions or asset acquisitions
were Asset Dispositions or Asset Acquisitions that occurred on the first
day of such Reference Period;
provided that to the extent that clause (C) or (D) of this sentence requires
that pro forma effect be given to an Asset Acquisition or Asset Disposition,
such pro forma calculation will be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line of
business of the Person, that is acquired or disposed for which financial
information is available.
For purposes of this definition, whenever pro forma effect is given to a
transaction, the pro forma calculations will be made in good faith by a senior
financial or accounting officer of our company. Interest on a Capitalized Lease
Obligation will be deemed to accrue at an interest rate reasonably determined by
a senior financial or accounting officer of our company to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit, including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers, suppliers or
contractors in the ordinary course of business that are, in conformity with
GAAP, recorded as accounts receivable, prepaid expenses or deposits on the
balance sheet of our company or our Restricted Subsidiaries, or capital
contribution to, by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others, or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and will include:
(1) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary; and
(2) the Fair Market Value of the Capital Stock, or any other
Investment, held by our company or any of our Restricted Subsidiaries of or
in any Person that has ceased to be a Restricted Subsidiary;
provided that the Fair Market Value of the Investment remaining in any Person
that has ceased to be a Restricted Subsidiary will not exceed the aggregate
amount of Investments previously made in such Person valued at the time such
Investments were made less the net reduction of such Investments. For purposes
of the definition of "Unrestricted Subsidiary" and the "Restricted Payments"
covenant described below:
(1) "Investment" will include the Fair Market Value of the assets, net
of liabilities other than liabilities to our company or any of our
Restricted Subsidiaries,
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of any Restricted Subsidiary at the time that such Restricted Subsidiary is
designated an Unrestricted Subsidiary;
(2) the Fair Market Value of the assets, net of liabilities (other
than liabilities to our company or any of our Restricted Subsidiaries), of
any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary
is designated a Restricted Subsidiary will be considered a reduction in
outstanding Investments; and
(3) any property transferred to or from an Unrestricted Subsidiary
will be valued at its Fair Market Value at the time of such transfer.
Notwithstanding the foregoing, in no event will any issuance of Capital Stock,
other than Disqualified Stock, of our company in exchange for Capital Stock,
property or assets of another Person or any redemption or repurchase of the
exchange notes or other Indebtedness of our company or any Restricted Subsidiary
for cash constitute an Investment by our company in such other Person.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest in the future; provided that in no event will an
operating lease be deemed to constitute a Lien.
"Liquor License" means every license, franchise or other authorization
required to serve liquor at any of casinos owned or operated by our company or
any of our Restricted Subsidiaries.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means:
(1) with respect to any Asset Sale, the proceeds of such Asset Sale in
the form of cash or cash equivalents, including payments in respect of
deferred payment obligations, to the extent corresponding to the principal,
but not interest, component thereof, when received in the form of cash or
cash equivalents, except to the extent such obligations are financed or
sold by us or any of our Restricted Subsidiaries with recourse to us or any
of our Restricted Subsidiaries, and proceeds from the conversion of other
property received when converted to cash or cash equivalents, net of:
(A) brokerage commissions and other fees and expenses, including
fees and expenses of counsel and investment bankers, related to such
Asset Sale;
(B) provisions for all taxes, whether or not such taxes will
actually be paid or are payable, including payments under any Tax
Agreement, as a result of such Asset Sale without regard to the
consolidated results of operations of our company and our Restricted
Subsidiaries, taken as a whole;
(C) payments made to repay Indebtedness other than Senior
Indebtedness or any other obligation outstanding at the time of such
Asset Sale that either (1) is secured by a Lien on the property or
assets sold or (II) is required to be paid as a result of such sale; and
(D) appropriate amounts to be provided by us or any of our
Restricted Subsidiaries as a reserve against any liabilities associated
with such Asset Sale, including, without limitation, pension and other
post-employment benefit liabili-
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ties, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP; and
(2) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations, to the
extent corresponding to the principal, but not interest, component thereof,
when received in the form of cash or cash equivalents, except to the extent
such obligations are financed or sold by us or any of our Restricted
Subsidiaries with recourse to our company or any Restricted Subsidiary, and
proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of attorney's fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"New Casino" means the pending project to develop, construct and operate a
new hotel-casino to be located on approximately 50 acres at the intersection of
Rampart Boulevard and Alta Drive in Las Vegas, Nevada.
"Obligations" means any principal, interest, premium, if any, penalties,
fees, indemnifications, reimbursements, damages or other liabilities payable
under the documentation governing or otherwise in respect of any Indebtedness,
in each case whether now or hereafter existing, renewed or restructured, whether
or not from time to time decreased or extinguished and later increased, created
or incurred, whether or not arising on or after the commencement of a proceeding
under Title 11, U.S. Code or any similar federal or state law for the relief of
debtors, including post-petition interest, and whether or not allowed or
allowable as a claim in any such proceeding.
"Offer to Purchase" means an offer made by us to purchase Notes from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
(1) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata
basis;
(2) the purchase price and the date of purchase which will be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed (the "Payment Date");
(3) that any Note not tendered will continue to accrue interest
pursuant to its terms;
(4) that, unless we default in the payment of the purchase price, any
Note accepted for payment pursuant to the Offer to Purchase will cease to
accrue interest on and after the Payment Date;
(5) that Holders electing to have a Note purchased pursuant to the
Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side
of the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day immediately
preceding the Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately
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preceding the Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued will be in a principal amount of $1,000 or integral multiples
thereof.
On the Payment Date, we will:
(1) accept for payment on a pro rata basis Notes or portions thereof
tendered pursuant to an Offer to Purchase;
(2) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and
(3) deliver, or cause to be delivered, to the Trustee all Notes or
portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the
Company.
The Paying Agent will promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price, and the Trustee will promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued will be in a principal amount of $1,000 or
integral multiples thereof. We will publicly announce the results of an Offer to
Purchase as soon as practicable after the Payment Date. The Trustee will act as
the Paying Agent for an Offer to Purchase. We will comply with Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Company
is required to repurchase Notes pursuant to an Offer to Purchase. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions for such Offer to Purchase, we will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations with respect to such Offer to Purchase by virtue thereof.
"Old First Mortgage Notes" means our 13% First Mortgage Notes due 2002 and
our 10 7/8% First Mortgage Notes due 2001 of the Company.
"Operating" means, with respect to the New Casino, the first time that (i)
all Gaming Licenses necessary to commence operations at the New Casino have been
granted and have not been revoked or suspended, (ii) the project manager and the
architect of the New Casino have delivered a certificate to the Trustee
certifying that the New Casino is complete in all material respects in
accordance with the plans and specifications therefor and all applicable
building laws, ordinances and regulations, (iii) the New Casino is in a
condition, including installation of furnishings, fixtures and equipment, to
receive guests in the ordinary course of business, (iv) gaming and other
operations in accordance with applicable law are open to the general public and
are being conducted at the New Casino, (v) a permanent or temporary certificate
of occupancy has been issued for the New Casino by Clark County, Nevada and (vi)
a notice of completion of the New Casino has been duly recorded.
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"Pari Passu Indebtedness" means all of our Indebtedness that ranks equal in
right of payment with the exchange notes.
"Pass-through Entity" means any entity taxed as a partnership for federal
income tax purposes, any disregarded entity for federal income tax purposes,
including a qualified Subchapter S subsidiary, an S-Corporation, or any other
entity whose items of income and deductions are passed through to its
equityholders for federal income tax purposes and retain the same
characteristics in the hands of such equityholders.
"Permitted FF&E Financing" means Indebtedness of our company or any of our
Restricted Subsidiaries that is Incurred to finance the acquisition or lease
after the date of the Indenture of newly acquired or leased furniture, fixtures
or equipment ("FF&E") used directly in the operation of any of our Casinos and
secured by a Lien on such FF&E, which Indebtedness has a principal amount not to
exceed 100% of the cost of the FF&E so purchased or leased.
"Permitted Investment" means:
(1) an Investment in our company or a Restricted Subsidiary of our
company or a Person which will, upon the making of such Investment, become
a Restricted Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, us or any of our
Restricted Subsidiaries; provided that such person's primary business is
related, ancillary or complementary to the businesses of our company and
our Restricted Subsidiaries on the date of such Investment;
(2) Temporary Cash Investments;
(3) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP;
(4) advances and loans to employees of our company or any of our
Restricted Subsidiaries in the ordinary course of business; provided that
the aggregate amount of such Investments does not exceed $1.0 million;
(5) stock, obligations or securities received in satisfaction of
judgments, foreclosure of Liens or good faith settlement of litigation,
disputes or other debts;
(6) Investments in any Person the primary business of which is
related, ancillary or complementary to the businesses of our company and
our Restricted Subsidiaries; provided that the aggregate amount of such
Investments does not exceed $10.0 million;
(7) Investments made as a result of the receipt of non-cash
consideration from an Asset Sale that was made in compliance with the
covenant "Asset Sales;"
(8) Investments in Currency Agreements and Interest Rate Agreements
with respect to Indebtedness otherwise permissible under the Indenture;
(9) receivables owing to our company or any Restricted Subsidiary, if
created or acquired in the ordinary course of business consistent with past
practices and payable or dischargeable in accordance with customary terms;
and
(10) Investments acquired in exchange for Capital Stock, other than
Disqualified Stock, of our company or for Capital Stock of Coast Resorts.
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"Permitted Junior Securities" means Capital Stock of our company, any
Restricted Subsidiary or any affiliate of or successor to our company pursuant
to a plan of reorganization or debt securities of our company, any Restricted
Subsidiary or any affiliate of or successor to our company pursuant to a plan of
reorganization that are subordinated to all Senior Indebtedness, and any debt
securities issued in exchange for Senior Indebtedness, to substantially the same
extent as, or to a greater extent than, the exchange notes are subordinated to
Senior Indebtedness pursuant to the Indenture on the Closing Date, so long as
(i) the effect of the use of this defined term in the subordination provisions
described under the caption "Subordination" is not to cause the exchange notes
to be treated as part of (a) the same class of claims in any plan of
reorganization as the Senior Indebtedness or (b) any class of claims in any plan
of reorganization equal with, or senior to, the Senior Indebtedness for any
payment or distribution in any case or proceeding or similar event relating to
the liquidation, insolvency, bankruptcy, dissolution, winding up or
reorganization of our company and (ii) to the extent that any Senior
Indebtedness outstanding on the date of consummation of any such plan of
reorganization is not paid in full in cash on such date, either (a) the holders
of any such Senior Indebtedness not so paid in full in cash have consented to
the terms of such plan of reorganization or readjustment or (b) such holders
receive securities which constitute Senior Indebtedness and which have been
determined by the relevant court to have a value, as of the effective date of
such plan of reorganization, of at least the value of such holder's interest in
the estate's interest in such Senior Indebtedness.
"Permitted Lender" means any Eligible Lender, any other Person that
qualifies as a "qualified institutional buyer" pursuant to Rule 144A under the
Securities Act, any purchaser of Indebtedness pursuant to Regulation S under the
Securities Act and any purchaser of Indebtedness that is registered under the
Securities Act.
"Permitted Lien" means:
(1) Liens securing Senior Indebtedness, including related Obligations,
that is permitted to be incurred pursuant to the Indenture;
(2) Liens existing on the date of the Indenture;
(3) Liens for taxes, assessments or governmental charges or claims
which are not yet delinquent or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
a reserve or other appropriate provision, if any, as will be required in
conformity with GAAP will have been made therefor;
(4) banker's liens, rights of setoff and Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of like nature incurred in the
ordinary course of business, exclusive of obligations for the payment of
borrowed money;
(5) Liens on the aircraft owned by us on the Closing Date or any
replacement aircraft and on the Rancho Road Property to secure Indebtedness
permitted by the terms of the Indenture under clause (1) of the second
paragraph of the "Limitation on Indebtedness and Issuances of Preferred
Stock" covenant set forth below and any Permitted Refinancing Indebtedness
applied to the refinancing thereof;
(6) Liens in favor of us or a Restricted Subsidiary;
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(7) Liens incurred to secure the purchase price or cost of
construction or improvement of property, which Lien will not cover any
property other than that being acquired, purchased, improved or
constructed;
(8) any interest or title of a lessor under Capitalized Lease
Obligations otherwise permitted under the Indenture;
(9) Liens securing Acquired Indebtedness created prior to, and not in
connection with or in contemplation of, the incurrence of such Indebtedness
by us or any Restricted Subsidiary; provided that such Lien does not extend
to any property or assets of our company or any Subsidiary other than the
assets acquired in connection with the incurrence of such Acquired
Indebtedness;
(10) Liens on property existing at the time of acquisition thereof by
us or a Restricted Subsidiary;
(11) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
in respect of obligations that are not yet due or that are bonded or that
are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of our
company or such Restricted Subsidiary, as the case may be, in accordance
with GAAP;
(12) Liens arising by reason of a judgment, decree or court order, to
the extent not otherwise resulting in an Event of Default;
(13) Liens securing obligations under Currency Agreements and Interest
Rate Agreements entered into in the ordinary course of business;
(14) extensions, renewals or refunding of any Liens referred to in
clauses (1) through (11) above, provided that the renewal, extension or
refunding is limited to all or part of the property securing the original
Lien; and
(15) Liens in addition to the foregoing incurred in the ordinary
course of business provided that the amount of the obligations secured by
such Liens does not exceed in the aggregate $5.0 million at any one time
outstanding and that (A) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit, other than trade credit in
the ordinary course of business, and (B) do not in the aggregate materially
detract from the value of the property or materially impair the use thereof
in the operation of business by our company or any of our Subsidiaries.
"Permitted Tax Distribution" means (1) payments to Coast Resorts required
to be made pursuant to the Tax Sharing Agreement and (2) if and for so long as
we are treated as a Pass-through Entity, distributions to equityholders of our
company (or, if such equityholder is a Pass-through Entity, its equityholders)
in an amount not to exceed the Tax Amount; provided that (A) prior to the first
such distribution to equityholders, our company delivers to the Trustee an
opinion of counsel reasonably satisfactory to the Trustee confirming that (i) we
are a Pass-through Entity and (ii) the holders of the outstanding exchange notes
will not recognize income, gain or loss for federal income tax purposes as a
result of the transaction pursuant to which we become a Pass-through Entity and
will be subject to federal income tax in the same manner and at the same times
as would have been the case if such transaction had not occurred and (B) prior
to any such
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distribution, we deliver to the Trustee a certificate of our Chief Financial
Officer to the effect that our company is a taxable as Pass-through Entity.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents, however designated, whether
voting or non-voting, of such Person's preferred or preference stock, whether
outstanding on the Closing Date or issued thereafter.
"Principals" means Michael J. Gaughan, J. Tito Tiberti, Jerry Herbst and
Franklin Toti.
"Project Costs" means, with respect to the development, construction or
acquisition of any of our Casinos not in existence on the date of the Indenture,
including the New Casino, or any expansion or refurbishment of an Existing
Casino, as the case may be, the aggregate costs required to complete such
development, construction and acquisition, including all direct costs related
thereto such as construction management, architectural, engineering and interior
design fees, site work, utility installations and hook-up fees, construction
permits, certificates and bonds, land acquisition costs, costs of furniture,
fixtures, furnishings, machinery and equipment, non-construction supplies and
pre-opening payroll, but excluding principal or interest payments on any
Indebtedness, other than interest which is required to be capitalized in
accordance with GAAP, which will be included in determining Project Costs.
"Public Equity Offering" means an underwritten public offering of Coast
Resorts common stock which is registered under the Securities Act and results in
net proceeds to Coast Resorts of at least $20.0 million.
"Rancho Road Property" means the approximately 29 acres of raw land owned
by us on the Closing Date located at 4300 West Carey Avenue, North Las Vegas,
Nevada.
"Related Parties" means, with respect to any Principal, (i) any spouse,
sibling, parent or lineal descendant of such Principal or any spouse of any such
sibling or lineal descendant and (ii) any trust, corporation, partnership or
other entity the beneficiaries, shareholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
such Principal and/or such other Person referred to in the immediately preceding
clause (i).
"Representative" means any agent or representative in respect of any
Designated Senior Indebtedness; provided that if, and for so long as, any
Designated Senior Indebtedness lacks such a representative, then the
Representative for such Designated Senior Indebtedness will at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of us other than an
Unrestricted Subsidiary.
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"Senior Indebtedness" means the following obligations of our company or a
Guarantor, whether outstanding on the Closing Date or thereafter Incurred:
(1) all Indebtedness and all other Obligations, including, without
limitation, expenses, fees, principal, interest, reimbursement obligations
under letters of credit and indemnities payable in connection therewith, of
our company or a Guarantor under or in respect of the Credit Agreement or
any amendments, restatements, modifications, renewals or replacements
thereof or a Borrowing Facility or any Interest Rate Agreement or Currency
Agreement relating to or otherwise in respect of the Indebtedness under the
Credit Agreement or any amendments, restatements, modifications, renewals
or replacements thereof or a Borrowing Facility; and
(2) all other Indebtedness and all other monetary obligations of our
company, other than the exchange notes, or a Guarantor, including principal
and interest on such Indebtedness, unless such Indebtedness or obligations,
by its terms or by the terms of any agreement or instrument pursuant to
which such Indebtedness or obligation is issued, is equal with, or
subordinated in right of payment to, the exchange notes, the Parent
Guarantee or Subsidiary Guarantees, as the case may be.
Notwithstanding anything to the contrary in clauses (1) and (2) above,
Senior Indebtedness will not include:
(1) any Indebtedness of our company or a Guarantor that, when
Incurred, was without recourse to our company or the Guarantor, as the case
may be;
(2) any of our Indebtedness to a Subsidiary or Affiliate of our
company;
(3) any Indebtedness of our company or a Guarantor, as the case may
be, to the extent not permitted by the "Limitation on Indebtedness and
Issuances of Preferred Stock" covenant or the "Limitation on Senior
Subordinated Indebtedness" covenant described below; provided that as to
any Indebtedness under the Credit Agreement which exceeds the dollar
limitations set forth in clause (1) of the definition of "Credit Facility"
and any Indebtedness otherwise incurred pursuant to Credit Facilities which
exceeds the dollar limitations set forth in clause (2) of the definition of
"Credit Facility," no such violation will be deemed to exist for purposes
of this clause (3) if the lenders thereunder have obtained a legal opinion,
which legal opinion, in the case of revolving Indebtedness, will be given
on the date of the credit commitment by such lenders with respect to such
Indebtedness, to the effect that the issuance of such Indebtedness does not
violate such covenant as of such date;
(4) any repurchase, redemption or other obligation in respect of
Disqualified Stock;
(5) any Indebtedness to any employee of our company or any of our
Subsidiaries;
(6) any liability for taxes owed or owing by our company or any of our
Subsidiaries or any amounts paid or payable under any Tax Agreement; and
(7) any Trade Payables.
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"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Restricted Subsidiaries:
(1) for our most recent fiscal year, accounted for more than 10% of
the consolidated revenues of our company and our Restricted Subsidiaries;
or
(2) as of the end of such fiscal year, was the owner of more than 10%
of the consolidated assets of our company and our Restricted Subsidiaries,
all as set forth on the most recently available consolidated financial
statements of our company for such fiscal year.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, and its successors.
"Stated Maturity" means, (1) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (2) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subordinated Notes" means the promissory notes executed by Gold Coast
Hotel and Casino, a Nevada limited partnership, in an aggregate principal amount
not to exceed $2.0 million, as assumed by us.
"Subsidiary" means, with respect to any Person, any corporation,
association, business trust or other business entity of which more than 50% of
the voting power of the outstanding Voting Stock is owned, directly or
indirectly, by such Person and one or more other Subsidiaries of such Person.
"Subsidiary Guarantor" means any of our future Subsidiaries that executes a
Subsidiary Guarantee pursuant to the "Subsidiary Guarantees" covenant set forth
below, until released from that Subsidiary Guarantee in accordance with the
Indenture.
"Tax Agreement" means (1) the Tax Sharing Agreement and (2) if and for so
long as we are treated as a Pass-through Entity, any agreement among our
company, Coast Resorts and the equityholders of our company and Coast Resorts
with respect to distributions of the Tax Amount.
"Tax Amount" means, with respect to any period, the federal, state and
local tax liability of our equityholders (or, if such holder is a Pass-though
Entity, its equityholders), assuming maximum rates, in respect of their direct
or indirect interests in our company for such period plus any additional amounts
payable to such equityholders to cover taxes arising from ownership of such
equity interests.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement dated
January 30, 1996, among us, Coast Resorts and Coast West, Inc., as in existence
on the date of the Indenture.
"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United
States of America or any agency thereof;
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(2) demand deposit accounts, time deposit accounts, certificates of
deposit and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50.0 million or the foreign currency equivalent thereof and
unless such accounts, certificates or deposits are fully insured by the
FDIC has outstanding debt which is rated "A," or such similar equivalent
rating, or higher by at least one nationally recognized statistical rating
organization as defined in Rule 436 under the Securities Act or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) commercial paper, maturing not more than one year after the date
of acquisition, issued by a corporation, other than an Affiliate of our
company, organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-2" or higher according to Moody's or "A-2" or higher
by S&P;
(5) securities with maturities of one year or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or Moody's; and
(6) other dollar denominated securities issued by any Person
incorporated in the United States rated at least "A" or the equivalent by
S&P or at least "A2" or the equivalent by Moody's and in each case either
(A) maturing not more than one year after the date of acquisition or (B)
which are subject to a repricing arrangement such as a Dutch auction not
more than one year after the date of acquisition and reprices at least
yearly thereafter which the Person making the investment believes in good
faith will permit such Person to sell such security at par in connection
with such repricing mechanism.
"The Orleans" means The Orleans Hotel and Casino.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of our Restricted Subsidiaries
arising in the ordinary course of business in connection with the acquisition of
goods or services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by our company or any of our Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means:
(1) any of our Subsidiaries that are designated an Unrestricted
Subsidiary by our Board of Directors in the manner provided below; and
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(2) any Subsidiary of an Unrestricted Subsidiary.
Our Board of Directors may designate any Restricted Subsidiary, including
any newly acquired or newly formed Subsidiary of our company, to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, our company or any Restricted
Subsidiary; provided that:
(1) any Guarantee by our company or any Restricted Subsidiary of any
Indebtedness of the Subsidiary being so designated will be deemed an
"Incurrence" of such Indebtedness and an "Investment" by our company or
such Restricted Subsidiary, or both, if applicable at the time of such
designation;
(2) either (I) the Subsidiary to be so designated has total assets of
$1,000 or less or (II) if such Subsidiary has assets greater than $1,000,
such designation would be permitted under the "Restricted Payments"
covenant described below; and (III) if applicable, the "Incurrence" of
Indebtedness and the "Investment" referred to in clause (1) of this proviso
would be permitted under the "Limitation on Indebtedness and Issuances of
Preferred Stock" and "Restricted Payments" covenants described below.
Our Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that:
(1) no Default or Event of Default will have occurred and be
continuing at the time of or after giving effect to such designation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such
time, have been permitted to be Incurred (and will be deemed to have been
Incurred) for all purposes of the Indenture.
Any such designation by the Board of Directors will be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.
"Voting Stock" means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned Restricted Subsidiary" means, with respect to any Subsidiary
of any Person, the ownership of all of the outstanding Capital Stock of such
Subsidiary, other than any director's qualifying shares, by such Person or one
or more Wholly Owned Restricted Subsidiaries of such Person.
COVENANTS
LIMITATION ON INDEBTEDNESS AND ISSUANCES OF PREFERRED STOCK
We will not, and will not permit any of our Restricted Subsidiaries to
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness or issue any shares of Disqualified
Stock or, in the case of any Restricted Subsidiary, issue any shares of
preferred stock; provided that we or any of our Restricted Subsidiaries may
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Incur Indebtedness and our company may issue Disqualified Stock if, after giving
effect to the Incurrence of such Indebtedness or the issuance of such
Disqualified Stock, in each case after the receipt and application of the
proceeds therefrom, the Interest Coverage Ratio would be greater than 2.0:1.
Notwithstanding the foregoing, we and any of our Restricted Subsidiaries,
except as specified below, may Incur each and all of the following:
(1) Indebtedness under the Credit Facility; provided that the
aggregate principal amount of all Indebtedness outstanding pursuant to this
clause (1) does not exceed $200.0 million;
(2) Indebtedness owed (A) by a Restricted Subsidiary to us or (B) by
us or a Restricted Subsidiary to any Restricted Subsidiary; provided that
any event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness,
other than to us or another Restricted Subsidiary, will be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by
this clause (2);
(3) Indebtedness issued in exchange for, or the net proceeds of which
are used to refinance or refund, then outstanding Indebtedness, other than
Indebtedness Incurred under clause (1), (2), (4), (7), (8) or (9) of this
paragraph, and any refinancings thereof in an amount not to exceed the
amount so refinanced or refunded plus premiums, accrued interest, fees and
expenses; provided that net proceeds of which are used to refinance or
refund the exchange notes or Indebtedness that is equal with, or
subordinated in right of payment to, the exchange notes will only be
permitted under this clause (3) if:
(A) in case the exchange notes are refinanced in part or the
Indebtedness to be refinanced is equal with the exchange notes, such new
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made equal with, or subordinate in right of payment to, the
remaining exchange notes;
(B) in case the Indebtedness to be refinanced is subordinated in
right of payment to the exchange notes, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which
such new Indebtedness is issued or remains outstanding, is expressly
made subordinate in right of payment to the exchange notes at least to
the extent that the Indebtedness to be refinanced is subordinated to the
exchange notes; and
(C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity
of the Indebtedness to be refinanced or refunded, and the Average Life
of such new Indebtedness is at least equal to the remaining Average Life
of the Indebtedness to be refinanced or refunded;
and provided further that in no event may our Indebtedness that is equal
with or subordinated in right of payment to the exchange notes be
refinanced by means of any Indebtedness of any Restricted Subsidiary
pursuant to this clause (3);
(4) Indebtedness (A) in respect of performance, surety or appeal
bonds, completion guarantees or similar instruments provided in the
ordinary course of business, (B) under Currency Agreements and Interest
Rate Agreements; provided
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that such agreements (I) are designed solely to protect us or our
Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates and (II) do not increase the Indebtedness of the
obligor outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or interest rates or by reason of fees,
indemnities and compensation payable thereunder; or (C) arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds
or performance bonds securing any obligations of our company or any of our
Restricted Subsidiaries pursuant to such agreements, in any case Incurred
in connection with the disposition of any business, assets or Restricted
Subsidiary, other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition, in a principal
amount not to exceed the gross proceeds actually received by us or any
Restricted Subsidiary in connection with such disposition;
(5) Our Indebtedness, to the extent the net proceeds thereof are
promptly (A) used to purchase exchange notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the exchange notes as described below under "-- Legal Defeasance
and Covenant Defeasance;"
(6) Indebtedness outstanding under Permitted FF&E Financings which are
either (x) Non-Recourse Indebtedness of our company and our Restricted
Subsidiaries or (y) limited in principal amount, including all refinancings
and replacements thereof, to $10.0 million at any one time outstanding
secured by Liens described in clause (7) of the definition of "Permitted
Liens;"
(7) Indebtedness evidenced by letters of credit or similar instruments
issued in the ordinary course of business of our company or any Restricted
Subsidiary including any such instrument to secure workers' compensation or
other insurance coverage or security or lease deposits;
(8) Indebtedness, in addition to Indebtedness permitted under clauses
(1) through (7) above and (9) through (12) below, in an aggregate principal
amount outstanding at any time not to exceed $15.0 million;
(9) obligations under letters of credit, bonds and other surety
arrangements posted by us or any of our Subsidiaries in order to prevent
the loss or material impairment of or to obtain a Gaming License or as
otherwise required by an order of any Gaming Authority or by applicable law
or regulation and consistent in character and amount with industry
practice;
(10) Our Indebtedness and Guarantees thereof by our Subsidiaries that
are Guarantors Incurred to finance the expansion or refurbishment of an
Existing Casino, provided the aggregate principal amount of such
Indebtedness at any time outstanding, together with any Indebtedness
applied to the refinancing thereof, does not exceed the lesser of $20.0
million or 80% of the aggregate Project Costs of such expansion or
refurbishment;
(11) following the date on which the New Casino is operating, our
Indebtedness and Guarantees thereof by our Subsidiaries that are Guarantors
Incurred to finance the expansion or refurbishment of an Existing Casino,
provided the aggregate principal amount of such Indebtedness at any time
outstanding, together with any Indebtedness
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applied to the refinancing thereof, does not exceed the lesser of $30.0
million or 80% of the aggregate Project Costs of such expansion or
refurbishment; and
(12) the Guarantee by us or any of our Restricted Subsidiaries of our
Indebtedness or any of our Restricted Subsidiaries that was permitted to be
incurred by another provision of this covenant.
Notwithstanding any other provision of this "Limitation on Indebtedness and
Issuances of Preferred Stock" covenant, the maximum amount of Indebtedness that
we or a Restricted Subsidiary may Incur pursuant to this "Limitation on
Indebtedness and Issuances of Preferred Stock" covenant will not be deemed to be
exceeded, with respect to any outstanding Indebtedness, due solely to the result
of fluctuations in the exchange rates of currencies.
For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness and Issuances of Preferred Stock" covenant,
(1) Indebtedness Incurred under the Credit Facility first will be
treated as Incurred pursuant to clause (1) of the second paragraph of this
"Limitation on Indebtedness and Issuances of Preferred Stock" covenant to
the full extent of Indebtedness permitted under such clause, it being
understood that additional Indebtedness under the Credit Facility may be
incurred to the full extent permitted under any other provision of the
Indenture;
(2) Guarantees, Liens or obligations with respect to letters of credit
supporting Indebtedness otherwise included in the determination of such
particular amount will not be included; and
(3) any Liens granted pursuant to the equal and ratable provisions
referred to in the "Liens" covenant described below will not be treated as
Indebtedness.
For purposes of determining compliance with this "Limitation on Indebtedness and
Issuances of Preferred Stock" covenant, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, other than Indebtedness referred to in clause
(1) of the preceding sentence, we, in our sole discretion, will classify, and
from time to time may reclassify, such item of Indebtedness and only be required
to include the amount and type of such Indebtedness in one of such clauses.
NO SENIOR SUBORDINATED INDEBTEDNESS
We will not Incur any Indebtedness that is subordinate in right of payment
to any Senior Indebtedness unless such Indebtedness is equal with, or
subordinated in right of payment to, the exchange notes. No Guarantor will Incur
any Indebtedness that is subordinate in right of payment to any Senior
Indebtedness of such Guarantor unless such Indebtedness is equal with, or
subordinated in right of payment to, the Parent Guarantee or Subsidiary
Guarantee, as the case may be, executed by such Guarantor.
LIENS
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, except
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Permitted Liens, unless the exchange notes and the Subsidiary Guarantees are
secured on an equal and ratable basis with the Indebtedness secured.
RESTRICTED PAYMENTS
We will not, and will not permit any Restricted Subsidiary to, directly or
indirectly:
(1) declare or pay any dividend or make any distribution on or with
respect to our company's or any Restricted Subsidiaries' Capital Stock,
other than (A) dividends or distributions payable solely in shares of its
Capital Stock other than Disqualified Stock or in options, warrants or
other rights to acquire shares of such Capital Stock and (B) pro rata
dividends or distributions on Common Stock of Restricted Subsidiaries held
by minority stockholders, held by Persons other than us or any of our
Restricted Subsidiaries;
(2) purchase, redeem, retire or otherwise acquire for value any shares
of Capital Stock of (A) our company, including options, warrants or other
rights to acquire such shares of Capital Stock, held by any Person or (B) a
Restricted Subsidiary, including options, warrants or other rights to
acquire such shares of Capital Stock, held by any of our Affiliates, other
than a Restricted Subsidiary, or any holder or any Affiliate of such holder
of 5% or more of our Capital Stock;
(3) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of our Indebtedness that is subordinated in right of
payment to the exchange notes or the Subsidiary Guarantees, except a
payment of interest or principal at the Stated Maturity thereof; or
(4) make any Investment, other than a Permitted Investment, in any
Person, such payments or any other actions described in clauses (1) through
(4) above being collectively "Restricted Payments"
if, at the time of, and after giving effect to, the proposed Restricted
Payment:
(A) a Default or Event of Default will have occurred and be
continuing;
(B) we could not Incur at least $1.00 of Indebtedness under the first
paragraph of the "Limitation on Indebtedness and Issuances of Preferred
Stock" covenant; or
(C) the aggregate amount of all Restricted Payments, that is, the
amount of any Restricted Payment with a fair market value in excess of $1.0
million, if other than in cash, to be determined in good faith by the Board
of Directors, whose determination will be conclusive and evidenced by a
Board Resolution, made after the Closing Date will exceed the sum of:
(I) 50% of the aggregate amount of the Adjusted Consolidated Net
Income or, if the Adjusted Consolidated Net Income is a loss, minus 100%
of the amount of such loss, determined by excluding income resulting
from transfers of assets by us or a Restricted Subsidiary to an
Unrestricted Subsidiary, accrued on a cumulative basis during the period
taken as one accounting period beginning on January 1, 1999 and ending
on the last day of the last fiscal quarter preceding the Transaction
Date for which reports have been filed with the Commission or provided
to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant; plus
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(II) the aggregate Net Cash Proceeds received by us after the
Closing Date from the issuance and sale permitted by the Indenture of
our Capital Stock, other than Disqualified Stock, to a Person who is not
our Subsidiary, including an issuance or sale permitted by the Indenture
of our Indebtedness for cash subsequent to the Closing Date upon the
conversion of such Indebtedness into Capital Stock, other than
Disqualified Stock, of our company, or from the issuance to a Person who
is not our Subsidiary of any options, warrants or other rights to
acquire our Capital Stock, in each case, exclusive of any Disqualified
Stock or any options, warrants or other rights that are redeemable at
the option of the holder, or are required to be redeemed, prior to the
Stated Maturity of the exchange notes; plus
(III) 100% of the aggregate capital contributions from Coast
Resorts; plus
(IV) an amount equal to the net reduction in Investments, other
than reductions in Permitted Investments, in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to us or any
Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment except, in each case, to the extent any such payment or
proceeds are included in the calculation of Adjusted Consolidated Net
Income, or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries, valued in each case as provided in the
definition of "Investments," not to exceed, in each case, the amount of
Investments previously made by us or any Restricted Subsidiary in such
Person or Unrestricted Subsidiary.
The foregoing provision will not be violated by reason of:
(1) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;
(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the exchange notes including premium, if any, and accrued and
unpaid interest, with the proceeds of, or in exchange for, Indebtedness
Incurred under clause (3) of the second paragraph of the "Limitation on
Indebtedness and Issuances of Preferred Stock" covenant;
(3) the repurchase, redemption or other acquisition of Capital Stock
of our company or a Restricted Subsidiary, or options, warrants or other
rights to acquire such Capital Stock, in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital
Stock, other than Disqualified Stock, of our company or of Coast Resorts to
the extent the net proceeds thereof are contributed to us, or options,
warrants or other rights to acquire such Capital Stock;
(4) the redemption or repurchase and the payment of dividends by us to
Coast Resorts to fund any redemption or repurchase by Coast Resorts of any
debt or equity securities of our company, any Restricted Subsidiary or
Coast Resorts required by, and in accordance with, any order of any Gaming
Authority, provided that we have used our reasonable best efforts to effect
a disposition of such securities to a third-party and has been unable to do
so;
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(5) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness of
our company or a Restricted Subsidiary which is subordinated in right of
payment to the exchange notes or the Subsidiary Guarantee executed by such
Restricted Subsidiary in exchange for, or out of the proceeds of, a
substantially concurrent offering of, shares of the Capital Stock, other
than Disqualified Stock, us or of Coast Resorts to the extent the net
proceeds thereof are contributed to us or of Coast Resorts to the extent
the net proceeds thereof are contributed to us, or options, warrants or
other rights to acquire such Capital Stock;
(6) dividends or other payments to Coast Resorts in an aggregate
amount not to exceed $500,000 per fiscal year to pay accounting, legal,
corporate reporting and other administrative expenses of Coast Resorts in
the ordinary course of business;
(7) payments or distributions to dissenting stockholders and the
payment of dividends by us to Coast Resorts to fund any such payments
pursuant to applicable law pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the
provisions of the Indenture applicable to mergers, consolidations and
transfers of all or substantially all of the property and assets of our
company or Coast Resorts;
(8) payments of amounts required for any repurchase, redemption,
retirement or other acquisition of any Capital Stock of our company or
Coast Resorts and the payment of dividends by our company to Coast Resorts
to fund any such payments or any options or rights to acquire such Capital
Stock of our company or Coast Resorts owned by any director, officer or
employee of our company or our Subsidiaries pursuant to any management
equity subscription agreement, stock option agreement or similar agreement,
or otherwise upon the death, disability, retirement or termination of
employment or departure from our company; provided that the aggregate price
paid for all such repurchased, redeemed, retired or acquired Capital Stock
of our company or options will not exceed in the aggregate $2.0 million;
(9) Investments in any Person so long as such Person is engaged in a
line of business in which we are permitted to be engaged pursuant to the
covenant described under "-- Covenants -- Line of Business" in an aggregate
amount not to exceed $15.0 million;
(10) Restricted Payments up to an amount equal to the Barbary Excess
Net Cash Proceeds;
(11) payments for the repurchase, redemption, retirement, defeasance
or other acquisition of any of the Subordinated Notes in an aggregate
amount not to exceed $2.0 million;
(12) Permitted Tax Distributions;
(13) dividends or other payments and the payments of dividends by us
to Coast Resorts to fund any such payments to the former partners of the
Gold Coast Hotel and Casino, a Nevada partnership, or the Barbary Coast
Hotel and Casino, a Nevada partnership, in an aggregate amount not to
exceed $1.5 million to pay income tax liability incurred as such partners
and assessed after the date of the Indenture; or
(14) Restricted Payments in an aggregate amount not to exceed $15.0
million.
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provided that, except in the case of clauses (1), (4), (7), (8) and (13), no
Default or Event of Default will have occurred and be continuing or occur as a
consequence of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph,
other than the Restricted Payment referred to in clause (2), (6), (12) and (13)
thereof and an exchange of Capital Stock for Capital Stock or Indebtedness
referred to in clause (3) or (5) thereof, and the Net Cash Proceeds from any
issuance of Capital Stock referred to in clauses (3) and (5), will be included
in calculating whether the conditions of clause (C) of the first paragraph of
this "Restricted Payments" covenant have been met with respect to any subsequent
Restricted Payments.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
We will not, and will not permit any Restricted Subsidiary to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by
us or any other Restricted Subsidiary;
(2) pay any Indebtedness owed to us or any other Restricted
Subsidiary;
(3) make loans or advances to us or any other Restricted Subsidiary;
or
(4) transfer any of its property or assets to us or any other
Restricted Subsidiary.
The foregoing provisions will not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date in the Credit Agreement, the
Indenture or any other agreements in effect on the Closing Date, and any
modifications, extensions, refinancings, renewals, substitutions or
replacements of such agreements; provided that the encumbrances and
restrictions in any such modifications, extensions, refinancings, renewals,
substitutions or replacements are no less favorable in any material respect
to the Holders than those encumbrances or restrictions that are then in
effect and that are being modified, extended, refinanced, renewed,
substituted or replaced;
(2) contained in any Indebtedness incurred under an agreement
described in clause (2)(B)(i) of the definition of "Credit Facility" and
any modifications, extensions, refinancings, renewals, substitutions or
replacements of such agreement; provided that the encumbrances and
restrictions in any such modifications, extensions, refinancings, renewals,
substitutions or replacements are no less favorable in any material respect
to the Holders than those encumbrances or restrictions that are then in
effect in such agreement;
(3) existing under or by reason of applicable law;
(4) contained in any agreement so long as such encumbrances and
restrictions are no more restrictive than those contained in the Indenture;
(5) existing with respect to any Person or the property or assets of
such Person acquired by us or any Restricted Subsidiary, existing at the
time of such acquisition and not incurred in contemplation thereof, which
encumbrances or restrictions are not
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applicable to any Person or the property or assets of any Person other than
such Person or the property or assets of such Person so acquired;
(6) in the case of clause (4) of the first paragraph of this "Dividend
and Other Payment Restrictions Affecting Restricted Subsidiaries" covenant,
(A) that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any
transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of our company or any Restricted Subsidiary
not otherwise prohibited by the Indenture, (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do
not, individually or in the aggregate, detract from the value of property
or assets of our company or any Restricted Subsidiary in any manner
material to our company or any Restricted Subsidiary, (D) existing by
reason of customary provisions in leases entered into in the ordinary
course of business or (E) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other
similar agreements entered into in the ordinary course of business.
(7) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary;
(8) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if (A) the encumbrance or
restriction applies only in the event of any default contained in such
Indebtedness or agreement, (B) the encumbrance or restriction is not
materially more disadvantageous to the Holders of the exchange notes than
is customary in comparable financings and (C) we believe that any such
encumbrance or restriction will not materially affect our company's ability
to make principal or interest payments on the exchange notes.
Nothing contained in this "Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant will prevent us or any Restricted
Subsidiary from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in the "Liens" covenant or (2) restricting the sale or
other disposition of property or assets of our company or any of our Restricted
Subsidiaries that secure Indebtedness of our company or any of our Restricted
Subsidiaries.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF WHOLLY OWNED RESTRICTED
SUBSIDIARIES
We will not, and will not permit any Restricted Subsidiary, to transfer,
sell, convey or otherwise dispose of any shares of Capital Stock of a Wholly
Owned Restricted Subsidiary, including options, warrants or other rights to
purchase shares of such Capital Stock, other than to us or one of our Wholly
Owned Restricted Subsidiaries unless:
(1) such transfer, sale, conveyance or disposition is of all of the
Capital Stock of such Wholly Owned Subsidiary; and
(2) the Net Cash Proceeds of any such transfer, sale, conveyance or
disposition are applied in accordance with clause (A) or (B) of the "Asset
Sales" covenant described below.
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In addition, we will not permit any of our Wholly Owned Restricted
Subsidiary to issue any Capital Stock, other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares, to any Person other
than us or any of our Wholly Owned Restricted Subsidiaries.
SUBSIDIARY GUARANTEES
If a Restricted Subsidiary acquired or created after the date of the
Indenture has at any time a Fair Market Value of more than $250,000, then that
Restricted Subsidiary must execute a Subsidiary Guarantee and deliver an opinion
of counsel, in accordance with the terms of the Indenture pursuant to which such
Subsidiary will become a Subsidiary Guarantor, on a senior subordinated basis
pursuant to subordination provisions substantially similar to those described
above under the caption "-- Subordination," of our payment obligations under the
exchange notes and the Indenture; provided that the aggregate Fair Market Value
of our Restricted Subsidiaries that are not Subsidiary Guarantors will not at
any time exceed $1.0 million.
REDEMPTION OF THE OLD FIRST MORTGAGE NOTES
On December 15, 2000, we will redeem any Old First Mortgage Notes then
outstanding.
CONSTRUCTION OF THE NEW CASINO
Simultaneously with the closing of any transaction pursuant to which we may
incur the Indebtedness referred to in clause (2) of the definition of "Credit
Facility", we will provide to the Trustee:
(1) a budget setting forth in reasonable detail all amounts to be
expended in connection with the development, construction and opening the
New Casino;
(2) an Officers' Certificate certifying that to best of their
knowledge after due inquiry;
(A) based upon our internal projections, we have sufficient funds,
together with funds available under the Credit Facility, to cause the
New Casino to be completed and operating within 21 months of the closing
of any transaction pursuant to which we may incur the Indebtedness
referred to in clause (2) of the definition of "Credit Facility"; and
(B) our internal projections with respect to the development,
construction and opening of the New Casino are reasonable.
TRANSACTIONS WITH AFFILIATES
Our company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction; including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service; with any Affiliate of our company or any
Restricted Subsidiary, unless:
(1) such transaction is on fair and reasonable terms no less favorable
to us or such Restricted Subsidiary than could be obtained, at the time of
such transaction or,
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if such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate; and
(2) we deliver to the Trustee:
(a) with respect to any transaction or series of related
transactions the aggregate amount of which exceeds $2.0 million in
value, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such transaction complies with this covenant
and has been approved by a majority of the Independent Directors; and
(b) with respect to any transaction or series of related
transactions the aggregate amount of which exceeds $5.0 million in
value, a written opinion of a nationally recognized accounting,
appraisal or investment banking firm stating that the transaction is
fair to us or such Restricted Subsidiary from a financial point of view.
The foregoing limitation does not limit, and will not apply to:
(1) any employment or related agreement or arrangement entered into by
us or any of our Subsidiaries in the ordinary course of business on terms
customary in the hotel-casino industry;
(2) transactions solely between or among us and any of our Restricted
Subsidiaries;
(3) payment of customary directors' fees and indemnities;
(4) any Restricted Payments not prohibited by the "Restricted
Payments" covenant and Investments permitted under clause (3) of the
definition of "Permitted Investments";
(5) any Tax Agreement; and
(6) in the case of clause (2)(b) of the first paragraph of this
covenant only, (i) any Construction and Design Contract approved by all of
the Independent Directors and (ii) any amounts paid pursuant to any
agreement or arrangement existing on the Closing Date between us and any of
LGT Advertising, Las Vegas Dissemination, Inc., RJS, Inc. or Nevada
Wallboards, Inc., and any renewals or replacements of any such agreement or
arrangement, in each case with terms no less favorable to our company than
those in effect on the Closing Date.
ASSET SALES
Our company will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (1) the consideration received by our company
or such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of and (2) at least 75% of the consideration received,
excluding contingent liabilities assumed by the transferee of any such assets,
consists of cash or Temporary Cash Investments or the assumption of Senior
Indebtedness of our company or a Subsidiary Guarantor, provided that we or such
Restricted Subsidiary is irrevocably released from all liability under such
Indebtedness. Within 360 days after the receipt of any Net Cash Proceeds from an
Asset Sale, other than Barbary Excess Net Cash Proceeds, we will or will cause
the relevant
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Restricted Subsidiary to (1)(A) apply an amount equal to such Net Cash Proceeds
to permanently repay Senior Indebtedness of our company or a Subsidiary
Guarantor or (B) invest an equal amount, or the amount not so applied pursuant
to clause (A) or enter into a definitive agreement committing to so invest
within 12 months after the date of such agreement, in property or assets, other
than current assets, of a nature or type or that are used in a business, or in
Capital Stock of a company having property and assets of a nature or type, or
engaged in a business, similar or related to the nature or type of the property
and assets of, or the business of, our company and our Restricted Subsidiaries
existing on the date of such investment and (2) no later than the end of the
12-month period referred to in clause (1), apply such excess Net Cash Proceeds,
to the extent not applied pursuant to clause (1), as provided in the following
paragraph of this "Asset Sales" covenant. The amount of such excess Net Cash
Proceeds required to be applied or to be committed to be applied during such
12-month period as set forth in clause (1) of the preceding sentence and not
applied as so required by the end of such period will constitute "Excess
Proceeds." Pending application of such Net Cash Proceeds by the end of the
relevant period, we and our Restricted Subsidiaries may use such Net Cash
Proceeds to temporarily repay revolving Indebtedness.
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Asset Sales" covenant totals at least $10.0 million, we must commence, not
later than the fifteenth Business Day of such month, an Offer to Purchase to the
Holders and, to the extent required by the terms of any Pari Passu Indebtedness,
an Offer to Purchase to all holders of such Pari Passu Indebtedness, the maximum
principal amount of exchange notes and any such Pari Passu Indebtedness that may
be purchased out of the Excess Proceeds, at an offer price equal to 100% of the
principal amount thereof, plus, in each case, accrued and unpaid interest and
Additional Interest, if any, to the Payment Date. If the aggregate principal
amount of exchange notes and any such Pari Passu Indebtedness tendered by
holders thereof exceeds the amount of Excess Proceeds, the exchange notes and
Pari Passu Indebtedness will be purchased on a pro rata basis. Upon the
completion of any such Offers to Purchase, the amount of Excess Proceeds will be
reset at zero.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
We must commence, within 20 days of the occurrence of a Change of Control,
and thereafter consummate an Offer to Purchase for all Notes then outstanding,
at a purchase price equal to 101% of the principal amount thereof, plus accrued
interest and Additional Interest, if any, to the Payment Date.
There can be no assurance that we will have sufficient funds available at
the time of any Change of Control to make any debt payment, including
repurchases of exchange notes, required by the foregoing covenant, as well as
may be contained in other securities of our company which might be outstanding
at the time. The above covenant requiring us to repurchase the exchange notes
will, unless consents are obtained, require us to repay all indebtedness then
outstanding, including indebtedness under the Credit Agreement, which by its
terms would prohibit the exchange note repurchase, either prior to or
concurrently with the exchange note repurchase.
We will not be required to make an Offer to Purchase pursuant to this
covenant if a third party makes an Offer to Purchase in compliance with this
covenant and repurchases all exchange notes validly tendered and not withdrawn
under such Offer to Purchase.
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INDEPENDENT DIRECTORS
We and Coast Resorts will each cause its Board of Directors to include at
least two Independent Directors at all times.
LINE OF BUSINESS
We will not, and will not permit any Subsidiary which, for our most recent
fiscal year, accounted for more than 10% of the consolidated revenues of our
company and our Subsidiaries or was the owner of more than 10% of the
consolidated assets of our company and our Subsidiaries in each case as set
forth on our most recently available consolidated financial statements for the
fiscal year to, engage in any business other than the gaming and hotel
businesses and such business activities as are incidental or related or
complementary thereto.
PAYMENTS FOR CONSENT
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the exchange notes unless such
consideration is offered to be paid and is paid to all Holders that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
COMMISSION REPORTS AND REPORTS TO HOLDERS
Whether or not required by the rules and regulations of the Commission, so
long as any exchange notes are outstanding, we will furnish to the Holders:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if we were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report thereon by our
certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if we were required to file such reports.
If we have designated any of our Subsidiaries as Unrestricted Subsidiaries,
then the quarterly and annual financial information required by the preceding
paragraph will include a reasonably detailed presentation, either on the face of
the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of our company and our Restricted
Subsidiaries separate from the financial condition and results of operations of
our Unrestricted Subsidiaries.
In addition, whether or not required by the rules and regulations of the
Commission, we will file a copy of all such information and reports referred to
in clauses (1) and (2) above with the Commission for public availability (unless
the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. In
addition, we have agreed that, for so long as any exchange notes remain
outstanding, we will furnish to the Holders and to securities analysts and
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prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Additional Interest, if any, with respect to, the exchange notes, whether
or not prohibited by the subordination provisions of the Indenture;
(2) default in payment when due of the principal of or premium, if
any, on the exchange notes, whether or not prohibited by the subordination
provisions of the Indenture;
(3) failure by us or any of our Subsidiaries to comply with the
provisions described under the captions "Covenants -- Merger, Consolidation
or Sale of Assets," "Repurchase of Notes Upon a Change of Control,"
"-- Asset Sales," "-- Restricted Payments" or "-- Limitation on
Indebtedness and Issuances of Preferred Stock";
(4) failure by us or any of our Restricted Subsidiaries for 45 days
after notice to comply with any of the other agreements in the Indenture;
(5) the occurrence with respect to any issue or issues of Indebtedness
of our company or any Significant Subsidiary having an outstanding
principal amount of $5.0 million or more in the aggregate for all such
issues or all such Persons, whether such Indebtedness now exists or will
hereafter be created, of (a) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration or (b) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment will not
have been made, waived or extended within 30 days of such payment default;
(6) failure by us or any of our Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days;
(7) except as permitted by the Indenture, the Parent Guarantee or any
Subsidiary Guarantee will be held in any judicial proceeding to be
unenforceable or invalid or will cease for any reason to be in full force
and effect or any Guarantor, or any Person acting on behalf of any
Guarantor, will deny or disaffirm its obligations under its Parent
Guarantee or Subsidiary Guarantee, as the case may be;
(8) the revocation, termination, suspension or other cessation of
effectiveness for a period of more than 90 consecutive days of any Gaming
License that results in the cessation or suspension of gaming operations or
any Liquor License that results in the cessation or suspension of the
ability to serve liquor, in each case at any of The Orleans, Gold Coast,
Barbary Coast, or New Casino (after it begins operations); provided that we
may relinquish a Gaming License or Liquor License with respect to any of
our hotel casinos other than The Orleans, the Gold Coast or the New Casino
if such relinquishment is, in the reasonable, good faith judgment of our
Board of Directors or the Restricted Subsidiary, as applicable, both
desirable in the conduct of
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the business of our company and its Restricted Subsidiaries, taken as a
whole, and not disadvantageous in any material respect to the Holders; and
(9) certain events of bankruptcy or insolvency with respect to us or
any of our Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding exchange
notes may declare all the exchange notes to be due and payable immediately. In
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to our company, any Restricted Subsidiary that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding exchange
notes will become due and payable immediately without further action or notice.
Holders may not enforce the Indenture or the exchange notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding exchange notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing Default or Event of Default, except a Default
or Event of Default relating to the payment of principal or interest, if it
determines that withholding notice is in their interest.
At any time after a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in principal amount of the exchange notes, by written
notice to our company and the Trustee, may rescind and annul such declaration
and its consequences if all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on, all such exchange notes that
have become due solely by such declaration of acceleration, have been cured or
waived and the rescission would not conflict with any judgment, order or decree
of any court of competent jurisdiction.
The Holders of at least a majority in aggregate principal amount of the
outstanding exchange notes may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability or that the Trustee determines in good faith may be unduly
prejudicial to the rights of Holders not joining in the giving of such direction
and may take any other action it deems proper that is not inconsistent with any
such direction received from Holders.
A Holder may not pursue any remedy with respect to the Indenture or the
exchange notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in aggregate principal amount of
outstanding exchange notes make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to
the Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
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(5) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding exchange notes do not give the Trustee
a direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder to
receive payment of the principal of or premium, if any, or interest on, such
Note or to bring suit for the enforcement of any such payment, on or after the
due date expressed in the exchange notes, which right will not be impaired or
affected without the consent of the Holder.
The Holders of a majority in aggregate principal amount of the exchange
notes then outstanding, by notice to the Trustee, may on behalf of the Holders
of all of the exchange notes waive any existing Default or Event of Default and
its consequences under the Indenture, except a continuing Default or Event of
Default in the payment of the principal of or premium, if any, or interest on
the exchange notes.
We are required to deliver to the Trustee annually a statement regarding
compliance with the Indenture. Upon becoming aware of any Default or Event of
Default, we are required to deliver to the Trustee a statement specifying such
Default or Event of Default.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
We will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets, as an entirety or substantially an entirety in one transaction or a
series of related transactions, to any Person or permit any Person to merge with
or into us unless:
(1) We will be the continuing Person, or the Person, if other than us,
formed by such consolidation or into which we are merged or that acquired
or leased our property and assets will be a corporation organized and
validly existing under the laws of the United States of America or any
state or jurisdiction thereof and will expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of our obligations on
all of the exchange notes and under the Indenture;
(2) immediately after giving effect to such transaction, no Default or
Event of Default exists;
(3) immediately after giving effect to such transaction on a pro forma
basis, we or any Person becoming the successor obligor of the exchange
notes will have a Consolidated Net Worth equal to or greater than our
Consolidated Net Worth immediately prior to such transaction;
(4) immediately after giving effect to such transaction on a pro forma
basis as if the transaction had occurred at the beginning of the applicable
four-quarter period, we, or any Person becoming the successor obligor of
the exchange notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of the "Limitation on Indebtedness
and Issuances of Preferred Stock" covenant; and
(5) We will deliver to the Trustee an Officers' Certificate, attaching
the arithmetic computations to demonstrate compliance with clauses (3) and
(4), and Opinion of Counsel, in each case stating that such consolidation,
merger or transfer and such supplemental indenture complies with this
provision and that all conditions precedent provided for herein relating to
such transaction have been complied with.
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Notwithstanding the foregoing clause (3), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to us, and (b) we may merge with an Affiliate
incorporated solely for the purpose of reincorporating our company in
another jurisdiction.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding exchange notes and all obligations of
each Guarantor discharged with respect to its Parent Guarantee or Subsidiary
Guarantee, as the case may be ("Legal Defeasance") except for:
(1) the rights of Holders of outstanding exchange notes to receive
payments in respect of the principal of, premium, if any, and interest and
Additional Interest, if any, on such exchange notes when such payments are
due from the trust referred to below;
(2) our obligations with respect to the exchange notes concerning
issuing temporary exchange notes, registration of the exchange notes,
mutilated, destroyed, lost or stolen exchange notes and the maintenance of
an office or agency for payment and money for security payments held in
trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and our obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, we may, at our option and at any time, elect to have the
obligations of our company and each Guarantor released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with those covenants will not constitute a
Default or Event of Default with respect to the exchange notes. In the event
Covenant Defeasance occurs, certain events, not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events, described under
"Events of Default" will no longer constitute an Event of Default with respect
to the exchange notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) we must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
and Additional Interest, if any, on the outstanding exchange notes on the
stated maturity or on the applicable redemption date, as the case may be,
and we must specify whether the exchange notes are being defeased to
maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, we will have delivered to the
Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that (a) we have received from, or there has been published by,
the Internal Revenue Service a ruling or (b) since the date of the
Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel will confirm that, the Holders of the outstanding exchange notes
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will not recognize income, gain or loss for federal income tax purposes as
a result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, we will have delivered to the
Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding exchange notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default will have occurred and be
continuing either: (A) on the date of such deposit, other than a Default or
Event of Default resulting from the borrowing of funds to be applied to
such deposit, or (B) insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit and receipt of good and readily
available funds;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument, other than the Indenture, to which we or any of
our Restricted Subsidiaries is a party or by which we or any of our
Restricted Subsidiaries are bound;
(6) we must have delivered to the Trustee an opinion of counsel to the
effect that, subject to customary assumptions and exclusions, after the
91st day following the deposit and receipt of good and readily available
funds, the trust funds will not be part of any "estate" formed by the
bankruptcy or reorganization of our company or subject to the "automatic
stay" under the Bankruptcy Code or, in the case of Covenant Defeasance,
will be subject to a first priority perfected Lien in favor of the trustee
for the benefit of the Holders;
(7) we must deliver to the Trustee an Officers' Certificate stating
that the deposit was not made by us with the intent of preferring the
Holders over our other creditors or with the intent of defeating,
hindering, delaying or defrauding creditors of our company or others; and
(8) we must deliver to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect, except as to:
(1) surviving rights of registration of transfer or exchange of the
exchange notes;
(2) covenants relating to payment of the exchange notes, maintenance
of an office or agency of our company in New York City, waiver of stay,
extension and usury laws by our company and the Guarantors and corporate
existence of our company;
(3) provisions regarding reinstatement of the Indenture in certain
circumstances; and
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(4) Coast Resorts' obligations under the Parent Guarantee and the
obligations of any Subsidiary Guarantor under its Subsidiary Guarantee and
the Trustee, at our expense, will execute proper instruments acknowledging
satisfaction and discharge of the Indenture when:
(a) either:
(i) all the exchange notes theretofore authenticated and
delivered, other than destroyed, lost or stolen exchange notes that
have been replaced or paid and exchange notes that are subject to
defeasance as described under "-- Legal Defeasance and Covenant
Defeasance," have been delivered to the Trustee for cancellation;
or
(ii) all exchange notes not theretofore delivered to the
Trustee for cancellation (A) have become due and payable, (B) will
become due and payable at maturity within 45 days or (C) are to be
called for redemption within 45 days under arrangements
satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and our expense, and we have
irrevocably deposited or caused to be deposited with the Trustee
funds in trust for such purpose, together with a statement by us
that such deposit is irrevocable, in an amount sufficient to pay
and discharge the entire Indebtedness on the exchange notes not
theretofore delivered to the Trustee for cancellation, for
principal, and premium, if any, on, and interest and Additional
Interest, if any, on the exchange notes to the date of such
deposit, in case of exchange notes that have become due and
payable, or to the Stated Maturity or redemption date, as the case
may be;
(b) we have paid or caused to be paid all sums payable under the
Indenture by us; and
(c) we and each Guarantor have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided in the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided below, the Indenture, the exchange notes, the Parent
Guarantee or any Subsidiary Guarantee may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the
exchange notes then outstanding. This includes, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, the exchange notes. Any existing default or compliance with any provision
of the Indenture, the exchange notes, the Parent Guarantee or any Subsidiary
Guarantee may also be waived with the consent of the Holders of a majority in
principal amount of the exchange notes then outstanding, again including
consents obtained in connection with a tender offer or exchange offer for the
exchange notes.
Without the consent of each Holder affected, an amendment or waiver may not
with respect to any exchange notes held by a non-consenting Holder:
(1) reduce the principal amount of exchange notes whose Holders must
consent to an amendment, supplement or waiver;
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(2) reduce the principal of or change the fixed maturity of any
exchange note or alter the provisions with respect to the redemption of the
exchange notes, other than provisions relating to the covenants described
above under the captions "Covenants -- Repurchase of Exchange Notes Upon a
Change in Control" and "Covenants -- Asset Sales;"
(3) reduce the rate of or change the time for payment of interest on
any exchange note;
(4) waive a Default or Event of Default in the payment of principal or
premium, interest or Additional Interest, if any, on the exchange notes,
except a rescission of acceleration of the exchange notes by the Holders of
at least a majority in aggregate principal amount of the exchange notes and
a waiver of the payment default that resulted from such acceleration;
(5) make any exchange note payable in money other than that stated in
the exchange notes;
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders to receive payments of
principal of or premium, interest or Additional Interest, if any, on the
exchange notes;
(7) waive a redemption payment with respect to any exchange note,
other than a payment required by one of the covenants described above under
the captions "Covenants -- Repurchase of Exchange Notes Upon a Change in
Control" and "Covenants -- Asset Sales"; or
(8) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any Holder of
exchange notes, we and the Trustee may amend or supplement the Indenture, the
exchange notes, the Parent Guarantee or any Subsidiary Guarantee:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated exchange notes in addition to or in
place of certificated exchange notes;
(3) to provide for the assumption of our obligations to Holders in the
case of a merger or consolidation or sale of all or substantially all of
our assets;
(4) to provide for additional Subsidiary Guarantees or for the release
of a Guarantor in compliance with the Indenture;
(5) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
under the Indenture of any such Holder; or
(6) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture
Act.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
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After an amendment under the Indenture becomes effective, we are required
to mail to Holders of the exchange notes a notice briefly describing such
amendment. However, the failure of any Holder to receive such notice, or any
defect therein, will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and we may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
We are not required to transfer or exchange any exchange note selected for
redemption. Also, we are not required to transfer or exchange any exchange note
for a period of 15 days before a selection of exchange notes to be redeemed.
The registered Holder of an exchange note will be treated as the owner of
it for all purposes.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of our company
or any Guarantor, as such, will have any liability for any obligations of our
company or any Guarantor under the exchange notes, the Indenture, the Parent
Guarantee or any Subsidiary Guarantee, or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting an
exchange note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the exchange notes. The waiver may not
be effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of our company or any Guarantor, its
right to obtain payment of claims in certain cases, or to realize certain
property received as security or otherwise will be limited. The Trustee will be
permitted to engage in other transactions. However, if it acquires any
conflicting interest, it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
exchange notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default will occur and be continuing, the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder, unless such Holder will have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
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ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the Indenture and
the related registration rights agreement without charge by writing to Coast
Hotels and Casinos, Inc., 4500 West Tropicana Avenue, Las Vegas, Nevada, 89103,
Attention: Chief Financial Officer.
BOOK ENTRY; DELIVERY AND FORM
Outstanding notes offered and sold to qualified institutional buyers
("QIBs") in reliance on Rule 144A ("Rule 144A Notes") and any outstanding notes
offered and sold in offshore transactions in reliance on Regulation S
("Regulation S Notes") were issued in registered, global form in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof.
The outstanding notes issued as described below under "-- Exchange of
Book-Entry Notes for Certificated Notes" were issued in definitive form.
Outstanding notes held in definitive form are subject to certain restrictions on
transfer set forth therein and will bear the legend regarding such restrictions
set forth under the heading "Transfer Restrictions" herein.
The Rule 144A Notes are represented by one or more notes in registered,
global form without interest coupons (collectively, the "Rule 144A Global
Notes"). The Regulation S Notes are represented by one or more notes in
registered, global form without interest coupons (collectively, the "Regulation
S Global Notes" and, together with the Rule 144A Global Notes, the "Global
Notes"). The Global Notes are on deposit with the Trustee as custodian for The
Depository Trust Company ("DTC"), in New York, New York, and registered in the
name of DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC as described below. Through and including the 40th
day after the later of the commencement of the issuance of the notes and the
issue date such period through and including such 40th day, the "Restricted
Period," beneficial interests in the Regulation S Global Notes may be held only
through the Euroclear System ("Euroclear") and Cedel, S.A. ("Cedel") (as
indirect participants in DTC), unless transferred to a person that takes
delivery through a Rule 144A Global Note in accordance with the certification
requirements described below. Beneficial interests in the Rule 144A Global Notes
may not be exchanged for beneficial interests in the Regulation S Global Notes
at any time except in the limited circumstances described below. See
"-- Exchanges between Regulation S Notes and Rule 144A Notes."
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of Certificated Notes,
as defined below.
Rule 144A Notes, including beneficial interests in the Rule 144A Global
Notes, will be subject to certain restrictions on transfer and will bear a
restrictive legend as described under "Transfer Restrictions." Regulation S
Notes will also bear the legend as described under "Transfer Restrictions." In
addition, transfers of beneficial interests in the Global Notes will be subject
to the applicable rules and procedures of DTC and its direct or
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indirect participants, including, if applicable, those of Euroclear and Cedel,
which may change from time to time.
Initially, the Trustee will act as Paying Agent and Registrar. The Notes
may be presented for registration of transfer and exchange at the offices of the
Registrar.
Exchange Notes
Exchange notes issued in exchange for outstanding notes originally offered
and sold (1) to QIBs in reliance on Rule 144A under the Securities Act or (2) in
reliance on Regulation S under the Securities Act will be represented by a
single, permanent Global Note in definitive, fully registered book-entry form
(the "Exchange Global Note" and together with the Rule 144A Global Note and the
Regulation S Global Note, the "Global Notes"), which will be registered in the
name DTC, or its nominee, on behalf of persons who receive exchange notes
represented thereby for credit to the respective accounts of such persons, or to
such other accounts as they may direct at DTC.
Exchange notes issued in exchange for outstanding notes will be issued,
upon request, in fully registered form (together with the Certificated Notes,
the "Certificated Notes"), but otherwise such holders will only be entitled to
registration of their respective exchange notes in book-entry form under the
Exchange Global Note.
Depository Procedures
The following description of the operations and procedures of DTC,
Euroclear and Cedel are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. The
Company takes no responsibility for these operations and procedures and urges
investors to contact the system or their participants directly to discuss these
matters.
DTC has advised us that DTC is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers, including the Placement Agents, banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it, (1)
upon deposit of the Global Notes, DTC will credit the accounts of Participants
designated by the Placement Agents with portions of the principal amount of the
Global Notes and (2) ownership of such interests in the Global Notes will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC with respect to the Participants or by the
Participants and the Indirect Participants with respect to other owners of
beneficial interest in the Global Notes.
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Investors in the Rule 144A Global Notes may hold their interests therein
directly through DTC, if they are Participants in such system, or indirectly
through organizations, including Euroclear and Cedel, which are Participants in
such system. Investors in the Regulation S Global Notes must initially hold
their interests therein through Euroclear or Cedel, if they are participants in
such systems, or indirectly through organizations that are participants in such
systems. After the expiration of the Restricted Period (but not earlier),
investors may also hold interests in the Regulation S Global Notes through
Participants in the DTC system other than Euroclear and Cedel. Euroclear and
Cedel will hold interests in the Regulation S Global Notes on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective depositories, which are Morgan Guaranty Trust
Company of New York, Brussels office, as operator of Euroclear, and Citibank,
N.A., as operator of Cedel. All interests in a Global Note, including those held
through Euroclear or Cedel, may be subject to the procedures and requirements of
DTC. Those interests held through Euroclear or Cedel may also be subject to the
procedures and requirements of such systems. The laws of some states require
that certain persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer beneficial interests in a
Global Note to such persons will be limited to that extent. Because DTC can act
only on behalf of Participants, which in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having beneficial
interests in a Global Note to pledge such interests to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
such interests, may be affected by the lack of a physical certificate evidencing
such interests.
Except as described below, owners of interest in the Global Notes will not
have exchange notes registered in their names, will not receive physical
delivery of exchange notes in certificated form and will not be considered the
registered owners or "Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and premium, if any, Additional
Interest, if any, and interest on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, we and the Trustee will
treat the persons in whose names the exchange notes, including the Global Notes,
are registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither we, the
Trustee nor any agent of us or the Trustee has or will have any responsibility
or liability for (1) any aspect of DTC's records or any Participant's or
Indirect Participant's records relating to or payments made on account of
beneficial ownership interest in the Global Notes, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Notes or (2) any other matter relating to the actions and practices of
DTC or any of its Participants or Indirect Participants. DTC has advised us that
its current practice, upon receipt of any payment in respect of securities such
as the exchange notes, including principal and interest, is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in the principal amount of
beneficial interest in the relevant security as shown on the records of DTC,
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Trustee or
our company.
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Neither our company nor the Trustee will be liable for any delay by DTC or any
of its Participants in identifying the beneficial owners of the exchange notes,
and we and the Trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. See "-- Same Day Settlement
and Payment."
Subject to the transfer restrictions set forth under "Transfer
Restrictions," transfers between Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in same day funds, and
transfers between participants in Euroclear and Cedel will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
exchange notes described herein, cross-market transfers between the Participants
in DTC, on the one hand, and Euroclear or Cedel participants, on the other hand,
will be effected through DTC in accordance with DTC's rules on behalf of
Euroclear or Cedel, as the case may be, by its respective depositary; however,
such cross-market transactions will require delivery of instructions to
Euroclear or Cedel, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Cedel, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositories for Euroclear or Cedel.
DTC has advised us that it will take any action permitted to be taken by a
Holder only at the direction of one or more Participants to whose account DTC
has credited the interests in the Global Notes and only in respect of such
portion of the aggregate principal amount of the notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the notes, DTC reserves the right to exchange the
Global Notes for legended Notes in certificated form, and to distribute such
notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the Regulation S Global Notes and in the
Rule 144A Global Notes among Participants in DTC, Euroclear and Cedel, they are
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither our company nor the
Trustee nor any of their respective agents will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
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<PAGE> 131
Exchange of Book-Entry Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if (1) DTC (A) notifies us that it is
unwilling or unable to continue as depositary for the Global Notes and we then
fail to appoint a successor depositary or (B) has ceased to be a clearing agency
registered under the Exchange Act, (2) we, at our option, notify the Trustee in
writing that it elects to cause the issuance of the Certificated Notes or (3)
there has occurred and continues to be a Default or Event of Default with
respect to the notes. In addition, beneficial interests in a Global Note may be
exchanged for Certificated Notes upon request but only upon compliance with
procedures set forth in the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests therein will
be registered in the names, and issued in any approved denominations, requested
by or on behalf of the depositary (in accordance with its customary procedures)
and will bear the applicable restrictive legend referred to in "Transfer
Restrictions," unless we determine otherwise in compliance with applicable law.
Exchange of Certificated Notes for Book-Entry Notes
Exchange notes issued in certificated form may not be exchanged for
beneficial interests in any Global Note unless the transferor first delivers to
the Trustee a written certificate in the form provided in the Indenture to the
effect that such transfer will comply with the appropriate transfer restrictions
applicable to such notes. See "Transfer Restrictions."
Exchanges Between Regulation S Notes and Rule 144A Notes
Prior to the expiration of the Restricted Period, beneficial interests in
the Regulation S Global Note may be exchanged for beneficial interests in the
Rule 144A Global Note only if such exchange occurs in connection with a transfer
of the notes pursuant to Rule 144A and the transferor first delivers to the
Trustee a written certificate in the form provided in the Indenture to the
effect that the notes are being transferred to a person who the transferor
reasonably believes to be a QIB within the meaning of Rule 144A, purchasing for
its own account or the account of a QIB in a transaction meeting the
requirements of Rule 144A and in accordance with all applicable securities laws
of the states of the United States and other jurisdictions.
Beneficial interest in a Rule 144A Global Note may be transferred to a
person who takes delivery in the form of an interest in the Regulation S Global
Note, whether before or after the expiration of the Restricted Period, only if
the transferor first delivers to the Trustee a written certificate in the form
provided in the Indenture to the effect that such transfer is being made in
accordance with Rule 903 or 904 of Regulation S or Rule 144, if available, and
that, if such transfer occurs prior to the expiration of the Restricted Period,
the interest transferred will be held immediately thereafter through Euroclear
or Cedel.
Transfers involving an exchange of a beneficial interest in the Regulation
S Global Note for a beneficial interest in a Rule 144A Global Note or vice versa
will be effected in DTC by means of an instruction originated by the Trustee
through the DTC Deposit/ Withdraw at Custodian system. Accordingly, in
connection with any such transfer, appropriate adjustments will be made to
reflect a decrease in the principal amount of the Regulation S Global Note and a
corresponding increase in the principal amount of the Rule 144A Global Note or
vice versa, as applicable. Any beneficial interest in one of the Global Notes
that is transferred to a person who takes delivery in the form of an interest
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<PAGE> 132
in the other Global Note will, upon transfer, cease to be an interest in such
Global Note and will become an interest in the other Global Note and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to beneficial interest in such other Global Note for so
long as it remains such an interest. The policies and practices of DTC may
prohibit transfers of beneficial interests in the Regulation S Global Note prior
to the expiration of the Restricted Period.
Same Day Settlement and Payment
The Indenture requires that payments in respect of the notes represented by
the Global Notes, including principal, premium, if any, interest and Additional
Interest, if any, be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to notes in
certificated form, we will make all payments of principal, premium, if any,
interest and Additional Interest, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such Holder's registered
address. The notes represented by the Global Notes are expected to be eligible
to trade in the PORTAL market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
notes will, therefore, be required by the Depositary to be settled in
immediately available funds. The Company expects that secondary trading in any
certificated notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day,
which must be a business day for Euroclear and Cedel, immediately following the
settlement date of DTC. DTC has advised us that cash received in Euroclear or
Cedel as a result of sales of interests in a Global Note by or through a
Euroclear or Cedel participant to a Participant in DTC will be received with
value on the settlement date of DTC, but will be available in the relevant
Euroclear or Cedel cash account only as of the business day for Euroclear or
Cedel following DTC's settlement date.
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<PAGE> 133
MATERIAL FEDERAL TAX CONSIDERATIONS
The following is a general discussion of United States federal tax
consequences associated with the exchange of the outstanding notes for the
exchange notes and of the ownership and disposition of the exchange notes by an
initial beneficial owner of the exchange notes. The discussion below is based
upon current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury Regulations, judicial authority and administrative
rulings and practice, any of which may be altered with retroactive effect
thereby changing the federal tax consequences discussed below. The tax treatment
of the holders of the exchange notes may vary depending upon their particular
situations. In addition, certain other holders, including insurance companies,
tax exempt organizations, financial institutions and broker-dealers, may be
subject to special rules not discussed below. We will not seek a ruling from the
Internal Revenue Service (the "IRS") with respect to any of the matters
discussed in this prospectus and there can be no assurance that the IRS will not
challenge one or more of the tax consequences described below. PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES
FEDERAL TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF EXCHANGE NOTES,
AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY FOREIGN,
STATE, LOCAL OR OTHER TAXING JURISDICTION AND THE POSSIBLE EFFECTS ON YOU OF
CHANGES IN U.S. FEDERAL OR OTHER TAX LAWS.
THE EXCHANGE OFFER
The exchange of outstanding notes for exchange notes pursuant to this
exchange offer should not be treated as an "exchange" for United States federal
income tax purposes because the exchange notes will not be considered to differ
materially in kind or extent from the outstanding notes. Rather, any exchange
notes received by you should be treated as a continuation of your investment in
the outstanding notes. As a result, there should be no United States federal
income tax consequences to you resulting from the exchange offer. In addition,
you should have the same adjusted issue price, adjusted basis, and holding
period in the exchange notes as you had in the outstanding notes immediately
prior to the exchange.
NON-UNITED STATES HOLDERS
The following is a general discussion of United States federal income and
estate tax consequences of the acquisition, ownership, and disposition of the
exchange notes by an initial beneficial owner of the exchange notes that, for
United States federal income tax purposes, is not a "United States person" (a
"Non-United States Holder"). United States persons acquiring the exchange notes
are subject to different rules than those discussed below. For purposes of this
discussion, a "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any political
subdivision thereof, an estate whose income is includible in gross income for
United States federal income tax purposes regardless of its source or a trust,
if a United States court is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. "United States"
refers to the United States of America, including the States and the District of
Columbia, and United States possessions, which include, Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island, and Northern Mariana Islands.
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<PAGE> 134
INTEREST
Generally, interest income of a Non-United States Holder that is not
effectively connected with a United States trade or business will be subject to
a United States federal income tax and withholding tax at a 30% rate, or, if
applicable, a lower rate as is prescribed by an income tax treaty between the
United States and your country of residence. However, interest paid on a note by
us or our paying agent to a Non-United States Holder will qualify for the
so-called "portfolio-interest exemption" and, therefore, will not be subject to
United States federal income tax or withholding tax provided that such interest
income is not effectively connected with a United States trade or business of
the Non-United States Holder and provided that:
- the Non-United States Holder does not actually or constructively own 10%
or more of the total combined voting power of all classes of stock of our
company that is entitled to vote;
- the Non-United States Holder is not
- a controlled foreign corporation related to our company actually or
constructively through the stock ownership rules under Section 864(d)(4)
of the Code,
- a bank which acquired the note in consideration for an extension of
credit made pursuant to a loan agreement entered into in the ordinary
course of business, or
- a foreign tax exempt organization or a foreign private foundation for
United States federal income tax purposes;
- the interest paid to the Non-United States Holder is not considered
contingent interest under Section 871(h)(4) of the Code and the
regulations thereunder, and
- either
- the Non-United States Holder provides to our company or our paying agent
a Form W-8BEN, or suitable substitute form, signed under penalties of
perjury that includes its name and address and certifies that the holder
is not a United States person, or
- the Non-United States Holder provides a Form W-8BEN, or a suitable
substitute form or other appropriate documentation, signed under the
penalties of perjury to a qualified intermediary, such as a securities
clearing organization, bank, or other financial institution, which in
turn provides to us or our paying agent a Form W-8IMY. The certificates
described in this paragraph are effective only with respect to payments
of interest made to the certifying Non-United States Holder after the
issuance of the certificate, in the calendar year of its issuance, and
the two immediately succeeding calendar years.
Except to the extent that an applicable treaty otherwise provides, interest
received by a Non-United States Holder that is effectively connected with a
United States trade or business conducted by such holder will be taxed at the
graduated rates applicable to United States persons. Effectively connected
interest received by a corporate Non-United States Holder may also, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate, or, if applicable, a lower treaty rate. Even though such effectively
connected interest will be subject to federal income tax, and possibly subject
to
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<PAGE> 135
the branch profits tax, it will not be subject to withholding if the Non-United
States Holder delivers a properly executed IRS Form W-8ECI to us or our agent.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
federal income tax on gain realized on a sale, redemption or other disposition
of a note unless
- the gain is effectively connected with the conduct of a trade or business
within the United States by the Non-United States Holder, or
- in the case of a Non-United States Holder who is a nonresident alien
individual and holds the note as a capital asset, such holder is present
in the United States for 183 or more days in the taxable year and certain
other requirements are met.
If a Non-United States Holder falls under clause (i) in the preceding
paragraph, the holder will be taxed on the net gain derived from the sale under
the graduated United States federal income tax rates that are applicable to
United States persons and, if the Non-United States Holder is a foreign
corporation, it may also be subject to the branch profits tax described above.
Even though the effectively connected income will be subject to federal income
tax, and possibly subject to the branch profits tax, it will not be subject to
withholding if the Non-United States Holder delivers a properly executed IRS
Form W-8ECI to us or our agent. If an individual Non-United States Holder falls
under clause (ii) in the preceding paragraph, the holder generally will be
subject to United States federal income tax at a rate of 30% on the amount by
which the gain derived from the sale from sources within the United States were
to exceed such holder's capital losses allocable to sources within the United
States for the taxable year of the sale.
FEDERAL ESTATE TAXES
If interest on the notes is exempt from withholding of United States
federal income tax under the rules described above, the notes will not be
included in the estate of a deceased Non-United States Holder for United States
federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
We will, when required, report to the IRS and to each Non-United States
Holder the amount of any interest paid on the exchange notes in each calendar
year, and the amount of tax withheld, if any, with respect to the payments.
Treasury Regulations provide that backup withholding and additional
information reporting will not apply to payments on the notes by us to a
Non-United States Holder if the holder certifies as to its status as a
Non-United States Holder under penalties of perjury or otherwise establishes an
exemption, provided that neither we nor our Paying Agent has actual knowledge
that the holder is a United States person or that the conditions of any other
exemption are not, in fact, satisfied.
The payment of the proceeds from the disposition of the notes to or through
the United States office of any broker, United States or foreign, will be
subject to information reporting and possible backup withholding at a rate of
31%, unless the owner certifies as to its status as a Non-United States Holder
under penalties of perjury or otherwise establishes an exemption, provided that
the broker does not have actual knowledge that the holder is a
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<PAGE> 136
United States person or that the conditions of any other exemption are not, in
fact, satisfied. The payment of the proceeds from the disposition of a note to
or through a non-United States office of a non-United States broker that is not
a United States related person will not be subject to information reporting or
backup withholding. In the case of the payment of proceeds from the disposition
of a note to or through a non-United States office of a broker that is either a
United States person or a United States related person, information reporting is
required on the payment unless the broker has documentary evidence in its files
that the owner is a Non-United States Holder and the broker has no actual
knowledge to the contrary. Backup withholding will not apply to payments made
through foreign offices of a broker that is a United States person or a United
States related person, absent actual knowledge that the payee is a United States
person. For purposes of this paragraph, a "United States related person" is
- a "controlled foreign corporation" for United States federal income tax
purposes,
- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment, or for such part of the period that the broker has been in
existence, is derived from activities that are effectively connected with
the conduct of a United States trade or business, or
- with respect to payments made after December 31, 2000, a foreign
partnership that, at any time during its taxable year, is 50% or more, by
income or capital interest, owned by United States persons or is engaged
in the conduct of a United States trade or business. Recently adopted
Treasury Regulations provide certain presumptions under which a
Non-United States Holder will be subject to backup withholding and
information reporting unless the Non-United States Holder provides a
certification as to its Non-United States Holder status.
Any amounts withheld under the backup withholding rules from a payment to a
Non-United States Holder will be allowed as a refund or a credit against such
Non-United States Holder's United States federal income tax liability provided
that the requisite procedures are followed.
The Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general,
these regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. In addition, these
regulations impose more stringent conditions on the ability of financial
intermediaries acting for a Non-United States Holder to provide certifications
on behalf of the holder, which may include entering into an agreement with IRS
to audit certain documentation with respect to such certifications. These
regulations are generally effective for payments made after December 31, 2000,
subject to certain transition rules. You should consult your own tax advisor to
determine the effects of the application of these regulations to your particular
circumstances.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING
THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
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<PAGE> 137
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for outstanding exchange notes where such outstanding exchange notes
were acquired as a result of market-making activities or other trading
activities.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any such resale of exchange
notes and any commissions or concessions received by such persons may be deemed
to be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
We will promptly send additional copies of this prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the letter of transmittal. We have agreed to pay all expenses
incident to the exchange offer other than commissions or concessions of any
brokers or dealers and will indemnify original holders of the outstanding
exchange notes, including any broker-dealers, against certain liabilities,
including certain liabilities under the Securities Act.
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by Gibson,
Dunn & Crutcher LLP, Los Angeles, California and New York, New York, and by
McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP, Reno, Nevada.
INDEPENDENT ACCOUNTANTS
The financial statements of Coast Hotels and Casinos, Inc. as of December
31, 1997 and 1998 and for the three years in the period ended December 31, 1998
and the financial statements of Coast Resorts, Inc., as the parent company only,
as of December 31, 1997 and 1998 and for the three years in the period ended
December 31, 1998, all included in this prospectus, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their reports
appearing herein.
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<PAGE> 138
INDEX TO FINANCIAL STATEMENTS
COAST HOTELS AND CASINOS, INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Balance Sheets of Coast Hotels and Casinos, Inc. as of
December 31, 1997 and 1998 and March 31, 1999
(Unaudited)............................................... F-3
Statements of Operations of Coast Hotels and Casinos, Inc.
for the years ended December 31, 1996, 1997 and 1998 and
for the three months ended March 31, 1998 and 1999
(Unaudited)............................................... F-4
Statements of Stockholder's Equity of Coast Hotels and
Casinos, Inc. for the years ended December 31, 1996, 1997
and 1998 and for the three months ended March 31, 1999
(Unaudited)............................................... F-5
Statements of Cash Flows of Coast Hotels and Casinos, Inc.
for the years ended December 31, 1996, 1997 and 1998 and
for the three months ended March 31, 1998 and 1999
(Unaudited)............................................... F-6
Notes to Financial Statements............................... F-7
COAST RESORTS, INC. (PARENT COMPANY ONLY)
Report of Independent Accountants........................... F-27
Balance Sheets of Coast Resorts, Inc. (parent company only)
as of December 31, 1997 and 1998 and March 31, 1999
(Unaudited)............................................... F-28
Statements of Operations of Coast Resorts, Inc. (parent
company only) for the years ended December 31, 1996, 1997
and 1998 and for the three months ended March 31, 1998 and
1999 (Unaudited).......................................... F-29
Statements of Stockholders' Equity of Coast Resorts, Inc.
(parent company only) for the years ended December 31,
1996, 1997 and 1998 and for the three months ended March
31, 1999 (Unaudited)...................................... F-30
Statements of Cash Flows of Coast Resorts, Inc. (parent
company only) for the years ended December 31, 1996, 1997
and 1998 and for the three months ended March 31, 1998 and
1999 (Unaudited).......................................... F-31
Notes to Financial Statements............................... F-32
</TABLE>
F-1
<PAGE> 139
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholder of
Coast Hotels and Casinos, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, stockholder's equity and cash flows present fairly, in all
material respects, the financial position of Coast Hotels and Casinos, Inc. (a
wholly owned subsidiary of Coast Resorts, Inc.) at December 31, 1997 and 1998,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 5, 1999, except for Note 15 as to which
the date is March 23, 1999
F-2
<PAGE> 140
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, DECEMBER 31, 1999
1997 1998 (UNAUDITED)
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................. $ 29,426 $ 41,595 $ 35,697
Accounts receivable, less allowance for
doubtful accounts $194 (1997), $594
(1998) and $767 (1999).................. 5,616 4,301 4,823
Inventories................................ 5,085 4,912 4,556
Due from affiliate......................... 1,675 -- --
Refundable income taxes.................... 1,772 -- --
Prepaid expenses and other................. 11,420 9,330 11,499
-------- -------- --------
TOTAL CURRENT ASSETS.................. 54,994 60,138 56,575
PROPERTY AND EQUIPMENT, net.................. 305,420 301,252 302,892
DUE FROM AFFILIATE........................... -- -- 4,352
OTHER ASSETS................................. 6,447 5,644 8,495
-------- -------- --------
$366,861 $367,034 $372,314
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable........................... $ 9,107 $ 9,888 $ 6,214
Accrued liabilities........................ 27,651 25,338 28,080
Due to affiliate........................... -- 1,353 --
Construction accounts payable.............. 2,491 -- --
Current portion of long-term debt.......... 8,076 7,905 7,817
-------- -------- --------
TOTAL CURRENT LIABILITIES............. 47,325 44,484 42,111
LONG-TERM DEBT, less current portion......... 207,173 199,954 233,981
DEFERRED INCOME TAXES........................ 10,063 6,654 --
DEFERRED RENT................................ 4,954 13,024 13,988
-------- -------- --------
TOTAL LIABILITIES..................... 269,515 264,116 290,080
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $1.00 par value, 25,000 shares
authorized, 1,000 shares issued and
outstanding................................ 1 1 1
Additional paid-in capital................... 95,858 86,903 86,903
Retained earnings............................ 1,487 16,014 (4,670)
-------- -------- --------
TOTAL STOCKHOLDER'S EQUITY............ 97,346 102,918 82,234
-------- -------- --------
$366,861 $367,034 $372,314
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 141
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------ ------------------
1996 1997 1998 1998 1999
-------- -------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Casino.......................................... $148,509 $211,026 $242,992 $59,179 $ 66,057
Food and beverage............................... 39,517 61,724 66,503 16,578 17,775
Hotel........................................... 14,700 28,095 28,443 6,937 7,877
Other........................................... 10,635 19,994 26,421 6,093 7,046
-------- -------- -------- ------- --------
GROSS OPERATING REVENUES........................ 213,361 320,839 364,359 88,787 98,755
Less: promotional allowances.................... (17,374) (26,956) (31,996) (7,773) (8,689)
-------- -------- -------- ------- --------
NET OPERATING REVENUES............................ 195,987 293,883 332,363 81,014 90,066
-------- -------- -------- ------- --------
OPERATING EXPENSES:
Casino.......................................... 74,169 114,932 127,512 31,512 32,046
Food and beverage............................... 31,680 50,129 47,278 11,734 11,776
Hotel........................................... 7,428 12,623 11,856 2,712 3,041
Other........................................... 8,351 19,516 22,458 4,827 5,969
General and administrative...................... 37,992 54,351 55,879 13,148 14,315
Pre-opening expenses............................ 7,125 -- -- -- --
Land lease...................................... -- 2,100 3,190 525 1,110
Deferred (non-cash) rent........................ -- 2,378 3,198 594 964
Depreciation and amortization................... 7,883 18,278 20,607 4,881 5,210
-------- -------- -------- ------- --------
TOTAL OPERATING EXPENSES..................... 174,628 274,307 291,978 69,933 74,431
-------- -------- -------- ------- --------
OPERATING INCOME.................................. 21,359 19,576 40,385 11,081 15,635
-------- -------- -------- ------- --------
OTHER INCOME (EXPENSES):
Interest expense:
Related parties................................. (160) (148) -- -- --
Other........................................... (22,076) (26,194) (27,323) (6,764) (6,514)
Interest income................................. 4,791 98 695 101 215
Interest capitalized............................ 7,464 1,016 58 -- --
Gain on disposal of equipment................... 58 919 168 25 --
-------- -------- -------- ------- --------
TOTAL OTHER INCOME (EXPENSES)................ (9,923) (24,309) (26,402) (6,638) (6,299)
-------- -------- -------- ------- --------
NET INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM.............................. 11,436 (4,733) 13,983 4,443 9,336
-------- -------- -------- ------- --------
PROVISION (BENEFIT) FOR INCOME TAXES.............. 6,617 (1,401) 5,225 1,625 3,013
-------- -------- -------- ------- --------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM....... 4,819 (3,332) 8,758 2,818 6,323
Extraordinary item -- loss on early retirement of
debt, net of applicable income tax benefit
($14,543)....................................... -- -- -- -- (27,007)
-------- -------- -------- ------- --------
NET INCOME (LOSS)................................. $ 4,819 $ (3,332) $ 8,758 $ 2,818 $(20,684)
======== ======== ======== ======= ========
UNAUDITED PRO FORMA DATA (reflecting
reorganization and change in tax status):
Provision (benefit) for income taxes............ 4,117
--------
Net income (loss)............................... $ 7,319
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 142
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, AND 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995...... 1,000 $1 $38,239 $ 5,094 $ 43,334
Exchange by Coast Resorts, Inc.
of notes payable for common
stock......................... 52,525 52,525
Reclassification of undistributed
earnings to additional paid-in
capital upon termination of
partnership status............ 5,094 (5,094) --
Net income....................... 4,819 4,819
----- -- ------- -------- --------
Balances at December 31, 1996...... 1,000 1 95,858 4,819 100,678
Net loss......................... (3,332) (3,332)
----- -- ------- -------- --------
Balances at December 31, 1997...... 1,000 1 95,858 1,487 97,346
Transfer of Coast West, Inc. to our
company by Coast Resorts, Inc.... (8,955) 5,769 (3,186)
Net income....................... 8,758 8,758
----- -- ------- -------- --------
Balances at December 31, 1998...... 1,000 1 86,903 16,014 102,918
Net loss (unaudited)............. (20,684) (20,684)
----- -- ------- -------- --------
Balances at March 31, 1999
(unaudited)...................... 1,000 $1 $86,903 $ (4,670) $ 82,234
===== == ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 143
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------- ------------------
1996 1997 1998 1998 1999
--------- -------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................................... $ 4,819 $ (3,332) $ 8,758 $ 2,818 $(20,684)
--------- -------- -------- ------- --------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization......................... 7,883 18,278 20,607 4,881 5,210
Provision for bad debts............................... 2,153 1,935 1,490 758 173
Gain on disposal of equipment......................... (58) (919) (168) (25) --
Deferred rent......................................... -- 2,378 3,198 594 964
Loss on early retirement of debt...................... -- -- -- -- 41,550
Deferred income taxes................................. 4,162 789 876 388 (7,927)
Amortization of original issue discount............... 497 616 706 166 124
(Increase) decrease in operating assets:
Accounts receivable................................. (1,608) (1,773) 915 (736) (694)
Refundable income taxes............................. (645) (1,127) 1,772 -- (3,400)
Inventories......................................... (2,286) 1,279 173 184 356
Prepaid expenses and other assets................... (1,395) (1,493) 2,463 (928) (2,113)
Increase (decrease) in operating liabilities:
Accounts payable.................................. 4,307 (2,727) 781 (1,734) (3,674)
Accrued liabilities............................... 9,204 2,142 (2,313) 7,295 2,742
--------- -------- -------- ------- --------
TOTAL ADJUSTMENTS............................... 22,214 19,378 30,500 10,843 33,311
--------- -------- -------- ------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES............... 27,033 16,046 39,258 13,661 12,627
--------- -------- -------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net of amounts in accounts
payable............................................. (125,722) (57,736) (15,492) (4,794) (6,532)
Proceeds from sale of equipment....................... 20 1,070 168 25 --
--------- -------- -------- ------- --------
NET CASH USED IN INVESTING ACTIVITIES................... (125,702) (56,666) (15,324) (4,769) (6,532)
--------- -------- -------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under bank lines of credit... 1,045 -- -- -- 47,000
Principal payments on bank lines of credit............ (29,200) -- -- -- --
Proceeds from issuance of long-term debt, net of
discounts and commissions........................... 179,570 19,569 -- -- 168,521
Principal payments on long-term debt.................. (1,826) (7,913) (8,097) (2,044) (192,032)
Payments of repurchase premiums....................... -- -- -- -- (33,177)
Advances to affiliate................................. (2,568) (3,165) (3,668) (32) (2,305)
Payments for debt issue costs......................... (1,336) -- -- -- --
--------- -------- -------- ------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES..... 145,685 8,491 (11,765) (2,076) (11,993)
--------- -------- -------- ------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.... 47,016 (32,129) 12,169 6,816 (5,898)
CASH AND CASH EQUIVALENTS, at beginning of period....... 14,539 61,555 29,426 29,426 41,595
--------- -------- -------- ------- --------
CASH AND CASH EQUIVALENTS, at end of period............. $ 61,555 $ 29,426 $ 41,595 $36,242 $ 35,697
========= ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 144
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- BACKGROUND INFORMATION AND BASIS OF PRESENTATION
Background Information
Coast Hotels and Casinos, Inc. (the "Company") is a Nevada corporation and
a wholly owned subsidiary of Coast Resorts, Inc. ("Coast Resorts"), which is
also a Nevada corporation. The Company was formed in September 1995 and owns and
operates the following hotel-casinos in Las Vegas, Nevada:
- Gold Coast Hotel and Casino, which is located approximately one mile west
of the Las Vegas Strip on Flamingo Road.
- Barbary Coast Hotel and Casino, which is located on the Las Vegas Strip.
- The Orleans Hotel and Casino, which is located approximately one mile
west of the Las Vegas Strip on Tropicana Avenue. The Orleans opened for
business on December 18, 1996.
Prior to the Reorganization described below, the Gold Coast Hotel and
Casino and the Barbary Coast Hotel and Casino had previously been operated
independently by Gold Coast Hotel and Casino, a Nevada limited partnership
organized in 1986 ("Gold Coast"), and Barbary Coast Hotel and Casino, a Nevada
partnership organized in 1979 ("Barbary Coast").
On January 1, 1996, the partners of Gold Coast and Barbary Coast (the
"Predecessor Partnerships") completed a reorganization (the "Reorganization")
with Coast Resorts. Coast Resorts was formed in September 1995 for the purpose
of effecting the Reorganization of the Predecessor Partnerships. Coast Resorts,
Gold Coast and Barbary Coast were all related through common ownership and
management control.
In the Reorganization, the partners of the Predecessor Partnerships each
transferred to Coast Resorts, by assignment or through the merger of
Gaughan-Herbst, Inc., a Nevada corporation, the sole general partner of the Gold
Coast, their respective partnership interests in the Predecessor Partnerships in
exchange for an aggregate of 1,000,000 shares of common stock, par value $.01
per share, of Coast Resorts. The partners of the Gold Coast (or their
principals) received in the aggregate 65% of such shares of common stock of
Coast Resorts, and the partners of the Barbary Coast received in the aggregate
35% of such shares. The shares of common stock were issued to the respective
partners (or their principals) of each such Predecessor Partnership based upon
such partners' pro rata interests in such Predecessor Partnership.
Concurrently with the exchange of the partners' interests in the
Predecessor Partnerships and the merger of Gaughan-Herbst, Inc. into Coast
Resorts, Coast Resorts became the sole partner of each of the Predecessor
Partnerships, and each Predecessor Partnership dissolved and terminated.
Immediately upon the dissolution and termination, all of the assets and
liabilities of the Predecessor Partnerships became the assets and liabilities of
Coast Resorts. Coast Resorts immediately contributed to our company all of the
assets of the Predecessor Partnerships other than those relating to a certain
ground lease (the "Coast West Lease"), which Coast Resorts contributed to Coast
West Inc.,
F-7
<PAGE> 145
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- BACKGROUND INFORMATION AND BASIS OF PRESENTATION -- CONTINUED
another wholly-owned subsidiary of Coast Resorts ("Coast West"). In addition,
our company assumed, jointly and severally with Coast Resorts, all of the
liabilities of the Predecessor Partnerships other than (i) obligations under a
portion of subordinated notes payable to former partners and $1,500,000
principal amount of demand notes payable to a related party which were retained
by Coast Resorts and were exchanged for shares of Coast Resorts Common Stock (as
defined below), and (ii) those liabilities incident to the Coast West Lease, and
Coast West assumed, jointly and severally with Coast Resorts, all of the
liabilities of the Predecessor Partnerships incident to the Coast West Lease.
Coast Resorts retained the liability for an aggregate principal amount of
$51,025,000 in notes payable to former partners and retained the liability for
$1,500,000 relating to demand notes due to a related party (the "Exchange
Liabilities"). On January 16, 1996, the Exchange Liabilities were exchanged for
494,353 shares of common stock, par value $.01 per share, of Coast Resorts (the
"Coast Resorts Common Stock"), based upon management's estimate of the fair
market value of such common stock.
As a result of the Reorganization, the former partners of the Predecessor
Partnerships (or their principals) immediately following the Reorganization
owned all of the issued and outstanding shares of common stock of Coast Resorts,
Coast Resorts owned all of the issued and outstanding common stock of our
company and Coast West, and our company and Coast West owned and had assumed in
the aggregate all of the assets and liabilities of the Predecessor Partnerships,
other than the Exchange Liabilities that were exchanged for Coast Resorts Common
Stock.
As further described in Note 9, on July 21, 1998 Coast Resorts contributed
the common stock of Coast West to our company, as a result of which Coast West
became a wholly owned subsidiary of our company. Coast West was then
subsequently merged into the company.
Basis of Presentation
Gold Coast and Barbary Coast historically operated under a high degree of
common control. The former Managing General Partner of Gold Coast was also the
Managing General Partner of Barbary Coast. Due to the common control of Gold
Coast and Barbary Coast and the continuation of ownership by the former
partners, the Reorganization was accounted for as a reorganization of entities
under common control. Accordingly, the financial statements of our company
reflect the Reorganization in a manner similar to a pooling of interests.
The financial statements include the accounts of our company, and from July
21, 1998 through December 31, 1998, its subsidiary Coast West. All intercompany
balances and transactions have been eliminated.
F-8
<PAGE> 146
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- BACKGROUND INFORMATION AND BASIS OF PRESENTATION -- CONTINUED
1999 Interim Financial Information
The accompanying financial statements as of and for the three months ended
March 31, 1998 and 1999 are unaudited and have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The unaudited financial statements should be
read in conjunction with the audited financial statements and footnotes for the
year ended December 31, 1998. In the opinion of management, all adjustments and
normal recurring accruals considered necessary for a fair presentation of the
results for the interim period have been included. The interim results reflected
in the unaudited financial statements are not necessarily indicative of expected
results for the full year.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories, which consist primarily of food and beverage, liquor store,
and gift shop merchandise, are valued at the lower of cost or market value,
which is determined using the first-in, first-out and the average cost methods,
except for the base stocks of bar glassware and restaurant china which are
stated at original cost with subsequent replacements charged to expense.
Original Issue Discount and Debt Issue Costs
Original issue discount is amortized over the life of the related
indebtedness using the effective interest method. Costs associated with the
issuance of debt are deferred and amortized over the life of the related
indebtedness also using the effective interest method.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Expenditures for additions,
renewals and betterments are capitalized; expenditures for maintenance and
repairs are charged to expense as incurred. Upon retirement or disposal of
assets, the cost and accumulated depreciation are eliminated from the accounts
and the resulting gain or loss is included in income. Depreciation is computed
by the straight-line method over the estimated useful lives of property and
equipment, which range from 5 to 15 years for equipment and up to 40 years for
buildings and improvements.
During construction, our company capitalizes interest and other direct and
indirect development costs. Interest is capitalized monthly by applying the
effective interest rate on certain borrowings to the average balance of
expenditures. The interest that was capitalized was $7,464,000 (1996),
$1,016,000 (1997) and $58,000 (1998).
F-9
<PAGE> 147
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Pre-opening and Related Promotional Expense
Costs associated with the opening of new hotel-casinos or major additions
to an existing hotel-casino, including personnel, training, certain marketing
and other costs, are capitalized and charged to expense over management's
estimate of the period of economic benefit associated with such costs.
Management believes that such period, with respect to major hotel-casinos, is
within one fiscal quarter of the date of opening. Effective January 1, 1999,
pre-opening costs are expensed as incurred. There were no capitalized
pre-opening costs at December 31, 1997 or 1998.
Valuation of Long-Lived Assets
Long-lived assets and certain identifiable intangibles held and used by our
company are reviewed for impairment whenever events or changes in circumstances
warrant such a review. The carrying value of a long-lived or intangible asset is
considered impaired when the anticipated undiscounted cash flow from such asset
is separately identifiable and is less than its carrying value. In that event, a
loss is recognized based on the amount by which the carrying value exceeds the
fair value of the asset. Fair value is determined primarily using the
anticipated cash flows discounted at a rate commensurate with the risk involved.
Losses on long-lived assets to be disposed of are determined in a similar
manner, except that fair values are reduced for the cost to dispose.
Advertising Costs
Costs for advertising are expensed as incurred, except costs for
direct-response advertising, which are capitalized and amortized over the period
of the related program. Direct-response advertising costs consist primarily of
mailing costs associated with direct mail programs. Capitalized advertising
costs were immaterial at December 31, 1997 and 1998. Advertising expense was
approximately $3.8 million, $7.5 million, and $6.0 million for the years ended
December 31, 1996, 1997 and 1998, respectively.
Casino Revenue
In accordance with common industry practice, our company recognizes as
casino revenue the net win from gaming activities, which is the difference
between amounts wagered and amounts paid to winning patrons.
Deferred Revenue
Wagers received on all sporting events are recorded as a liability until
the final outcome of the event when the payoffs, if any, can be determined.
F-10
<PAGE> 148
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Progressive Jackpot Payouts
The Company has a number of progressive slot machines, progressive poker
games and a progressive keno game. As coins are played on the progressive slot
machines, the amount available to win increases, to be paid out when the
appropriate jackpot is hit. The keno game and poker game payouts also increase
with the amount of play, to be paid out when hit. In accordance with common
industry practice, our company has recorded the progressive jackpot as a
liability with a corresponding charge against casino revenue.
Promotional Allowances
The retail value of hotel accommodations and food and beverage items
provided to customers without charge is included in gross revenues and then
deducted as promotional allowances, to arrive at net revenues. The estimated
cost of providing these complimentary services is as follows for the years ended
December 31, 1996, 1997 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Hotel.................................... $ 1,804 $ 2,023 $ 2,497
Food and beverage........................ 14,725 23,187 25,552
------- ------- -------
Total cost of promotional allowances... $16,529 $25,210 $28,049
======= ======= =======
</TABLE>
The cost of promotional allowances has been allocated to expense as follows
for the years ended December 31, 1996, 1997 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Casino................................... $15,361 $22,280 $25,290
Other.................................... 1,168 2,930 2,759
------- ------- -------
$16,529 $25,210 $28,049
======= ======= =======
</TABLE>
Slot Club Promotion
The Company has established promotional clubs to encourage repeat business
from frequent and active slot machine customers. Members in the clubs earn
points based on slot activity accumulated in the members' account. Points can be
redeemed for certain consumer products (typically household appliances), travel,
food and beverage or cash. The Company accrues for slot club points expected to
be redeemed in the future based on the average cost of items expected to be
redeemed.
F-11
<PAGE> 149
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Income Taxes
Prior to the Reorganization, our company operated as individual
partnerships which did not pay federal income taxes. The partners of Gold Coast
and Barbary Coast were taxed on their proportionate share of each of their
respective partnership's taxable income or loss.
Subsequent to the Reorganization, our company is included in the
consolidated federal income tax return filed by Coast Resorts. The Company's tax
allocation is based on the amount of tax it would incur if it filed a separate
return. Coast Resorts will pay our company an amount equal to the tax benefit
arising from the utilization of net operating losses of our company to the
extent that such losses result in a reduction in the amount of tax payable by
Coast Resorts.
In connection with the Reorganization, effective January 1, 1996, our
company adopted Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" ("SFAS 109"). Under SFAS 109 deferred tax assets and
liabilities are recognized for the expected future tax consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. The adoption of SFAS 109 on January 1, 1996
resulted in the recognition in the 1996 financial statements of net deferred tax
liabilities and a corresponding charge to earnings through the income tax
provision of approximately $2,500,000. In addition, upon termination of the
partnership tax status on January 1, 1996, all undistributed earnings of the
predecessor partnerships were reclassified to additional paid-in capital.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a remaining
maturity at acquisition of three months or less to be cash equivalents. Cash in
excess of daily requirements is typically invested in U.S. Government-backed
repurchase agreements with maturities of 30 days or less. Such investments are
generally made with major financial institutions having a high credit rating. At
times, our company's cash deposited in financial institutions may be in excess
of federally insured limits. These instruments are stated at cost, which
approximates fair value because of their short maturity.
Short-term Investments
Short-term investments purchased with an original maturity of over three
months but less than one year are stated at cost, which approximates fair value
because of their short maturity. There were no short-term investments at
December 31, 1997 or 1998.
F-12
<PAGE> 150
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Concentration of Credit Risk
The Company extends credit to patrons after background checks and
investigations of creditworthiness and does not require collateral. The Company
has a concentration of credit risk in Southern Nevada. The Company records
provisions for potential credit losses and such losses have been within
management's expectations. Management believes that as of December 31, 1998, no
significant concentration of credit risk exists for which an allowance has not
already been determined and recorded.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Stock Options
The Financial Accounting Standards Board has issued Statement No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"). This Statement
defines a fair value based method of accounting for an employee stock option in
which companies account for stock options by recognizing, as compensation
expense in the statement of operations, the fair value of stock options granted
over the vesting period of the option. The statement also permits companies to
continue accounting for stock options under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). The Company
has elected to account for stock options under APB No. 25 and will disclose the
pro forma impact on net income and earning per share as if our company had used
the fair value method recommended by SFAS No. 123.
Reclassifications
Certain amounts in the 1996 and 1997 financial statements have been
reclassified to conform with the 1998 presentation.
F-13
<PAGE> 151
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- PROPERTY AND EQUIPMENT
Major classes of property and equipment consist of the following as of
December 31, 1997 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
Building........................................ $232,661 $ 233,570
Furniture and fixtures.......................... 139,022 146,175
-------- ---------
371,683 379,745
Less accumulated depreciation................... (81,733) (100,369)
-------- ---------
289,950 279,376
Land............................................ 15,232 15,232
Construction in progress........................ 238 6,644
-------- ---------
Net property and equipment...................... $305,420 $ 301,252
======== =========
</TABLE>
NOTE 4 -- LEASES
The Barbary Coast building is located on land which is leased. The lease
term runs through May 2003 with a purchase option and two 30 year renewal
options. In addition, the parking lot adjacent to the building is being leased
under a 10 year lease which runs through December 2003. Annual rental payments
under these leases total $300,000.
During December 1995, our company entered into a ground lease for the land
underlying the Orleans. The land is owned by The Tiberti Company, a Nevada
general partnership, of which a stockholder of Coast Resorts is the managing
partner. The stockholder is also the president and a director and stockholder of
the general contractor for the construction of the Orleans, as more fully
described in Note 10. The lease provides for an initial term of fifty years with
a twenty-five year renewal option and includes a purchase option, exercisable by
our company, at fair market value during the twentieth and twenty-first years of
the lease. Lease payments range from $175,000 to $250,000 per month during the
first sixteen years of the lease increasing by 3% per annum thereafter. The
total amount of the base rent payments on the Orleans lease is being charged to
expense on the straight-line method over the term of the lease. The Company has
recorded deferred rent to reflect the excess of rent expense over cash payments
since inception of the lease.
The Coast West lease was entered into in September 1995, for a parcel of
land located in the western area of Las Vegas to be used for future development
opportunities. The Coast West Lease term runs through December 31, 2055, with
three 10-year renewal options. Monthly payments started at $166,667 for the year
ended December 31, 1995. Thereafter, the monthly rent increases by the amount of
$5,000 in January of each year. The lease includes a put option exercisable by
the landlord requiring the purchase of the land at fair market value at the end
of the 20th through 24th years of the lease, provided that the purchase price
shall not be less than ten times, nor more than fifteen times, the annual rent
at such time. Based on the terms of the lease, the potential purchase price
F-14
<PAGE> 152
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- LEASES -- CONTINUED
commitment ranges from approximately $31,000,000 to approximately $51,000,000 in
the years 2014 through 2018. The total amount of the base rent payments on the
Coast West Lease are being charged to expense on the straight-line method over
the term of the lease. The Company has recorded deferred rent to reflect the
excess of rent expense over cash payments since the inception of the lease.
Future Minimum Lease Payments
The following is an annual schedule of future minimum cash lease payments
required under operating leases that have initial or remaining noncancelable
terms in excess of one year as of December 31, 1998:
OPERATING LEASES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, PAYMENTS
------------------------ --------------
(IN THOUSANDS)
<S> <C>
1999............................................. $ 4,890
2000............................................. 5,000
2001............................................. 5,060
2002............................................. 5,370
2003............................................. 5,480
Later years...................................... 420,657
--------
Total minimum lease payments................... $446,457
========
</TABLE>
Rent Expense
Rent expense for the years ended December 31, 1996, 1997 and 1998 is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Occupancy rentals........................... $4,777 $4,777 $6,688
Other equipment............................. 414 900 115
------ ------ ------
$5,191 $5,677 $6,803
====== ====== ======
</TABLE>
F-15
<PAGE> 153
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- ACCRUED LIABILITIES
Major classes of accrued liabilities consist of the following as of
December 31, 1997 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Slot club liability................................ $ 6,475 $ 7,548
Compensation and benefits.......................... 8,177 7,318
Progressive jackpot payouts........................ 4,101 4,511
Customer deposits and unpaid winners............... 5,069 3,003
Deferred sports book revenue....................... 871 914
Taxes.............................................. 1,046 575
Accrued interest expense........................... 1,354 1,207
Other.............................................. 558 262
------- -------
$27,651 $25,338
======= =======
</TABLE>
F-16
<PAGE> 154
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- LONG-TERM DEBT
Long-term debt consists of the following as of December 31, 1997 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Related parties:
7.5% notes, payable in monthly installments of
interest only, with all principal and any
unpaid interest due December 31, 2001. The
notes are uncollateralized and are payable to
the former partners of Barbary Coast and Gold
Coast. Approximately $51,025,000 of the notes
were exchanged for Coast Resorts Common Stock
on January 16, 1996 as more fully described in
Note 1......................................... $ 1,975 $ 1,975
Non-related parties:
13% First Mortgage Notes due December 15, 2002,
with interest payable semiannually on June 15
and December 15, net of original issue discount
of $4,677,000 in 1997 and $3,971,000 in 1998... 170,323 171,029
10 7/8% First Mortgage Notes due November 1,
2001, with interest payable quarterly on March
15, June 15, September 15 and December 15...... 16,800 16,800
9.19% note payable, payable in 60 monthly
installments of approximately $750,000,
including principal and interest,
collateralized by certain gaming and other
equipment...................................... 22,481 14,987
8.6% note due August 11, 2007, payable in monthly
installments of $26,667 principal plus interest
on remaining principal balance, collateralized
by 1980 Hawker aircraft........................ 3,067 2,773
Other notes payable.............................. 603 295
-------- --------
215,249 207,859
Less: current portion............................ 8,076 7,905
-------- --------
$207,173 $199,954
======== ========
</TABLE>
On January 30, 1996, our company completed a private placement of $175
million principal amount of 13% First Mortgage Notes Due December 15, 2002 (the
"13% First Mortgage Notes"). Interest on the 13% First Mortgage Notes is payable
semi-annually commencing June 15, 1996. The 13% First Mortgage Notes are
unconditionally guaranteed by Coast Resorts, Coast West and certain future
subsidiaries of our company. Net proceeds from the offering (after deducting
original issue discount and commissions) were approximately $164.1 million. Of
that amount, (i) approximately $114.8 million was deposited in a construction
disbursement account restricted for use by our company to finance in part the
cost of developing, constructing, equipping and opening The Orleans,
F-17
<PAGE> 155
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- LONG-TERM DEBT -- CONTINUED
(ii) approximately $19.3 million was used by our company to purchase U.S.
Government Obligations which were deposited into an interest escrow account
restricted to fund the interest payable on the 13% First Mortgage Notes through
December 15, 1996 and (iii) approximately $29.2 million was used by our company
to repay all outstanding indebtedness under our company's credit facility, which
was terminated. The balance of approximately $800,000 was used to pay, in part,
the estimated offering expenses of $2.4 million.
The 13% First Mortgage Notes are redeemable at the option of our company at
106.50% and 103.25% of the principal amount thereof during the twelve month
periods beginning December 15, 2000 and 2001, respectively. In addition, on or
before December 15, 1998, our company was entitled to redeem up to $57.25
million aggregate principal amount of 13% First Mortgage Notes at 110% of the
principal amount thereof with the net proceeds of a public offering of Coast
Resorts Common Stock subject to certain limitations as outlined in the indenture
governing the 13% First Mortgage Notes (the "Indenture").
Pursuant to the terms of the Indenture, in December 1996 our company
incurred approximately $30 million of equipment financing for The Orleans. In
August 1997, our company incurred an additional $3.2 million in equipment
financing. At December 31, 1997 and 1998, outstanding equipment financing
totaled approximately $25.5 million and $17.8 million, respectively.
The Indenture contains covenants that, among other things, limit the
ability of our company to pay dividends or make advances to Coast Resorts, repay
existing indebtedness, incur additional indebtedness, or sell material assets,
as defined in the Indenture. Additionally, pursuant to the Indenture, if on July
20, 1998 (the twentieth day of the month following the first month in which The
Orleans has been operating for 18 months) the Fixed Charge Coverage Ratio (as
defined in the Indenture) of our company for the most recently ended four full
fiscal quarters was less than 1.5 to 1, our company would have been required to
consummate an asset sale of the Barbary Coast within one year. The proceeds from
such asset sale would be required to be used by our company to repurchase Notes
at a price equal to 101% of the principal amount of such Notes. As of June 30,
1998, the measurement date, the Fixed Charge Coverage Ratio was in excess of 1.5
to 1.
The Company is permitted by the Indenture governing the 13% First Mortgage
Notes to borrow up to an additional $20 million for working capital purposes. In
November 1997, our company issued $16.8 million principal amount of 10 7/8%
first mortgage notes due November 1, 2001 ("10 7/8% First Mortgage Notes"). The
10 7/8% First Mortgage Notes are collateralized on a pari passu basis with the
13% First Mortgage Notes. Interest on the 10 7/8% First Mortgage Notes is
payable quarterly on March 15, June 15, September 15 and December 15. The
10 7/8% First Mortgage Notes are unconditionally guaranteed by Coast Resorts and
certain future subsidiaries of Coast Hotels. Net proceeds from the offering
(after deducting commissions) were approximately $16.5 million and were used for
working capital purposes.
F-18
<PAGE> 156
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- LONG-TERM DEBT -- CONTINUED
The 10 7/8% First Mortgage Notes are redeemable at any time prior to
November 1, 2001 at a redemption price equal to the principal amount thereof,
plus any accrued and unpaid interest plus an "Applicable Premium" as defined in
the indenture governing the 10 7/8% First Mortgage Notes. That indenture
contains covenants that, among other things, limit the ability of our company to
pay dividends to Coast Resorts, repay existing indebtedness, incur additional
indebtedness or sell material assets.
Maturities on long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, MATURITIES
------------------------ --------------
(IN THOUSANDS)
<S> <C>
1999............................................. $ 7,905
2000............................................. 7,918
2001............................................. 19,150
2002............................................. 175,323
2003............................................. 323
Thereafter....................................... 1,211
--------
$211,830
========
</TABLE>
NOTE 7 -- INCOME TAXES AND PRO FORMA DATA
As discussed in Note 1, prior to the Reorganization, our company operated
as individual partnerships which did not pay federal income taxes. Effective
January 1, 1996, our company adopted SFAS 109. The adoption of SFAS 109 resulted
in the recognition in the 1996 financial statements of net deferred tax
liabilities and a corresponding charge to earnings through the income tax
provision of approximately $2,500,000. Had the companies been taxed as C
Corporations since formation, the income tax provision and net income for the
year ended December 31, 1996 would have been $4,117,000 and $7,319,000,
respectively.
The components of the income tax provision (benefit) for the years ended
December 31, 1996, 1997 and 1998 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1997 1998
------ ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal:
Current.................................. $2,454 $(2,189) $4,349
Deferred................................. 4,163 788 876
------ ------- ------
$6,617 $(1,401) $5,225
====== ======= ======
</TABLE>
F-19
<PAGE> 157
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES AND PRO FORMA DATA -- CONTINUED
The income tax provision (benefit) for the years ended December 31, 1996,
1997 and 1998 differs from that computed at the federal statutory corporate tax
rate as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1997 1998
---- ----- ----
<S> <C> <C> <C>
Federal statutory rate......................... 34.0% (34.0)% 35.0%
Establishment of deferred taxes................ 21.0% -- --
Other.......................................... 2.0% 4.4 % 2.4%
---- ----- ----
Effective tax rate........................ 57.0% (29.6)% 37.4%
==== ===== ====
</TABLE>
The tax effects of significant temporary differences representing net
deferred tax assets and liabilities at December 31, 1997 and 1998 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Current:
Accrued vacation............................... $ 565 $ 810
Allowance for doubtful accounts................ 2,893 286
Accrued slot club points....................... 902 444
Progressive liabilities........................ 1,025 1,103
Accrued medical and other benefits............. 131 202
Tax credits.................................... 1,299 --
NOL carryforward............................... 273 --
Other.......................................... 42 --
-------- --------
Total current.......................... 7,130 2,845
-------- --------
Non-current:
FICA, alternative minimum tax and other tax
credits..................................... -- 2,195
Deferred rent.................................. 1,734 4,688
-------- --------
Total non-current...................... 1,734 6,883
-------- --------
Total deferred tax assets........................ 8,864 9,728
-------- --------
Deferred tax liabilities:
Non-current:
Property, plant and equipment.................. (11,797) (13,537)
-------- --------
Total deferred tax liabilities......... (11,797) (13,537)
-------- --------
Net deferred tax liability....................... $ (2,933) $ (3,809)
======== ========
</TABLE>
NOTE 8 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair values of our company's financial instruments
have been determined by our company using available market information and
appropriate valuation
F-20
<PAGE> 158
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- FAIR VALUE OF FINANCIAL INSTRUMENTS -- CONTINUED
methodologies. The carrying amounts of cash and cash equivalents, accounts
receivable, and accounts payable approximate fair values due to the short-term
maturities of these instruments. The carrying amounts and estimated fair values
of our company's other financial instruments at December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Liabilities:
Current portion of long-term debt.............. $ 7,905 $ 7,905
13% First Mortgage Notes....................... $171,029 $196,000
10 7/8% First Mortgage Notes................... $ 16,800 $ 19,328
Other long-term debt........................... $ 12,125 $ 10,789
</TABLE>
The methods and assumptions are summarized as follows:
For current portion of long-term debt, the carrying amount approximates
fair value due to the short-term nature of such debt. The fair value of the 13%
First Mortgage Notes was determined based upon market quotes. The fair value of
the 10 7/8% First Mortgage Notes was determined using the make-whole premium as
defined in the associated indenture. For all other long-term debt, the fair
value is estimated using a discounted cash flow analysis, based on the
incremental borrowing rates currently available to our company for debt with
similar terms and maturity.
NOTE 9 -- COAST WEST, INC.
The Company had agreed to provide advances to Coast West sufficient to make
payments on the Coast West Lease and other obligations, including project
development and site improvement. The Indenture limited the amount outstanding
under advances to Coast West to $8.0 million unless Coast West became a
subsidiary of our company. Based on the cash requirements of Coast West for
lease payments and anticipated development costs, it was likely that by
September 1998 Coast West would require cash from our company that, when added
to the outstanding advances from our company, would exceed $8.0 million. On July
21, 1998, Coast Resorts contributed the capital stock of Coast West to our
company, as a result of which Coast West became a wholly owned subsidiary of our
company. In 1999, the operations of Coast West were merged into the Company and
the subsidiary was dissolved.
As of the date of the stock transfer, Coast West had total assets of
$3,615,000, total liabilities of $12,570,000, which includes $7,699,000 due to
our company and $4,871,000 of deferred rent, and an accumulated deficit of
$8,955,000. The Company had recorded an allowance for doubtful accounts in
connection with advances provided to Coast West for lease payments. On the date
of the stock transfer, the total allowance for bad debt expense recorded by our
company in relation to those advances was $5,769,000. Upon the transfer of Coast
West stock, our company wrote off this allowance for doubtful accounts to
F-21
<PAGE> 159
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- COAST WEST, INC. -- CONTINUED
retained earnings and recorded the assumption of the $8,955,000 of net
liabilities of Coast West as a decrease in additional paid-in capital.
NOTE 10 -- RELATED PARTY TRANSACTIONS
The Company's advertising services are provided by LGT Advertising, a
company owned by several stockholders of Coast Resorts. LGT purchases
advertising for our company from third parties and passes along any discounts
they receive. LGT and its owners receive no compensation or profit for these
services, as our company is invoiced for actual costs incurred. Advertising
expense amounted to approximately $3.8 million, $7.5 million and $6.0 million
for the years ended December 31, 1996, 1997 and 1998, respectively.
The Company received laundry services from Exber, Inc. (dba El Cortez Hotel
& Casino). A major stockholder-officer of Exber, Inc. is the father of a major
stockholder of Coast Resorts and a director and officer of our company. Laundry
expense payable to Exber, Inc. was approximately $864,000 for the year ended
December 31, 1996. The Company discontinued its laundry service from Exber, Inc.
in October 1996.
The Company purchases certain of its equipment and inventory for its
operations from RJS, a company owned by the father of a major stockholder and
director of Coast Resorts and a director and officer of our company and our
company's restaurant manager. RJS invoices our company based on actual costs
incurred. For the fiscal years ended December 31, 1996, 1997 and 1998, our
company incurred expenses payable to RJS of approximately $4.1 million, $1.4
million and $829,000, respectively.
The Company purchases wallboards and parlay cards for its race and sports
books from Nevada Wallboards, Inc. A major stockholder and director of Coast
Resorts and a director and officer of our company is the majority stockholder of
Nevada Wallboards, Inc. For the fiscal years ended December 31, 1996, 1997 and
1998, our company incurred expenses payable to Nevada Wallboards of
approximately $145,000, $198,000 and $186,000, respectively.
A director of our company is the President and sole stockholder of
Yates-Silverman, Inc. which was retained by our company as the designer of The
Orleans and the Coast West project. For the fiscal years ended December 31,
1996, 1997 and 1998, our company incurred expenses payable to Yates-Silverman of
approximately $508,000, $177,000 and $500,000, respectively.
The Company maintains numerous racetrack dissemination contracts with Las
Vegas Dissemination, Inc. ("LVD"). The son of a major stockholder and director
of Coast Resorts and a director and officer of our company is the president and
sole shareholder of LVD. LVD has been granted a license by the Nevada gaming
authorities to disseminate live racing for those events and tracks for which it
contracts and has been granted the exclusive right to disseminate all
pari-mutuel services and race wire services in the State of Nevada. Under these
dissemination contracts, our company pays to LVD an amount based
F-22
<PAGE> 160
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 -- RELATED PARTY TRANSACTIONS -- CONTINUED
on the wagers accepted for races held at the racetracks covered by the
respective contracts. The Company also pays to LVD a monthly fee for race wire
services. For the fiscal years ended December 31, 1996, 1997 and 1998, our
company incurred expenses payable to LVD of approximately $889,000, $1.1 million
and $3.1 million, respectively.
J.A. Tiberti Construction Company ("Tiberti Construction") has served as
the general contractor for the original construction of the Gold Coast and for
certain expansions thereof, for the original construction of the Barbary Coast
and all expansions thereof and for the original construction and Phase II
expansion of The Orleans. The president of Tiberti Construction is a stockholder
and director of Coast Resorts and a director of our company. For the years ended
December 31, 1996, 1997 and 1998, our company paid approximately $80.3 million,
$26.2 million and $3.7 million, respectively, to Tiberti Construction in
connection with such construction services.
As more fully described in Note 4, our company is a party to a ground lease
with The Tiberti Company with respect to the land underlying The Orleans. The
president of The Tiberti Company is a director and stockholder of Coast Resorts.
Amounts paid to the Tiberti Company with respect to the lease were $3.0 million,
$2.1 million and $2.4 million for the years ended December 31, 1996, 1997 and
1998, respectively.
NOTE 11 -- BENEFIT PLANS
401(k) Plans
The Company offers separate defined contribution 401(k) plans for eligible
employees. During 1996, previously separate plans of the Gold Coast and the
Barbary Coast were consolidated into one plan. All employees of the Gold Coast
and The Orleans, and all employees of the Barbary Coast not covered by a
collective bargaining agreement, are eligible to participate. The employees may
elect to defer up to 15% of their yearly compensation, subject to statutory
limits. The Company makes matching contributions of 50% of the first 6% of the
employees' contribution. Contribution expense was $1,176,000, $842,000 and
$1,252,000 for the years ended December 31, 1996, 1997 and 1998, respectively.
Defined Benefit Plan
Certain employees at the Barbary Coast are covered by a union-sponsored,
collectively bargained, multi-employer, defined benefit pension plan. The
Barbary Coast contributed $274,000, $313,000 and $308,000 during the years ended
December 31, 1996, 1997 and 1998, respectively, to the plan. These contributions
are determined in accordance with the provisions of negotiated labor contracts
and generally are based on the number of hours worked.
F-23
<PAGE> 161
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- BENEFIT PLANS -- CONTINUED
Stock Compensation Plan
In December 1996, the Board of Directors of Coast Resorts adopted the 1996
Stock Incentive Plan (the "Plan") which authorizes the issuance of (i) shares of
Coast Resorts Common Stock or any other class of security of Coast Resorts which
is convertible into shares of Coast Resorts Common Stock or (ii) a right or
interest with an exercise or conversion privilege at a price related to Coast
Resorts Common Stock or with a value derived from the value of such common
stock. Awards under the Plan are not restricted to any specified form or
structure and may include, without limitation, sales or bonuses of stock,
restricted stock, stock options, reload stock options, stock purchase warrants,
other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom
stock, dividend equivalents, performance units or performance shares. Officers,
key employees, directors (whether employee directors or non-employee directors)
and consultants of Coast Resorts and its subsidiaries are eligible to
participate in the Plan.
Under the terms of the Plan, the aggregate number of shares issued and
issuable pursuant to all awards, including all incentive stock options, granted
under the Plan shall not exceed 220,000 at any time. In addition, the aggregate
number of shares subject to awards granted during any calendar year to any one
eligible person, including the number of shares involved in awards having a
value derived from the value of shares, shall not exceed 40,000.
No awards shall be made under the Plan after the tenth anniversary of the
adoption of the Plan. Although shares may be issued after the tenth anniversary
of the adoption of the Plan pursuant to awards made prior to such date, no
shares shall be issued under the Plan after the twentieth anniversary of
adoption of the Plan. As of December 31, 1998, no awards have been made under
the Plan.
F-24
<PAGE> 162
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- SUPPLEMENTAL CASH FLOWS INFORMATION
For the years ended December 31, 1996, 1997 and 1998 and the three months
ended March 31, 1998 and 1999 supplemental cash flows information amounts are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------------- ----------------
1996 1997 1998 1998 1999
------- ------- ------- ------ ------
(IN THOUSANDS) (IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest paid................. $21,607 $25,488 $26,764 $1,473 $7,308
======= ======= ======= ====== ======
Income taxes paid............. $ 3,100 $ -- $ 2,300 $3,841 $ --
======= ======= ======= ====== ======
Supplemental schedule of non-
cash investing and financing
activities:
Property and equipment
acquisitions included in
accounts payable or financed
through notes payable....... $38,918 $ 2,491 $ -- $ -- $ --
======= ======= ======= ====== ======
Conversion of notes payable to
Coast Resorts Common
Stock....................... $52,525 $ -- $ -- $ -- $ --
======= ======= ======= ====== ======
Transfer of net liabilities of
Coast West to our company by
Coast Resorts ($8,955) less
write-off of related
allowance for advances to
Coast West ($5,769)......... $ -- $ -- $ 3,186 $ -- $ --
======= ======= ======= ====== ======
</TABLE>
NOTE 13 -- REGULATION OF GAMING OPERATIONS
The gaming operations of our company are subject to the licensing and
regulatory control of the Nevada Gaming Commission (the Nevada Commission), the
Nevada State Gaming Control Board (the Nevada Control Board) and the Clark
County Liquor and Gaming Board (the Clark County Board) (collectively, the
"Nevada Gaming Authorities"). These agencies issue gaming licenses based upon,
among other considerations, evidence that the character and reputation of
principal owners, officers, directors, and certain other key employees are
consistent with regulatory goals. The necessary licenses have been secured by
our company. The licenses are not transferable and must be renewed periodically
upon the payment of appropriate taxes and license fees. The Nevada Gaming
Authorities have broad discretion with regard to the renewal of the licenses
which may at any time revoke, suspend, condition, limit or restrict a license
for any cause deemed reasonable by the issuing agency. Officers, directors, and
key employees of our company must be approved by the Nevada Control Board and
licensed by the Nevada Commission and Clark County Board.
F-25
<PAGE> 163
COAST HOTELS AND CASINOS, INC.
(A WHOLLY OWNED SUBSIDIARY OF COAST RESORTS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 14 -- COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on the financial position,
results of operations or cash flows of our company.
NOTE 15 -- SUBSEQUENT EVENTS
First Mortgage Notes Repurchase
In March 1999, we issued $175.0 million of 9.5% senior subordinated notes
with interest payable on April 1 and October 1 beginning October 1, 1999 and
entered into a $75.0 million credit facility due 2004 to facilitate a
refinancing. With the proceeds from those notes and borrowings under the credit
facility, we repurchased substantially all of the outstanding 13% first mortgage
notes and all of the 10 7/8% first mortgage notes and amended the indenture
under which the 13% first mortgage notes were issued to eliminate substantially
all of its restrictive covenants. Approximately $2.0 million in principal amount
of the 13% first mortgage notes remain outstanding and are governed by the terms
of the amended indenture. In connection with the repurchase of the 13% first
mortgage notes and the 10 7/8% first mortgage notes, we incurred repurchase
premiums of $31.0 million and $2.1 million, respectively. The repurchase
premiums and the write-offs of unamortized debt issuance costs and original
issue discount resulted in an extraordinary loss of $27.0 million, net of
applicable income tax benefit of $14.5 million.
Stock Option Plan
Effective January 1, 1999, Coast Resorts issued options to purchase 30,415
shares of its common stock to its chief operating officer, who is also the chief
operating officer of our company. The options vest in increments on January 1,
1999, January 1, 2000 and January 1, 2001. The exercise price on the options is
at $100 per share, which is equivalent to the estimated fair value of Coast
Resorts' common stock at the grant date, as estimated by Coast Resorts from
recent sales of common stock between shareholders.
F-26
<PAGE> 164
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholders of
Coast Resorts, Inc.
In our opinion, the accompanying balance sheets and related statements of
operations, stockholders' equity and cash flows present fairly, in all material
respects, the financial position of Coast Resorts, Inc. (parent company only) as
of December 31, 1997 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
The Company has no material business activity other than that conducted
through its wholly owned subsidiary, Coast Hotels and Casinos, Inc. ("CHC"). The
accompanying financial statements include the parent's investment in CHC using
the equity method of accounting, and have been prepared solely to accompany the
financial statements of CHC. The financial statements of Coast Resorts, Inc.
(parent company only) should be read in conjunction with the financial
statements of CHC included in this prospectus.
PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 5, 1999, except for Note 2 as
to which the date is March 23, 1999
F-27
<PAGE> 165
COAST RESORTS, INC.
(PARENT COMPANY ONLY)
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1997 1998 1999
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................. $ 3 $ 3 $ 3
------- -------- --------
TOTAL CURRENT ASSETS.................. 3 3 3
INVESTMENT IN SUBSIDIARIES................... 94,767 103,054 82,370
------- -------- --------
$94,770 $103,057 $ 82,373
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to affiliates.......................... $ 301 $ 601 $ 1,131
Accrued liabilities........................ 30 30 --
------- -------- --------
TOTAL CURRENT LIABILITIES............. 331 631 1,131
------- -------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 500,000
shares authorized, none issued and
outstanding............................. -- -- --
Common stock, $.01 par value, 2,000,000
shares authorized, 1,494,353 shares
issued and outstanding at December 31,
1997 and 1998 and 1,489,353 shares
issued and outstanding at March 31,
1999.................................... 15 15 15
Additional paid-in capital................. 95,398 95,398 95,398
Treasury stock............................. -- -- (500)
Retained earnings (deficit)................ (974) 7,013 (13,671)
------- -------- --------
TOTAL STOCKHOLDERS' EQUITY............ 94,439 102,426 81,242
------- -------- --------
$94,770 $103,057 $ 82,373
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE> 166
COAST RESORTS, INC.
(PARENT COMPANY ONLY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Equity interest in income
(loss) from
subsidiaries............. $ 3,689 $ (4,335) $ 8,287 $ 2,596 $ (20,684)
General and administrative
expenses................. (81) (261) (134) (230) --
---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes.................... 3,608 (4,596) 8,153 2,366 (20,684)
Income tax provision
(benefit)................ (28) 14 166 (32) --
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS).......... $ 3,636 $ (4,610) $ 7,987 $ 2,398 $ (20,684)
========== ========== ========== ========== ==========
Basic and diluted net
income (loss) per share
of common stock.......... $ 2.47 $ (3.08) $ 5.34 $ 1.60 $ (13.89)
========== ========== ========== ========== ==========
Weighted average common
shares outstanding....... 1,472,742 1,494,353 1,494,353 1,494,353 1,489,353
========== ========== ========== ========== ==========
UNAUDITED PRO FORMA DATA
(reflecting
reorganization and change
in tax status of
subsidiaries):
Income (loss) before income
taxes.................... $ 6,108
Provision (benefit) for
income taxes............. (28)
----------
NET INCOME (LOSS).......... $ 6,136
==========
Basic and diluted net
income per share of
common stock............. $ 4.17
==========
Weighted average common
shares outstanding....... 1,472,742
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE> 167
COAST RESORTS, INC.
(PARENT COMPANY ONLY)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, AND 1998
AND FOR THE THREE MONTHS ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
--------- ------ ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1995.................... 1,000,000 $10 $19,340 $ 23,538 $ -- $ 42,888
Exchange of notes payable
of subsidiary for common
stock................... 494,353 5 52,520 52,525
Reclassification of
undistributed earnings
to additional paid-in
capital upon termination
of partnership status... 23,538 (23,538) --
Net income................ 3,636 3,636
--------- --- ------- -------- ----- --------
Balances at December 31,
1996.................... 1,494,353 15 95,398 3,636 -- 99,049
Net loss.................. (4,610) (4,610)
--------- --- ------- -------- ----- --------
Balances at December 31,
1997.................... 1,494,353 15 95,398 (974) -- 94,439
Net income................ 7,987 7,987
--------- --- ------- -------- ----- --------
Balances at December 31,
1998.................... 1,494,353 15 95,398 7,013 102,426
Repurchase of common
stock................... (5,000) (500) (500)
Net loss (unaudited)...... (20,684) (20,684)
--------- --- ------- -------- ----- --------
Balances at March 31, 1999
(unaudited)............. 1,489,353 $15 $95,398 $(13,671) $(500) $ 81,242
========= === ======= ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-30
<PAGE> 168
COAST RESORTS, INC.
(PARENT COMPANY ONLY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------------- ------------------
1996 1997 1998 1998 1999
------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................... $ 3,636 $(4,610) $ 7,987 $ 2,398 $(20,684)
------- ------- ------- ------- --------
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Equity interest in net (income) loss
from subsidiaries................. (3,689) 4,335 (8,287) (2,596) 20,684
Accrued liabilities.................. -- 30 -- (23) (30)
Due to affiliates.................... 53 245 300 221 530
------- ------- ------- ------- --------
TOTAL ADJUSTMENTS................. (3,636) 4,610 (7,987) (2,398) 21,184
------- ------- ------- ------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES...................... -- -- -- -- --
------- ------- ------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock........... -- -- -- -- (500)
------- ------- ------- ------- --------
NET CASH USED IN FINANCING
ACTIVITIES...................... -- -- -- -- (500)
------- ------- ------- ------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS..................... -- -- -- -- --
CASH AND CASH EQUIVALENTS, at beginning
of period............................ 3 3 3 3 3
------- ------- ------- ------- --------
CASH AND CASH EQUIVALENTS, at end of
period............................... $ 3 $ 3 $ 3 $ 3 $ 3
======= ======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-31
<PAGE> 169
COAST RESORTS, INC.
(PARENT COMPANY ONLY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background Information and Basis of Presentation
Coast Resorts, Inc. ("Coast Resorts" or the "Company") is a Nevada
corporation and serves as a holding company for Coast Hotels and Casinos, Inc.
("Coast Hotels") and Coast West, Inc. ("Coast West"), also Nevada corporations.
The Company has no material business activity other than that conducted through
Coast Hotels.
On July 21, 1998, our company contributed the common stock of Coast West to
Coast Hotels, as a result of which Coast West became a wholly owned subsidiary
of Coast Hotels.
The accompanying financial statements present the financial position and
results of operations of Coast Resorts as a parent company only, and thus
include Coast Resort's investment in Coast Hotels, as well as Coast Resort's
equity interest in its results of its operations. Accordingly, these financial
statements should be read in conjunction with the financial statements of Coast
Hotels.
Net Income (Loss) Per Common Share
Net income per common share for the years ended December 31, 1996, 1997 and
1998 is computed by dividing net income by the weighted average number of shares
of common stock outstanding, which weighted average totaled 1,472,742 shares,
1,494,353 shares and 1,494,353 shares, respectively. The Company has no dilutive
securities outstanding for any of the periods presented.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
SFAS 128 is effective for periods ending after December 15, 1997 and replaces
currently reported earnings per share with "basic," or undiluted, earnings per
share and "diluted" earnings per share. Basic earnings per share is computed
based on weighted average shares outstanding while diluted earnings per share
reflects the additional dilution for all potential dilutive securities, such as
stock options and warrants.
The Company has adopted the provisions of SFAS 128 in its fiscal 1997 and
1998 financial statements. The retroactive adoption had no impact on our
company's operating results for the year ended December 31, 1996.
1999 Interim Financial Information
The accompanying financial statements as of and for the three months ended
March 31, 1998 and 1999 are unaudited and have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The unaudited financial statements should be
read in conjunction with the audited financial statements and footnotes for the
year ended December 31, 1998. In the
F-32
<PAGE> 170
COAST RESORTS, INC.
(PARENT COMPANY ONLY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
opinion of management, all adjustments and normal recurring accruals considered
necessary for a fair presentation of the results for the interim period have
been included. The interim results reflected in the unaudited financial
statements are not necessarily indicative of expected results for the full year.
NOTE 2 -- SUBSEQUENT EVENTS
Coast Hotels First Mortgage Notes Repurchase
In March 1999, Coast Hotels issued $175.0 million of 9.5% senior
subordinated notes with interest payable on April 1 and October 1, 1999 and
entered into a $75.0 million credit facility due 2004 to facilitate a
refinancing. With the proceeds from those notes and borrowings under the credit
facility, Coast Hotels repurchased substantially all of the outstanding 13%
first mortgage notes and all of the 10 7/8% first mortgage notes and amended the
Indenture under which the 13% first mortgage notes were issued to eliminate
substantially all of its restrictive covenants. Approximately $2.0 million in
principal amount of the 13% first mortgage notes remain outstanding and are
governed by the terms of the amended Indenture. In connection with the
repurchase of the 13% notes and the 10 7/8% notes, Coast Hotels incurred
repurchase premiums of $31.0 million and $2.1 million, respectively. The
repurchase premiums and the write-offs of unamortized debt issuance costs and
original issue discount resulted in an extraordinary loss of $27.0 million, net
of applicable income tax benefit of $14.5 million.
Stock Option Plan
Effective January 1, 1999, Coast Resorts issued options to purchase 30,415
shares of its common stock to its chief operating officer who is also the chief
operating officer of Coast Hotels. The options vest in increments on January 1,
1999, January 1, 2000 and January 1, 2001. The exercise price on the options is
at $100 per share, which is equivalent to the estimated fair value of Coast
Resort's common stock at the grant date, as estimated by Coast Resorts from
recent sales of common stock between shareholders.
F-33
<PAGE> 171
- ------------------------------------------------------
- ------------------------------------------------------
ALL TENDERED OUTSTANDING NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER
RELATED DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND
REQUESTS FOR ADDITIONAL COPIES OF THIS PROSPECTUS, THE LETTER OF TRANSMITTAL AND
OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE AGENT AS FOLLOWS:
BY MAIL, OVERNIGHT COURIER OR HAND:
FIRSTAR BANK OF MINNESOTA, N.A.
101 EAST 5TH STREET
12TH FLOOR
ST. PAUL, MINNESOTA 55101
BY FACSIMILE:
(651) 229-6415
CONFIRM BY TELEPHONE:
(651) 229-2600
(Originals of all documents submitted by facsimile should be sent promptly
by hand, overnight courier, or registered or certified mail.)
No broker dealer or other person is authorized in connection with any offer
made hereby to give any information or to make any representations not contained
in this prospectus and, if given or made, the unauthorized information or
representations must not be relied upon as having been authorized by us. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities offered hereby nor does it constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby to any person in any jurisdiction in which it is unlawful to make
such an offer or solicitation to such person. Neither the delivery of this
prospectus nor any sale made hereunder shall under any circumstances create any
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
Until , 1999 (90 days from the date of this prospectus) all
dealers effecting transactions in the exchange notes, whether or not
participating in this exchange offer, may be required to deliver a prospectus.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
OFFER TO EXCHANGE
OUR 9 1/2% SENIOR SUBORDINATED NOTES
DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR
ANY AND ALL OF OUR OUTSTANDING
9 1/2% SENIOR SUBORDINATED NOTES
DUE 2009
[LOGO]
PAYMENT OF PRINCIPAL AND INTEREST
GUARANTEED ON A SENIOR SUBORDINATED BASIS
BY COAST RESORTS, INC.
-------------------------
PROSPECTUS
-------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 172
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502(1) of the General Corporation Law of Nevada, or the "NGCL,"
provides that a Nevada corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by reason
of the fact that such person is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
Section 78.7502(2) of the NGCL provides that a Nevada corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth in subsection (1), against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if he or she acted under the standards set forth in
subsection (1), except that no indemnification may be made for any claim, issue
or matter as to which such person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which such action or suit was brought or
other court of competent jurisdiction determines upon application that in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 78.7502(3) of the NGCL provides that to the extent a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (1) and (2), or in defense of any claim, issue or matter therein,
the corporation shall indemnify such person against expenses, including
attorneys' fees, actually and reasonably incurred by him or her in connection
with the defense.
Section 78.751(1) of the NGCL provides that any discretionary
indemnification under Section 78.7502, unless ordered by a court or advanced
pursuant to subsection 2 of Section 78.751, may be made by the corporation only
as authorized in the specific case upon determination that indemnification of
such director, officer, employee or agent is proper in the circumstances. The
determination must be made (a) by the stockholders; (b) by the board of
directors by majority vote of quorum consisting of directors who were not
parties to the action, suit or proceeding; (c) if a majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion; or (d) if a quorum
consisting of directors
II-1
<PAGE> 173
who were not parties to the action, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
Section 78.751(2) of the NGCL provides that the articles of incorporation,
bylaws or an agreement made by the corporation may provide that the expenses of
officers and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that he or she is
not entitled to be indemnified by the corporation. Such provision does not
affect any rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or otherwise by
law.
Section 78.752 of the NGCL provides that a Nevada corporation may purchase
and maintain insurance or make other financial arrangements on behalf of any
person who acted in any of the capacities set forth above for any liability
asserted against such person for any liability asserted against him or her and
liability and expenses incurred by him or her in any such capacity or arising
out of his or her status as such, whether or not the corporation has the
authority to indemnify him or her against such liabilities and expenses.
Our Amended Articles of Incorporation provides that none of our directors
or officers shall be personally liable to us or our stockholders for damages for
breach of fiduciary duty as a director. However, such provision does not
eliminate or limit the liability of a director or officer for any act or
omission which involves intentional misconduct, fraud or a knowing violation of
law, or the payment of distributions in violation of Section 78.300 of the NGCL.
In addition, our Amended Articles of Incorporation and Amended Bylaws provide
for indemnification of its directors and officers in accordance with the NGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
3.1 Amended Articles of Incorporation of Coast Hotels and
Casinos, Inc.(5)
3.2 First Amended Bylaws of Coast Hotels and Casinos, Inc.(5)
3.3 Articles of Incorporation of Coast Resorts, Inc.(1)
3.4 First Amended Bylaws of Coast Resorts, Inc.(1)
4.1 Indenture dated as of January 30, 1996, among Coast Hotels
and Casinos, Inc., as issuer of 13% First Mortgage Notes due
2002, Coast Resorts, Inc. and Coast West, Inc., as the
Guarantors, and American Bank National Association, as
Trustee.(4)
4.3 Form of 13% Note (included in Exhibit 4.1)
4.4 Indenture dated as of March 23, 1999 among Coast Hotels and
Casinos, Inc., as issuer of 9 1/2% Senior Subordinated Notes
due 2009, Coast Resorts, Inc., as guarantor, and Firstar
Bank of Minnesota, N.A., as trustee
4.5 Form of 9 1/2% Note (included in Exhibit 4.4)
</TABLE>
II-2
<PAGE> 174
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
4.6 First Supplemental Indenture dated as of March 5, 1999, with
respect to the Indenture dated as of January 30, 1996 among
Coast Hotels and Casinos, as issuer of the 13% Notes, Coast
Resorts, Inc. and Coast West, Inc., as the Guarantors, and
Firstar Bank of Minnesota, N.A., as successor in interest to
American Bank National Association, as Trustee.
5.1 Opinion of Gibson, Dunn & Crutcher LLP(8)
5.2 Opinion of McDonald Carano Wilson McCune Bergin Frankovich &
Hicks LLP(8)
10.1 Registration Rights Agreement dated as of January 30, 1996
among Coast Hotels and Casinos, Inc., as issuer of the 13%
Notes, Coast Resorts, Inc. and Coast West, Inc., as the
Guarantors, and Bear, Stearns & Co. Inc. and BA Securities,
Inc.(4)
10.2 13% Note Guarantee of Coast Resorts, Inc.(4)
10.3 13% Note Guarantee of Coast West, Inc.(4)
10.4 Deed of Trust, Assignment of Rents, Leases and Security
Agreement dated January 30, 1996 of Coast Hotels and
Casinos, Inc.(4)
10.5 Leasehold Deed of Trust, Assignment of Rents, Leases and
Security Agreement dated January 30, 1996 of Coast West,
Inc.(4)
10.6 Security Agreement dated January 30, 1996 by and between
Coast Hotels and Casinos, Inc. and American Bank National
Association(4)
10.7 Security Agreement dated January 30, 1996 by and between
Coast West, Inc. and American Bank National Association(4)
10.8 Stock Pledge and Security Agreement dated January 30, 1996
by and among Coast Resorts, Inc. and American Bank National
Association(4)
10.9 Disbursement and Escrow Agreement dated January 30, 1996,
among Nevada Title Company, Nevada Construction Services,
Inc., American Bank National Association and Coast Hotels
and Casinos, Inc.(4)
10.10 Pledge and Escrow Agreement dated January 30, 1996 between
American Bank National Association and Coast Hotel and
Casinos, Inc.(4)
10.11 Collateral Assignment of Contracts dated January 30, 1996(4)
10.12 Escrow Agreement dated January 30, 1996 by and among Coast
Resorts, Inc., American Bank National Association, and Bank
of America Nevada(4)
10.13 Unsecured Environmental Indemnification Agreement dated
January 30, 1996 among Coast Hotel and Casinos, Inc. and
American Bank National Association(4)
10.14 Unsecured Environmental Indemnification Agreement among
Coast West, Inc. and American Bank National Association(4)
10.15 Tax Sharing Agreement dated as of January 30, 1996 by and
among Coast Resorts, Inc., Coast Hotels and Casinos, Inc.,
and Coast West, Inc.(4)
10.16 Agreement Between Owner and Contractor dated as of January
24, 1996, between J.A. Tiberti Construction Co., Inc. and
Coast Hotels and Casinos, Inc.(4)
10.17 Ground Lease dated as of October 1, 1995, between The
Tiberti Company, a Nevada general partnership, and Coast
Hotels and Casinos, Inc. (as successor of Gold Coast Hotel
and Casino, a Nevada limited partnership)(3)
10.18 Lease Agreement dated May 1, 1992, by and between Empey
Enterprises, a Nevada general partnership, as lessor, and
the Barbary Coast Hotel & Casino, a Nevada general
partnership, as lessee(1)
</TABLE>
II-3
<PAGE> 175
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
10.19 Ground Lease Agreement dated October 28, 1994 by and among
21 Stars, Ltd., a Nevada limited liability company, as
landlord, Barbary Coast Hotel & Casino, a Nevada general
partnership, as tenant, Wanda Peccole, as successor trustee
of the Peccole 1982 Trust dated February 15, 1982 ("Trust"),
and The William Peter and Wanda Ruth Peccole Family Limited
Partnership, a Nevada limited partnership ("Partnership"),
and, together with Trust, as owner, as amended(1)
10.20 Form of Subordination Agreement between Coast Hotels and
Casinos, Inc. and certain former Gold Coast partners holding
Subordinated Notes(4)
10.21 Lease dated as of November 1, 1982, by and between Nevada
Power Company, a Nevada Corporation as landlord, and Barbary
Coast Hotel and Casino, a Nevada general partnership(1)
10.22 Leasehold Deed of Trust, Assignment of Rents and Security
Agreement dated February 13, 1991, by and between the
Barbary Coast Hotel and Casino, a Nevada general
partnership, First American Title Company of Nevada, and
Exber, Inc., a Nevada corporation(1)
10.23 Agreement and Plan of Reorganization dated as of September
29, 1995, among Coast Resorts, Inc., the Gold Coast Hotel
and Casino, a Nevada limited partnership, the Barbary Coast
Hotel and Casino, a Nevada general partnership, and
Gaughan-Herbst, Inc., a Nevada corporation(2)
10.24 Supplement to Agreement and Plan of Reorganization dated as
of December 22, 1995, among Coast Resorts, Inc., the Gold
Coast Hotel and Casino, a Nevada limited partnership, the
Barbary Coast Hotel and Casino, a Nevada general
partnership, and Gaughan-Herbst, Inc., a Nevada
corporation(3)
10.25 10 7/8% First Mortgage Note due 2001, dated November 21,
1997(6)
10.26 Indenture dated as of November 21, 1997 among Coast Hotels
and Casinos, Inc., as issuer of the 10 7/8% First Mortgage
Notes due 2001, the Guarantors, and Firstar Bank of
Minnesota, N.A., as Trustee(6)
10.27 10 7/8% Note Guarantee of Coast Resorts, Inc.(6)
10.28 Purchase Agreement for the 10 7/8% Notes dated November 21,
1997(6)
10.29 Security Agreement dated November 21, 1997 (Coast Hotels and
Casinos, Inc.)(6)
10.30 Deed of Trust, Assignment of Rents, Leases and Security
Agreement dated November 21, 1997(6)
10.31 Stock Pledge and Security Agreement dated November 21, 1997
(Coast Resorts, Inc.)(6)
10.32 Pari Passu Intercreditor Agreement dated November 21,
1997(6)
10.33 Master Security Agreement, dated as of October 24, 1996, by
and between Coast Hotels and Casinos, Inc. and the CIT
Group/Equipment Financing, Inc.(7)
10.34 Amendment No. 1, dated December 27, 1996, to Master Security
Agreement dated as of October 24, 1996 by and between Coast
Hotels and Casinos, Inc. and the CIT Group/Equipment
Financing Inc.(7)
10.35 Agreement Between Owner and Contractor dated as of February
9, 1999, between Coast Resorts, Inc., as owner, and J.A.
Tiberti Construction Co., Inc., as contractor(7)
</TABLE>
II-4
<PAGE> 176
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
10.36 Employment Agreement dated as of January 1, 1999, between
Harlan Braaten and Coast Hotels and Casinos, Inc.
10.37 Amendment dated as of March 5, 1999 to the Deed of Trust,
Assignment of Rents, Leases and Security Agreement dated
January 30, 1996 of Coast Hotels and Casinos, Inc.
10.38 Amendment dated as of March 5, 1999 to the Leasehold Deed of
Trust, Assignment of Rents, Leases and Security Agreement
dated January 30, 1996 of Coast West, Inc.
10.39 Amendment dated as of March 5, 1999 to the Security
Agreement dated January 30, 1996 by and between Coast Hotels
and Casinos, Inc. and American Bank National Association
10.40 Amendment dated as of March 5, 1999 to the Security
Agreement dated January 30, 1996 by and between Coast West,
Inc. and American Bank National Association
10.41 Amendment dated as of March 5, 1999 to the Stock Pledge and
Security Agreement dated January 30, 1996 by and among Coast
Resorts, Inc. and American Bank National Association
10.42 Amendment dated as of March 5, 1999 to the Collateral
Assignment of Contracts dated January 30, 1996
10.43 Amendment dated as of March 5, 1999 to the Unsecured
Indemnity Agreement dated January 30, 1996 among Coast Hotel
and Casinos, Inc. and American Bank National Association
10.44 Amendment dated as of March 5, 1999 to the Unsecured
Indemnity Agreement among Coast West, Inc. and American Bank
National Association
10.45 Placement Agreement for the 9 1/2% Notes, dated March 18,
1999, among Coast Hotels and Casinos, Inc., Coast Resorts,
Inc., Morgan Stanley & Co. Incorporated and NationsBanc
Montgomery Securities LLC
10.46 Registration Rights Agreement dated March 23, 1999 among
Coast Hotels and Casinos, Inc. and Coast Resorts, Inc., and
Morgan Stanley & Co. Incorporated and NationsBanc Montgomery
Securities LLC
10.47 Loan Agreement dated as of March 18, 1999 among Coast Hotels
and Casinos, Inc., as Borrower, the Lenders referred to
therein, and Bank of America National Trust and Savings
Association, as Administrative Agent
12 Computation of Ratio of Earnings to Fixed Charges
21 List of Subsidiary of Coast Resorts, Inc.
23.1 Consent of Independent Accountants
23.2 Consent of Gibson, Dunn & Crutcher (included in the opinion
filed as Exhibit 5.1 hereto)(8)
23.3 Consent of McDonald Carano Wilson McCune Bergin Frankovich &
Hicks LLP (included in the opinion filed as Exhibit 5.2
hereto)(8)
24 Powers of Attorney (included on signature pages of this
Registration Statement on Form S-4)
25 Form T-1 Statement of Eligibility and Qualification of
Firstar Bank of Minnesota, N.A., as Trustee
27.1 Financial Data Schedule for Coast Hotels and Casinos, Inc.
27.2 Financial Data Schedule for Coast Resorts, Inc. (Parent
Company only)
</TABLE>
II-5
<PAGE> 177
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
99.1 Form of Letter of Transmittal(8)
99.2 Form of Notice of Guaranteed Delivery(8)
</TABLE>
- -------------------------
(1) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s General Form for Registration of Securities on Form
10 and incorporated herein by reference.
(2) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Amendment No. 1 to General Form for Registration of
Securities on Form 10 and incorporated herein by reference.
(3) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Amendment No. 2 to General Form for Registration of
Securities on Form 10 and incorporated herein by reference.
(4) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1995 and incorporated herein by reference.
(5) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Registration Statement on Form S-4 filed May 2,
1996 and incorporated herein by reference
(6) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1997 and incorporated herein by reference.
(7) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1998 and incorporated herein by reference.
(8) To be filed by amendment.
(b) Financial Statement Schedules.
The following Financial Statement Schedule was previously filed:
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION OF SCHEDULE
- -------- -----------------------
<S> <C>
II Valuation and Qualifying Accounts(1)
</TABLE>
- -------------------------
(1) Previously filed with the Securities and Exchange Commission in Coast
Resorts, Inc.'s and Coast Hotels and Casinos, Inc.'s Annual Reports on Form
10-K for the year ended December 31, 1998 and incorporated herein by
reference.
Schedules other than those listed above have been omitted because of the
absence of conditions under which they are required or because the information
required is set forth in the financial statements or the notes thereto.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This
II-6
<PAGE> 178
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(b) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrants will, unless
in the opinion of its counsel the matter as been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-7
<PAGE> 179
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Coast Hotels
and Casinos, Inc. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of Las
Vegas, State of Nevada, on May 17, 1999.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
----------------------------------------
Michael J. Gaughan
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL J. GAUGHAN Chairman of the Board, Chief May 17, 1999
- --------------------------------------------- Executive Officer and
Michael J. Gaughan Director (Principal
executive officer)
/s/ GAGE PARRISH Chief Financial Officer May 17, 1999
- --------------------------------------------- and Director (Principal
Gage Parrish financial
and accounting officer)
/s/ HARLAN D. BRAATEN Director May 17, 1999
- ---------------------------------------------
Harlan D. Braaten
/s/ JERRY HERBST Director May 17, 1999
- ---------------------------------------------
Jerry Herbst
/s/ J. TITO TIBERTI Director May 17, 1999
- ---------------------------------------------
J. Tito Tiberti
/s/ FRANKLIN TOTI Director May 17, 1999
- ---------------------------------------------
Franklin Toti
/s/ CHARLES SILVERMAN Director May 17, 1999
- ---------------------------------------------
Charles Silverman
/s/ F. MICHAEL CORRIGAN Director May 17, 1999
- ---------------------------------------------
F. Michael Corrigan
/s/ JOSEPH S. BLASCO Director May 17, 1999
- ---------------------------------------------
Joseph S. Blasco
</TABLE>
II-8
<PAGE> 180
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Coast Resorts,
Inc. has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Las Vegas, State of
Nevada, on May 17, 1999.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
----------------------------------------
Michael J. Gaughan
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL J. GAUGHAN Chairman of the Board, Chief May 17, 1999
- --------------------------------------------- Executive Officer and
Michael J. Gaughan Director (Principal
executive officer)
/s/ GAGE PARRISH Chief Financial Officer May 17, 1999
- --------------------------------------------- and Director (Principal
Gage Parrish financial
and accounting officer)
/s/ HARLAN D. BRAATEN Director May 17, 1999
- ---------------------------------------------
Harlan D. Braaten
/s/ JERRY HERBST Director May 17, 1999
- ---------------------------------------------
Jerry Herbst
/s/ J. TITO TIBERTI Director May 17, 1999
- ---------------------------------------------
J. Tito Tiberti
/s/ FRANKLIN TOTI Director May 17, 1999
- ---------------------------------------------
Franklin Toti
/s/ CHARLES SILVERMAN Director May 17, 1999
- ---------------------------------------------
Charles Silverman
/s/ F. MICHAEL CORRIGAN Director May 17, 1999
- ---------------------------------------------
F. Michael Corrigan
/s/ JOSEPH S. BLASCO Director May 17, 1999
- ---------------------------------------------
Joseph S. Blasco
</TABLE>
II-9
<PAGE> 181
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
3.1 Amended Articles of Incorporation of Coast Hotels and
Casinos, Inc.(5)
3.2 First Amended Bylaws of Coast Hotels and Casinos, Inc.(5)
3.3 Articles of Incorporation of Coast Resorts, Inc.(1)
3.4 First Amended Bylaws of Coast Resorts, Inc.(1)
4.1 Indenture dated as of January 30, 1996, among Coast Hotels
and Casinos, Inc., as issuer of 13% First Mortgage Notes due
2002, Coast Resorts, Inc. and Coast West, Inc., as the
Guarantors, and American Bank National Association, as
Trustee.(4)
4.3 Form of 13% Note (included in Exhibit 4.1)
4.4 Indenture dated as of March 23, 1999 among Coast Hotels and
Casinos, Inc., as issuer of 9 1/2% Senior Subordinated Notes
due 2009, Coast Resorts, Inc., as guarantor, and Firstar
Bank of Minnesota, N.A., as trustee
4.5 Form of 9 1/2% Note (included in Exhibit 4.4)
4.6 First Supplemental Indenture dated as of March 5, 1999, with
respect to the Indenture dated as of January 30, 1996 among
Coast Hotels and Casinos, as issuer of the 13% Notes, Coast
Resorts, Inc. and Coast West, Inc., as the Guarantors, and
Firstar Bank of Minnesota, N.A., as successor in interest to
American Bank National Association, as Trustee.
5.1 Opinion of Gibson, Dunn & Crutcher LLP(8)
5.2 Opinion of McDonald Carano Wilson McCune Bergin Frankovich &
Hicks LLP(8)
10.1 Registration Rights Agreement dated as of January 30, 1996
among Coast Hotels and Casinos, Inc., as issuer of the 13%
Notes, Coast Resorts, Inc. and Coast West, Inc., as the
Guarantors, and Bear, Stearns & Co. Inc. and BA Securities,
Inc.(4)
10.2 13% Note Guarantee of Coast Resorts, Inc.(4)
10.3 13% Note Guarantee of Coast West, Inc.(4)
10.4 Deed of Trust, Assignment of Rents, Leases and Security
Agreement dated January 30, 1996 of Coast Hotels and
Casinos, Inc.(4)
10.5 Leasehold Deed of Trust, Assignment of Rents, Leases and
Security Agreement dated January 30, 1996 of Coast West,
Inc.(4)
10.6 Security Agreement dated January 30, 1996 by and between
Coast Hotels and Casinos, Inc. and American Bank National
Association(4)
10.7 Security Agreement dated January 30, 1996 by and between
Coast West, Inc. and American Bank National Association(4)
10.8 Stock Pledge and Security Agreement dated January 30, 1996
by and among Coast Resorts, Inc. and American Bank National
Association(4)
10.9 Disbursement and Escrow Agreement dated January 30, 1996,
among Nevada Title Company, Nevada Construction Services,
Inc., American Bank National Association and Coast Hotels
and Casinos, Inc.(4)
10.10 Pledge and Escrow Agreement dated January 30, 1996 between
American Bank National Association and Coast Hotel and
Casinos, Inc.(4)
10.11 Collateral Assignment of Contracts dated January 30, 1996(4)
10.12 Escrow Agreement dated January 30, 1996 by and among Coast
Resorts, Inc., American Bank National Association, and Bank
of America Nevada(4)
</TABLE>
<PAGE> 182
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
10.13 Unsecured Environmental Indemnification Agreement dated
January 30, 1996 among Coast Hotel and Casinos, Inc. and
American Bank National Association(4)
10.14 Unsecured Environmental Indemnification Agreement among
Coast West, Inc. and American Bank National Association(4)
10.15 Tax Sharing Agreement dated as of January 30, 1996 by and
among Coast Resorts, Inc., Coast Hotels and Casinos, Inc.,
and Coast West, Inc.(4)
10.16 Agreement Between Owner and Contractor dated as of January
24, 1996, between J.A. Tiberti Construction Co., Inc. and
Coast Hotels and Casinos, Inc.(4)
10.17 Ground Lease dated as of October 1, 1995, between The
Tiberti Company, a Nevada general partnership, and Coast
Hotels and Casinos, Inc. (as successor of Gold Coast Hotel
and Casino, a Nevada limited partnership)(3)
10.18 Lease Agreement dated May 1, 1992, by and between Empey
Enterprises, a Nevada general partnership, as lessor, and
the Barbary Coast Hotel & Casino, a Nevada general
partnership, as lessee(1)
10.19 Ground Lease Agreement dated October 28, 1994 by and among
21 Stars, Ltd., a Nevada limited liability company, as
landlord, Barbary Coast Hotel & Casino, a Nevada general
partnership, as tenant, Wanda Peccole, as successor trustee
of the Peccole 1982 Trust dated February 15, 1982 ("Trust"),
and The William Peter and Wanda Ruth Peccole Family Limited
Partnership, a Nevada limited partnership ("Partnership"),
and, together with Trust, as owner, as amended(1)
10.20 Form of Subordination Agreement between Coast Hotels and
Casinos, Inc. and certain former Gold Coast partners holding
Subordinated Notes(4)
10.21 Lease dated as of November 1, 1982, by and between Nevada
Power Company, a Nevada Corporation as landlord, and Barbary
Coast Hotel and Casino, a Nevada general partnership(1)
10.22 Leasehold Deed of Trust, Assignment of Rents and Security
Agreement dated February 13, 1991, by and between the
Barbary Coast Hotel and Casino, a Nevada general
partnership, First American Title Company of Nevada, and
Exber, Inc., a Nevada corporation(1)
10.23 Agreement and Plan of Reorganization dated as of September
29, 1995, among Coast Resorts, Inc., the Gold Coast Hotel
and Casino, a Nevada limited partnership, the Barbary Coast
Hotel and Casino, a Nevada general partnership, and
Gaughan-Herbst, Inc., a Nevada corporation(2)
10.24 Supplement to Agreement and Plan of Reorganization dated as
of December 22, 1995, among Coast Resorts, Inc., the Gold
Coast Hotel and Casino, a Nevada limited partnership, the
Barbary Coast Hotel and Casino, a Nevada general
partnership, and Gaughan-Herbst, Inc., a Nevada
corporation(3)
10.25 10 7/8% First Mortgage Note due 2001, dated November 21,
1997(6)
10.26 Indenture dated as of November 21, 1997 among Coast Hotels
and Casinos, Inc., as issuer of the 10 7/8% First Mortgage
Notes due 2001, the Guarantors, and Firstar Bank of
Minnesota, N.A., as Trustee(6)
10.27 10 7/8% Note Guarantee of Coast Resorts, Inc.(6)
10.28 Purchase Agreement for the 10 7/8% Notes dated November 21,
1997(6)
10.29 Security Agreement dated November 21, 1997 (Coast Hotels and
Casinos, Inc.)(6)
10.30 Deed of Trust, Assignment of Rents, Leases and Security
Agreement dated November 21, 1997(6)
</TABLE>
<PAGE> 183
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
10.31 Stock Pledge and Security Agreement dated November 21, 1997
(Coast Resorts, Inc.)(6)
10.32 Pari Passu Intercreditor Agreement dated November 21,
1997(6)
10.33 Master Security Agreement, dated as of October 24, 1996, by
and between Coast Hotels and Casinos, Inc. and the CIT
Group/Equipment Financing, Inc.(7)
10.34 Amendment No. 1, dated December 27, 1996, to Master Security
Agreement dated as of October 24, 1996 by and between Coast
Hotels and Casinos, Inc. and the CIT Group/Equipment
Financing Inc.(7)
10.35 Agreement Between Owner and Contractor dated as of February
9, 1999, between Coast Resorts, Inc., as owner, and J.A.
Tiberti Construction Co., Inc., as contractor(7)
10.36 Employment Agreement dated as of January 1, 1999, between
Harlan Braaten and Coast Hotels and Casinos, Inc.
10.37 Amendment dated as of March 5, 1999 to the Deed of Trust,
Assignment of Rents, Leases and Security Agreement dated
January 30, 1996 of Coast Hotels and Casinos, Inc.
10.38 Amendment dated as of March 5, 1999 to the Leasehold Deed of
Trust, Assignment of Rents, Leases and Security Agreement
dated January 30, 1996 of Coast West, Inc.
10.39 Amendment dated as of March 5, 1999 to the Security
Agreement dated January 30, 1996 by and between Coast Hotels
and Casinos, Inc. and American Bank National Association
10.40 Amendment dated as of March 5, 1999 to the Security
Agreement dated January 30, 1996 by and between Coast West,
Inc. and American Bank National Association
10.41 Amendment dated as of March 5, 1999 to the Stock Pledge and
Security Agreement dated January 30, 1996 by and among Coast
Resorts, Inc. and American Bank National Association
10.42 Amendment dated as of March 5, 1999 to the Collateral
Assignment of Contracts dated January 30, 1996
10.43 Amendment dated as of March 5, 1999 to the Unsecured
Indemnity Agreement dated January 30, 1996 among Coast Hotel
and Casinos, Inc. and American Bank National Association
10.44 Amendment dated as of March 5, 1999 to the Unsecured
Indemnity Agreement among Coast West, Inc. and American Bank
National Association
10.45 Placement Agreement for the 9 1/2% Notes, dated March 18,
1999, among Coast Hotels and Casinos, Inc., Coast Resorts,
Inc., Morgan Stanley & Co. Incorporated and NationsBanc
Montgomery Securities LLC
10.46 Registration Rights Agreement dated March 23, 1999 among
Coast Hotels and Casinos, Inc. and Coast Resorts, Inc., and
Morgan Stanley & Co. Incorporated and NationsBanc Montgomery
Securities LLC
10.47 Loan Agreement dated as of March 18, 1999 among Coast Hotels
and Casinos, Inc., as Borrower, the Lenders referred to
therein, and Bank of America National Trust and Savings
Association, as Administrative Agent
12 Computation of Ratio of Earnings to Fixed Charges
21 List of Subsidiary of Coast Resorts, Inc.
23.1 Consent of Independent Accountants
</TABLE>
<PAGE> 184
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
23.2 Consent of Gibson, Dunn & Crutcher (included in the opinion
filed as Exhibit 5.1 hereto)(8)
23.3 Consent of McDonald Carano Wilson McCune Bergin Frankovich &
Hicks LLP (included in the opinion filed as Exhibit 5.2
hereto)(8)
24 Powers of Attorney (included on signature pages of this
Registration Statement on Form S-4)
25 Form T-1 Statement of Eligibility and Qualification of
Firstar Bank of Minnesota, N.A., as Trustee
27.1 Financial Data Schedule for Coast Hotels and Casinos, Inc.
27.2 Financial Data Schedule for Coast Resorts, Inc. (Parent
Company only)
99.1 Form of Letter of Transmittal(8)
99.2 Form of Notice of Guaranteed Delivery(8)
</TABLE>
- -------------------------
(1) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s General Form for Registration of Securities on Form
10 and incorporated herein by reference.
(2) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Amendment No. 1 to General Form for Registration of
Securities on Form 10 and incorporated herein by reference.
(3) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Amendment No. 2 to General Form for Registration of
Securities on Form 10 and incorporated herein by reference.
(4) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1995 and incorporated herein by reference.
(5) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Registration Statement on Form S-4 filed May 2,
1996 and incorporated herein by reference
(6) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1997 and incorporated herein by reference.
(7) Previously filed with the Securities and Exchange Commission as an exhibit
to Coast Resorts, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1998 and incorporated herein by reference.
(8) To be filed by amendment.
<PAGE> 1
EXHIBIT 4.4
================================================================================
COAST HOTELS AND CASINOS, INC.
ISSUER
COAST RESORTS, INC.
GUARANTOR
9 1/2% SENIOR SUBORDINATED NOTES
DUE APRIL 1, 2009
-------------------------------
INDENTURE
Dated as of March 23, 1999
-------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
TRUSTEE
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
<S> <C>
310 (a)(1)....................................................... 7.10
(a)(2)....................................................... 7.10
(a)(3)....................................................... N.A.
(a)(4)....................................................... N.A.
(a)(5)....................................................... 7.10
(b).......................................................... 7.10
(c).......................................................... N.A.
311 (a).......................................................... 7.11
(b).......................................................... 7.11
(c).......................................................... N.A.
312 (a).......................................................... 2.05
(b).......................................................... 11.03
(c).......................................................... 11.03
313 (a).......................................................... 7.06
(b)(1)....................................................... 10.03
(b)(2)....................................................... 7.07
(c).......................................................... 7.06;
11.02
(d).......................................................... 7.06
314 (a).......................................................... 4.03;
11.02
(b).......................................................... 10.02
(c)(1)....................................................... 11.04
(c)(2)....................................................... 11.04
(c)(3)....................................................... N.A.
(d).......................................................... N.A.
(e).......................................................... 11.05
(f).......................................................... N.A.
315 (a).......................................................... 7.01
(b).......................................................... 7.05;
11.02
(c).......................................................... 7.01
(d).......................................................... 7.01
(e).......................................................... 6.11
316 (a) (last sentence).......................................... 2.09
(a)(1)(A).................................................... 6.05
(a)(1)(B).................................................... 6.04
(a)(2)....................................................... N.A.
(b).......................................................... 6.07
(c).......................................................... 2.12
317 (a)(1)....................................................... 6.08
(a)(2)....................................................... 6.09
(b).......................................................... 2.04
318 (a).......................................................... 11.01
(b).......................................................... N.A.
(c).......................................................... 11.01
</TABLE>
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions...................................................................1
Section 1.02. Other Definitions............................................................23
Section 1.03. Incorporation by Reference of Trust Indenture Act............................23
Section 1.04. Rules of Construction........................................................23
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating..............................................................24
Section 2.02. Execution and Authentication.................................................24
Section 2.03. Registrar and Paying Agent...................................................25
Section 2.04. Paying Agent to Hold Money in Trust..........................................25
Section 2.05. Holder Lists.................................................................25
Section 2.06. Transfer and Exchange........................................................26
Section 2.07. Replacement Notes............................................................36
Section 2.08. Outstanding Notes............................................................36
Section 2.09. Treasury Notes...............................................................36
Section 2.10. Temporary Notes..............................................................37
Section 2.11. Cancellation.................................................................37
Section 2.12. Defaulted Interest...........................................................37
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee...........................................................37
Section 3.02. Selection of Notes to Be Redeemed............................................38
Section 3.03. Notice of Redemption.........................................................38
Section 3.04. Effect of Notice of Redemption...............................................39
Section 3.05. Deposit of Redemption Price..................................................39
Section 3.06. Notes Redeemed in Part.......................................................39
Section 3.07. Optional Redemption..........................................................39
Section 3.08. Gaming Redemption............................................................40
Section 3.09. No Mandatory Redemption......................................................41
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.............................................................41
Section 4.02. Maintenance of Office or Agency..............................................41
Section 4.03. Commission Reports and Reports to Holders....................................42
Section 4.04. Compliance Certificate.......................................................42
Section 4.05. Taxes........................................................................43
Section 4.06. Stay, Extension and Usury Laws...............................................43
Section 4.07. Incurrence of Indebtedness and Issuances of Preferred Stock..................43
Section 4.08. No Senior Subordinated Indebtedness..........................................46
Section 4.09. Liens........................................................................46
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 4.10. Restricted Payments..........................................................46
Section 4.11. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.................................................................48
Section 4.12. Limitations on the Issuance and Sale of Capital Stock of Wholly
Owned Restricted Subsidiaries................................................49
Section 4.13. Subsidiary Guarantees........................................................50
Section 4.14. Redemption of the Old First Mortgage Notes...................................50
Section 4.15. Construction of the New Casino...............................................50
Section 4.16. Transactions with Affiliates.................................................50
Section 4.17. Asset Sales..................................................................51
Section 4.18. Corporate Existence..........................................................52
Section 4.19. Limitation on Status as Investment Company...................................52
Section 4.20. Repurchase of Notes Upon a Change of Control.................................52
Section 4.21. Independent Directors........................................................52
Section 4.22. Line of Business.............................................................52
Section 4.23. Payments for Consent.........................................................53
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.....................................53
Section 5.02. Successor Corporation Substituted............................................53
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................................................54
Section 6.02. Acceleration.................................................................55
Section 6.03. Other Remedies...............................................................55
Section 6.04. Waiver of Past Defaults......................................................56
Section 6.05. Control by Majority..........................................................56
Section 6.06. Limitation on Suits..........................................................56
Section 6.07. Rights of Holders of Notes to Receive Payment................................57
Section 6.08. Collection Suit by Trustee...................................................57
Section 6.09. Trustee May File Proofs of Claim.............................................57
Section 6.10. Priorities...................................................................57
Section 6.11. Undertaking for Costs........................................................58
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee............................................................58
Section 7.02. Rights of Trustee............................................................59
Section 7.03. Individual Rights of Trustee.................................................60
Section 7.04. Trustee's Disclaimer.........................................................60
Section 7.05. Notice of Defaults...........................................................60
Section 7.06. Reports by Trustee to Holders of the Notes...................................60
Section 7.07. Compensation and Indemnity...................................................61
Section 7.08. Replacement of Trustee.......................................................61
Section 7.09. Successor Trustee by Merger, etc.............................................62
Section 7.10. Eligibility; Disqualification................................................62
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 7.11. Preferential Collection of Claims Against Company............................63
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.....................63
Section 8.02. Legal Defeasance and Discharge...............................................63
Section 8.03. Covenant Defeasance..........................................................63
Section 8.04. Conditions to Legal or Covenant Defeasance...................................64
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions...............................................65
Section 8.06. Repayment to Company.........................................................66
Section 8.07. Reinstatement................................................................66
Section 8.08. Satisfaction and Discharge...................................................66
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes..........................................67
Section 9.02. With Consent of Holders of Notes.............................................68
Section 9.03. Compliance with Trust Indenture Act..........................................69
Section 9.04. Revocation and Effect of Consents............................................69
Section 9.05. Notation on or Exchange of Notes.............................................69
Section 9.06. Trustee to Sign Amendments, etc..............................................69
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.....................................................70
Section 10.02. Liquidation; Dissolution; Bankruptcy.........................................70
Section 10.03. Default on Designated Senior Indebtedness....................................70
Section 10.04. Acceleration of Notes........................................................71
Section 10.05. When Distribution Must Be Paid Over..........................................71
Section 10.06. Notice by Company............................................................72
Section 10.07. Subrogation..................................................................72
Section 10.08. Relative Rights..............................................................72
Section 10.09. Subordination May Not Be Impaired by Company.................................72
Section 10.10. Distribution or Notice to Representative.....................................72
Section 10.11. Rights of Trustee and Paying Agent...........................................73
Section 10.12. Authorization to Effect Subordination........................................73
Section 10.13. Amendments...................................................................73
ARTICLE 11
NOTE GUARANTEES
Section 11.01. Parent Guarantee.............................................................73
Section 11.02. Subordination of Guarantees..................................................74
Section 11.03. Limitation on Coast Resorts Liability........................................74
Section 11.04. Execution and Delivery of Parent Guarantee...................................75
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms...........................75
Section 11.06. Releases Following Sale of Assets............................................76
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<S> <C> <C>
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.................................................76
Section 12.02. Notices......................................................................76
Section 12.03. Communication by Holders of Notes with Other Holders of Notes................78
Section 12.04. Certificate and Opinion as to Conditions Precedent...........................78
Section 12.05. Statements Required in Certificate or Opinion................................78
Section 12.06. Rules by Trustee and Agents..................................................78
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.................................................................78
Section 12.08. Governing Law................................................................79
Section 12.09. No Adverse Interpretation of Other Agreements................................79
Section 12.10. Successors...................................................................79
Section 12.11. Severability.................................................................79
Section 12.12. Counterpart Originals........................................................79
Section 12.13. Table of Contents, Headings, etc.............................................79
</TABLE>
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EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT
SUBSIDIARY GUARANTORS
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INDENTURE dated as of March 23, 1999 among Coast Hotels and Casinos,
Inc., a Nevada corporation (the "Company"), Coast Resorts, Inc., a Nevada
corporation, as guarantor ("Coast Resorts"), and Firstar Bank of Minnesota,
N.A., as trustee (the "Trustee").
The Company, Coast Resorts and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9 1/2% Series A Senior Subordinated Notes due 2009 (the "Series A Notes")
and the 9 1/2% Series B Senior Subordinated Notes due 2009 (the "Series B Notes"
and, together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition from such Person by a Restricted Subsidiary and not
Incurred by such Person in connection with, or in anticipation of, such Person
becoming a Restricted Subsidiary or such Asset Acquisition; provided that
Indebtedness of such Person which is redeemed, defeased, retired or otherwise
repaid at the time of or immediately upon consummation of the transactions by
which such Person becomes a Restricted Subsidiary or such Asset Acquisition
shall not be Acquired Indebtedness.
"Additional Interest" means all additional interest then owing pursuant
to the Registration Rights Agreement.
"Additional Notes" means additional Notes (other than the Initial Notes)
issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as
part of the same series as the Initial Notes.
"Adjusted Consolidated Net Income" means, for any period, the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries and the net
income of any Unrestricted Subsidiary to the extent distributed to the Company
or one of its Restricted Subsidiaries for such period determined on a
consolidated basis in conformity with GAAP less, if and for so long as the
Company is a Pass-through Entity, the Tax Amount; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting, except to the extent of the
amount of dividends or other distributions actually paid to the Company or any
of its Restricted Subsidiaries by such Person during such period; (ii) solely
for the purposes of calculating the amount of Restricted Payments that may be
made pursuant to clause (iii) of the first paragraph of Section 4.10 (and in
such case, except to the extent includable pursuant to clause (i) above), the
net income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with the Company or any
of its Restricted Subsidiaries or all or substantially all of the property and
assets of such Person are
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acquired by the Company or any of its Restricted Subsidiaries; (iii) the net
income of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary of
such net income to the Company or any Restricted Subsidiary is not at the time
of such determination permitted by the operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary; (iv) any gains
or losses (on an after-tax basis) attributable to Asset Sales; (v) all
extraordinary gains and extraordinary losses; (vi) the cumulative effect of a
change in accounting principles; and (vii) the fees, expenses and other costs
incurred in connection with the repurchase of the Old First Mortgage Notes
(including premium paid upon, original issue discount or accruals on, and
deferred financing costs written off in connection with the repurchase of the
Old First Mortgage Notes), the issuance of the Notes, the initial establishment
of the Indebtedness described under each of clauses (i) and (ii) of the
definition of "Credit Facility" below.
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; provided that the
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (ii)
an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business (including any casino or hotel facility) of such Person; provided
that the property and assets acquired are related, ancillary or complementary to
the businesses of the Company and its Restricted Subsidiaries on the date of
such acquisition.
"Asset Disposition" means the sale or other disposition or
discontinuation of use by the Company or any of its Restricted Subsidiaries
(other than to the Company or another Restricted Subsidiary) of (i) all or
substantially all of the Capital Stock of any Restricted Subsidiary of the
Company or (ii) assets that constitute a business or operation of the Company or
any of its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of the
Company or any of its Restricted Subsidiaries or
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<PAGE> 10
(iii) any other property and assets of the Company or any of its Restricted
Subsidiaries (other than the Capital Stock or other Investment in an
Unrestricted Subsidiary) outside the ordinary course of business of the Company
or such Restricted Subsidiary and, in each case, that is not governed by the
provisions of this Indenture applicable to mergers, consolidations and sales of
assets of the Company; provided that "Asset Sale" shall not include: (a) sales
or other dispositions of inventory, receivables and other current assets; (b)
sales, transfers or other dispositions of assets with a Fair Market Value not in
excess of $1.0 million in any transaction or series of related transactions; (c)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 4.10 or Investments permitted
pursuant to clause (vi) of the definition of "Permitted Investments"; (d) sales,
transfers or other dispositions of property or equipment that has become worn
out, obsolete or damaged or otherwise unsuitable for use in connection with the
business of the Company or its Restricted Subsidiaries; (e) the sale, transfer
or other disposition of any property or assets by any Restricted Subsidiary to
the Company or any Restricted Subsidiary; (f) the sale, transfer or other
disposition of any Designated Asset; and (g) any exchange of property or assets
(other than property or assets comprising The Orleans, the Gold Coast or the New
Casino) by the Company or a Restricted Subsidiary in exchange for property or
assets with a fair market value at least equal to the fair market value of the
property or assets disposed of and which are to be used or are useful in any
business in which the Company is permitted to engage pursuant to Section 4.22.
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(A) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (B) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Barbary Coast" means the Barbary Coast Hotel and Casino.
"Barbary Sale" means a sale, transfer or disposition or the Barbary
Coast.
"Barbary EBITDA" means the earnings before interest, taxes, depreciation
and amortization of the Barbary Coast, calculated in the same manner as
Consolidated EBITDA is calculated for the Company and its Restricted
Subsidiaries pursuant to the definition of "Consolidated EBITDA"; provided that
for such calculations, an appropriate allocation shall be made for overhead that
is properly allocable to the Barbary Coast.
"Barbary Excess Net Cash Proceeds" means the Net Cash Proceeds of the
Barbary Sale minus an amount equal to the Barbary EBITDA for the then most
recent four fiscal quarters prior to the date of the Barbary Sale multiplied by
five.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Borrowing Facilities" means one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed
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<PAGE> 11
to borrow from such lenders against such receivables) or letters of credit, in
each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of
the rental obligations under a Capitalized Lease.
"Casino" means any gaming establishment and other property or assets
directly ancillary thereto or used in connection therewith, including any
buildings, restaurants, hotels, theaters, parking facilities, retail shops,
land, golf courses and other recreation and entertainment facilities, vessels,
barges, ships and equipment.
"Cedel" means Cedel Bank, SA.
"Change of Control" means such time as: (i) Coast Resorts sells,
transfers, conveys or otherwise disposes of (other than by way of a merger or
consolidation), in one or a series of related transactions, of all or
substantially all of its assets to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than to (A) the Company or a wholly owned
Subsidiary of the Company or (B) Michael J. Gaughan or his Related Parties; (ii)
the Company and its Subsidiaries, taken as a whole, sell, transfer, convey or
otherwise dispose of (other than by way of a merger or consolidation), in one or
a series of related transactions, of all or substantially all of their assets to
any "person" (as such term is used in Section 13(d)(3) of the Exchange Act)
other than Coast Resorts or Michael J. Gaughan or his Related Parties; (iii) a
plan relating to the liquidation or dissolution of Coast Resorts or the Company
is adopted; (iv) the liquidation or dissolution of Coast Resorts or the Company;
(v) individuals who on the Closing Date constituted the Board of Directors of
Coast Resorts or the Company (together with any new or replacement directors
whose election by the Board of Directors or whose nomination by the Board of
Directors for election by Coast Resorts' or the Company's stockholders, as
applicable, was approved by a vote of at least a majority of the members of the
Board of Directors then still in office who either were members of the Board of
Directors on the Closing Date or whose election or nomination for election was
so approved) cease for any reason to constitute a majority of the members of the
Board of Directors of Coast Resorts or the Company, as applicable, then in
office; (vi) prior to the consummation of Coast Resorts' first Public Equity
Offering, (A) Michael J. Gaughan and his Related Parties cease to be the
"beneficial owners" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act) in the aggregate at least 20% of the Voting Stock of Coast
Resorts or (B) any "person" (as defined above) or "group" (as such term is used
in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, including any group
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(1) under the Exchange Act), becomes the "beneficial
owner" (as defined above), directly or indirectly, more of the Voting Stock of
Coast Resorts than is "beneficially owned" by the Principals and
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<PAGE> 12
their Related Parties; (vii) after the consummation of Coast Resorts' first
Public Equity Offering, a transaction is consummated (including, without
limitation, any merger or consolidation) which results in: (A) any "person" (as
defined above) or "group" (as such term is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act), other than the Principals and their Related
Parties, becoming the "beneficial owner" (as defined above), directly or
indirectly, of more than 40% of the Voting Stock of Coast Resorts; and (B) any
"person" (as defined above) or "group" (as defined above) becoming the
"beneficial owner" (as defined above), directly or indirectly, of more of the
Voting Stock of Coast Resorts than is at the time "beneficially owned" (as
defined above) by Principals and their Related Parties in the aggregate; but, in
the case of both clauses (A) and (B) of this clause (vii), excluding from the
percentage of Voting Stock held by any person consisting of a group the Voting
Stock owned by any Principal and his Related Parties who are deemed to be
members of the group; provided that such Principal and his Related Parties
beneficially own a majority of the total Voting Stock of Coast Resorts held by
such group; or (viii) Coast Resorts ceases to own 100% of the outstanding
Capital Stock of the Company (other than pursuant to a merger of the Company
into Coast Resorts). For purposes of this definition, any transfer of an equity
interest of an entity that was formed for the purpose of acquiring Voting Stock
of the Company will be deemed to be a transfer of such portion of such Voting
Stock as corresponds to the portion of the equity of such entity that has been
so transferred.
"Closing Date" means the date on which the Initial Notes are originally
issued under this Indenture.
"Coast Resorts" means Coast Resorts, Inc., a Nevada corporation.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's common equity, whether outstanding on the
Closing Date or issued thereafter.
"Company" means Coast Hotels and Casinos, Inc., a Nevada corporation,
and any and all successors thereto.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary gains or losses or sales of assets) or,
so long as the Company is a Pass-through Entity, the Tax Amount, (iii)
depreciation expense, (iv) amortization expense, (v) any preopening expenses to
the extent that such preopening expenses were deducted in computing Consolidated
Net Income on a consolidated basis and determined in accordance with GAAP, and
(vi) all other non-cash items including deferred (non-cash) rent expense,
reducing Adjusted Consolidated Net Income less all non-cash items increasing
Adjusted Consolidated Net Income; provided, that if any Restricted Subsidiary is
not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced
(to the extent not otherwise reduced in accordance with GAAP) by an amount equal
to (A) the amount of the Adjusted Consolidated Net Income attributable to such
Restricted Subsidiary multiplied by (B) the percentage ownership interest in the
income of such Restricted Subsidiary not owned on the last day of such period by
the Company or any of its Restricted Subsidiaries.
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"Consolidated Interest Expense" means, for any period, the aggregate
amount of: (i) interest, including capitalized interest, in respect of
Indebtedness (including, without limitation, amortization of original issue
discount on any Indebtedness and the interest portion of any deferred payment
obligation, calculated in accordance with the effective interest method of
accounting; all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; the net costs
associated with Interest Rate Agreements; and Indebtedness that is Guaranteed or
secured by the assets of the Company or any of its Restricted Subsidiaries);
(ii) all but the principal component of rentals in respect of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or to be accrued by the
Company and its Restricted Subsidiaries during such period; and (iii) the
product of (a) all dividend payments, whether or not in cash, on any series of
Disqualified Stock of the Company, other than dividend payments on Capital Stock
payable solely in Capital Stock of the Company (other than Disqualified Stock)
or to the Company or a Restricted Subsidiary of the Company, times (b) a
fraction, the numerator or which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate or
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP; excluding, however, (A) any amount of such interest of
any Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof (but only in the same proportion as the
net income of such Restricted Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) of the definition
thereof) and (B) original issue discount written off in connection with the
repurchase of the Old First Mortgage Notes.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 135 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries
except as investments), less any amounts attributable to Disqualified Stock or
any equity security convertible into or exchangeable for Indebtedness, the cost
of treasury stock and the principal amount of any promissory notes receivable
from the sale of the Capital Stock of the Company or any of its Restricted
Subsidiaries, each item to be determined in conformity with GAAP (excluding the
effects of foreign currency exchange adjustments under Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 52).
"Construction and Design Contract" means any contract for the
construction, design, development or equipping, including any capital addition,
improvement, extension or repair, for any of the Company's Casinos existing now
or in the future, as finalized, amended, supplemented or otherwise modified from
time to time.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means the Loan Agreement dated as of the date of this
Indenture, among the Company, and Bank of America NT&SA, as administrative
agent, and the lenders referred to therein, together with any agreements,
instruments and documents executed or delivered pursuant to or in connection
with such Loan Agreement (including, without limitation, any Guarantees and
security documents), in each case as such Loan Agreement or such agreements,
instruments or documents may be amended, supplemented, extended, renewed,
refinanced or otherwise modified from time to time.
"Credit Facility" means: (i) the Credit Agreement; provided that the
aggregate principal amount of all Indebtedness outstanding under the Credit
Agreement, including all Indebtedness incurred to
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refinance or replace any Indebtedness incurred pursuant to this clause (i), does
not exceed $75.0 million less permanent reductions in the available Indebtedness
under the Credit Agreement resulting from the application of Asset Sale
proceeds; and (ii) any other agreement evidencing Indebtedness; provided that:
(A) prior to the time that the New Casino is Operating, at least 75% of the
proceeds of such Indebtedness are used exclusively to finance the Project Costs
for the New Casino; (B) either (1) such Indebtedness is incurred under the
Credit Agreement or an amendment or supplement to the Credit Agreement, in
either case with the existing lenders under the Credit Agreement or other
Eligible Lenders or (2) if the Company is unable to incur Indebtedness pursuant
to clause (1) above on terms reasonably acceptable to the Company, (a) all of
the initial lenders or purchasers of such Indebtedness are Permitted Lenders,
(b) after giving pro forma effect to the issuance of all Indebtedness which is
outstanding as of the date of determination pursuant to the Credit Agreement and
which may otherwise be incurred under such Credit Facility, the Interest
Coverage Ratio would be at least 1.5 to 1 and (c) such Indebtedness is not
issued with any equity or cash flow participations; (C) prior to the time that
the New Casino is Operating, the aggregate principal amount of such Indebtedness
outstanding at any time, including any refinancings or replacements thereof,
shall not exceed the lesser of (1) $125.0 million and (2) 85% of the Project
Costs for the New Casino, less permanent reductions in such Indebtedness
resulting from the application of Asset Sale Proceeds; and (D) after the New
Casino is Operating, the aggregate principal amount of such Indebtedness
outstanding at any time, including any refinancings or replacements thereof and
including any Indebtedness which was previously incurred and is outstanding
under this clause (ii), shall not exceed $125.0 million less permanent
reductions in such Indebtedness resulting from the application of Asset Sale
proceeds; and provided, further, that the lenders under the Credit Facility
shall be conclusively entitled to rely on a certificate of the Company as to
compliance with the requirements of this definition.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Asset" means the Rancho Road Property and the aircraft owned
by the Company on the date of this Indenture.
"Designated Senior Indebtedness" means (i) any Indebtedness under the
Credit Agreement and any amendments, restatements, modifications, renewals or
replacements thereof and (ii) any other Indebtedness constituting Senior
Indebtedness that, at the date of determination, has commitments for or
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an aggregate principal amount outstanding of at least $20.0 million and that is
specifically designated by the Company, in the instrument creating or evidencing
such Senior Indebtedness, as "Designated Senior Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed or is
redeemable at the option of the holder of such class or series of Capital Stock
at any time on or prior to the date that is 91 days after the Stated Maturity of
the Notes or (ii) convertible into or exchangeable for Capital Stock referred to
in clause (i) above or Indebtedness having a scheduled maturity on or prior to
the date that is 91 days after the Stated Maturity of the Notes; provided that
any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the Notes shall
not constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Section 4.17 and Section
4.20 and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Section 4.17 and Section 4.20.
"Eligible Lenders" means (i) the lenders under the Credit Agreement,
(ii) any affiliate of any lender under the Credit Agreement, (iii) any
commercial bank, savings bank or loan association having a combined capital and
surplus of at least $100.0 million and (iv) any other financial institution,
including a mutual fund or other fund, having total assets of at least $250.0
million.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Casino" means any Casino of the Company in existence on the
Closing Date and the New Casino.
"Fair Market Value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
which in the case of a transaction involving $5.0 million or more, shall be as
determined in good faith by the Board of Directors, whose determination shall be
conclusive if evidenced by a resolution of the Board of Directors.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
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Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and computations
contained or referred to in this Indenture shall be computed in conformity with
GAAP applied on a consistent basis.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of the United States or
foreign government, any state province or any city or other political
subdivision, or any officer of official thereof, including the Nevada Gaming
Commission, the Nevada State Gaming Control Board, the City of Las Vegas and any
other agency with authority to regulate any gaming operation (or proposed gaming
operation) owned, managed or operated by the Company or any of its Subsidiaries.
"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct the present and future
gaming activities of the Company and its Subsidiaries.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Gold Coast" means the Gold Coast Hotel and Casino.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person: (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise); or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means Coast Resorts or any Subsidiary Guarantor and each of
their respective successors and assigns.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
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<PAGE> 17
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "Incurrence" of Acquired Indebtedness; provided that
the accrual of interest or accretion of principal shall not be considered an
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication): (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all obligations of such
Person in respect of letters of credit, banker's acceptances or other similar
instruments (including reimbursement obligations with respect thereto), other
than obligations with respect to letters of credit securing obligations (other
than obligations described in this definition) entered into in the ordinary
course of business of such person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third business day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit; (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables; (v) all Capitalized
Lease Obligations; (vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the Fair Market Value of such asset at such date of determination and (B) the
amount of such Indebtedness; (vii) all Indebtedness of other Persons Guaranteed
by such Person to the extent such Indebtedness is Guaranteed by such Person; and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation for the payment of principal (with
letters of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries thereunder),
provided (A) that the amount outstanding at any time of any Indebtedness issued
with original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP, (B) that money
borrowed and set aside at the time of the Incurrence of any Indebtedness in
order to prefund the payment of the interest on such Indebtedness shall not be
deemed to be "Indebtedness" so long as such money is held to secure the payment
of such interest and (C) that Indebtedness shall not include (1) any liability
for federal, state, local or other taxes or the obligation to make payments
pursuant to a Tax Agreement or (2) obligations arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of day-light overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however, that
such obligations are extinguished within three business days of incurrence.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Directors" means any members of the Board of Directors of
the Company other than (1) Michael J. Gaughan, J. Tito Tiberti, Jerry Herbst,
Harlan D. Braaten, Gage Parrish, (2) any spouses, siblings, parents or lineal
descendants of any person set forth in clause (1) above and any spouse of any
such sibling or lineal descendant and (3) any officer or other employee of Coast
Resorts or any Affiliate of Coast Resorts, including the Company.
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<PAGE> 18
"Indirect Participant" means a Person who holds a beneficial interest in
a Global Note through a Participant.
"Initial Notes" means the first $175,000,000 aggregate principal amount
of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Consolidated EBITDA for the then most recent four
fiscal quarters prior to such Transaction Date for which reports have been filed
with the Commission or provided to the Trustee pursuant to Section 4.03 hereof
(the "Four Quarter Period") to (ii) the aggregate Consolidated Interest Expense
during such Four Quarter Period. In making the foregoing calculation: (A) pro
forma effect shall be given to any Indebtedness Incurred or repaid during the
period (the "Reference Period") commencing on the first day of the Four Quarter
Period and ending on the Transaction Date (other than Indebtedness Incurred
under a revolving credit or similar arrangement to the extent of the commitment
thereunder (or under any predecessor revolving credit or similar arrangement) in
effect on the last day of such Four Quarter Period except to the extent any
portion of such Indebtedness is projected, in the reasonable judgment of the
senior management of the Company, to remain outstanding for a period in excess
of 12 months from the date of the Incurrence thereof), in each case as if such
Indebtedness had been Incurred or repaid on the first day of such Reference
Period (and pro forma effect shall be given to the purchase of any U.S.
government securities required to be purchased with the proceeds of any such
Indebtedness and set aside to prefund the payment of interest on such
Indebtedness at the time such Indebtedness is Incurred); (B) Consolidated
Interest Expense attributable to interest on any Indebtedness (whether existing
or being Incurred) computed on a pro forma basis and bearing a floating interest
rate shall be computed as if the rate in effect on the Transaction Date (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months or, if
shorter, at least equal to the remaining term of such Indebtedness) had been the
applicable rate for the entire period; (C) pro forma effect shall be given to
Asset Dispositions and Asset Acquisitions (including giving pro forma effect to
the application of proceeds of any Asset Disposition and to any discharge of or
other relief from Indebtedness to which the Company and its continuing
Restricted Subsidiaries are not liable following any Asset Disposition and the
reduction of any associated Consolidated Interest Expense and the change in
Consolidated EBITDA resulting therefrom) and the designation of Unrestricted
Subsidiaries as Restricted Subsidiaries that occur during such Reference Period
as if they had occurred and such proceeds had been applied and such discharge or
relief had occurred on the first day of such Reference Period; and (D) pro forma
effect shall be given to asset dispositions and asset acquisitions (including
giving pro forma effect to the application of proceeds of any asset disposition
and to any discharge of or other relief from Indebtedness to which the Company
and its continuing Restricted Subsidiaries are not liable following any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into the Company or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided that to the extent that clause (C)
or (D) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed for which
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<PAGE> 19
financial information is available. For purposes of this definition, whenever
pro forma effect is given to a transaction, the pro forma calculations shall be
made in good faith by a senior financial or accounting officer of the Company.
Interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by a senior financial or accounting officer
of the Company to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers, suppliers or
contractors in the ordinary course of business that are, in conformity with
GAAP, recorded as accounts receivable, prepaid expenses or deposits on the
balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include: (i) the
designation of a Restricted Subsidiary as an Unrestricted Subsidiary; and (ii)
the Fair Market Value of the Capital Stock (or any other Investment) held by the
Company or any of its Restricted Subsidiaries of (or in) any Person that has
ceased to be a Restricted Subsidiary; provided that the Fair Market Value of the
Investment remaining in any Person that has ceased to be a Restricted Subsidiary
shall not exceed the aggregate amount of Investments previously made in such
Person valued at the time such Investments were made less the net reduction of
such Investments. For purposes of the definition of "Unrestricted Subsidiary"
and Section 4.10: (i) "Investment" shall include the Fair Market Value of the
assets (net of liabilities (other than liabilities to the Company or any of its
Restricted Subsidiaries)) of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; (ii) the Fair
Market Value of the assets (net of liabilities (other than liabilities to the
Company or any of its Restricted Subsidiaries)) of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary shall be considered a reduction in outstanding Investments; and (iii)
any property transferred to or from an Unrestricted Subsidiary shall be valued
at its Fair Market Value at the time of such transfer. Notwithstanding the
foregoing, in no event shall any issuance of Capital Stock (other than
Disqualified Stock) of the Company in exchange for Capital Stock, property or
assets of another Person or any redemption or repurchase of the Notes or other
Indebtedness of the Company or any Restricted Subsidiary for cash constitute an
Investment by the Company in such other Person.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders for use by such Holders in connection
with the Exchange Offer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature
12
<PAGE> 20
thereof or any agreement to give any security interest in the future); provided
that in no event shall an operating lease be deemed to constitute a Lien.
"Liquor License" means every license, franchise or other authorization
required to serve liquor at any of casinos owned or operated by the Company or
any of its Restricted Subsidiaries.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means: (i) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold by the Company or any Restricted Subsidiary with recourse to the Company
or any Restricted Subsidiary) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of: (A) brokerage
commissions and other fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale; (B) provisions for all taxes
(whether or not such taxes will actually be paid or are payable), including
payments under any Tax Agreement, as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole; (C) payments made to repay Indebtedness other
than Senior Indebtedness or any other obligation outstanding at the time of such
Asset Sale that either (1) is secured by a Lien on the property or assets sold
or (2) is required to be paid as a result of such sale; and (D) appropriate
amounts to be provided by the Company or any Restricted Subsidiary as a reserve
against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity
with GAAP; and (2) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold by the Company or any Restricted Subsidiary
with recourse to the Company or any Restricted Subsidiary) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"New Casino" means the pending project to develop, construct and operate
a new hotel-casino to be located on approximately 50 acres at the intersection
of Rampart Boulevard and Alta Drive in Las Vegas, Nevada.
"Note Guarantee" means any Subsidiary Guarantee or the Guarantee by
Coast Resorts of the Company's payment obligations under this Indenture and on
the Notes, executed pursuant to the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture, and shall include the Initial Notes and the Additional Notes, which
shall be treated as a single class for all purposes under this Indenture.
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<PAGE> 21
"Obligations" means any principal, interest, premium, if any, penalties,
fees, indemnifications, reimbursements, damages or other liabilities payable
under the documentation governing or otherwise in respect of any Indebtedness,
in each case whether now or hereafter existing, renewed or restructured, whether
or not from time to time decreased or extinguished and later increased, created
or incurred, whether or not arising on or after the commencement of a proceeding
under Title 11, U.S. Code or any similar federal or state law for the relief of
debtors (including post-petition interest) and whether or not allowed or
allowable as a claim in any such proceeding.
"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the section of this Indenture pursuant to which the offer is being
made and that all Notes validly tendered will be accepted for payment on a pro
rata basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date"); (iii) that any Note not tendered will
continue to accrue interest pursuant to its terms; (iv) that, unless the Company
defaults in the payment of the purchase price, any Note accepted for payment
pursuant to the Offer to Purchase shall cease to accrue interest on and after
the Payment Date; (v) that Holders electing to have a Note purchased pursuant to
the Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side of
the Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day immediately preceding the
Payment Date; (vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company shall:
(i) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable,
in the event that the Company is required to repurchase Notes pursuant to an
Offer to Purchase. To the extent that the provisions of any securities laws or
regulations conflict with the provisions for such Offer to Purchase, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations with respect to such Offer to Purchase
by virtue thereof.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
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<PAGE> 22
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Old First Mortgage Notes" means the 13% First Mortgage Notes due 2002
and the 10 7/8% First Mortgage Notes due 2001 of the Company.
"Operating" means, with respect to the New Casino, the first time that
(i) all Gaming Licenses necessary to commence operations at the New Casino have
been granted and have not been revoked or suspended, (ii) the project manager
and the architect of the New Casino have delivered a certificate to the Trustee
certifying that the New Casino is complete in all material respects in
accordance with the plans and specifications therefor and all applicable
building laws, ordinances and regulations, (iii) the New Casino is in a
condition (including installation of furnishings, fixtures and equipment) to
receive guests in the ordinary course of business, (iv) gaming and other
operations in accordance with applicable law are open to the general public and
are being conducted at the New Casino, (v) a permanent or temporary certificate
of occupancy has been issued for the New Casino by Clark County, Nevada and (vi)
a notice of completion of the New Casino has been duly recorded.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means all Indebtedness of the Company ranking
pari passu in right of payment with the Notes.
"Participant" means, with respect to the Depositary, Euroclear or Cedel,
a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Pass-through Entity" means any entity taxed as a partnership for
federal income tax purposes, any disregarded entity for federal income tax
purposes, including a qualified Subchapter S subsidiary, an S-Corporation, or
any other entity whose items of income and deductions are passed through to its
equityholders for federal income tax purposes and retain the same
characteristics in the hands of such equityholders.
"Permitted FF&E Financing" means Indebtedness of the Company or any of
its Restricted Subsidiaries that is Incurred to finance the acquisition or lease
after the date of this Indenture of newly acquired or leased furniture, fixtures
or equipment ("FF&E") used directly in the operation of any of the Company's
Casinos and secured by a Lien on such FF&E, which Indebtedness has a principal
amount not to exceed 100% of the cost of the FF&E so purchased or leased.
"Permitted Investment" means: (i) an Investment in the Company or a
Restricted Subsidiary of the Company or a Person which will, upon the making of
such Investment, become a Restricted Subsidiary or be merged or consolidated
with or into or transfer or convey all or substantially all its assets to, the
Company or a Restricted Subsidiary; provided that such person's primary business
is related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date
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<PAGE> 23
of such Investment; (ii) Temporary Cash Investments; (iii) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses in accordance with GAAP; (iv) advances and
loans to employees of the Company or any of its Restricted Subsidiaries in the
ordinary course of business; provided that the aggregate amount of such
Investments does not exceed $1.0 million; (v) stock, obligations or securities
received in satisfaction of judgments, foreclosure of Liens or good faith
settlement of litigation, disputes or other debts; (vi) Investments in any
Person the primary business of which is related, ancillary or complementary to
the businesses of the Company and its Restricted Subsidiaries; provided that the
aggregate amount of such Investments does not exceed $10.0 million; (vii)
Investments made as a result of the receipt of non-cash consideration from an
Asset Sale that was made in compliance with Section 4.17 hereof; (viii)
Investments in Currency Agreements and Interest Rate Agreements with respect to
Indebtedness otherwise permissible under this Indenture; (ix) receivables owing
to the Company or any Restricted Subsidiary, if created or acquired in the
ordinary course of business consistent with past practices and payable or
dischargeable in accordance with customary terms; and (x) Investments acquired
in exchange for Capital Stock (other than Disqualified Stock) of the Company or
for Capital Stock of Coast Resorts.
"Permitted Junior Securities" means Capital Stock of the Company, any
Restricted Subsidiary or any affiliate of or successor to the Company pursuant
to a plan of reorganization or debt securities of the Company, any Restricted
Subsidiary or any affiliate of or successor to the Company pursuant to a plan of
reorganization that are subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the same
extent as, or to a greater extent than, the Notes are subordinated to Senior
Indebtedness pursuant to this Indenture on the Closing Date, so long as (i) the
effect of the use of this defined term in the subordination provisions described
under the caption "Subordination" is not to cause the Notes to be treated as
part of (a) the same class of claims in any plan of reorganization as the Senior
Indebtedness or (b) any class of claims in any plan of reorganization pari passu
with, or senior to, the Senior Indebtedness for any payment or distribution in
any case or proceeding or similar event relating to the liquidation, insolvency,
bankruptcy, dissolution, winding up or reorganization of the Company and (ii) to
the extent that any Senior Indebtedness outstanding on the date of consummation
of any such plan of reorganization is not paid in full in cash on such date,
either (a) the holders of any such Senior Indebtedness not so paid in full in
cash have consented to the terms of such plan of reorganization or readjustment
or (b) such holders receive securities which constitute Senior Indebtedness and
which have been determined by the relevant court to have a value, as of the
effective date of such plan of reorganization, of at least the value of such
holder's interest in the estate's interest in such Senior Indebtedness.
"Permitted Lender" means any Eligible Lender, any other Person that
qualifies as a "qualified institutional buyer" pursuant to Rule 144A under the
Securities Act, any purchaser of Indebtedness pursuant to Regulation S under the
Securities Act and any purchaser of Indebtedness that is registered under the
Securities Act.
"Permitted Lien" means: (i) Liens securing Senior Indebtedness
(including related Obligations) that is permitted to be incurred pursuant to
this Indenture; (ii) Liens existing on the date of this Indenture; (iii) Liens
for taxes, assessments or governmental charges or claims which are not yet
delinquent or which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor; (iv) banker's liens, rights of setoff and Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of like nature
16
<PAGE> 24
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (v) Liens on the aircraft owned by the Company on
the Closing Date (or any replacement aircraft) and on the Rancho Road Property
to secure Indebtedness permitted by the terms of this Indenture under clause (i)
of the second paragraph of Section 4.07(a) hereof set forth below (and any
Permitted Refinancing Indebtedness applied to the refinancing thereof); (vi)
Liens in favor of the Company or a Restricted Subsidiary; (vii) Liens incurred
to secure the purchase price or cost of construction or improvement of property,
which Lien shall not cover any property other than that being acquired,
purchased, improved or constructed; (viii) any interest or title of a lessor
under Capitalized Lease Obligations otherwise permitted under this Indenture;
(ix) Liens securing Acquired Indebtedness created prior to (and not in
connection with or in contemplation of) the incurrence of such Indebtedness by
the Company or any Restricted Subsidiary; provided that such Lien does not
extend to any property or assets of the Company or any Subsidiary other than the
assets acquired in connection with the incurrence of such Acquired Indebtedness;
(x) Liens on property existing at the time of acquisition thereof by the Company
or a Restricted Subsidiary; (xi) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business in respect of obligations that are not yet due or
that are bonded or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Restricted Subsidiary, as the case may be, in
accordance with GAAP; (xii) Liens arising by reason of a judgment, decree or
court order, to the extent not otherwise resulting in an Event of Default;
(xiii) Liens securing obligations under Currency Agreements and Interest Rate
Agreements entered into in the ordinary course of business; (xiv) extensions,
renewals or refunding of any Liens referred to in clauses (i) through (xi)
above, provided that the renewal, extension or refunding is limited to all or
part of the property securing the original Lien; and (xv) Liens in addition to
the foregoing incurred in the ordinary course of business provided that the
amount of the obligations secured by such Liens does not exceed in the aggregate
$5.0 million at any one time outstanding and that (A) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (B) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or any of its
Subsidiaries.
"Permitted Tax Distribution" means (1) payments to Coast Resorts
required to be made pursuant to the Tax Sharing Agreement and (2) if and for so
long as the Company is treated as a Pass-through Entity, distributions to
equityholders of the Company (or, if such equityholder is a Pass-through Entity,
its equityholders) in an amount not to exceed the Tax Amount; provided that (A)
prior to the first such distribution to equityholders, the Company delivers to
the Trustee an opinion of counsel reasonably satisfactory to the Trustee
confirming that (i) the Company is a Pass-through Entity and (ii) the holders of
the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of the transaction pursuant to which the Company
becomes a Pass-through Entity and will be subject to federal income tax in the
same manner and at the same times as would have been the case if such
transaction had not occurred and (B) prior to any such distribution, the Company
delivers to the Trustee a certificate of the Company's Chief Financial Officer
to the effect that the Company is a taxable as Pass-through Entity.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
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<PAGE> 25
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference stock, whether
outstanding on the Closing Date or issued thereafter.
"Principals" means Michael J. Gaughan, J. Tito Tiberti, Jerry Herbst and
Franklin Toti.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Project Costs" means, with respect to the development, construction or
acquisition of any of the Company's Casinos not in existence on the date of this
Indenture, including the New Casino, or any expansion or refurbishment of an
Existing Casino, as the case may be, the aggregate costs required to complete
such development, construction and acquisition, including all direct costs
related thereto such as construction management, architectural, engineering and
interior design fees, site work, utility installations and hook-up fees,
construction permits, certificates and bonds, land acquisition costs, costs of
furniture, fixtures, furnishings, machinery and equipment, non-construction
supplies and pre-opening payroll, but excluding principal or interest payments
on any Indebtedness (other than interest which is required to be capitalized in
accordance with GAAP, which shall be included in determining Project Costs).
"Public Equity Offering" means an underwritten public offering of Coast
Resorts common stock which is registered under the Securities Act and results in
net proceeds to Coast Resorts of at least $20.0 million.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Rancho Road Property" means the approximately 29 acres of raw land
owned by the Company on the Closing Date located at 4300 West Carey Avenue,
North Las Vegas, Nevada.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Closing Date among the Company and the other parties named on
the signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time, and, with respect to any Additional Notes, one
or more registration rights agreements between the Company and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented from time
to time, relating to rights given by the Company to the purchasers of Additional
Notes to register such Additional Notes under the Securities Act.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Related Parties" means, with respect to any Principal, (i) any spouse,
sibling, parent or lineal descendant of such Principal or any spouse of any such
sibling or lineal descendant and (ii) any trust, corporation, partnership or
other entity the beneficiaries, shareholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
such Principal and/or such other Person referred to in the immediately preceding
clause (i).
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<PAGE> 26
"Representative" means any agent or representative in respect of any
Designated Senior Indebtedness; provided that if, and for so long as, any
Designated Senior Indebtedness lacks such a representative, then the
Representative for such Designated Senior Indebtedness shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the following obligations of the Company or
a Guarantor, whether outstanding on the Closing Date or thereafter Incurred: (i)
all Indebtedness and all other Obligations (including, without limitation,
expenses, fees, principal, interest, reimbursement obligations under letters of
credit and indemnities payable in connection therewith) of the Company or a
Guarantor under (or in respect of) the Credit Agreement or any amendments,
restatements, modifications, renewals or replacements thereof or a Borrowing
Facility or any Interest Rate Agreement or Currency Agreement relating to or
otherwise in respect of the Indebtedness under the Credit Agreement or any
amendments, restatements, modifications, renewals or replacements thereof or a
Borrowing Facility; and (ii) all other Indebtedness and all other monetary
obligations of the Company (other than the Notes) or a Guarantor, including
principal and interest on such Indebtedness, unless such Indebtedness or
obligations, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness or obligation is issued, is pari passu with,
or subordinated in right of payment to, the Notes, the Parent Guarantee or
Subsidiary Guarantees, as the case may be. Notwithstanding anything to the
contrary in clauses (i) and (ii) above, Senior Indebtedness shall not include:
(a) any Indebtedness of the Company or a Guarantor that, when Incurred, was
without recourse to the Company or the Guarantor, as the case may be; (b) any
Indebtedness of the Company to a Subsidiary or Affiliate of the Company; (c) any
Indebtedness of the Company or a Guarantor, as the case may be, to the extent
not permitted by Section 4.07 or Section 4.08; provided that as to any
Indebtedness under the Credit Agreement which exceeds the dollar limitations set
forth in clause (i) of the definition of "Credit Facility" and any Indebtedness
otherwise incurred pursuant to Credit Facilities which exceeds the dollar
limitations set forth in clause (ii) of the definition of "Credit
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<PAGE> 27
Facility," no such violation shall be deemed to exist for purposes of this
clause (c) if the lenders thereunder have obtained a legal opinion (which legal
opinion, in the case of revolving Indebtedness, shall be given on the date of
the credit commitment by such lenders with respect to such Indebtedness) to the
effect that the issuance of such Indebtedness does not violate Section 4.07 or
Section 4.08 as of such date; (d) any repurchase, redemption or other obligation
in respect of Disqualified Stock; (e) any Indebtedness to any employee of the
Company or any of its Subsidiaries; (f) any liability for taxes owed or owing by
the Company or any of its Subsidiaries or any amounts paid or payable under any
Tax Agreement; and (g) any Trade Payables.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Restricted Subsidiaries: (i) for
the most recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries; or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, and its successors.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subordinated Notes" means the promissory notes executed by Gold Coast
Hotel and Casino, a Nevada limited partnership, in an aggregate principal amount
not to exceed $2.0 million, as assumed by the Company.
"Subsidiary" means, with respect to any Person, any corporation,
association, business trust or other business entity of which more than 50% of
the voting power of the outstanding Voting Stock is owned, directly or
indirectly, by such Person and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" means the Guarantee by a Subsidiary Guarantor of
the Company's payment obligations under this Indenture and on the Notes,
executed pursuant to the provisions of this Indenture.
"Subsidiary Guarantor" means a future Subsidiary of the Company that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, until released from that Subsidiary Guarantee in accordance with this
Indenture.
"Tax Agreement" means (i) the Tax Sharing Agreement and (ii) if and for
so long as the Company is treated as a Pass-through Entity, any agreement among
the Company, Coast Resorts and the equityholders of the Company and Coast
Resorts with respect to distributions of the Tax Amount.
"Tax Amount" means, with respect to any period, the federal, state and
local tax liability of equityholders of the Company (or, if such holder is a
Pass-though Entity, its equityholders), assuming
20
<PAGE> 28
maximum rates, in respect of their direct or indirect interests in the Company
for such period plus any additional amounts payable to such equityholders to
cover taxes arising from ownership of such equity interests.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement dated
January 30, 1996, among Coast Resorts, the Company and Coast West, Inc., as in
existence on the date of this Indenture.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof; (ii) demand deposit accounts, time deposit accounts,
certificates of deposit and money market deposits maturing within one year of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50.0 million (or the foreign currency equivalent thereof) and (unless
such accounts, certificates or deposits are fully insured by the FDIC) has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor; (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above; (iv) commercial paper, maturing
not more than one year after the date of acquisition, issued by a corporation
(other than an Affiliate of the Company) organized and in existence under the
laws of the United States of America, any state thereof or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of "P-2" (or higher) according to Moody's or
"A-2" (or higher) by S&P; (v) securities with maturities of one year or less
from the date of acquisition issued or fully and unconditionally guaranteed by
any state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by S&P
or Moody's; and (vi) other dollar denominated securities issued by any Person
incorporated in the United States rated at least "A" or the equivalent by S&P or
at least "A2" or the equivalent by Moody's and in each case either (A) maturing
not more than one year after the date of acquisition or (B) which are subject to
a repricing arrangement (such as a Dutch auction) not more than one year after
the date of acquisition (and reprices at least yearly thereafter) which the
Person making the investment believes in good faith will permit such Person to
sell such security at par in connection with such repricing mechanism.
"The Orleans" means The Orleans Hotel and Casino.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
thereunder.
"Trade Payables" means, with respect to any Person, any accounts payable
or any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Restricted Subsidiaries
arising in the ordinary course of business in connection with the acquisition of
goods or services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
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<PAGE> 29
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means: (i) any Subsidiary of the Company that
is designated an Unrestricted Subsidiary by the Board of Directors of the
Company in the manner provided below; and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate any Restricted Subsidiary
(including any newly acquired or newly formed Subsidiary of the Company) to be
an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary; provided that: (A) any Guarantee by the Company or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of such Indebtedness and an "Investment" by the Company
or such Restricted Subsidiary (or both, if applicable) at the time of such
designation; (B) either (1) the Subsidiary to be so designated has total assets
of $1,000 or less or (2) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under Section 4.10 hereof; and (3) if applicable,
the "Incurrence" of Indebtedness and the "Investment" referred to in clause (A)
of this proviso would be permitted under Section 4.07 and Section 4.10 hereof.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that: (i) no Default or Event of Default shall
have occurred and be continuing at the time of or after giving effect to such
designation; and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such time,
have been permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of this Indenture. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means, with respect to any
Subsidiary of any Person, the ownership of all of the outstanding Capital Stock
of such Subsidiary (other than any director's qualifying shares) by such Person
or one or more Wholly Owned Restricted Subsidiaries of such Person.
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<PAGE> 30
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Authentication Order".............................................. 2.02
"Covenant Defeasance"............................................... 8.03
"DTC"............................................................... 2.03
"Event of Default".................................................. 6.01
"Excess Proceeds"................................................... 4.07
"Legal Defeasance".................................................. 8.02
"Paying Agent"...................................................... 2.03
"Registrar"......................................................... 2.03
"Restricted Payments"............................................... 4.10
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
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<PAGE> 31
(f) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the Commission from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantor and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form. If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid. A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture. The Trustee shall, upon a written order of
the Company signed by an Officer (an "Authentication Order"), authenticate Notes
for original issue up to the aggregate principal amount stated
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<PAGE> 32
in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding
at any time may not exceed such amount except as provided in Section 2.07
hereof. The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar. The Company initially
appoints The Depository Trust Company ("DTC") to act as Depositary with respect
to the Global Notes. The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Additional Interest, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company, Coast Resorts
or a Subsidiary of the Company) shall have no further liability for the money.
If the Company, Coast Resorts or a Subsidiary of the Company acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
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<PAGE> 33
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary, (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee or (iii) upon request of the Trustee or any
Holders if there shall have occurred and be continuing a Default or Event of
Default with respect to the Notes. Upon the occurrence of any of the preceding
events in (i), (ii) or (iii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global
Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that prior to the expiration of the
Restricted Period, transfers of beneficial interests in the Regulation S
Global Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
interests in any Unrestricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section
2.06(b)(i) above, the transferor of such beneficial interest must
deliver to the Registrar either (A) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing
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<PAGE> 34
information regarding the Participant account to be credited with such
increase or (B) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (B)(1) above. Upon consummation of an Exchange Offer by
the Company in accordance with Section 2.06(f) hereof, the requirements
of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon
receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes
contained in this Indenture and the Notes or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Note, then
the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
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<PAGE> 35
(D) the Registrar receives the following: (1) if the
holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or (2) if the holder of
such beneficial interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof; and, in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Registrar and the Company to the effect that
such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global
Note cannot be exchanged for, or transferred to Persons who take delivery
thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for
a Restricted Definitive Note or to transfer such beneficial interest to
a Person who takes delivery thereof in the form of a Restricted
Definitive Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
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<PAGE> 36
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Definitive
Note in the appropriate principal amount. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant
to this Section 2.06(c) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant
to this Section 2.06(c)(i) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to
a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that
it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following: (1) if the
holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of
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<PAGE> 37
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or (2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof; and,
in each such case set forth in this subparagraph (D), an Opinion
of Counsel in form reasonably acceptable to the Registrar and
the Company to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the
Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive Note,
then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the Trustee
shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iii) shall be registered in such name or names and
in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iii)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global
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<PAGE> 38
Note, in the case of clause (B) above, the 144A Global Note, in the case
of clause (C) above, the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following: (1) if the
Holder of such Definitive Notes proposes to exchange such Notes
for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or (2) if
the Holder of such Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of
a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and, in each
such case set forth in this subparagraph (D), an Opinion of
Counsel in form reasonably acceptable to the Registrar and the
Company to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs
in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note at any time. Upon receipt of a request for such an exchange
or transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in
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accordance with Section 2.02 hereof, the Trustee shall authenticate one
or more Unrestricted Global Notes in an aggregate principal amount equal
to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must deliver
a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule
903 or Rule 904, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
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(D) the Registrar receives the following: (1) if the
Holder of such Restricted Definitive Notes proposes to exchange
such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or (2) if the Holder of
such Restricted Definitive Notes proposes to transfer such Notes
to a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof; and, in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Registrar and the Company to the effect that
such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant
to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes issued
in exchange therefor or substitution thereof) shall bear the
legend in substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S.
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<PAGE> 41
PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS, OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES," AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Global Note
or Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
to this Section 2.06 (and all Notes issued in exchange therefor
or substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
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SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF COAST HOTELS AND CASINOS, INC."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the receipt of an Authenticating Order.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 4.17, 4.20 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part or (C) to register the transfer of or to exchange a Note between a
record date and the next succeeding interest payment date.
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(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06
to effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note. Every
replacement Note is an additional obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser. If the principal amount of any
Note is considered paid under Section 4.01 hereof, it ceases to be outstanding
and interest on it ceases to accrue. If the Paying Agent (other than the
Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption
date or maturity date, money sufficient to pay Notes payable on that date, then
on and after that date such Notes shall be deemed to be no longer outstanding
and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
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SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
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SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to April 1, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Additional Interest thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on April 1 of the
years indicated below:
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004............................................................. 104.750%
2005............................................................. 103.167%
2006............................................................. 101.583%
2007 and thereafter.............................................. 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, at any time prior to April 1, 2002, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes issued
under this Indenture with the Net Cash Proceeds to the Company of one or more
Public Equity Offerings or the capital contributions to the Company by Coast
Resorts with the Net Cash Proceeds to Coast Resorts of one or more Public Equity
Offerings at a redemption price equal to 109.500% of the aggregate principal
amount thereof plus accrued and unpaid interest and Additional Interest, if any,
to the redemption date; provided that at least $113.75 million in aggregate
principal amount of Notes remains outstanding immediately after the occurrence
of such redemption (excluding Notes held by the Company and its Subsidiaries)
and provided further, that such redemption occurs within 45 days of the date of
the closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. GAMING REDEMPTION
(a) Notwithstanding any other provision of this Indenture, if any
Gaming Authority notifies a holder or beneficial owner of Notes that: (1) the
holder or beneficial owner must obtain a license, qualification or finding of
suitability under an applicable gaming law and the holder or beneficial owner
does not apply for such license, qualification or finding of suitability within
30 days (or such shorter period required by the Gaming Authority); or (2) the
holder or beneficial owner will not be licensed, qualified or found suitable
under an applicable gaming law; then the Company shall have the right, at its
option, (1) to require that the holder or beneficial owner dispose of the
holder's or beneficial owner's Notes within 30 days (or such earlier date as
required by the Gaming Authority) of (A) the termination of the 30 day period
described above for the holder or beneficial owner to apply for a license,
qualification or finding of suitability or (B) the receipt of the notice from
the Gaming Authority that the holder or beneficial owner will not be licensed,
qualified or found suitable; or (2) to redeem the holder's or beneficial owner's
Notes at a price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Additional Interest, if any, to the date of redemption (or
such earlier date as required by the Gaming Authority or applicable gaming
laws).
(b) Immediately upon a determination that a holder or beneficial
owner will not be licensed, qualified or found suitable, the holder or
beneficial owner will have no further rights (1) to exercise any right conferred
by the Notes, directly or indirectly, through any trustee, nominee or any other
Person or entity, or (2) to receive any interest or other distribution or
payment with respect to the Notes or any remuneration in any form from the
Company for services rendered or otherwise, except the redemption price of the
Notes. The holder or beneficial owner applying for a license, qualification or
finding of suitability must pay all related costs.
(c) In connection with any redemption pursuant to this Section 3.08,
and except as may be required by a Gaming Authority, the Company shall be
required to comply with Sections 3.01 through 3.06 hereof.
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SECTION 3.09. NO MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than Coast Resorts, the Company or a
Subsidiary thereof, holds as of 12:00 noon Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Additional Interest, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the then applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Additional Interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
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SECTION 4.03. COMMISSION REPORTS AND REPORTS TO HOLDERS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Holders: (1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants; and (2) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. in each case, within the time periods specified
in the Commission's rules and regulations.
(b) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company.
(c) In addition, whether or not required by the rules and
regulations of the Commission, the Company shall file a copy of all such
information and reports referred to in clauses (a)(1) and (a)(2) above with the
Commission for public availability (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. For so long as any Notes remain outstanding,
the Company, Coast Resorts and each Subsidiary Guarantor shall furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such
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<PAGE> 50
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company, Coast Resorts and each Subsidiary Guarantor
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and each of the Company, Coast Resorts and each of the
Subsidiary Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.07. INCURRENCE OF INDEBTEDNESS AND ISSUANCES OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes and any
Guarantees thereof issued on the Closing Date and other Indebtedness existing on
the Closing Date, including the Old First Mortgage Notes until redeemed) or
issue any shares of Disqualified Stock or, in the case of any Restricted
Subsidiary, issue any shares of preferred stock; provided that the Company or
any Restricted Subsidiary may Incur Indebtedness and the Company may issue
Disqualified Stock if, after giving effect to the Incurrence of such
Indebtedness or the issuance of such Disqualified Stock, in each case after the
receipt and application of the proceeds therefrom, the Interest Coverage Ratio
would be greater than 2.0:1.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following:
(i) Indebtedness under the Credit Facility; provided that the aggregate
principal amount of all Indebtedness outstanding pursuant to this clause
(i) does not exceed $200.0 million;
(ii) Indebtedness owed (A) by a Restricted Subsidiary to the Company or (B)
by the Company or a Restricted Subsidiary to any Restricted Subsidiary;
provided that any event which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of
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<PAGE> 51
such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence
of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which are
used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness Incurred under clause (i), (ii), (iv), (vii), (viii) or
(ix) of this paragraph) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, accrued
interest, fees and expenses); provided that Indebtedness the proceeds of
which are used to refinance or refund the Notes or Indebtedness that is
pari passu with, or subordinated in right of payment to, the Notes shall
only be permitted under this clause (iii) if: (A) in case the Notes are
refinanced in part or the Indebtedness to be refinanced is pari passu
with the Notes, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made pari passu with, or subordinate in right
of payment to, the remaining Notes; (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the
Notes at least to the extent that the Indebtedness to be refinanced is
subordinated to the Notes; and (C) such new Indebtedness, determined as
of the date of Incurrence of such new Indebtedness, does not mature
prior to the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at least
equal to the remaining Average Life of the Indebtedness to be refinanced
or refunded; and provided further that in no event may Indebtedness of
the Company that is pari passu with or subordinated in right of payment
to the Notes be refinanced by means of any Indebtedness of any
Restricted Subsidiary pursuant to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or appeal bonds,
completion guarantees or similar instruments provided in the ordinary
course of business, (B) under Currency Agreements and Interest Rate
Agreements; provided that such agreements (1) are designed solely to
protect the Company or its Restricted Subsidiaries against fluctuations
in foreign currency exchange rates or interest rates and (2) do not
increase the Indebtedness of the obligor outstanding at any time other
than as a result of fluctuations in foreign currency exchange rates or
interest rates or by reason of fees, indemnities and compensation
payable thereunder; or (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from Guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), in a
principal amount not to exceed the gross proceeds actually received by
the Company or any Restricted Subsidiary in connection with such
disposition;
(v) Indebtedness of the Company, to the extent the net proceeds thereof are
promptly (A) used to purchase Notes tendered in an Offer to Purchase
made as a result of a Change in Control or (B) deposited to defease the
Notes under Article 8;
(vi) Indebtedness outstanding under Permitted FF&E Financings which are
either (x) Non-Recourse Indebtedness of the Company and its Restricted
Subsidiaries or (y) limited in principal amount,
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including all refinancings and replacements thereof, to $10.0 million at
any one time outstanding secured by Liens described in clause (vii) of
the definition of "Permitted Liens";
(vii) Indebtedness evidenced by letters of credit or similar instruments
issued in the ordinary course of business of the Company or any
Restricted Subsidiary including any such instrument to secure workers'
compensation or other insurance coverage or security or lease deposits;
(viii) Indebtedness, in addition to Indebtedness permitted under clauses (i)
through (vii) above and (ix) through (xii) below, in an aggregate
principal amount outstanding at any time not to exceed $15.0 million;
(ix) obligations under letters of credit, bonds and other surety arrangements
posted by the Company or any Subsidiary of the Company in order to
prevent the loss or material impairment of or to obtain a Gaming License
or as otherwise required by an order of any Gaming Authority or by
applicable law or regulation and consistent in character and amount with
industry practice;
(x) Indebtedness of the Company (and Guarantees thereof by the Subsidiaries
of the Company that are Guarantors) Incurred to finance the expansion or
refurbishment of an Existing Casino, provided the aggregate principal
amount of such Indebtedness at any time outstanding, together with any
Indebtedness applied to the refinancing thereof, does not exceed the
lesser of $20.0 million or 80% of the aggregate Project Costs of such
expansion or refurbishment;
(xi) following the date on which the New Casino is operating, Indebtedness of
the Company (and Guarantees thereof by the Subsidiaries of the Company
that are Guarantors) Incurred to finance the expansion or refurbishment
of an Existing Casino, provided the aggregate principal amount of such
Indebtedness at any time outstanding, together with any Indebtedness
applied to the refinancing thereof, does not exceed the lesser of $30.0
million or 80% of the aggregate Project Costs of such expansion or
refurbishment; and
(xii) the Guarantee by the Company or any Restricted Subsidiary of
Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of this Section
4.07.
(b) Notwithstanding any other provision of this Section 4.07, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.07 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness, due solely to the result of
fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.07, (1) Indebtedness Incurred under the Credit
Facility first shall be treated as Incurred pursuant to clause (i) of the second
paragraph of this Section 4.07(a) to the full extent of Indebtedness permitted
under such clause (it being understood that additional Indebtedness under the
Credit Facility may be incurred to the full extent permitted under any other
provision of this Indenture); (2) Guarantees, Liens or obligations with respect
to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included; and (3) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.07, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses (other than
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Indebtedness referred to in clause (1) of the preceding sentence), the Company,
in its sole discretion, shall classify, and from time to time may reclassify,
such item of Indebtedness and only be required to include the amount and type of
such Indebtedness in one of such clauses.
SECTION 4.08. NO SENIOR SUBORDINATED INDEBTEDNESS.
The Company shall not Incur any Indebtedness that is subordinate in
right of payment to any Senior Indebtedness unless such Indebtedness is pari
passu with, or subordinated in right of payment to, the Notes. No Guarantor
shall Incur any Indebtedness that is subordinate in right of payment to any
Senior Indebtedness of such Guarantor unless such Indebtedness is pari passu
with, or subordinated in right of payment to, the Parent Guarantee or Subsidiary
Guarantee, as the case may be, executed by such Guarantor.
SECTION 4.09. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, except Permitted Liens, unless the Notes and
the Subsidiary Guarantees are secured on an equal and ratable basis with the
Indebtedness secured.
SECTION 4.10. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly: (i) declare or pay any dividend or make any
distribution on or with respect to the Company's or any Restricted Subsidiaries'
Capital Stock (other than (A) dividends or distributions payable solely in
shares of its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to acquire shares of such Capital Stock and (B) pro
rata dividends or distributions on Common Stock of Restricted Subsidiaries held
by minority stockholders) held by Persons other than the Company or any of its
Restricted Subsidiaries; (ii) purchase, redeem, retire or otherwise acquire for
value any shares of Capital Stock of (A) the Company (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Person or (B) a Restricted Subsidiary (including options, warrants or other
rights to acquire such shares of Capital Stock) held by any Affiliate of the
Company (other than a Restricted Subsidiary) or any holder (or any Affiliate of
such holder) of 5% or more of the Capital Stock of the Company; (iii) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Company that is subordinated in right of payment to the
Notes or the Subsidiary Guarantees, except a payment of interest or principal at
the Stated Maturity thereof; or (iv) make any Investment, other than a Permitted
Investment, in any Person (such payments or any other actions described in
clauses (i) through (iv) above being collectively "Restricted Payments") if, at
the time of, and after giving effect to, the proposed Restricted Payment: (A) a
Default or Event of Default shall have occurred and be continuing; (B) the
Company could not Incur at least $1.00 of Indebtedness under Section 4.07(a)
hereof; or (C) the aggregate amount of all Restricted Payments (the amount of
any Restricted Payment with a fair market value in excess of $1.0 million, if
other than in cash, to be determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution)
made after the Closing Date shall exceed the sum of: (1) 50% of the aggregate
amount of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated
Net Income is a loss, minus 100% of the amount of such loss) (determined by
excluding income resulting from transfers of assets by the Company or a
Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one
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accounting period) beginning on January 1, 1999 and ending on the last day of
the last fiscal quarter preceding the Transaction Date for which reports have
been filed with the Commission or provided to the Trustee pursuant to Section
4.03; plus (2) the aggregate Net Cash Proceeds received by the Company after the
Closing Date from the issuance and sale permitted by this Indenture of its
Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of the Company, including an issuance or sale permitted by this
Indenture of Indebtedness of the Company for cash subsequent to the Closing Date
upon the conversion of such Indebtedness into Capital Stock (other than
Disqualified Stock) of the Company, or from the issuance to a Person who is not
a Subsidiary of the Company of any options, warrants or other rights to acquire
Capital Stock of the Company (in each case, exclusive of any Disqualified Stock
or any options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the Stated Maturity of the
Notes); plus (3) 100% of the aggregate capital contributions from Coast Resorts;
plus (4) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments) in any Person resulting from payments of
interest on Indebtedness, dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or any Restricted Subsidiary or
from the Net Cash Proceeds from the sale of any such Investment (except, in each
case, to the extent any such payment or proceeds are included in the calculation
of Adjusted Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments"), not to exceed, in each case, the amount of
Investments previously made by the Company or any Restricted Subsidiary in such
Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at said date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of payment to
the Notes including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of
Section 4.07(a); (iii) the repurchase, redemption or other acquisition of
Capital Stock of the Company or a Restricted Subsidiary (or options, warrants or
other rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock
(other than Disqualified Stock) of the Company or of Coast Resorts to the extent
the net proceeds thereof are contributed to the Company (or options, warrants or
other rights to acquire such Capital Stock); (iv) the redemption or repurchase
(and the payment of dividends by the Company to Coast Resorts to fund any
redemption or repurchase by Coast Resorts) of any debt or equity securities of
the Company, any Restricted Subsidiary or Coast Resorts required by, and in
accordance with, any order of any Gaming Authority, provided that the Company
has used its reasonable best efforts to effect a disposition of such securities
to a third-party and has been unable to do so; (v) the making of any principal
payment or the repurchase, redemption, retirement, defeasance or other
acquisition for value of Indebtedness of the Company or a Restricted Subsidiary
which is subordinated in right of payment to the Notes or the Subsidiary
Guarantee executed by such Restricted Subsidiary in exchange for, or out of the
proceeds of, a substantially concurrent offering of, shares of the Capital Stock
(other than Disqualified Stock) of the Company or of Coast Resorts to the extent
the net proceeds thereof are contributed to the Company or of Coast Resorts to
the extent the net proceeds thereof are contributed to the Company (or options,
warrants or other rights to acquire such Capital Stock); (vi) dividends or other
payments to Coast Resorts in an aggregate amount not to exceed $500,000 per
fiscal year to pay accounting, legal, corporate reporting and other
administrative expenses of Coast Resorts in the ordinary course of business;
(vii) payments or distributions to dissenting stockholders (and the payment of
dividends by the Company to Coast Resorts to fund any such payments) pursuant to
applicable law pursuant to or in connection with a consolidation, merger or
transfer of assets that complies with the provisions of this Indenture
applicable
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to mergers, consolidations and transfers of all or substantially all of the
property and assets of the Company or Coast Resorts; (viii) payments of amounts
required for any repurchase, redemption, retirement or other acquisition of any
Capital Stock of the Company or Coast Resorts (and the payment of dividends by
the Company to Coast Resorts to fund any such payments) or any options or rights
to acquire such Capital Stock of the Company or Coast Resorts owned by any
director, officer or employee of the Company or its Subsidiaries pursuant to any
management equity subscription agreement, stock option agreement or similar
agreement, or otherwise upon the death, disability, retirement or termination of
employment or departure from the Company; provided that the aggregate price paid
for all such repurchased, redeemed, retired or acquired Capital Stock of the
Company or options shall not exceed in the aggregate $2.0 million; (ix)
Investments in any Person so long as such Person is engaged in a line of
business in which the Company is permitted to be engaged pursuant to Section
4.22 in an aggregate amount not to exceed $15.0 million; (x) Restricted Payments
up to an amount equal to the Barbary Excess Net Cash Proceeds; (xi) payments for
the repurchase, redemption, retirement, defeasance or other acquisition of any
of the Subordinated Notes in an aggregate amount not to exceed $2.0 million;
(xii) Permitted Tax Distributions; (xiii) dividends or other payments (and the
payments of dividends by the Company to Coast Resorts to fund any such payments)
to the former partners of the Gold Coast Hotel and Casino, a Nevada partnership,
or the Barbary Coast Hotel and Casino, a Nevada partnership, in an aggregate
amount not to exceed $1.5 million to pay income tax liability incurred as such
partners and assessed after the date of this Indenture; or (xiv) Restricted
Payments in an aggregate amount not to exceed $15.0 million provided that,
except in the case of clauses (i), (iv), (vii), (viii) and (xiii), no Default or
Event of Default shall have occurred and be continuing or occur as a consequence
of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii), (vi), (xii) and
(xiii) thereof and an exchange of Capital Stock for Capital Stock or
Indebtedness referred to in clause (iii) or (v) thereof) and the Net Cash
Proceeds from any issuance of Capital Stock referred to in clauses (iii) and
(v), shall be included in calculating whether the conditions of clause (C) of
the first paragraph of this Section 4.10 have been met with respect to any
subsequent Restricted Payments.
SECTION 4.11. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to: (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary; (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary; (iii) make
loans or advances to the Company or any other Restricted Subsidiary; or (iv)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Agreement, this
Indenture or any other agreements in effect on the Closing Date, and any
modifications, extensions, refinancings, renewals, substitutions or replacements
of such agreements; provided that the encumbrances and restrictions in any such
modifications, extensions, refinancings, renewals, substitutions or replacements
are no less favorable in any material respect to the Holders than those
encumbrances or restrictions that are then in effect and that are being
modified, extended, refinanced, renewed, substituted or replaced; (ii) contained
in any Indebtedness incurred under
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an agreement described in clause (ii)(B)(1) of the definition of "Credit
Facility" and any modifications, extensions, refinancings, renewals,
substitutions or replacements of such agreement; provided that the encumbrances
and restrictions in any such modifications, extensions, refinancings, renewals,
substitutions or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in effect in
such agreement; (iii) existing under or by reason of applicable law; (iv)
contained in any agreement so long as such encumbrances and restrictions are no
more restrictive than those contained in this Indenture; (v) existing with
respect to any Person or the property or assets of such Person acquired by the
Company or any Restricted Subsidiary, existing at the time of such acquisition
and not incurred in contemplation thereof, which encumbrances or restrictions
are not applicable to any Person or the property or assets of any Person other
than such Person or the property or assets of such Person so acquired; (vi) in
the case of clause (iv) of the first paragraph of this Section 4.11, (A) that
restrict in a customary manner the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or contract or similar
property or asset, (B) existing by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or assets of
the Company or any Restricted Subsidiary not otherwise prohibited by this
Indenture, (C) arising or agreed to in the ordinary course of business, not
relating to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of the Company or any Restricted
Subsidiary in any manner material to the Company or any Restricted Subsidiary,
(D) existing by reason of customary provisions in leases entered into in the
ordinary course of business or (E) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business; (vii) with respect
to a Restricted Subsidiary and imposed pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock of, or property and assets of, such Restricted Subsidiary; (viii)
contained in the terms of any Indebtedness or any agreement pursuant to which
such Indebtedness was issued if (A) the encumbrance or restriction applies only
in the event of any default contained in such Indebtedness or agreement, (B) the
encumbrance or restriction is not materially more disadvantageous to the Holders
of the Notes than is customary in comparable financings and (C) the Company
believes that any such encumbrance or restriction will not materially affect the
Company's ability to make principal or interest payments on the Notes.
Nothing contained in this Section 4.11 shall prevent the Company or any
Restricted Subsidiary from (i) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 or (ii) restricting the sale
or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.12. LIMITATIONS ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF WHOLLY
OWNED RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary,
to transfer, sell, convey or otherwise dispose of any shares of Capital Stock of
a Wholly Owned Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) other than to the Company or
one of its Wholly Owned Restricted Subsidiaries unless: (i) such transfer, sale,
conveyance or disposition is of all of the Capital Stock of such Wholly Owned
Subsidiary; and (ii) the Net Cash Proceeds of any such transfer, sale,
conveyance or disposition are applied in accordance with clause (A) or (B) of
Section 4.17.
In addition, the Company shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any Capital Stock (other than, if necessary,
shares of its Capital Stock constituting
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directors' qualifying shares) to any Person other than to the Company or a
Wholly Owned Restricted Subsidiary of the Company.
SECTION 4.13. SUBSIDIARY GUARANTEES.
If a Restricted Subsidiary acquired or created after the date of this
Indenture has at any time a Fair Market Value of more than $250,000, then that
Restricted Subsidiary shall execute a Subsidiary Guarantee substantially in the
form of Exhibit E hereto and deliver an Opinion of Counsel, pursuant to which
such Subsidiary shall become a Subsidiary Guarantor, on a senior subordinated
basis (pursuant to subordination provisions substantially similar to those
described in Article 10 and Section 11.02), of the Company's payment obligations
under the Notes and this Indenture; provided that the aggregate Fair Market
Value of Restricted Subsidiaries of the Company that are not Subsidiary
Guarantors shall not at any time exceed $1.0 million.
SECTION 4.14. REDEMPTION OF THE OLD FIRST MORTGAGE NOTES.
On December 15, 2000, the Company shall redeem any Old First Mortgage
Notes then outstanding.
SECTION 4.15. CONSTRUCTION OF THE NEW CASINO.
Simultaneously with the closing of any transaction pursuant to which the
Company may incur the Indebtedness referred to in clause (ii) of the definition
of "Credit Facility", the Company shall provide to the Trustee: (i) a budget
setting forth in reasonable detail all amounts to be expended in connection with
the development, construction and opening the New Casino; (ii) an Officers'
Certificate certifying that to best of their knowledge after due inquiry: (A)
based upon the Company's internal projections, the Company has sufficient funds,
together with funds available under the Credit Facility, to cause the New Casino
to be completed and operating within 21 months of the closing of any transaction
pursuant to which the Company may incur the Indebtedness referred to in clause
(ii) of the definition of "Credit Facility"; and (B) the Company's internal
projections with respect to the development, construction and opening of the New
Casino are reasonable.
SECTION 4.16. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any Affiliate of the
Company or any Restricted Subsidiary, unless: (i) such transaction is on fair
and reasonable terms no less favorable to the Company or such Restricted
Subsidiary than could be obtained, at the time of such transaction or, if such
transaction is pursuant to a written agreement, at the time of the execution of
the agreement providing therefor, in a comparable arm's-length transaction with
a Person that is not such a holder or an Affiliate; and (ii) the Company
delivers to the Trustee: (a) with respect to any transaction or series of
related transactions the aggregate amount of which exceeds $2.0 million in
value, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such transaction complies with this covenant and has
been approved by a majority of the Independent Directors; and (b) with respect
to any transaction or series of related transactions the aggregate amount of
which exceeds $5.0 million in value, a written opinion of a nationally
recognized accounting, appraisal or investment banking firm stating that the
transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view.
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The foregoing limitation does not limit, and shall not apply to: (i) any
employment or related agreement or arrangement entered into by the Company or
any of its Subsidiaries in the ordinary course of business on terms customary in
the hotel-casino industry; (ii) transactions solely between or among the Company
and any of its Restricted Subsidiaries; (iii) payment of customary directors'
fees and indemnities; (iv) any Restricted Payments not prohibited by Section
4.10 and Investments permitted under clause (iii) of the definition of
"Permitted Investments"; (v) any Tax Agreement; and (vi) in the case of clause
(ii)(b) of the first paragraph of this Section 4.16 only, (A) any Construction
and Design Contract approved by all of the Independent Directors and (B) any
amounts paid pursuant to any agreement or arrangement existing on the Closing
Date between the Company and any of LGT Advertising, Las Vegas Dissemination,
Inc., RJS, Inc. or Nevada Wallboards, Inc., and any renewals or replacements of
any such agreement or arrangement, in each case with terms no less favorable to
the Company than those in effect on the Closing Date.
SECTION 4.17. ASSET SALES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, consummate any Asset Sale, unless (i) the consideration received by the
Company or such Restricted Subsidiary is at least equal to the fair market value
of the assets sold or disposed of and (ii) at least 75% of the consideration
(excluding contingent liabilities assumed by the transferee of any such assets)
received consists of cash or Temporary Cash Investments or the assumption of
Senior Indebtedness of the Company or a Subsidiary Guarantor, provided that the
Company or such Restricted Subsidiary is irrevocably released from all liability
under such Indebtedness. Within 360 days after the receipt of any Net Cash
Proceeds from an Asset Sale (other than Barbary Excess Net Cash Proceeds), the
Company shall or shall cause the relevant Restricted Subsidiary to (i)(A) apply
an amount equal to such Net Cash Proceeds to permanently repay Senior
Indebtedness of the Company or a Subsidiary Guarantor or (B) invest an equal
amount, or the amount not so applied pursuant to clause (A) (or enter into a
definitive agreement committing to so invest within 12 months after the date of
such agreement), in property or assets (other than current assets) of a nature
or type or that are used in a business (or in Capital Stock of a company having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business of,
the Company and its Restricted Subsidiaries existing on the date of such
investment and (ii) apply (no later than the end of the 12-month period referred
to in clause (i)) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (i)) as provided in the following paragraph of this Section
4.17. The amount of such excess Net Cash Proceeds required to be applied (or to
be committed to be applied) during such 12-month period as set forth in clause
(i) of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds." Pending application of such Net Cash
Proceeds by the end of the relevant period, the Company and its Restricted
Subsidiaries may use such Net Cash Proceeds to temporarily repay revolving
Indebtedness.
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.17 totals at least $10.0 million, the Company must commence, not later
than the fifteenth Business Day of such month, an Offer to Purchase to the
Holders and, to the extent required by the terms of any Pari Passu Indebtedness,
an Offer to Purchase to all holders of such Pari Passu Indebtedness, the maximum
principal amount of Notes and any such Pari Passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price equal to 100% of the
principal amount thereof, plus, in each case, accrued and unpaid interest and
Additional Interest, if any, to the Payment Date. If the aggregate principal
amount of Notes and any such Pari Passu Indebtedness tendered by holders thereof
exceeds the amount of Excess Proceeds, the Notes and Pari
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Passu Indebtedness shall be purchased on a pro rata basis. Upon the completion
of any such Offers to Purchase, the amount of Excess Proceeds shall be reset at
zero.
SECTION 4.18. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence (or its existence as a Pass-through Entity), and the
corporate, partnership or other existence of each of its Restricted
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Restricted
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Restricted Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders.
SECTION 4.19. LIMITATION ON STATUS AS INVESTMENT COMPANY
None of the Company or any of its subsidiaries shall become subject to
registration as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act of 1940.
SECTION 4.20. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL.
Within 20 days of the occurrence of a Change of Control, the Company
shall commence and thereafter shall consummate an Offer to Purchase for all
Notes then outstanding, at a purchase price equal to 101% of the principal
amount thereof, plus accrued interest and Additional Interest, if any, to the
Payment Date. The Company shall not be required to make an Offer to Purchase
pursuant to this Section 4.20 if a third party makes an Offer to Purchase in
compliance with this Section 4.20 and repurchases all Notes validly tendered and
not withdrawn under such Offer to Purchase.
SECTION 4.21. INDEPENDENT DIRECTORS.
Coast Resorts and the Company shall each cause its Board of Directors to
include at least two Independent Directors at all times.
SECTION 4.22. LINE OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary which, for
the most recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries or was the owner of
more than 10% of the consolidated assets of the Company and its Subsidiaries (in
each case as set forth on the most recently available consolidated financial
statements of the Company for such fiscal year) to, engage in any business other
than the gaming and hotel businesses and such business activities as are
incidental or related or complementary thereto.
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SECTION 4.23. PAYMENTS FOR CONSENT.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all Holders that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into the Company unless: (i) the Company shall be the
continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or that acquired or leased
such property and assets of the Company shall be a corporation organized and
validly existing under the laws of the United States of America or any state or
jurisdiction thereof and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, all of the obligations of the Company on
all of the Notes and under this Indenture; (ii) immediately after giving effect
to such transaction, no Default or Event of Default exists; (iii) immediately
after giving effect to such transaction on a pro forma basis, the Company or any
Person becoming the successor obligor of the Notes shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction; (iv) immediately after giving effect to
such transaction on a pro forma basis as if the transaction had occurred at the
beginning of the applicable four-quarter period, the Company, or any Person
becoming the successor obligor of the Notes, as the case may be, could Incur at
least $1.00 of Indebtedness under the first paragraph of Section 4.07(a); and
(v) the Company delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clauses (iii) and (iv))
and Opinion of Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision and that
all conditions precedent provided for herein relating to such transaction have
been complied with. Notwithstanding the foregoing clause (iii), (a) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company, and (b) the Company may merge with
an Affiliate incorporated solely for the purpose of reincorporating the Company
in another jurisdiction.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of
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the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; provided, however, that the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an Event of Default:
(a) default for 30 days in the payment when due of interest on, or
Additional Interest, if any, with respect to, the Notes, whether or not such
payment is prohibited by Article 10;
(b) default in the payment when due of principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
whether or not such payment is prohibited by Article 10;
(c) failure by the Company or any of its Subsidiaries to comply with
any of the provisions of Section 4.07, 4.10, 4.17, 4.20 or 5.01 hereof;
(d) failure by the Company or any of its Restricted Subsidiaries to
observe or perform any other covenant or agreement in this Indenture or the
Notes for 45 days after notice to the Company by the Trustee or the Holders of
at least 25% in aggregate principal amount of the Notes (including Additional
Notes, if any) then outstanding voting as a single class;
(e) the occurrence with respect to any issue or issues of
Indebtedness of the Company or any Significant Subsidiary having an outstanding
principal amount of $5.0 million or more in the aggregate for all such issues or
all such Persons, whether such Indebtedness now exists or shall hereafter be
created, of (i) an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated Maturity and
such Indebtedness has not been discharged in full or such acceleration has not
been rescinded or annulled within 30 days of such acceleration or (ii) the
failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default;
(f) a final judgment or final judgments for the payment of money
shall be entered by a court or courts of competent jurisdiction against the
Company or any of its Restricted Subsidiaries and such judgment or judgments are
not paid, discharged or stayed for a period of 60 days, provided that the
aggregate of all such judgments exceeds $5.0 million;
(g) except as permitted by this Indenture, any Note Guarantee is
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations under
such Guarantor's Note Guarantee;
(h) the revocation, termination, suspension or other cessation of
effectiveness for a period of more than 90 consecutive days of any Gaming
License that results in the cessation or suspension of
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gaming operations or any Liquor License that results in the cessation or
suspension of the ability to serve liquor, in each case at any of The Orleans,
Gold Coast, Barbary Coast, or New Casino (after it begins operations); provided
that the Company may relinquish a Gaming License or Liquor License with respect
to any of its hotel casinos other than The Orleans, the Gold Coast or the New
Casino if such relinquishment is, in the reasonable, good faith judgment of the
Board of Directors of the Company or the Restricted Subsidiary, as applicable,
both desirable in the conduct of the business of the Company and its Restricted
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders;
(i) the Company or any of its Restricted Subsidiaries pursuant to or
within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) generally is not paying its debts as they
become due; or
(j) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Company or any of
its Restricted Subsidiaries in an involuntary case; (ii) appoints a custodian of
the Company or any of its Restricted Subsidiaries or for all or substantially
all of the property of the Company or any of its Restricted Subsidiaries; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries; and, in any such case the order or decree remains unstayed and in
effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (i) or (j) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (i) or
(j) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
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constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Additional Interest, if any, or
interest on, the Notes (including in connection with an offer to purchase);
provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that may involve the
Trustee in personal liability or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders not joining in the giving of such
direction and may take any other action it deems proper that is not inconsistent
with any such direction received from Holders.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may not pursue any remedy with respect to this Indenture or the
Notes unless:
(a) the Holder gives the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in aggregate principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any costs, liability or
expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder to receive
payment of the principal of or premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, which right shall not be impaired or affected without
the consent of the Holder.
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A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Additional
Interest, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Additional Interest, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Additional Interest, if any, and
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal, premium and
Additional Interest, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee
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shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
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(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation
for its acceptance of this Indenture and services hereunder as may be separately
agreed in writing. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
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(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and interest and Additional Interest, if any, on such Notes when such
payments are due from the trust described in Section 8.04 hereof, (b) the
Company's obligations with respect to such Notes under Article 2 and Section
4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (d)
this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.19, 4.20, 4.21,
4.22 and 4.23 hereof and clauses (iii) and (iv) of Section 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that,
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with respect to the outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(c) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of Legal
Defeasance under Section 8.02 or Covenant Defeasance under Section 8.03 to the
outstanding Notes:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Additional Interest, if any, on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be, and
the Company must specify whether the Notes are being defeased to maturity or to
a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing either: (A) on the date of such deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness all or a portion
of the proceeds of which will be used to defease the Notes pursuant to this
Article 8 concurrently with such incurrence) or (B) insofar as Sections 6.01(g)
or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day
after the date of deposit and receipt of good and readily available funds;
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(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that on the
91st day following the deposit and receipt of good and readily available funds,
the trust funds will not be part of any "estate" formed by the bankruptcy or
reorganization of the Company or subject to the "automatic stay" under the
Bankruptcy Code or, in the case of an election under Section 8.03 hereof, will
be subject to a first priority perfected Lien in favor of the trustee for the
benefit of the Holders;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
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SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
SECTION 8.08. SATISFACTION AND DISCHARGE
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 2.02 through 2.07, 4.01, 4.02, 4.06, 4.18,
7.07, 7.08, 8.06 and 8.07 hereof, the obligations of Coast Resorts under
Sections 4.06 and 11.01, any Subsidiary Guarantor's obligations under its
Subsidiary Guarantee, and the Paying Agent's obligations under Section 8.08
shall survive until the Notes are no longer outstanding, after which only such
obligations under Sections 7.07, 8.06 and 8.08 shall survive) and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when: (a) either: (i) all the Notes
theretofore authenticated and delivered (other than destroyed, lost or stolen
Notes that have been replaced or paid and Notes that are subject to defeasance
as described under Article 8 have been delivered to the Trustee for
cancellation; or (ii) all Notes not theretofore delivered to the Trustee for
cancellation (A) have become due and payable, (B) will become due and payable at
maturity within 45 days or (C) are to be called for redemption within 45 days
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company, and
the Company has irrevocably deposited or caused to be deposited with the Trustee
funds in trust for such purpose, together with a statement by the Company that
such deposit is irrevocable, in an amount sufficient to pay and discharge the
entire Indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any, on) and interest and
Additional Interest, if any, on the Notes to the date of such deposit (in case
of Notes that have become due and payable) or to the Stated Maturity or
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redemption date, as the case may be; (b) the Company has paid or caused to be
paid all sums payable under this Indenture by the Company; and (c) the Company
and each Guarantor have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided in this
Indenture relating to the satisfaction and discharge of this Indenture have been
complied with.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, Coast
Resorts and the Trustee may amend or supplement this Indenture, any Note
Guarantee or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company or a
Guarantor pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
hereunder of any Holder;
(e) to provide for additional Subsidiary Guarantees as set forth in
Section 4.13 or for the release of a Guarantor in compliance with this
Indenture;
(f) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA; or
(g) to provide for the issuance of Additional Notes in accordance
with the limitations set forth in this Indenture.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
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SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Sections 4.17 and 4.20
hereof), any Note Guarantee and the Notes with the consent of the Holders of at
least a majority in principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, any Note
Guarantee or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including Additional
Notes, if any) voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes).
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes a notice briefly
describing the amendment, supplement or waiver. Any failure of the Holders to
receive such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or supplemental Indenture or
waiver. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 4.17 and 4.20 hereof;
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, interest or Additional Interest, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes (including Additional
Notes, if any) and a waiver of the payment default that resulted from such
acceleration);
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(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, interest or Additional Interest, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note (other than,
subject to the requirements of the TIA, a payment required by Sections 4.17 or
4.20 hereof); or
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
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ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full in cash of all Senior Indebtedness (whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of such Senior Indebtedness.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of Coast Resorts, the Company or any
Subsidiary Guarantor in a liquidation or dissolution of such entity or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such entity or its property, in an assignment for the benefit of
creditors of such entity or any marshaling of the assets and liabilities of such
entity:
(i) holders of Senior Indebtedness of such entity shall be
entitled to receive payment in full in cash of all Obligations due in
respect of such Senior Indebtedness (including interest after the
commencement of any such proceeding at the rate specified in the
applicable Senior Indebtedness whether or not allowed or allowable in
such proceeding) before Holders of the Notes shall be entitled to
receive any payment with respect to the Notes, the Parent Guarantee or a
Subsidiary Guarantee, as applicable (except that Holders may receive (A)
Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof);
and
(ii) until all Obligations due with respect to Senior
Indebtedness of such entity (as provided in clause (i) above) are paid
in full in cash, any distribution to which Holders would be entitled but
for this Article 10 shall be made to holders of Senior Indebtedness
(except that Holders of Notes may receive (A) Permitted Junior
Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their
interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.
(a) The Company may not make any payment in respect of the Notes nor
may Coast Resorts or any Subsidiary Guarantor make any payment with respect to
the Parent Guarantee or a Subsidiary Guarantee (other than (A) Permitted Junior
Securities and (B) payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof) if:
(i) a payment default on Designated Senior Indebtedness
occurs and is continuing beyond any applicable grace period (including
any acceleration of the Designated Senior Indebtedness); or
(ii) a default, other than a payment default, on Designated
Senior Indebtedness occurs and is continuing that then permits holders
of the Designated Senior Indebtedness to accelerate its maturity and the
Trustee receives a notice of the default (a "Payment Blockage Notice")
from the Company, a Representative, or the holders of a majority of
outstanding principal amount of any
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issue of Designated Senior Indebtedness. If the Trustee receives any
such Payment Blockage Notice, no subsequent Payment Blockage Notice
shall be effective for purposes of this Section unless and until (A) 360
days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice and (B) all scheduled payments of principal,
premium, interest and Additional Interest, if any, on the Notes that
have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been
waived for a period of not less than 180 days.
(b) Payments on the Notes, the Parent Guarantee and the Subsidiary
Guarantee may and shall be resumed:
(i) in the case of a payment default, upon the date on which
such default is cured or waived, or
(ii) in the case of a default referred to in clause (ii) of
Section 10.03(a) hereof, the earlier of the date on which such default
is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any
Designated Senior Indebtedness has been accelerated.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Indebtedness of the
acceleration, but failure to give such notice shall not affect the subordination
of the Notes to the Senior Indebtedness as provided in this Article 10.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness as their interests may appear or
their Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of all Obligations with respect to
Senior Indebtedness remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
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SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Indebtedness is paid in full and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the Holders of Notes have been
applied to the payment of Senior Indebtedness. A distribution made under this
Article 10 to holders of Senior Indebtedness that otherwise would have been made
to Holders of Notes is not, as between the Company and Holders, a payment by the
Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as
between the Company and Holders of Notes, the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on the Notes in
accordance with their terms; (ii) affect the relative rights of Holders of Notes
and creditors of the Company other than their rights in relation to holders of
Senior Indebtedness; or (iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Indebtedness to receive distributions
and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness
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and other Indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Indebtedness.
ARTICLE 11
NOTE GUARANTEES
SECTION 11.01. PARENT GUARANTEE.
Subject to this Article 11, Coast Resorts hereby unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the obligations of the
Company hereunder or thereunder, that: (a) the principal of and premium,
interest and Additional Interest, if any, on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal and premium, if any, and interest on the
Notes, if lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder shall be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that same will be promptly paid in full when due or performed in
accordance with the terms
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of the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, Coast Resorts shall be obligated
to pay the same immediately. Coast Resorts agrees that this is a guarantee of
payment and not a guarantee of collection.
Coast Resorts hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Coast Resorts hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that the Parent Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, Coast Resorts or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or Coast
Resorts, any amount paid by either to the Trustee or such Holder, this Parent
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Coast Resorts agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Coast Resorts
further agrees that, as between Coast Resorts, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Parent Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by Coast Resorts for
the purpose of this Parent Guarantee. Coast Resorts shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Parent Guarantee.
SECTION 11.02. SUBORDINATION OF GUARANTEES.
The Obligations of each Guarantor under its Note Guarantee pursuant to
this Article 11 shall be junior and subordinated to the Senior Indebtedness of
such Guarantor on the same basis as the Notes are junior and subordinated to
Senior Indebtedness of the Company. For the purposes of the foregoing sentence,
the Trustee and the Holders shall have the right to receive and/or retain
payments by any of the Guarantors only at such times as they may receive and/or
retain payments in respect of the Notes pursuant to this Indenture, including
Article 10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantees
not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar federal or state law to the extent applicable to the Note
Guarantees. To
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<PAGE> 82
effectuate the foregoing intention, the Trustee, the Holders and each Guarantor
hereby irrevocably agree that the obligations of each Guarantor will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 11, result in the
obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEES.
To evidence its Parent Guarantee set forth in Section 11.01, Coast
Resorts hereby agrees that a notation of such Parent Guarantee substantially in
the form included in Exhibit E shall be endorsed by an Officer of Coast Resorts
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of Coast Resorts by its President or one of its Vice
Presidents. Coast Resorts hereby agrees that its Parent Guarantee set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Parent Guarantee. If an Officer whose
signature is on this Indenture or on the Parent Guarantee no longer holds that
office at the time the Trustee authenticates the Note on which the Parent
Guarantee is endorsed, the Parent Guarantee shall be valid nevertheless. The
delivery of any Note by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of the Parent Guarantee set forth in this
Indenture on behalf of Coast Resorts.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.13 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Note Guarantees in accordance with Section 4.13 hereof, to
the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Except as otherwise provided in Section 11.06, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 11.06 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under this Indenture and the Note Guarantee on the terms set forth
herein or therein; and
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees
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<PAGE> 83
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Note Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of (a) a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, (b) a sale or other
disposition of all of the capital stock of any Guarantor or (c) the designation
of any Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the
terms of this Indenture, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor or in the event of its designation as an Unrestricted
Subsidiary) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Guarantor) will be released and
relieved of any obligations under its Note Guarantee; provided that the Net Cash
Proceeds of such sale or other disposition are applied in accordance with the
applicable provisions of this Indenture, including without limitation Section
4.17 hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.17 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note Guarantee
shall remain liable for the full amount of principal of and interest on the
Notes and for the other obligations of any Guarantor under this Indenture as
provided in this Article 11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
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<PAGE> 84
If to the Company or any Guarantor:
Coast Hotels and Casinos
c/o Coast Resorts, Inc.
4500 West Tropicana Avenue
Las Vegas, NV 89103
Telecopier No.: (702) 364-7499
Attention: President
With a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue, 46th Floor
Los Angeles, California 90071
Telecopier No.: (213) 229-7520
Attention: Karen E. Bertero, Esq.
If to the Trustee:
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101
Telecopier No.: (651) 229-6415
Attention: Corporate Trust Department
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it. If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
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<PAGE> 85
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the Note
Guarantees, this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such waiver is against public policy.
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<PAGE> 86
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors. All agreements of Coast Resorts in this Indenture shall bind its
successors, except as otherwise provided in Section 11.06.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 87
SIGNATURES
Dated as of March 23, 1999
COAST HOTELS AND CASINOS, INC.
By: [SIG ILLEGIBLE]
-------------------------------------
Name:
Title:
COAST RESORTS, INC.
By: [SIG ILLEGIBLE]
-------------------------------------
Name:
Title:
FIRSTAR BANK OF MINNESOTA, N.A.
By: [SIG ILLEGIBLE]
-------------------------------------
Name:
Title:
<PAGE> 88
EXHIBIT A
[Face of Note]
- --------------------------------------------------------------------------------
CUSIP No.:[ (144A)]
[ (Reg. S)]
[ (ISIN)]
9 1/2% Senior Subordinated Notes due 2009
No. ___ $175.0 million
COAST HOTELS AND CASINOS, INC.
promises to pay to
--------------------------------------------------------------
or registered assigns,
the principal sum of
-----------------------------------------------------------
Dollars on April 1, 2009.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated: March 23, 1999
COAST HOTELS AND CASINOS, INC.
By:
-------------------------------------
Name:
Title:
(SEAL)
This is one of the [Global] Notes referred to in the within-mentioned Indenture:
FIRSTAR BANK OF MINNESOTA, N.A.,
as Trustee
By:
-------------------------------------
Authorized Signatory
- --------------------------------------------------------------------------------
A-1
<PAGE> 89
[Back of Note]
9 1/2% Senior Subordinated Notes due 2009
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF COAST HOTELS AND
CASINOS, INC.](1)
[THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS, OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT
- --------
(1) This legend should be included on the Global Notes and omitted from
Definitive Notes.
A-2
<PAGE> 90
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES," AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](2)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Coast Hotels and Casinos, Inc., a Nevada corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 9 1/2% per annum from March 23, 1999 until maturity and shall pay the
Additional Interest payable pursuant to Section 2(d) of the Registration Rights
Agreement referred to below. The Company will pay interest and Additional
Interest semi-annually in arrears on April 1 and October 1 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 1, 1999. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Additional Interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Additional Interest to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Additional
Interest, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Additional Interest may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Additional Interest on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Firstar Bank of
Minnesota, N.A., the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying
- ----------
(2) This legend should be included on the Restricted Global Notes and
Restricted Definitive Notes and omitted from Unrestricted Global Notes
and Unrestricted Definitive Notes.
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<PAGE> 91
Agent or Registrar without notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 23, 1999 ("Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $175.0 million
in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes pursuant to this Paragraph
5 prior to April 1, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Additional Interest thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on April 1 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004............................................................. 104.750%
2005............................................................. 103.167%
2006............................................................. 101.583%
2007 and thereafter.............................................. 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to April 1, 2002, the Company may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Notes
issued under the Indenture with the Net Cash Proceeds to the Company of one or
more Public Equity Offerings or the capital contributions to the Company by
Coast Resorts with the Net Cash Proceeds to Coast Resorts of one or more Public
Equity Offerings at a redemption price equal to 109.500% of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional
Interest, if any, to the redemption date; provided that at least $113.75 million
in aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries) and provided further, that such redemption occurs within 45 days
of the date of the closing of such Public Equity Offering.
6. GAMING REDEMPTION.
(a) Notwithstanding the provisions of paragraph 5(a), if any Gaming
Authority notifies a holder or beneficial owner of Notes that: (1) the holder or
beneficial owner must obtain a license, qualification or finding of suitability
under an applicable gaming law and the holder or beneficial owner does not apply
for such license, qualification or finding of suitability within 30 days (or
such shorter period required by the Gaming Authority); or (2) the holder or
beneficial owner will not be licensed, qualified or found suitable under an
applicable gaming law; then the Company shall have the right, at its option, (1)
to require that the holder or beneficial owner dispose of the holder's or
beneficial owner's Notes within 30 days (or such earlier date as required by the
Gaming Authority) of (A) the termination of the 30 day period described above
for the holder or beneficial owner to apply for a license, qualification
A-4
<PAGE> 92
or finding of suitability or (B) the receipt of the notice from the Gaming
Authority that the holder or beneficial owner will not be licensed, qualified or
found suitable; or (2) to redeem the holder's or beneficial owner's Notes at a
price equal to 100% of the principal amount thereof, plus accrued and unpaid
interest and Additional Interest, if any, to the date of redemption (or such
earlier date as required by the Gaming Authority or applicable gaming laws).
(b) Immediately upon a determination that a holder or beneficial
owner will not be licensed, qualified or found suitable, the holder or
beneficial owner will have no further rights (1) to exercise any right conferred
by the Notes, directly or indirectly, through any trustee, nominee or any other
Person or entity, or (2) to receive any interest or other distribution or
payment with respect to the Notes or any remuneration in any form from the
Company for services rendered or otherwise, except the redemption price of the
Notes. The holder or beneficial owner applying for a license, qualification or
finding of suitability must pay all related costs.
7. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
8. OFFERS TO PURCHASE.
(a) Change of Control. Within 20 days of the occurrence of a Change
of Control, the Company shall commence and thereafter shall consummate an Offer
to Purchase for all Notes then outstanding, at a purchase price equal to 101% of
the principal amount thereof, plus accrued interest and Additional Interest, if
any, to the Payment Date. The Company shall not be required to make an Offer to
Purchase pursuant to this paragraph 8(a) if a third party makes an Offer to
Purchase in compliance with the Indenture and repurchases all Notes validly
tendered and not withdrawn under such Offer to Purchase.
(b) Asset Sales. The Company shall not, and shall not permit any
Restricted Subsidiary to, consummate any Asset Sale, unless (i) the
consideration received by the Company or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold or disposed of and (ii) at
least 75% of the consideration (excluding contingent liabilities assumed by the
transferee of any such assets) received consists of cash or Temporary Cash
Investments or the assumption of Senior Indebtedness of the Company or a
Subsidiary Guarantor, provided that the Company or such Restricted Subsidiary is
irrevocably released from all liability under such Indebtedness. Within 360 days
after the receipt of any Net Cash Proceeds from an Asset Sale (other than
Barbary Excess Net Cash Proceeds), the Company shall or shall cause the relevant
Restricted Subsidiary to (i)(A) apply an amount equal to such Net Cash Proceeds
to permanently repay Senior Indebtedness of the Company or a Subsidiary
Guarantor or (B) invest an equal amount, or the amount not so applied pursuant
to clause (A) (or enter into a definitive agreement committing to so invest
within 12 months after the date of such agreement), in property or assets (other
than current assets) of a nature or type or that are used in a business (or in
Capital Stock of a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, the Company and its Restricted Subsidiaries
existing on the date of such investment and (ii) apply (no later than the end of
the 12-month period referred to in clause (i)) such excess Net Cash Proceeds (to
the extent not applied pursuant to clause (i)) as provided in the following
paragraph of this subparagraph 8(b). The amount of such excess Net Cash Proceeds
required to be applied (or to be committed to be applied) during such 12-month
period as set forth in clause (i) of the preceding sentence and not applied as
so required by the end of
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<PAGE> 93
such period shall constitute "Excess Proceeds." Pending application of such Net
Cash Proceeds by the end of the relevant period, the Company and its Restricted
Subsidiaries may use such Net Cash Proceeds to temporarily repay revolving
Indebtedness.
If, as of the first day of any calendar month, the aggregate amount of Excess
Proceeds not theretofore subject to an Offer to Purchase pursuant to this
subparagraph 8(b) totals at least $10.0 million, the Company must commence, not
later than the fifteenth Business Day of such month, an Offer to Purchase to the
Holders and, to the extent required by the terms of any Pari Passu Indebtedness,
an Offer to Purchase to all holders of such Pari Passu Indebtedness, the maximum
principal amount of Notes and any such Pari Passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price equal to 100% of the
principal amount thereof, plus, in each case, accrued and unpaid interest and
Additional Interest, if any, to the Payment Date. If the aggregate principal
amount of Notes and any such Pari Passu Indebtedness tendered by holders thereof
exceeds the amount of Excess Proceeds, the Notes and Pari Passu Indebtedness
shall be purchased on a pro rata basis. Upon the completion of any such Offers
to Purchase, the amount of Excess Proceeds shall be reset at zero.
9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, any Note Guarantee or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes and Additional Notes, if any, voting as a single
class, and any existing default or compliance with any provision of the
Indenture, any Note Guarantee or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes and
Additional Notes, if any, voting as a single class. Without the consent of any
Holder of a Note, the Indenture, any Note Guarantee or the Notes may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes or to
alter the provisions of Article 2 of the Indenture (including the related
definitions) in a manner that does not materially adeversely affect any Holder,
to provide for the assumption of the Company's or Guarantor's obligations to
Holders of the Notes by a successor to the Company or a Guarantor in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely
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affect the legal rights under the Indenture of any such Holder, to comply with
the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, to provide for the
Issuance of Additional Notes in accordance with the limitations set forth in the
Indenture, or to allow any Guarantor to execute a supplemental indenture to the
Indenture and/or a Note Guarantee with respect to the Notes.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an
Event of Default: (a) default for 30 days in the payment when due of interest
on, or Additional Interest, if any, with respect to, the Notes, whether or not
such payment is prohibited by Article 10 of the Indenture; (b) default in the
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, whether or not such payment is
prohibited by Article 10 of the Indenture; (c) failure by the Company or any of
its Subsidiaries to comply with any of the provisions of Section 4.07, 4.10,
4.17, 4.20 or 5.01 of the Indenture; (d) failure by the Company or any of its
Restricted Subsidiaries to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
45 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes (including Additional Notes, if
any) then outstanding voting as a single class; (e) the occurrence with respect
to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $5.0 million or more in the
aggregate for all such issues or all such Persons, whether such Indebtedness now
exists or shall hereafter be created, of (i) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration or (ii) the failure to make a principal payment at the final (but
not any interim) fixed maturity and such defaulted payment shall not have been
made, waived or extended within 30 days of such payment default; (f) a final
judgment or final judgments for the payment of money shall be entered by a court
or courts of competent jurisdiction against the Company or any of its Restricted
Subsidiaries and such judgment or judgments are not paid, discharged or stayed
for a period of 60 days, provided that the aggregate of all such judgments
exceeds $5.0 million; (g) except as permitted by this Indenture, any Note
Guarantee is held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under such Guarantor's Note Guarantee; (h) the revocation,
termination, suspension or other cessation of effectiveness for a period of more
than 90 consecutive days of any Gaming License that results in the cessation or
suspension of gaming operations or any Liquor License that results in the
cessation or suspension of the ability to serve liquor, in each case at any of
The Orleans, Gold Coast, Barbary Coast, or New Casino (after it begins
operations); provided that the Company may relinquish a Gaming License or Liquor
License with respect to any of its hotel casinos other than The Orleans, the
Gold Coast or the New Casino if such relinquishment is, in the reasonable, good
faith judgment of the Board of Directors of the Company or the Restricted
Subsidiary, as applicable, both desirable in the conduct of the business of the
Company and its Restricted Subsidiaries, taken as a whole, and not
disadvantageous in any material respect to the Holders; (i) the Company or any
of its Restricted Subsidiaries pursuant to or within the meaning of Bankruptcy
Law: (i) commences a voluntary case, (ii) consents to the entry of an order for
relief against it in an involuntary case, (iii) consents to the appointment of a
custodian of it or for all or substantially all of its property, (iv) makes a
general assignment for the benefit of its creditors, or (v) generally is not
paying its debts as they become due; or (j) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any of its Restricted Subsidiaries in an involuntary
case; (ii) appoints a custodian of the Company or any of its Restricted
Subsidiaries or for all or substantially all of the property of the Company or
any of its Restricted Subsidiaries; or (iii) orders the liquidation of the
Company or any of its Restricted
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Subsidiaries; and, in any such case the order or decree remains unstayed and in
effect for 60 consecutive days. If any Event of Default (other than an Event of
Default arising from certain events of bankruptcy or insolvency) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
will become due and payable without further action or notice. If an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy to
collect the payment of principal, premium, if any, and interest on the Notes or
to enforce the performance of any provision of the Notes or the Indenture. The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding. A delay or omission by the
Trustee or any holder of a note in exercise any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.
14. SUBORDINATION. The Notes and the Note Guarantees are
subordinated in right of payment, to the extent and in the manner provided in
Article 10 and Section 11.2 of the Indenture, to the prior payment in full of
all Senior Indebtedness. The Company agrees, and each Holder by accepting a Note
consents and agrees, to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of Notes and may otherwise
deal with the Company or any Affiliate of the Company with the same rights it
would have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder, of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or the
Guarantor under the Notes or the Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
17. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of March 23, 1999, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
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contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Coast Hotels and Casinos, Inc.
c/o Coast Resorts, Inc.
4500 West Tropicana Avenue
Las Vegas, NV 89103
Telecopier No.: (702) 364-7499
Attention: President
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NOTE GUARANTEE
Coast Resorts, Inc., a Nevada corporation, (hereinafter referred to as
the "Guarantor" which term includes any successors or assigns under the
Indenture and any additional Subsidiary Guarantors), has irrevocably and
unconditionally guaranteed (i) the due and punctual payment of the principal of,
premium, if any, and interest and Additional Interest, if any, on the 9 1/2%
Senior Subordinated Notes due 2009 (the "Notes") of Coast Hotels and Casinos,
Inc., a Nevada corporation (the "Company"), whether at stated maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and premium, if any, and (to the extent permitted by law)
interest on any interest or Additional Interest, if any, on the Notes, and the
due and punctual performance of all other obligations of the Company, to the
Holders or the Trustee all in accordance with the terms set forth in Article 11
of the Indenture and (ii) in case of any extension of time of payment or renewal
of any Notes or any such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of each Guarantor to the Holders and to the Trustee
pursuant to this Note Guarantee and the Indenture are expressly set forth in
Article 11 of the Indenture and reference is hereby made to such Indenture for
the precise terms of this Note Guarantee.
The obligations of each Guarantor to the Holders and to the Trustee
pursuant to this Note Guarantee and the Indenture are expressly subordinated to
Senior Indebtedness of the Guarantor as set forth in Section 11.2 and Article 10
of the Indenture and reference is hereby made to such Section and Article for
the precise terms of such subordination.
No stockholder, employee, officer, director or incorporator, as such,
past, present or future of each Guarantor shall have any liability under this
Note Guarantee by reason of his or its status as such stockholder, employee,
officer, director or incorporator.
This is a continuing Note Guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and Indenture or until released or has no further force or effect in accordance
with the Indenture and shall inure to the benefit of the successors and assigns
of the Trustee and the Holders, and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This is
a Note Guarantee of payment and not of collectibility.
This Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
The Obligations of each Guarantor under its Note Guarantee shall be
limited to the extent necessary to insure that it does not constitute a
fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
This Note Guarantee shall be governed by the laws of the state of New
York.
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Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of March 23, 1999 COAST RESORTS, INC.
By:
-------------------------------------
Name:
Title:
(SEAL)
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<PAGE> 99
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
-----------------------------------
(Insert assignee's legal name)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-------------------------
Your Signature:
-------------------------------
(Sign exactly as your name
appears on the face of this Note)
Signature Guarantee*:
----------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
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<PAGE> 100
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.17 or 4.20 of the Indenture, check the appropriate box below:
[ ] Section 4.17 [ ] Section 4.20
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.17 or Section 4.20 of the Indenture, state the
amount you elect to have purchased:
$________________
Date:
-------------------------
Your Signature:
-------------------------------
(Sign exactly as your name
appears on the face of this Note)
Tax Identification No.:
-----------------------
Signature Guarantee*:
-------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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<PAGE> 101
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease in Amount of decrease in of this Global Note authorized officer of
Principal Amount Principal Amount following such decrease Trustee or Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
* This schedule should be included only if the Note is issued in global
form.
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<PAGE> 102
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Coast Hotels and Casinos, Inc.
c/o Coast Resorts, Inc.
4500 West Tropicana Avenue
Las Vegas, NV 89103
Telephone No.: (702) 365-7111
Attention: General Counsel
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101
Telephone No.: (651) 229-2600
Attention: Corporate Trust Department
Re: 9 1/2% Senior Subordinated Notes due 2009
Reference is hereby made to the Indenture, dated as of March 23, 1999
(the "Indenture"), among Coast Hotels and Casinos, Inc., as issuer (the
"Company"), Coast Resorts, Inc., as guarantor, and Firstar Bank of Minnesota,
N.A., as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor
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and any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed in,
on or through the facilities of a designated offshore securities market and
neither such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE
SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and
in accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company
or a subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities
Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or
Rule 904, and the Transferor hereby further certifies that it has not
engaged in any general solicitation within the meaning of Regulation D
under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global
Note or Restricted Definitive Notes and the requirements of the
exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and
(2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than $100,000, an Opinion of Counsel acceptable
to the Company provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect
that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or
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Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Definitive
Notes and in the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i)
The Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule 144,
Rule 903 or Rule 904 and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
------------------------------
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ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] Unrestricted Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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<PAGE> 106
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Coast Hotels and Casinos, Inc.
c/o Coast Resorts, Inc.
4500 West Tropicana Avenue
Las Vegas, NV 89103
Telephone No.: (702) 365-7111
Attention: General Counsel
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101
Telephone No.: (651) 229-2600
Attention: Corporate Trust Department
Re: 9 1/2% Senior Subordinated Notes due 2009
Dear Sirs:
Reference is hereby made to the Indenture, dated as of March 23, 1999
(the "Indenture"), among Coast Hotels and Casinos, Inc., as issuer (the
"Company"), Coast Resorts, Inc., as guarantor, and Firstar Bank of Minnesota,
N.A., as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
__________________________, (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
C-1
<PAGE> 107
EXHIBIT C
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE> 108
EXHIBIT C
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
------------------------------
C-3
<PAGE> 109
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Coast Hotels and Casinos, Inc.
c/o Coast Resorts, Inc.
4500 West Tropicana Avenue
Las Vegas, NV 89103
Telephone No.: (702) 365-7111
Attention: General Counsel
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101
Telephone No.: (651) 229-2600
Attention: Corporate Trust Department
Re: 9 1/2% Senior Subordinated Notes due 2009
Dear Sirs:
Reference is hereby made to the Indenture, dated as of March 23, 1999
(the "Indenture"), among Coast Hotels and Casinos, Inc., as issuer (the
"Company"), Coast Resorts, Inc., as guarantor, and Firstar Bank of Minnesota,
N.A., as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $100,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in
D-1
<PAGE> 110
EXHIBIT D
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
----------------------------------------
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
------------------------------
D-2
<PAGE> 111
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Coast Hotels and Casinos, Inc. (or its permitted successor), a
Nevada corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and Firstar Bank of Minnesota,.
N.A., as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 23, 1999 providing for
the issuance of an aggregate principal amount of up to $175,000,000 of 9 1/2%
Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby
agrees as follows:
(a) Along with all Guarantors named in the Indenture, to
jointly and severally Guarantee to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and
assigns, the Notes or the obligations of the Company hereunder or
thereunder, that:
(i) the principal of and interest on the Notes will
be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the
overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders
or the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately.
E-1
<PAGE> 112
EXHIBIT E
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes
or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any
provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of
a guarantor.
(c) The following is hereby waived: diligence presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture, and the Guaranteeing Subsidiary accepts all obligations of a
Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to
either the Company or the Guarantors, any amount paid by either to the
Trustee or such Holder, this Note Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article
6 of the Indenture for the purposes of this Note Guarantee,
notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and
(y) in the event of any declaration of acceleration of such obligations
as provided in Article 6 of the Indenture, such obligations (whether or
not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 11.03 of the Indenture, after giving
effect to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such
other Guarantor under Article 11 of the Indenture, this new Note
Guarantee shall be limited to the maximum amount permissible such that
the obligations of such Guarantor under this Note Guarantee will not
constitute a fraudulent transfer or conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
E-2
<PAGE> 113
EXHIBIT E
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor
unless:
(i) subject to Sections 11.05 and 11.06 of the Indenture,
the Person formed by or surviving any such consolidation or merger (if
other than such Guarantor) unconditionally assumes all the obligations
of such Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Indenture
and the Note Guarantee on the terms set forth therein or herein; and
(ii)immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of the
Indenture as though all of such Note Guarantees had been issued at the date of
the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 11.06 of
Article 11 of the Indenture, and notwithstanding clauses (a) and (b) above,
nothing contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
5. RELEASES.
(a) In the event of (a) a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or otherwise, (b) a
sale or other disposition of all of the capital stock of any Guarantor or (c)
the designation of any Subsidiary Guarantor as an Unrestricted Subsidiary in
accordance with the terms of this Indenture, then such Guarantor (in the event
of a sale or other disposition, by way of merger, consolidation or otherwise, of
all of the capital stock of such Guarantor or in the event of its designation as
an Unrestricted Subsidiary) or the corporation acquiring the property (in the
event of a sale or other disposition of all of the assets of such Guarantor)
will be released and relieved of any obligations under its Note Guarantee;
provided that the Net Cash Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.17 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to
the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without limitation
Section 4.17 of the Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.
E-3
<PAGE> 114
EXHIBIT E
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in Article 11 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
E-4
<PAGE> 115
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[GUARANTEEING SUBSIDIARY]
By:
-------------------------------------
Name:
Title:
COAST HOTELS AND RESORTS, INC.
By:
-------------------------------------
Name:
Title:
[EXISTING GUARANTORS]
By:
-------------------------------------
Name:
Title:
FIRSTAR BANK OF MINNESOTA, N.A.
as Trustee
By:
-------------------------------------
Authorized Signatory
E-5
<PAGE> 1
EXHIBIT 4.6
--------------
First Supplemental Indenture
dated as of March 5, 1999
------------------
with respect to:
INDENTURE
Dated as of January 30, 1996
COAST HOTELS AND CASINOS, INC.
as Issuer
13% FIRST MORTGAGE NOTES DUE 2002
COAST RESORTS, INC.
and
COAST WEST, INC.
as Guarantors
FIRSTAR BANK OF MINNESOTA, N.A.
as successor Trustee to
American Bank National Association
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE dated as of March 5, 1999 (this
"Supplemental Indenture") between COAST HOTELS AND CASINOS, INC., a Nevada
corporation (the "Company"), COAST RESORTS, INC., a Nevada corporation ("Coast
Resorts"), as guarantor, COAST WEST, INC., a Nevada corporation ("Coast West"),
as guarantor (together with Coast Resorts, the "Guarantors") and FIRSTAR BANK OF
MINNESOTA, N.A., a national banking association organized under the laws of the
United States, as trustee (the "Trustee") for the securities issued under the
Indenture dated as of January 30, 1996 (the "Indenture") among the Company, the
Guarantors and the Trustee, as successor trustee to American Bank National
Association.
Recitals
A. Pursuant to and in accordance with the terms of the Indenture
dated as of January 30, 1996, the Company established and issued debt securities
denominated as the "13% First Mortgage Notes due 2002" (the "Notes") and entered
into the related security documents (the "Security Documents"). Notes in the
aggregate principal amount of $175,000,000 are outstanding on the date of this
Supplemental Indenture.
B. In accordance with Section 9.02 of the Indenture, the Company
has obtained the written consent of the holders of Notes representing not less
than a majority in principal amount of the outstanding Notes to certain
amendments to the Indenture and the Security Documents.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises herein contained and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed as follows:
Agreements
Section 1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Indenture.
Section 2. Condition to Effectiveness; Operative Date. This Supplemental
Indenture shall become effective as of the date hereof. The terms of this
Supplemental Indenture will become operative only upon acceptance by the Company
for payment of tendered Notes pursuant to the terms of the Company's Offer to
Purchase and Consent Solicitation Statement dated February 19, 1999, as such
offer may be amended from time to time. The date that this Supplemental
Indenture becomes operative shall be denominated herein as the "Operative Date."
2
<PAGE> 3
Section 3. Amendment to Indenture.
(a) The Indenture is hereby amended by deleting therefrom the following
provisions in their entirety:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Existing Section Number Caption
----------------------------------------------------------------------------------------
<S> <C>
Section 4.03 SEC Reports
----------------------------------------------------------------------------------------
Section 4.05 Taxes
----------------------------------------------------------------------------------------
Section 4.06 Stay, Extension and Usury Laws
----------------------------------------------------------------------------------------
Section 4.07 Restricted Payments
----------------------------------------------------------------------------------------
Section 4.08 Dividend and Other Payment Restrictions Affecting
Subsidiaries
----------------------------------------------------------------------------------------
Section 4.09 Incurrence of Indebtedness and Issuance of Preferred
Stock
----------------------------------------------------------------------------------------
Section 4.10 Asset Sales
----------------------------------------------------------------------------------------
Section 4.11 Transactions with Affiliates
----------------------------------------------------------------------------------------
Section 4.12 Liens
----------------------------------------------------------------------------------------
Section 4.13 Line of Business
----------------------------------------------------------------------------------------
Section 4.14 Corporate Existence
----------------------------------------------------------------------------------------
Section 4.15 Change of Control
----------------------------------------------------------------------------------------
Section 4.16 Limitation on Issuances and Sales of Capital Stock of
Wholly Owned Subsidiaries
----------------------------------------------------------------------------------------
Section 4.17 Subsidiary Guarantees
----------------------------------------------------------------------------------------
Section 4.18 Maintenance of Insurance
----------------------------------------------------------------------------------------
Section 4.19 Limitation on Status as Investment Company
----------------------------------------------------------------------------------------
Section 4.20 Further Assurances
----------------------------------------------------------------------------------------
Section 4.21 Limitations on Activities of Coast West
----------------------------------------------------------------------------------------
Section 4.23 Limitations on Use of Proceeds
----------------------------------------------------------------------------------------
Section 4.24 Limitations on Construction
----------------------------------------------------------------------------------------
Section 4.25 Payments for Consent
----------------------------------------------------------------------------------------
Section 4.26 Board of Directors
----------------------------------------------------------------------------------------
Section 5.01 Merger, Consolidation or Sale of Assets
----------------------------------------------------------------------------------------
</TABLE>
(b) The Indenture is hereby amended by deleting therefrom
subsections (b) and (c) of Section 4.04 captioned "Compliance Certificate."
(c) The Indenture is hereby amended by deleting therefrom
subsections (v), (vi), (vii), (xi) and (xii) of Section 6.01 captioned "Events
of Default."
3
<PAGE> 4
(d) Each of the following provisions of the Indenture is hereby
renumbered as indicated below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Section Number New Section Number Caption
-----------------------------------------------------------------------------------
<S> <C> <C>
4.04(a) 4.03 Compliance Certificate
-----------------------------------------------------------------------------------
4.22 4.04 No Amendment to Subordinate
Provisions
-----------------------------------------------------------------------------------
5.02 5.01 Successor Corporation
Substituted
-----------------------------------------------------------------------------------
6.01(viii) 6.01(v)
-----------------------------------------------------------------------------------
6.01(ix) 6.01(vi)
-----------------------------------------------------------------------------------
6.01(x) 6.01(vii)
-----------------------------------------------------------------------------------
</TABLE>
(e) Any definitions used exclusively in the deleted provisions of
the Indenture set forth in paragraphs (a), (b) and (c) of this Section 3 are
hereby deleted in their entirety from the Indenture.
(f) Section 11.04 captioned "Guarantors May Consolidate, Etc., on
Certain Terms" is hereby amended and restated in its entirety as follows:
"SECTION 11.04 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN
TERMS.
(a) Except as set forth in Articles 4 or 5 hereof
and except for the merger of Coast West into the Company, no
Guarantor shall consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person) another Person
whether or not affiliated with such Guarantor unless (i) subject
to the provisions of Section 11.05 hereof the Person formed by
or surviving any such consolidation or merger (if other than
such Guarantor) assumes, pursuant to a supplemental indenture
and appropriate Security Documents in form and substance
reasonably satisfactory to the Trustee, all the Obligations of
such Guarantor under the Notes, the Indenture and the Security
Documents; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such
Guarantor, or any Person formed by or surviving any such
consolidation or merger, (A) would have Consolidated Net Worth
(immediately after giving effect to such transaction) equal to
or greater than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction and (B) except with
respect to consolidations or mergers between Guarantors, would
have a Fixed Charge Coverage Ratio (immediately after giving
effect to such transaction) no lower than the Fixed Charge
Coverage Ratio of such Guarantor immediately preceding the
transaction; and (iv) such transaction will not result in the
loss or suspension or material impairment of any material Gaming
License. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all
of the Notes issuable hereunder which theretofore shall not have
been signed by
4
<PAGE> 5
the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Note Guarantees
theretofore and thereafter issued in accordance with the terms
of this Indenture as though all of such Note Guarantees had been
issued at the date of the execution hereof.
(b) The Trustee, subject to the provisions of
Section 11.05 hereof, shall be entitled to receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence
that any such consolidation, merger, sale or conveyance, and any
such assumption of Obligations, comply with the provisions of
this Section 11.04. Such certificate and opinion shall comply
with the provisions of Section 12.05."
(f) Section 11.05 captioned "Releases of Note Guarantees" is hereby
amended and restated in its entirety as follows:
"SECTION 11.05 RELEASES OF NOTE GUARANTEES.
In the event of a sale or other disposition of any
Guarantor, by way of merger or consolidation, or a sale or other
disposition of all of the Capital Stock of any Guarantor (other
than the disposition of the Capital Stock of Coast West to the
Company), then such Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or
otherwise, of all of the Capital Stock of such Guarantor) shall
be released and relieved of any Obligations under its Note
Guarantee; provided that (i) immediately after giving effect to
such transaction, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence
thereof and (ii) the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable
provisions of this Indenture. Coast West shall be released and
relieved of any Obligations under its Note Guarantee at any time
that it so elects; provided that Coast West has repaid to the
Company in cash the aggregate amount of any Indebtedness owed to
the Company by Coast West as of the date of such election and
release. If Coast West merges with the Company and the Company
is the surviving entity, then Coast West shall be automatically
relieved of any Obligations under its Note Guarantee at the
effective time of the merger. Upon delivery by the Company to
the Trustee of an Officers' Certificate and Opinion of Counsel,
to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture,
the Trustee shall execute any documents reasonably required in
order to evidence the release of any such Guarantor from its
obligations under its Note Guarantee. Any Guarantor not released
from its obligations under its Note Guarantee shall remain
liable for the full amount of principal of, premium and
Liquidated Damages, if any, and interest on the Notes and for
the other Obligations of any Guarantor under this Indenture as
provided in this Article 11."
5
<PAGE> 6
Section 4. Effective Date and Operative Date of this Supplemental
Indenture. This Supplemental Indenture shall be effective as of the date hereof
and shall be operative as of the Operative Date.
Section 5. Indenture Ratified. Except as hereby otherwise expressly
provided, the Indenture is in all respects ratified and confirmed, and all the
terms, provisions and conditions thereof shall be and remain in full force and
effect.
Section 6. Counterparts. This Supplemental Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 7. Supplemental Indenture is an Amendment to Indenture. This
Supplemental Indenture is an amendment to the Indenture. The Indenture and this
Supplemental Indenture shall be read together from and after the Operative Date.
Section 8. Governing Law. This Supplemental Indenture shall be governed
by and construed in accordance with the internal laws of the State of New York.
[Remainder of Page Intentionally Blank]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year first above written.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
Title: Chief Executive Officer
COAST RESORTS, INC., as Guarantor
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
Title: Chief Executive Officer
COAST WEST, INC., as Guarantor
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
Title: President
FIRSTAR BANK OF MINNESOTA, N.A.,
as Trustee
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
Title: Vice President
7
<PAGE> 1
EXHIBIT 10.36
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into on this 1st day of
January 1999 by and between Coast Hotels & Casinos, Inc., a Nevada Corporation
("Employer") and Harlan Braaten ("Employee").
1. SCOPE OF DUTIES. Employer hereby employs Employee as its President and
Chief Operating Officer to perform such executive duties as are commonly
attendant upon these offices and such further normal executive duties as
may be specified from time to time by the Board of Directors through their
designated representative. In construing the provisions of this Agreement,
"Employer" shall also include Coast Resorts, Inc. and Coast West, Inc. and
any subsequently formed corporations affiliated with Employer wherein
Employee is chosen to be President and Chief Operating Officer by the Board
of Directors.
2. TERM OF AGREEMENT. The term of this agreement shall commence on
January 1, 1999 and terminate on December 31, 2001. Employee has
represented to Employer that he is not currently under contract to any
entity other than Coast Hotels & Casinos, Inc.
3. EMPLOYEE'S COMPENSATION PACKAGE. Employee shall receive:
(a) An initial annual salary of $250,000 during 1999 increasing to
$300,000 on January 1, 2000.
(b) A bonus of at least fifty percent (50%) of his annual salary if
the EBITDA target in each year's budget (as approved by the Chief
Executive Officer and ratified by the Board of Directors) is met for
each year of this Agreement.
4. STOCK OPTIONS. Employer will provide to Employee on January 1, 1999,
stock options for 30,415 shares of Coast Resorts, Inc. with a strike price
of $100 per share. The option will be fully vested as to one-third of the
shares on the grant date of January 1, 1999 and will vest in an additional
one-third of the shares on January 1, 2000 and on the final one-third of
the
1
<PAGE> 2
shares on January 1, 2001 provided that Employee is still employed by
Employer on the date the options vest. Notwithstanding the foregoing, it is
the understanding of both Employer and Employee that the options will be
granted pursuant to an IRS qualified Stock Option and Stock Appreciation
Rights plan and that Employer and Employee will cooperate fully in insuring
that the options are issued in connection with a qualified Stock Option and
Stock Appreciation Rights Plan. If Employee resigns during the term of this
agreement or thereafter or is terminated for any reason, he will have 90
days to exercise and pay for all or part of his vested stock options.
5. GAMING LICENSURE. Employee acknowledges and agrees that the laws of
Nevada require that Employee may be investigated for suitability and
licensing. Employee shall fully cooperate with the appropriate governmental
authorities in order that he may obtain all certificates, permits and
licenses required in connection with his employment hereunder. Employee
further acknowledges and agrees that in the event he fails to so cooperate
or he fails to obtain, within the time specified by the Nevada Gaming
Commission and all other governmental agencies having jurisdiction, or
thereafter maintain, in good standing and in full force and effect, during
the term hereof, all required certificates, permits and licenses in
connection with his employment hereunder, Employer may terminate this
Agreement, in which event Employer shall have no further liability or
obligation whatsoever to Employee hereunder, notwithstanding anything to
the contrary contained herein.
6. NO COMPETITION AGREEMENT. In consideration hereof and in consideration
of the grant of options contained herein, Employee covenants and agrees
that during the term of his employment, he shall not, directly or
indirectly, engage in, participate in or otherwise be connected in any way
(other that through a passive ownership role) with any firm, person,
corporation, or other entity that is engaged in a for profit business. In
addition to all other rights provided to Employer hereunder, if Employee
breaches any of his obligations contained in this paragraph, Employer shall
have the right to terminate this Agreement but any such termination shall
not be deemed an election of remedies and Employer expressly reserves all
other legal and equitable remedies. Employee further agrees that he shall
not at any time during the term of this Agreement or thereafter without
Employer's written consent, disclose to other persons or business entities
any trade secrets or other confidential information and all information
concerning Employer's customers constitute Employer's exclusive property,
that all of the restrictions on his activities contained in this Agreement
are required for Employer's reasonable protection and that in the event of
any breach of the Agreement by him, Employer will be entitled if it so
elects, to
2
<PAGE> 3
institute and prosecute proceedings at law or in equity to obtain damages
with respect to such breach, to enforce the specific performance of this
Agreement or to enjoin Employee from engaging in any activity in violation
hereof.
7. TERMINATION OF AGREEMENT. This Agreement may be terminated by the
Employee upon 30 days written notice at any time with or without good cause, in
which event Employer's obligations under this Agreement shall terminate. This
Agreement may be terminated by Employer at any time during the term hereof with
or without good cause. Upon any such termination, Employer shall have no
further liability or obligation whatsoever to Employee hereunder except as
expressly set forth in paragraph 8 of this Agreement. Good cause shall be
defined as:
(a) Employee's death or disability, which is hereby defined to
mean his incapacity for medical reasons certified to by a licensed
physician which precludes the substantial performance of his duties
hereunder for a substantially consecutive period of six (6) months;
(b) Employee's arrest on a felony offense, provided that probable
cause existed for such arrest;
(c) Employee's misconduct, inattention to Employer's business,
failure to substantially perform his duties or other material breach of
this agreement, which is not remedied by Employee to the good faith
satisfaction of Employer within fifteen days following his receipt of
written notice thereof.
8. SEVERANCE PAY. If Employee is terminated for any reason other than that
set forth in paragraph 5 or 7, in lieu of any amounts provided for in this
contract, Employee shall be entitled to $300,000, any prorata earned bonus and
any prorata unvested stock options for that year.
9. SEVERABILITY. If any provision hereof is unenforceable, illegal or
invalid for any reason whatsoever, such fact shall not affect the remaining
provision hereof. If any of the provisions hereof which impose restrictions on
Employee are, with respect to such restrictions, determined by a final judgment
by any court of competent jurisdiction to be unenforceable or invalid, such
provision should be severed and the remainder of the provisions enforced.
3
<PAGE> 4
10. NO WAIVER. No failure or delay on the part of Employer or Employee in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any such right, power or
remedy preclude any other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
11. ENTIRE AGREEMENT. This instrument contains the entire agreement between
Employer and Employee. It may not be changed orally but only by an Agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. No amendment, modification,
termination or waiver of any provision of this Agreement nor consent to any
departure by the Employee therefrom shall in any event be effective unless the
same shall be in writing and signed by a duly authorized officer of Employer or
Employee, as the case may be. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
12. CHOICE OF LAW. This Agreement shall be controlled, construed and
enforced in accordance with the laws of Nevada.
13. NOTICES. All notices, demands, and other communications required or
permitted hereunder shall be given by hand delivery (with a receipt
acknowledging hand delivery), or overnight delivery service or by certified
mail return receipt requested, and by facsimile. Notice will be deemed to have
been duly given on the day of hand delivery and one day after having been sent
by overnight delivery or by certified mail return receipt requested and by
facsimile.
4
<PAGE> 5
All notices and other communications shall be delivered or
sent to:
Employer
Coast Hotels and Casinos, Inc.
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
Facsimile: 365-7566
Employee
Harlan Braaten
[address]
In witness whereof, Employer and Employee have executed this Agreement
in Las Vegas, Nevada on the 16th day of February, 1999
COAST HOTELS AND CASINOS, INC.
/s/ HARLAN BRAATEN By: /s/ MICHAEL GAUGHAN
- --------------------------- -------------------------------
Harlan Braaten Michael Gaughan
Chief Executive Officer and
Chairman of the Board
Employee Employer
5
<PAGE> 1
EXHIBIT 10.37
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Jesse Sharf, Esq.
Gibson, Dunn & Crutcher LLP
333 So. Grand Avenue
Los Angeles, CA 90071
AMENDMENT TO DEED OF TRUST,
ASSIGNMENT OF RENTS, LEASES AND SECURITY AGREEMENT
This is an Amendment made effective this 5th day of March, 1999 (this
"Amendment") to the Deed of Trust, Assignment of Rents, Leases and Security
Agreement dated as of January 30, 1996 (the "Deed of Trust") by Coast Hotels and
Casinos, Inc., a Nevada corporation (the "Company"), whose address is 4500 West
Tropicana Avenue, Las Vegas, Nevada 89103, to National Title Company, a Nevada
corporation (the "Trustee"), as trustee for the benefit of Firstar Bank of
Minnesota, N.A. (the "Beneficiary"), as beneficiary and successor in interest to
American Bank National Association, with a principal place of business at 101
East Fifth Street, 12th Floor, St. Paul, Minnesota 55101, which Deed of Trust is
recorded with the Official Records of Clark County, Nevada, as Book No. 960130,
Instrument No. 00397 and encumbers, inter alia, certain property in Clark
County, as described in Schedule A to the recorded Deed of Trust.
W I T N E S S E T H
WHEREAS, the Company and Trustee entered into the Deed of Trust in
connection with that certain Indenture dated as of January 30, 1996 (the
"Indenture") by and among the Company, Coast Resorts, Inc., a Nevada
corporation, as guarantor, Coast West, Inc., a Nevada corporation, as guarantor,
and the Beneficiary, as trustee, pursuant to which the Company issued
$175,000,000 aggregate principal amount of 13% First Mortgage Notes due 2002
(the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Deed of Trust
may be amended with the consent of holders representing not less than a majority
in aggregate principal amount of Notes outstanding (the "Requisite Consents");
WHEREAS, the Company, pursuant to the terms of its Offer to Purchase and
Consent Solicitation Statement dated February 19, 1999, has offered to purchase
outstanding Notes and solicited consents to amend the Indenture and related
security documents (the "Offer") and has received the Requisite Consents; and
WHEREAS, the parties now desire to amend the Deed of Trust as reflected
herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE> 2
AGREEMENT
1. The Deed of Trust is hereby amended by deleting the following
sections in their entirety therefrom:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
1.5 Insurance
----------------------------------------------------------------------------------
1.6 Condemnation
----------------------------------------------------------------------------------
1.7 Care of Trust Estate
----------------------------------------------------------------------------------
1.8 Space Leases
----------------------------------------------------------------------------------
1.9 Further Encumbrance
----------------------------------------------------------------------------------
1.10 Partial Releases of Trust Estate
----------------------------------------------------------------------------------
1.11 Further Assurances
----------------------------------------------------------------------------------
1.16 Use of Land
----------------------------------------------------------------------------------
1.17 Compliance with Permitted Lien Agreements
----------------------------------------------------------------------------------
1.18 Defense of Actions
----------------------------------------------------------------------------------
1.19 Affiliates
----------------------------------------------------------------------------------
2.2 Performance of Leases
----------------------------------------------------------------------------------
2.3 Cure by Beneficiary
----------------------------------------------------------------------------------
6.7 Estoppel Certificates
----------------------------------------------------------------------------------
6.9 Required Notices
----------------------------------------------------------------------------------
</TABLE>
2. The Deed of Trust is hereby further amended by deleting
therefrom subsections (d), (e), (f) and (g) of Section 1.12 captioned "Security
Agreement and Financing Statements."
3. Each of the following provisions of the Leasehold Deed of Trust
is hereby renumbered as indicated below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Section Number New Section Number Caption
-----------------------------------------------------------------------------------
<S> <C> <C>
1.12 1.5 Compliance Certificate
-----------------------------------------------------------------------------------
1.13 1.6 No Amendment to Subordinate
Provisions
-----------------------------------------------------------------------------------
1.14 1.7 Successor Corporation
Substituted
-----------------------------------------------------------------------------------
1.15 1.8 Beneficiary's Cure of
Trustor's Default
-----------------------------------------------------------------------------------
1.20 1.9 Title Insurance
-----------------------------------------------------------------------------------
2.4 2.2 No Merger of Estates
-----------------------------------------------------------------------------------
2.5 2.3 No Assignment of Leases
-----------------------------------------------------------------------------------
2.6 2.4 Maintenance of Leases
-----------------------------------------------------------------------------------
2.7 2.5 Treatment of the Leases in
Bankruptcy
-----------------------------------------------------------------------------------
2.8 2.6 Notices
-----------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Section Number New Section Number Caption
-----------------------------------------------------------------------------------
<S> <C> <C>
6.8 6.7 Governing Law
-----------------------------------------------------------------------------------
6.10 6.8 Reconveyance
-----------------------------------------------------------------------------------
6.11 6.9 Attorneys' Fees
-----------------------------------------------------------------------------------
6.12 6.10 Late Charges
-----------------------------------------------------------------------------------
6.13 6.11 Cost of Accounting
-----------------------------------------------------------------------------------
6.14 6.12 Right of Entry
-----------------------------------------------------------------------------------
6.15 6.13 Corrections
-----------------------------------------------------------------------------------
6.16 6.14 Statute of Limitations
-----------------------------------------------------------------------------------
6.17 6.15 Subrogation
-----------------------------------------------------------------------------------
6.18 6.16 Joint and Several Liability
-----------------------------------------------------------------------------------
6.19 6.17 Context
-----------------------------------------------------------------------------------
6.20 6.18 Time
-----------------------------------------------------------------------------------
6.21 6.19 Interpretation
-----------------------------------------------------------------------------------
6.22 6.20 Effect of NRS Section 107.030
-----------------------------------------------------------------------------------
</TABLE>
4. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
5. This Amendment shall not become operative until such date that
the Company accepts tendered Notes for purchase pursuant to the terms of the
Offer. The date this Agreement becomes operative shall be dominated herein as
the "Operative Date."
6. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: Chief Executive Officer
----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
----------------------------------
4
<PAGE> 5
STATE OF NEVADA )
) SS:
COUNTY OF CLARK )
On March 22, 1999, before me, a Notary Public in and for said state, personally
appeared Michael J. Gaughan, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ LISA A. HARRIS
- -------------------------------- LISA A. HARRIS
(SEAL) Notary Public Nevada
My appt. exp. Dec. 13, 2000
No. 97-1797-1
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On March 22, 1999, before me, a Notary Public in and for said state, personally
appeared Frank P. Leslie III, (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ROBIN A. CHASE
- -------------------------------- ROBIN A. CHASE
(SEAL) Commission #1111768
Notary Public -- California
Los Angeles County
My Comm. Expires Sep. 29, 2000
5
<PAGE> 1
EXHIBIT 10.38
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Jesse Sharf, Esq.
Gibson, Dunn & Crutcher LLP
333 So. Grand Avenue
Los Angeles, CA 90071
AMENDMENT TO LEASEHOLD DEED OF TRUST,
ASSIGNMENT OF RENTS, LEASES AND SECURITY AGREEMENT
This is an Amendment made effective this 5th day of March, 1999 (this
"Amendment") to the Leasehold Deed of Trust, Assignment of Rents, Leases and
Security Agreement dated as of January 30, 1996 (the "Leasehold Deed of Trust")
by Coast West, Inc., a Nevada corporation (the "Company"), whose address is 4500
West Tropicana Avenue, Las Vegas, Nevada 89103, to National Title Company, a
Nevada corporation (the "Trustee"), as trustee for the benefit of Firstar Bank
of Minnesota, N.A. (the "Beneficiary"), as beneficiary and successor in interest
to American Bank National Association, with a principal place of business at 101
East Fifth Street, 12th Floor, St. Paul, Minnesota 55101, which Leasehold Deed
of Trust is recorded with the Official Records of Clark County, Nevada, as Book
No. 960130, Instrument No. 00398 and encumbers, inter alia, certain property in
Clark County, as described in Exhibit A to the recorded Leasehold Deed of Trust.
W I T N E S S E T H
WHEREAS, the Company and Trustee entered into the Leasehold Deed of
Trust in connection with that certain Indenture dated as of January 30, 1996
(the "Indenture") by and among the Company, Coast Resorts, Inc., a Nevada
corporation, as guarantor, Coast West, Inc., a Nevada corporation, as guarantor,
and the Beneficiary, as trustee, pursuant to which the Company issued
$175,000,000 aggregate principal amount of 13% First Mortgage Notes due 2002
(the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Leasehold Deed
of Trust may be amended with the consent of holders representing not less than a
majority in aggregate principal amount of Notes outstanding (the "Requisite
Consents");
WHEREAS, Coast Hotels and Casinos, pursuant to the terms of its Offer to
Purchase and Consent Solicitation Statement dated February 19, 1999, has offered
to purchase outstanding Notes and solicited consents to amend the Indenture and
related security documents (the "Offer") and has received the Requisite
Consents; and
WHEREAS, the parties now desire to amend the Leasehold Deed of Trust as
reflected herein.
<PAGE> 2
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Leasehold Deed of Trust is hereby amended by deleting
therefrom the following sections in their entirety:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
1.5 Insurance
----------------------------------------------------------------------------------
1.6 Condemnation
----------------------------------------------------------------------------------
1.7 Care of Trust Estate
----------------------------------------------------------------------------------
1.8 Space Leases
----------------------------------------------------------------------------------
1.9 Further Encumbrance
----------------------------------------------------------------------------------
1.10 Partial Releases of Trust Estate
----------------------------------------------------------------------------------
1.11 Further Assurances
----------------------------------------------------------------------------------
1.16 Use of Land
----------------------------------------------------------------------------------
1.17 Compliance with Permitted Lien Agreements
----------------------------------------------------------------------------------
1.18 Defense of Actions
----------------------------------------------------------------------------------
1.19 Affiliates
----------------------------------------------------------------------------------
2.2 Performance of Leases
----------------------------------------------------------------------------------
2.3 Cure by Beneficiary
----------------------------------------------------------------------------------
6.7 Estoppel Certificates
----------------------------------------------------------------------------------
6.9 Required Notices
----------------------------------------------------------------------------------
</TABLE>
2. The Leasehold Deed of Trust is hereby amended by deleting
therefrom subsections (d), (e), (f) and (g) of Section 1.12 captioned "Security
Agreement and Financing Statements."
3. Each of the following provisions of the Leasehold Deed of Trust
is hereby renumbered as indicated below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Section Number New Section Number Caption
-----------------------------------------------------------------------------------
<S> <C> <C>
1.12 1.5 Compliance Certificate
-----------------------------------------------------------------------------------
1.13 1.6 No Amendment to Subordinate
Provisions
-----------------------------------------------------------------------------------
1.14 1.7 Successor Corporation
Substituted
-----------------------------------------------------------------------------------
1.15 1.8 Beneficiary's Cure of
Trustor's Default
-----------------------------------------------------------------------------------
1.20 1.9 Title Insurance
-----------------------------------------------------------------------------------
2.4 2.2 No Merger of Estates
-----------------------------------------------------------------------------------
2.5 2.3 No Assignment of Leases
-----------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Section Number New Section Number Caption
-----------------------------------------------------------------------------------
<S> <C> <C>
2.6 2.4 Maintenance of Leases
-----------------------------------------------------------------------------------
2.7 2.5 Treatment of the Leases in
Bankruptcy
-----------------------------------------------------------------------------------
2.8 2.6 Notices
-----------------------------------------------------------------------------------
6.8 6.7 Governing Law
-----------------------------------------------------------------------------------
6.10 6.8 Reconveyance
-----------------------------------------------------------------------------------
6.11 6.9 Attorneys' Fees
-----------------------------------------------------------------------------------
6.12 6.10 Late Charges
-----------------------------------------------------------------------------------
6.13 6.11 Cost of Accounting
-----------------------------------------------------------------------------------
6.14 6.12 Right of Entry
-----------------------------------------------------------------------------------
6.15 6.13 Corrections
-----------------------------------------------------------------------------------
6.16 6.14 Statute of Limitations
-----------------------------------------------------------------------------------
6.17 6.15 Subrogation
-----------------------------------------------------------------------------------
6.18 6.16 Joint and Several Liability
-----------------------------------------------------------------------------------
6.19 6.17 Context
-----------------------------------------------------------------------------------
6.20 6.18 Time
-----------------------------------------------------------------------------------
6.21 6.19 Interpretation
-----------------------------------------------------------------------------------
6.22 6.20 Effect of NRS Section 107.030
-----------------------------------------------------------------------------------
</TABLE>
4. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
5. This Amendment shall not become operative until such date that
Coast Hotels and Casinos accepts tendered Notes for purchase pursuant to the
terms of the Offer. The date this Agreement becomes operative shall be dominated
herein as the "Operative Date."
6. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST WEST, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: President
----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
----------------------------------
4
<PAGE> 5
STATE OF NEVADA )
) SS:
COUNTY OF CLARK )
On March 22, 1999, before me, a Notary Public in and for said state, personally
appeared Michael J. Gaughan, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ LISA A. HARRIS
- -------------------------------- LISA A. HARRIS
(SEAL) Notary Public Nevada
My appt. exp. Dec. 13, 2000
No. 97-1797-1
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On March 22, 1999, before me, a Notary Public in and for said state, personally
appeared Frank P. Leslie III, (proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ROBIN A. CHASE
- -------------------------------- ROBIN A. CHASE
(SEAL) Commission #1111768
Notary Public -- California
Los Angeles County
My Comm. Expires Sep. 29, 2000
5
<PAGE> 1
EXHIBIT 10.39
AMENDMENT
TO
SECURITY AGREEMENT
This Amendment to the Security Agreement (this "Amendment"), dated as of
March 5, 1999, is entered into by and between Coast Hotels and Casinos, Inc., a
Nevada corporation (the "Company"), and Firstar Bank of Minnesota, N.A., as the
secured party and successor in interest to American Bank National Association
(the "Secured Party").
W I T N E S S E T H
WHEREAS, the Company and the Secured Party entered into that certain
Security Agreement dated as of January 30, 1996 (the "Agreement") in connection
with that certain Indenture dated as of January 30, 1996 (the "Indenture") by
and among the Company, Coast Resorts, Inc., a Nevada corporation, as guarantor,
Coast West, Inc., a Nevada corporation, as guarantor, and the Secured Party, as
trustee, pursuant to which the Company issued $175,000,000 aggregate principal
amount of 13% First Mortgage Notes due 2002 (the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Agreement may be
amended with the consent of holders representing not less than a majority in
aggregate principal amount of Notes outstanding (the "Requisite Consents");
WHEREAS, the Company, pursuant to the terms of its Offer to Purchase and
Consent Solicitation Statement dated February 19, 1999, has offered to purchase
outstanding Notes and solicited consents to amend the Indenture and related
security documents (the "Offer") and has received the Requisite Consents; and
WHEREAS, the parties now desire to amend the Agreement as reflected
herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Agreement is hereby amended by deleting therefrom
subsections (a), (b), (c), (e), (f), (h), (i) and (k) from Section 5 captioned
"Covenants of Debtor."
2. The Agreement is hereby amended by renumbering the following
subsections of Section 5 ("Covenants of Debtor") as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
5(d) 5(a)
-----------------------------------------------------------------------------------
5(g) 5(b)
-----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
5(j) 5(c)
-----------------------------------------------------------------------------------
5(l) 5(d)
-----------------------------------------------------------------------------------
5(m) 5(e)
-----------------------------------------------------------------------------------
5(n) 5(f)
-----------------------------------------------------------------------------------
5(o) 5(g)
-----------------------------------------------------------------------------------
5(p) 5(h)
-----------------------------------------------------------------------------------
5(q) 5(i)
-----------------------------------------------------------------------------------
5(r) 5(j)
-----------------------------------------------------------------------------------
5(s) 5(k)
-----------------------------------------------------------------------------------
5(t) 5(l)
-----------------------------------------------------------------------------------
</TABLE>
3. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
4. This Amendment shall not become operative until such date that
the Company accepts tendered Notes for purchase pursuant to the terms of the
Offer. The date this Agreement becomes operative shall be dominated herein as
the "Operative Date."
5. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
NAME: Michael J. Gaughan
Title: Chief Executive Officer
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
Title: Vice President
3
<PAGE> 1
EXHIBIT 10.40
AMENDMENT
TO
SECURITY AGREEMENT
This Amendment to the Security Agreement (this "Amendment"), dated as of
March 5, 1999, is entered into by and between Coast West, Inc., a Nevada
corporation (the "Company"), and Firstar Bank of Minnesota, N.A., as the secured
party and successor in interest to American Bank National Association (the
"Secured Party").
W I T N E S S E T H
WHEREAS, the Company and the Secured Party entered into that certain
Security Agreement dated as of January 30, 1996 (the "Agreement") in connection
with that certain Indenture dated as of January 30, 1996 (the "Indenture") by
and among Coast Hotels and Casinos, Inc., a Nevada corporation ("Coast Hotels
and Casinos"), Coast Resorts, Inc., a Nevada corporation, as guarantor, the
Company, as guarantor, and the Secured Party, as trustee, pursuant to which the
Coast Hotels and Casinos issued $175,000,000 aggregate principal amount of 13%
First Mortgage Notes due 2002 (the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Agreement may be
amended with the consent of holders representing not less than a majority in
aggregate principal amount of Notes outstanding (the "Requisite Consents");
WHEREAS, Coast Hotels and Casinos, pursuant to the terms of its Offer to
Purchase and Consent Solicitation Statement dated February 19, 1999, has offered
to purchase outstanding Notes and solicited consents to amend the Indenture and
related security documents (the "Offer") and has received the Requisite
Consents; and
WHEREAS, the parties now desire to amend the Agreement as reflected
herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Agreement is hereby amended by deleting therefrom
subsections (b), (c), (e), (f), (h), (i) and (k) from Section 5 captioned
"Covenants of Debtor."
2. The Agreement is hereby amended by renumbering the following
subsections of Section 5 ("Covenants of Debtor") as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
5(d) 5(b)
-----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
5(g) 5(c)
-----------------------------------------------------------------------------------
5(j) 5(d)
-----------------------------------------------------------------------------------
5(l) 5(e)
-----------------------------------------------------------------------------------
5(m) 5(f)
-----------------------------------------------------------------------------------
5(n) 5(g)
-----------------------------------------------------------------------------------
5(o) 5(h)
-----------------------------------------------------------------------------------
5(p) 5(i)
-----------------------------------------------------------------------------------
5(q) 5(j)
-----------------------------------------------------------------------------------
5(r) 5(k)
-----------------------------------------------------------------------------------
5(s) 5(l)
-----------------------------------------------------------------------------------
5(t) 5(m)
-----------------------------------------------------------------------------------
</TABLE>
3. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
4. This Amendment shall not become operative until such date that
Coast Hotels and Casinos accepts tendered Notes for purchase pursuant to the
terms of the Offer. The date this Agreement becomes operative shall be dominated
herein as the "Operative Date."
5. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST WEST, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: President
----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
----------------------------------
3
<PAGE> 1
EXHIBIT 10.41
AMENDMENT
TO
STOCK PLEDGE AND SECURITY AGREEMENT
This Amendment to the Stock Pledge and Security Agreement (this
"Amendment"), dated as of March 5, 1999, is entered into by and between Coast
Resorts, Inc., a Nevada corporation (the "Company"), and Firstar Bank of
Minnesota, N.A., as trustee for the holders of Notes and successor in interest
to American Bank National Association (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company executed that certain Stock Pledge and Security
Agreement dated as of January 30, 1996, in favor of the Trustee (the
"Agreement") in connection with that certain Indenture dated as of January 30,
1996 (the "Indenture") by and among Coast Hotels and Casinos, Inc., a Nevada
corporation ("Coast Hotels and Casinos"), the Company, as guarantor, Coast West,
a Nevada corporation, as guarantor, and the Trustee, pursuant to which the Coast
Hotels and Casinos issued $175,000,000 aggregate principal amount of 13% First
Mortgage Notes due 2002 (the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Agreement may be
amended with the consent of holders representing not less than a majority in
aggregate principal amount of Notes outstanding (the "Requisite Consents");
WHEREAS, Coast Hotels and Casinos, pursuant to the terms of its Offer to
Purchase and Consent Solicitation Statement dated February 19, 1999, has offered
to purchase outstanding Notes and solicited consents to amend the Indenture and
related security documents (the "Offer") and has received the Requisite
Consents; and
WHEREAS, the parties now desire to amend the Agreement as reflected
herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Agreement is hereby amended by deleting therefrom clauses
(a), (e), (f) and (h) from Section 4 captioned "Covenants."
2. The Agreement is hereby amended to by renumbering the following
subsections of Section 4 ("Covenants") as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
4(b) 4(a)
-----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
4(c) 4(b)
-----------------------------------------------------------------------------------
4(d) 4(c)
-----------------------------------------------------------------------------------
4(g) 4(d)
-----------------------------------------------------------------------------------
</TABLE>
3. Pursuant to the amendments set forth in Sections 1 and 2 hereof,
Section 4 of the Agreement is hereby amended and restated in its entirety as
follows:
"4. Covenants. Shareholder hereby agrees: (a) to promptly deliver to
Trustee all originals of certificates and other documents, instruments
and agreements evidencing the Collateral which are now held or hereafter
received by Shareholder, together with such blank stock powers executed
by Shareholder as Trustee may request; (b) to procure, execute and
deliver from time to time any endorsements, assignments, financing
statements and other documents, instruments and agreements and take
other actions deemed necessary, as Trustee may request, to perfect,
maintain and protect its lien hereunder and the priority thereof; (c) to
appear in and defend any action or proceeding which may affect its title
to or Trustee's interest in the Collateral; and (d) to pay, and to save
Trustee and the Noteholders harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamps,
excise, sales or other similar taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Stock Pledge
Agreement."
4. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
5. This Amendment shall not become operative until such date that
the Coast Hotels and Casinos accepts tendered Notes for purchase pursuant to the
terms of the Offer. The date this Agreement becomes operative shall be dominated
herein as the "Operative Date."
6. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST RESORTS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: Chief Executive Officer
-----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
-----------------------------------
Each of Coast Hotels and Casinos, Inc.
and Coast West, Inc. hereby
acknowledges receipt of this Amendment
and agrees to be bound by and comply
with the terms thereof:
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: Chief Executive Officer
-----------------------------------
COAST WEST, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: President
-----------------------------------
<PAGE> 1
EXHIBIT 10.42
AMENDMENT
TO
COLLATERAL ASSIGNMENT
This Amendment to the Collateral Assignment (this "Amendment"), dated as
of March 5, 1999, is entered into by and between Coast Hotels and Casinos, Inc.,
a Nevada corporation (the "Company"), and Firstar Bank of Minnesota, N.A., as
trustee for the benefit of the Note holders and successor in interest to
American Bank National Association (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company made that certain Collateral Assignment dated as of
January 30, 1996, in favor of the Trustee (the "Collateral Assignment") in
connection with that certain Indenture dated as of January 30, 1996 (the
"Indenture") by and among the Company, Coast Resorts, Inc., a Nevada
corporation, as guarantor, Coast West, Inc., a Nevada corporation, as guarantor,
and the Trustee, pursuant to which the Company issued $175,000,000 aggregate
principal amount of 13% First Mortgage Notes due 2002 (the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Collateral
Assignment may be amended with the consent of holders representing not less than
a majority in aggregate principal amount of Notes outstanding (the "Requisite
Consents");
WHEREAS, the Company, pursuant to the terms of its Offer to Purchase and
Consent Solicitation Statement dated February 19, 1999, has offered to purchase
outstanding Notes and solicited consents to amend the Indenture and related
security documents (the "Offer") and has received the Requisite Consents; and
WHEREAS, the parties now desire to amend the Collateral Assignment as
reflected herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Collateral Assignment is hereby amended by deleting
therefrom the following sections in their entirety:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
4 Covenants of the Company
----------------------------------------------------------------------------------
8 Additional Instruments
----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
2. Each of the following sections of the Collateral Assignment is
hereby renumbered as indicated below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Section Number New Section Number Caption
-----------------------------------------------------------------------------------
<S> <C> <C>
5 4 Limitation of Trustee's
Obligations
-----------------------------------------------------------------------------------
6 5 Cure by Trustee
-----------------------------------------------------------------------------------
7 6 Rights and Remedies
-----------------------------------------------------------------------------------
9 7 Miscellaneous
-----------------------------------------------------------------------------------
</TABLE>
3. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
4. This Amendment shall not become operative until such date that
the Company accepts tendered Notes for purchase pursuant to the terms of the
Offer. The date this Agreement becomes operative shall be dominated herein as
the "Operative Date."
5. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
NAME: Michael J. Gaughan
-----------------------------------
Title: Chief Executive Officer
----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
----------------------------------
3
<PAGE> 1
EXHIBIT 10.43
AMENDMENT
TO
UNSECURED INDEMNITY AGREEMENT
This Amendment to the Unsecured Indemnity Agreement (this "Amendment"),
dated as of March 5, 1999, is entered into by and between Coast Hotels and
Casinos, Inc., a Nevada corporation (the "Company"), and Firstar Bank of
Minnesota, N.A., as trustee for the benefit of the Note holders and successor in
interest to American Bank National Association (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Trustee entered into that certain Unsecured
Indemnity Agreement dated as of January 30, 1996 (the "Agreement") in connection
with that certain Indenture dated as of January 30, 1996 (the "Indenture") by
and among the Company, Coast Resorts, Inc., a Nevada corporation, as guarantor,
Coast West, Inc., a Nevada corporation, as guarantor, and the Trustee, pursuant
to which the Company issued $175,000,000 aggregate principal amount of 13% First
Mortgage Notes due 2002 (the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Agreement may be
amended with the consent of holders representing not less than a majority in
aggregate principal amount of Notes outstanding (the "Requisite Consents");
WHEREAS, the Company, pursuant to the terms of its Offer to Purchase and
Consent Solicitation Statement dated February 19, 1999, has offered to purchase
outstanding Notes and solicited consents to amend the Indenture and related
security documents (the "Offer") and has received the Requisite Consents; and
WHEREAS, the parties now desire to amend the Agreement as reflected
herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Agreement is hereby amended by deleting therefrom the
following sections in their entirety:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
2.5 Compliance Regarding Hazardous Substances
----------------------------------------------------------------------------------
2.6 Notices Regarding Hazardous Substances
----------------------------------------------------------------------------------
2.7 Remedial Work
----------------------------------------------------------------------------------
2.8 Site Visits, Observations and Testing
----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
2.9 Costs and Expenses
----------------------------------------------------------------------------------
</TABLE>
2. The Agreement is hereby amended by deleting therefrom subsection
3.1.2 of Section 3.1 ("Events of Default").
3. The Agreement is hereby amended by renumbering the following
subsection of Section 3.1 ("Events of Default") as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
3.1.3 3.1.2
-----------------------------------------------------------------------------------
</TABLE>
4. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
5. This Amendment shall not become operative until such date that
the Company accepts tendered Notes for purchase pursuant to the terms of the
Offer. The date this Agreement becomes operative shall be dominated herein as
the "Operative Date."
6. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST HOTELS AND CASINOS, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: Chief Executive Officer
----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
----------------------------------
3
<PAGE> 1
EXHIBIT 10.44
AMENDMENT
TO
UNSECURED INDEMNITY AGREEMENT
This Amendment to the Unsecured Indemnity Agreement (this "Amendment"),
dated as of March 5, 1999, is entered into by and between Coast West, Inc., a
Nevada corporation (the "Company"), and Firstar Bank of Minnesota, N.A., as
trustee for the benefit of the Note holders and successor in interest to
American Bank National Association (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Trustee entered into that certain Unsecured
Indemnity Agreement dated as of January 30, 1996 (the "Agreement") in connection
with that certain Indenture dated as of January 30, 1996 (the "Indenture") by
and among the Coast Hotels and Casinos, Inc., a Nevada corporation ("Coast
Hotels and Casinos"), Coast Resorts, Inc., a Nevada corporation, as guarantor,
the Company, as guarantor, and the Trustee, pursuant to which Coast Hotels and
Casinos issued $175,000,000 aggregate principal amount of 13% First Mortgage
Notes due 2002 (the "Notes");
WHEREAS, pursuant to Section 9.02 of the Indenture, the Agreement may be
amended with the consent of holders representing not less than a majority in
aggregate principal amount of Notes outstanding (the "Requisite Consents");
WHEREAS, Coast Hotels and Casinos, pursuant to the terms of its Offer to
Purchase and Consent Solicitation Statement dated February 19, 1999, has offered
to purchase outstanding Notes and solicited consents to amend to the Indenture
and related security documents (the "Offer") and has received the Requisite
Consents; and
WHEREAS, the parties now desire to amend the Agreement as reflected
herein.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the premises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. The Agreement is hereby amended by deleting therefrom the
following sections in their entirety:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
2.5 Compliance Regarding Hazardous Substances
----------------------------------------------------------------------------------
2.6 Notices Regarding Hazardous Substances
----------------------------------------------------------------------------------
2.7 Remedial Work
----------------------------------------------------------------------------------
2.8 Site Visits, Observations and Testing
----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Section Caption
----------------------------------------------------------------------------------
<S> <C>
2.9 Costs and Expenses
----------------------------------------------------------------------------------
</TABLE>
2. The Agreement is hereby amended by deleting therefrom subsection
3.1.2 of Section 3.1 ("Events of Default").
3. The Agreement is hereby amended by renumbering the following
subsection of Section 3.1 ("Events of Default") as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Existing Subsection Number New Subsection Number
-----------------------------------------------------------------------------------
<S> <C>
3.1.3 3.1.2
-----------------------------------------------------------------------------------
</TABLE>
4. This Amendment may be executed in one or more counterparts, all
of which will constitute one and the same instrument.
5. This Amendment shall not become operative until such date that
Coast Hotels and Casinos accepts tendered Notes for purchase pursuant to the
terms of the Offer. The date this Agreement becomes operative shall be dominated
herein as the "Operative Date."
6. Except as amended hereby, the Agreement shall continue in full
force and effect, and the Agreement and this Amendment shall be read together
from and after the Operative Date.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
COAST WEST, INC.
By: /s/ MICHAEL J. GAUGHAN
-------------------------------------
Name: Michael J. Gaughan
-----------------------------------
Title: Chief Executive Officer
----------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
By: /s/ FRANK P. LESLIE III
-------------------------------------
Name: Frank P. Leslie III
-----------------------------------
Title: Vice President
----------------------------------
3
<PAGE> 1
EXHIBIT 10.45
$175,000,000
COAST HOTELS AND CASINOS, INC.
COAST RESORTS, INC.
9 1/2% SENIOR SUBORDINATED NOTES DUE 2009
PLACEMENT AGREEMENT
March 18, 1999
<PAGE> 2
March 18, 1999
Morgan Stanley & Co. Incorporated
NationsBanc Montgomery Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Coast Hotels and Casinos, Inc., a Nevada corporation (the "COMPANY"),
proposes to issue and sell you (the "PLACEMENT AGENTS") $175,000,000 principal
amount of its 9 1/2% Senior Subordinated Notes due 2009 (the "NOTES") to be
issued pursuant to the provisions of an Indenture to be dated as of March 23,
1999 (the "INDENTURE"), among the Company, Coast Resorts, Inc., as Guarantor
(the "GUARANTOR"), and Firstar Bank of Minnesota, N.A., as trustee (the
"TRUSTEE"). The Notes will be guaranteed (the "GUARANTEE") by the Guarantor.
The Notes will be offered without being registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), to qualified institutional
buyers in compliance with the exemption from registration provided by Rule 144A
under the Securities Act and in offshore transactions in reliance on Regulation
S under the Securities Act ("REGULATION S").
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement dated the as of the
Closing Date (as defined in Section 4), among the Company, the Guarantor and the
Placement Agents (the "REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and will prepare
a final offering memorandum (the "FINAL MEMORANDUM"; references herein to a
"MEMORANDUM" refer in each case to the Preliminary Memorandum and the Final
Memorandum) including a description of the terms of the Notes and the Guarantee,
the terms of the offering and a description of the Company and the Guarantor. As
used herein, the term "Memorandum" shall include in each case the documents
incorporated by reference therein. The terms "SUPPLEMENT", "AMENDMENT" and
"AMEND" as used herein with respect to a Memorandum shall include all documents
deemed to be incorporated by reference in the Preliminary Memorandum or Final
Memorandum that are filed subsequent to the date of such Memorandum with the
Securities and Exchange Commission (the "COMMISSION") pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE Act").
<PAGE> 3
Additionally, in connection with the sale of the Notes, the Company has
made a tender offer (the "TENDER OFFER") to purchase up to all of its 13% First
Mortgage Notes due 2002 (the "FIRST MORTGAGE NOTES"), on the terms and subject
to the conditions set forth in the Offer to Purchase and Consent Solicitation
dated February 19, 1999, as amended (the "OFFER TO PURCHASE"). In connection
with the Tender Offer, the Company has sought consents (the "CONSENT
SOLICITATION") from the registered holders of the First Mortgage Notes to
certain proposed amendments (the "PROPOSED AMENDMENTS") to the Indenture dated
as of January 30, 1996 (the "FIRST MORTGAGE NOTES INDENTURE"), among the
Company, the Guarantor, Coast West, Inc., a Nevada corporation ("COAST WEST"),
and American Bank National Association, predecessor in interest to Firstar Bank
of Minnesota, N.A., as trustee (the "FIRST MORTGAGE NOTES TRUSTEE"). The Company
and the Guarantor will also enter into a Credit Agreement (the "CREDIT
AGREEMENT") dated as of the date hereof among the Company, the Guarantor and the
lenders named therein (collectively, the "BANKS")
1. Representations and Warranties. The Company and the Guarantor
represent and warrant to, and agree with, you that:
(a) (i) Each document, if any, to be filed pursuant to the
Exchange Act and incorporated by reference in either Memorandum complied
or will comply when so filed in all material respects with the Exchange
Act and the applicable rules and regulations of the Commission
thereunder and (ii) the Preliminary Memorandum does not contain and the
Final Memorandum, in the form used by the Placement Agents to confirm
sales and on the Closing Date (as defined in Section 4), as amended or
supplemented if the Company and the Guarantor shall have furnished any
amendments or supplements thereto, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in either Memorandum based upon information relating to any
Placement Agent furnished to the Company in writing by such Placement
Agent through Morgan Stanley & Co. Incorporated expressly for use
therein.
(b) Each of the Company and the Guarantor has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in each Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and the Guarantor, taken together. The Company is
the Guarantor's only subsidiary. On the date of this Agreement, Coast
West is the Company's only
2
<PAGE> 4
subsidiary. Within two (2) days of the Closing Date, Coast West will be
merged with and into the Company and the Company will not have any
subsidiaries.
(c) All of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Guarantor, free and clear
of all liens, encumbrances, equities or claims, except for liens,
encumbrances, equities or claims arising under the First Mortgage Notes,
the 10 7/8% First Mortgage Notes due 2001 of the Company and the
Credit Facility.
(d) The Tender Offer, the Consent Solicitation, the Supplemental
Indenture implementing the Proposed Amendments to the First Mortgage
Notes Indenture (the "SUPPLEMENTAL INDENTURE") and the use by the
Company of the funds needed in connection therewith and the other
transactions described in the Final Memorandum under the caption
"Summary--The Transactions" have been duly and validly authorized by all
necessary action on the part of the Company and the Guarantor, and no
other corporate proceedings by the Company or the Guarantor are
necessary to authorize such actions.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
(f) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with
the terms of this Agreement, will be valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
general principles of equity, and will be entitled to the benefits of
the Indenture pursuant to which such Notes are to be issued and the
Registration Rights Agreement.
(g) The Guarantee to be endorsed on the Notes by the Guarantor
has been duly authorized, executed and delivered and, when the Notes
have been executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Placement Agents
in accordance with the terms of this Agreement, the Guarantee of the
Guarantor thereon will be the valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
general principles of equity, and will be entitled to the benefits of
the Indenture pursuant to which such Notes are to be issued and the
Registration Rights Agreement.
(h) Each of the Indenture and the Registration Rights Agreement
has been duly authorized and, when executed and delivered by the
Company, the Guarantor, and
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<PAGE> 5
the Trustee (in the case of the Indenture), will be a valid and binding
agreement of the Company and the Guarantor, enforceable against each of
them in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity and except
as rights to indemnification and contribution under the Registration
Rights Agreement may be limited under applicable law.
(i) The Credit Agreement has been duly authorized and, when
executed and delivered by the Company, the Guarantor, and the Banks,
will be a valid and binding agreement of the Company and the Guarantor,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general principles of equity.
(j) The Supplemental Indenture has been executed and delivered by
the Company, the Guarantor, Coast West and the First Mortgage Notes
Trustee and consented to by holders of a majority of aggregate
outstanding principal amount of First Mortgage Notes and constitutes a
valid and binding agreement of the Company, the Guarantor and Coast
West, enforceable against the Company, the Guarantor and Coast West in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general principles of equity.
(k) The execution and delivery by the Company and the Guarantor
of, and the performance by the Company and the Guarantor of their
respective obligations under, this Agreement, the Indenture, the
Supplemental Indenture, the Registration Rights Agreement, the Notes,
the Guarantee and the Credit Agreement, as applicable, and the
consummation by the Company of the Tender Offer and the Consent
Solicitation will not contravene any provision of applicable law or the
articles of incorporation or bylaws of the Company or the Guarantor or
any agreement or other instrument binding upon the Company or the
Guarantor that is material to the Company or the Guarantor or any
judgment, order or decree applicable to the Company or any of the
aforementioned actions of any governmental body or the Guarantor, agency
or court having jurisdiction over the Company or the Guarantor, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company or the Guarantor of their respective obligations under this
Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Notes, the Guarantee and the Credit Agreement, as
applicable, or the consummation by the Company of the Tender Offer or
the Consent Solicitation, except (i) such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Notes or by Federal and state securities laws with
respect to the Company's and the Guarantor's obligations under the
Registration Rights Agreement or (ii) where the failure to obtain such
consent, approval, authorization, order or
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<PAGE> 6
qualification would not, either individually or in the aggregate, have a
material adverse effect on the Company and the Guarantor, taken
together.
(l) Each of the Company and the Guarantor possesses the permits,
licenses, consents and other authorizations (collectively, "GOVERNMENTAL
LICENSES") issued by, and has made all filings with, the appropriate
regulatory entities necessary to own, lease and operate its properties
and to conduct the businesses now operated by it, except where the
failure thereof would not, singly or in the aggregate, have a material
adverse effect on the Company and the Guarantor, taken together. All
such Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not
have a material adverse effect on the Company and the Guarantor, taken
together. Each of the Company and Guarantor is in compliance with the
terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a
material adverse effect on the Company and the Guarantor, taken
together. No event has occurred (including, without limitation, the
receipt of any notice from any regulatory entity) which allows, or after
notice or lapse of time, or both, would allow revocation, modification,
suspension or termination of any Governmental License or would result in
any other material impairment of the rights of the holder of any such
Governmental Authorization which, singly or in the aggregate, would
result in a material adverse effect on the Company and the Guarantor,
taken together. To the knowledge of the Company and the Guarantor, no
regulatory entity is considering limiting, suspending or revoking any
Governmental License or is investigating either of them, other than
ordinary course administrative reviews or any ordinary course review of
the transactions contemplated hereby.
(m) There has not occurred any material adverse change, or any
development involving a prospective material adverse change; in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company from that set forth in the Final Memorandum.
(n) There are no legal or governmental proceedings pending or, to
the knowledge of the Company and Guarantor, threatened, to which the
Company or the Guarantor is a party or to which any of the properties of
the Company or the Guarantor is subject other than proceedings
accurately described in all material respects in each Memorandum and
proceedings that would not have a material adverse effect (i) on the
Company and the Guarantor, taken together, (ii) on the power or ability
of the Company or the Guarantor to perform their respective obligations
under this Agreement, the Indenture, the Supplemental Indenture, the
Registration Rights Agreement, the Notes, the Guarantee or the Credit
Agreement, as applicable, or to consummate the transactions contemplated
by the Final Memorandum, including the Tender Offer and Consent
Solicitation or (iii) on the power or ability of the Company or the
Guarantor to perform
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<PAGE> 7
its obligations under the First Mortgage Notes Indenture as amended by
the Supplemental Indenture.
(o) The Company and the Guarantor have good and marketable fee
simple title to all real property owned by them which is material to
their businesses, free and clear of all liens and defects other than (i)
those described in the Final Memorandum and (ii) such liens and
encumbrances as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such
property. The Company and the Guarantor have a valid leasehold interest
in all leases of real property and buildings held by them under lease,
free and clear of all liens, other than (i) such liens and encumbrances
as are not material and do not interfere with the use made and proposed
to be made of such real property and buildings and (ii) such liens and
encumbrances as are described in the Final Memorandum.
(p) The Company and the Guarantor own, possess or have the right
to use, or can acquire on reasonable terms, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names ("INTELLECTUAL PROPERTY") currently employed by them in connection
with the business now operated by them, except where the failure to own,
possess, have the right to use or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have a
material adverse effect on the Company and the Guarantor, taken
together; and, neither the Company nor the Guarantor has received any
notice of infringement of or conflict with asserted rights of others
with respect to any of such intellectual property which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a material adverse effect
on the Company and the Guarantor, taken together.
(q) The Company and the Guarantor (i) are in compliance with all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety or the environment
and relating to hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and the Guarantor, taken
together.
(r) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license
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<PAGE> 8
or approval, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the
aggregate, have a material adverse effect on the Company and the
Guarantor, taken together.
(s) The Company is not, and after giving effect to the offering
and sale of the Notes and the application of the proceeds thereof as
described in the Final Memorandum, will not be an "investment company"
as such term is defined in the Investment Company Act of 1940, as
amended.
(t) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "AFFILIATE") of the
Company has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Notes in a manner that would require the
registration under the Securities Act of the Notes or the Guarantee or
(ii) other than with respect to actions taken by the Placement Agents,
as to which the Company makes no representation or warranty, engaged in
any form of general solicitation or general advertising in connection
with the offering of the Notes (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(u) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Securities
Act (i) has imposed (or has informed the Company that it is considering
imposing) any condition on the Company retaining any rating assigned to
it or any of its securities or (ii) has indicated to the Company that it
is considering (A) the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (B) any change in the
outlook for any rating of the Company or any of its securities.
(v) None of the Company, its Affiliates or any person acting on
its or their behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes
and the Company and its Affiliates and any person acting on its or their
behalf have complied and will comply with the offering restrictions
requirement of Regulation S, except no representation, warranty or
agreement is made by the Company in this paragraph with respect to
actions taken by or on behalf of the Placement Agents.
(w) It is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner contemplated
by this Agreement to register the Notes or the Guarantee under the
Securities Act or to qualify the Indenture under the Trust Indenture Act
of 1939, as amended.
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<PAGE> 9
(x) The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
2. Agreements to Sell and Purchase. Subject to the conditions set forth
herein and upon the basis of the representations and warranties herein
contained, the Company hereby agrees to sell to the several Placement Agents,
and each Placement Agent agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Notes set forth in Schedule I hereto
opposite its name at a purchase price of 97.000% of the principal amount thereof
(the "PURCHASE PRICE"), plus accrued interest, if any, to the Closing Date.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Placement Agents, it will
not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Notes (other than the sale of the Notes under this
Agreement).
3. Terms of Offering. You have advised the Company that the Placement
Agents will make an offering of the Notes purchased by the Placement Agents
hereunder on the terms to be set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Notes shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Notes for the respective accounts of the several Placement
Agents at 10:00 a.m., New York City time, on March 23, 1999, or at such other
time on the same or such other date, not later than March 26, 1999, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE."
Certificates for the Notes shall be in definitive form or global form,
as specified by you in accordance with the terms of the Indenture, and
registered in such names and in such denominations as you shall request in
writing not later than one full business day prior to the Closing Date. The
certificates evidencing the Notes shall be delivered to you on the Closing Date
for the respective accounts of the several Placement Agents, with any transfer
taxes payable in connection with the transfer of the Notes to the Placement
Agents duly paid, against payment of the Purchase Price therefor, plus accrued
interest, if any, to the date of payment and delivery.
5. Conditions to the Placement Agents' Obligations. The several
obligations of the Placement Agents to purchase and pay for the Notes on the
Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
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<PAGE> 10
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded the Company, the Guarantor or any of their securities or
in the rating outlook for the Company or the Guarantor by any
"nationally recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company or the Guarantor from that set forth in
the Final Memorandum (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Notes on the terms and in
the manner contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing Date
a certificate, dated the Closing Date and signed by an executive officer
of the Company and the Guarantor, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of the
Company and the Guarantor contained in this Agreement are true and
correct as of the Closing Date and that the Company and the Guarantor
have complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing Date
the opinions of Gibson, Dunn & Crutcher LLP, outside counsel for the
Company and the Guarantor, and McDonald Carano Wilson McCune Bergin
Frankovich & Hicks LLP, outside Nevada counsel for the Company, dated
the Closing Date, to the effect set forth in Exhibits A-1 and A-2,
respectively. Such opinion shall be rendered to the Placement Agents at
the request of the Company and the Guarantor and shall so state therein.
(d) The Placement Agents shall have received on the Closing Date
an opinion of Latham & Watkins, counsel for the Placement Agents, dated
the Closing Date, to the effect set forth in Exhibit B.
(e) The Placement Agents shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Placement Agents, from Pricewaterhousecoopers LLP, independent
public accountants, containing statements and information of the type
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<PAGE> 11
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Final
Memorandum; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(f) The Company shall have accepted for payment the First
Mortgage Notes tendered in the Tender Offer on or before the Closing
Date and the First Mortgage Notes Indenture shall have been amended by
the Supplemental Indenture.
(g) The Credit Agreement shall have been executed by the Company,
the Guarantor and the Banks and shall be in full force and effect.
6. Covenants of the Company and the Guarantor. In further consideration
of the agreements of the Placement Agents contained in this Agreement, the
Company and the Guarantor, jointly and severally, covenant with each Placement
Agent as follows:
(a) To furnish to you in New York City, without charge, prior to
3:00 p.m. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section 6(c),
as many copies of the Final Memorandum, any documents incorporated by
reference therein and any supplements and amendments thereto as you may
reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to the
date on which all of the Notes shall have been sold by the Placement
Agents, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Final Memorandum in order to
make the statements therein, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, not misleading, or if, in
the reasonable opinion of counsel for the Placement Agents, it is
necessary to amend or supplement the Final Memorandum to comply with
applicable law, forthwith to prepare and furnish, at its own expense, to
the Placement Agents, either amendments or supplements to the Final
Memorandum so that the statements in the Final Memorandum as so amended
or supplemented will not, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, be misleading or so that
the Final Memorandum, as amended or supplemented, will comply with
applicable law.
(d) To endeavor to qualify the Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
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<PAGE> 12
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements
and expenses of counsel and the accountants of the Company and the
Guarantor in connection with the issuance and sale of the Notes and all
other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies
thereof to the Placement Agents, in the quantities herein above
specified, (ii) all costs and expenses related to the transfer and
delivery of the Notes to the Placement Agents, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or legal investment memorandum in connection with the offer and
sale of the Notes under state securities laws and all expenses in
connection with the qualification of the Notes for offer and sale under
state securities laws as provided in Section 6(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Placement Agents in connection with such qualification and in connection
with the Blue Sky or legal investment memorandum, (iv) any fees charged
by rating agencies for the rating of the Notes, (v) the fees and
expenses, if any, incurred in connection with the admission of the Notes
for trading in PORTAL or any appropriate market system, (vi) the costs
and charges of the Trustee and any transfer agent, registrar or
depositary, (vii) the cost of the preparation, issuance and delivery of
the Notes, (viii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with
the marketing of the offering of the Notes, including, without
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company,
travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, and (ix) all other costs and expenses
incident to the performance of the obligations of the Company and the
Guarantor hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 8, and the last paragraph of Section 10, the Placement
Agents will pay all of their costs and expenses, including fees and
disbursements of their counsel, transfer taxes payable on resale of any
of the Notes by them and any advertising expenses connected with any
offers they may make.
(f) Neither the Company, the Guarantor nor any of their
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the Notes in
a manner which would require the registration under the Securities Act
of the Notes.
(g) Not to solicit any offer to buy or offer or sell the Notes by
means of any form of general solicitation or general advertising (as
those terms are used in
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<PAGE> 13
Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(h) While any of the Notes remain "restricted securities" within
the meaning of the Securities Act, to make available, upon request, to
any seller of such Notes the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section
13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Notes to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the PORTAL Market.
(j) None of the Company, the Guarantor or any of their Affiliates
or any person acting on any of their behalf (other than the Placement
Agents) will engage in any directed selling efforts (as that term is
defined in Regulation S) with respect to the Notes, and the Company, the
Guarantor and their Affiliates and each person acting on any of their
behalf (other than the Placement Agents) will comply with the offering
restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined
in Rule 144A under the Securities Act) to resell any of the Notes which
constitute "restricted securities" under Rule 144A that have been
reacquired by any of them.
(l) Within two (2) days after the Closing Date, the Company will
cause Coast West to be merged with and into the Company and the Company
will at such time have no subsidiaries.
7. Offering of Notes; Restrictions on Transfer. (a) Each Placement
Agent, severally and not jointly, represents and warrants that such Placement
Agent is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company and the Guarantor that (i) it will not solicit offers
for, or offer or sell, Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for Notes only from, and
will offer Notes only to, persons that it reasonably believes to be (A) in the
case of offers inside the United States, QIBs and (B) in the case of offers
outside the United States, to persons other than U.S. persons (including dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) in reliance
upon Regulation S under the Securities Act that, in each case, in purchasing
such Notes are deemed to have represented and agreed as provided in the Final
Memorandum under the caption "Transfer Restrictions".
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<PAGE> 14
(b) Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) such Placement Agent understands that no action has been or
will be taken in any jurisdiction by the Company or the Guarantor that
would permit a public offering of the Notes, or possession or
distribution of either Memorandum or any other offering or publicity
material relating to the Notes, in any country or jurisdiction where
action for that purpose is required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers, sells
or delivers Notes or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Notes have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons, except in accordance with Rule
144A or Regulation S under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act;
(iv) such Placement Agent has offered Notes and will offer and
sell Notes (A) as part of their distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on
its or their behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes,
and any such Placement Agent, its Affiliates and any such persons have
complied and will comply with the offering restrictions requirement of
Regulation S;
(v) such Placement Agent has (A) not offered or sold and, prior
to the date six months after the Closing Date, will not offer or sell
any Notes to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995,
(B) complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom
and (C) only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the Notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
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<PAGE> 15
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Notes have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees not to
offer or sell, directly or indirectly, any Securities in Japan or for
the account of any resident thereof except pursuant to any exemption
from the registration requirements of the Securities and Exchange Law of
Japan and otherwise in compliance with applicable provisions of Japanese
law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms
used above have the meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company and the Guarantor,
jointly and severally, agree to indemnify and hold harmless each Placement Agent
and each person, if any, who controls any Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
either Memorandum (as amended or supplemented if the Company and the Guarantor
shall have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein in the light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Placement
Agent furnished to the Company in writing by such Placement Agent through Morgan
Stanley & Co. Incorporated expressly for use therein provided, however, that the
foregoing indemnity agreement with respect to any Preliminary Memorandum shall
not inure to the benefit of any Placement Agent from whom the person asserting
any such losses, claims, damages or liabilities purchased Securities, or any
person controlling such Placement Agent, if a copy of the Final Memorandum (as
then amended
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<PAGE> 16
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Placement
Agent to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Securities to such person, and if
the Final Memorandum (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 6(a) hereof.
(b) Each Placement Agent agrees, severally and not jointly, to indemnify
and hold harmless the Company and the Guarantor, their directors, their officers
and each person, if any, who controls the Company or the Guarantor within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company and the
Guarantor to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to the Company in writing by such
Placement Agent Morgan Stanley & Co. Incorporated expressly for use in either
Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. The Company may assume
at its sole expense the defense of any such litigation or proceeding; such
defense shall be conducted by counsel reasonably satisfactory to such
indemnified person and the Company shall pay the fees and disbursements of such
counsel related to such proceeding. Notwithstanding the foregoing, in any such
proceeding, any indemnified party shall have the right to retain its own counsel
and assume its own defense in such proceeding, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party
15
<PAGE> 17
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the third and fourth
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Placement Agents on the other hand from the offering of the Notes or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the Company
and the Guarantor on the one hand and of the Placement Agents on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Guarantor
on the one hand and the Placement Agents on the other hand in connection with
the offering of the Notes shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Notes (before deducting
expenses) received by the Company and the total discounts and commissions
received by the Placement Agents, in each case as set forth in the Final
Memorandum, bear to the aggregate offering price of the Notes. The relative
fault of the Company and the Guarantor on the one hand and of the Placement
Agents on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Guarantor, on the one hand, or by the Placement
Agents, on the other hand, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Placement Agents' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal amount of Notes
they have purchased hereunder, and not joint.
(e) The Company, the Guarantor and the Placement Agents agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation
16
<PAGE> 18
(even if the Placement Agents were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in Section 8(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 8(d) shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no Placement
Agent shall be required to contribute any amount in excess of the amount by
which the total price at which the Notes resold by it in the initial placement
of such Notes were offered to investors exceeds the amount of any damages that
such Placement Agent has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section
8 and the representations, warranties and other statements of the Company and
the Guarantor contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Company or the
Guarantor, their officers or directors or any person controlling the Company or
the Guarantor and (iii) acceptance of and payment for any of the Notes.
9. Termination. This Agreement shall be subject to termination by notice
given by you to the Company and the Guarantor, if (a) after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of
any securities of the Company shall have been suspended on any exchange or in
any over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated in the Final
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
17
<PAGE> 19
If, on the Closing Date, either of the Placement Agents shall fail or
refuse to purchase Notes that it or they have agreed to purchase hereunder on
such date, and the aggregate principal amount of Notes which such defaulting
Placement Agent agreed but failed or refused to purchase is not more than
one-tenth of the aggregate principal amount of Notes to be purchased on such
date, the other Placement Agent shall be obligated severally to purchase the
Notes which such defaulting Placement Agent agreed but failed or refused to
purchase on such date; provided that in no event shall the principal amount of
Notes that a Placement Agent has agreed to purchase pursuant to this Agreement
be increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of Notes without the written consent of such Placement
Agent. If, on the Closing Date, either Placement Agent shall fail or refuse to
purchase Notes which it has agreed to purchase hereunder on such date and the
aggregate principal amount of Notes with respect to which such default occurs is
more than one-tenth of the aggregate principal amount of Notes to be purchased
on such date, and arrangements satisfactory to you and the Company for the
purchase of such Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of the non-defaulting
Placement Agent, the Company or the Guarantor. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Final Memorandum or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve a defaulting Placement Agent
from liability in respect of any default of such Placement Agent under this
Agreement.
If this Agreement shall be terminated by the Placement Agents, or either
of them, because of any failure or refusal on the part of the Company or the
Guarantor to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or the Guarantor shall be unable to
perform its obligations under this Agreement, the Company and the Guarantor will
reimburse the Placement Agents or such Placement Agent as has so terminated this
Agreement with respect to itself, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Placement Agent in connection with this Agreement or the offering
contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[Signature page follows]
18
<PAGE> 20
Very truly yours,
COAST HOTELS AND CASINOS, INC.
By: /s/ GAGE PARRISH
----------------------------------------
Name: Gage Parrish
Title: Vice President, Chief Financial
Officer and Assistant Secretary
COAST RESORTS, INC.
By: /s/ GAGE PARRISH
----------------------------------------
Name: Gage Parrish
Title: Vice President, Chief Financial
Officer and Assistant Secretary
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
NationsBanc Montgomery Securities LLC
By: Morgan Stanley & Co. Incorporated
By: /s/ BRYAN W. ANDRZEJEWSKI
----------------------------------
Name: Bryan W. Andrzejewski
Title: Vice President
[Signature page to Placement Agreement]
19
<PAGE> 21
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of
Placement Agent Notes to be Purchased
- --------------- ---------------------
<S> <C>
Morgan Stanley & Co. Incorporated $105,000,000
NationsBanc Montgomery Securities LLC $ 70,000,000
Total $175,000,000
</TABLE>
S-1
<PAGE> 22
EXHIBIT A-1
OPINION OF GIBSON, DUNN & CRUTCHER
The opinion of the counsel for the Company, to be delivered pursuant to
Section 5(c) of the Placement Agreement shall be attached hereto.
A1-1
<PAGE> 23
EXHIBIT A-2
OPINION OF MCDONALD CARANO WILSON MCCUNE
BERGIN FRANKOVICH & HICKS
The opinion of the Nevada counsel for the Company, to be delivered pursuant to
Section 5(c) of the Placement Agreement shall be attached hereto.
A2-1
<PAGE> 24
EXHIBIT B
OPINION OF LATHAM & WATKINS
The opinion of Latham & Watkins to be delivered pursuant to Section 5(d)
of the Placement Agreement shall be attached hereto.
B-1
<PAGE> 1
EXHIBIT 10.46
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated March 23, 1999
among
COAST HOTELS AND CASINOS, INC.
COAST RESORTS, INC.
and
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
================================================================================
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into March 23, 1999, among COAST HOTELS AND CASINOS, INC., a Nevada
corporation (the "Company"), COAST RESORTS, INC., a Nevada corporation (the
"Guarantor"), and MORGAN STANLEY & CO. INCORPORATED and NATIONSBANC MONTGOMERY
SECURITIES LLC (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated
March 18, 1999, among the Company, the Guarantor and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $175,000,000 principal amount of the
Company's 9 1/2% Senior Subordinated Notes Due 2009 (the "Securities"). In order
to induce the Placement Agents to enter into the Placement Agreement, the
Company has agreed to provide to the Placement Agents and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Placement
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Dates" shall have the meaning set forth in Section
2(a)(ii).
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
<PAGE> 3
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Exchange Securities" shall mean securities issued by the
Company under the Indenture containing terms identical to the Securities
(except that (i) interest thereon shall accrue from the last date on
which interest was paid on the Securities or, if no such interest has
been paid, from March 23, 1999 and (ii) the Exchange Securities will not
contain restrictions on transfer) and to be offered to Holders of
Securities in exchange for Securities pursuant to the Exchange Offer.
"Guarantor" shall have the meaning set forth in the preamble.
"Holder" shall mean the Placement Agents, for so long as they
own any Registrable Securities, and each of their successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture; provided that for purposes
of Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities
dated as of March 23, 1999 among the Company, the Guarantor and Firstar
Bank of Minnesota, N.A., as trustee, and as the same may be amended from
time to time in accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or any of its affiliates (as such term is
defined in Rule 405 under the 1933 Act) (other than the Placement Agents
or subsequent Holders of Registrable Securities if such subsequent
holders are deemed to be such affiliates solely by reason of their
holding of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage or amount.
"Majority Shelf Holders" shall mean the Holders of a majority in
principal amount of Registrable Securities covered by the Shelf
Registration Statement; provided that whenever the consent or approval
of Majority Shelf Holders is required hereunder, Registrable Securities
held by the Company or any of its affiliates (as such term is defined in
Rule 405 under the 1933 Act) (other than the Placement Agents or
subsequent Holders of Registrable Securities if such subsequent holders
are deemed to be such affiliates solely by reason of their holding of
such Registrable Securities) shall not be counted in determining whether
such consent or approval was given by the Holders of such required
percentage or amount.
2
<PAGE> 4
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus supplement,
including a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to
such prospectus, and in each case including all material incorporated by
reference therein.
"Registrable Securities" shall mean the Securities; provided,
however, that the Securities shall cease to be Registrable Securities
(i) when a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule
144 (or any similar provision then in force, but not Rule 144A) under
the 1933 Act or (iii) when such Securities shall have ceased to be
outstanding.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees,
(ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and
disbursements of one counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange Securities
or Registrable Securities), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) all
fees and disbursements relating to the qualification of the Indenture
under applicable securities laws, (vi) the fees and disbursements of the
Trustee and its counsel, (vii) the fees and disbursements of counsel for
the Company and, in the case of a Shelf Registration Statement, the fees
and disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of the Company, including the expenses of
any special audits or "cold comfort" letters required by or incident to
such performance and compliance, but excluding fees and expenses of
counsel to the underwriters (other than fees and expenses set forth in
clause (ii) above) or the Holders and underwriting discounts and
commissions
3
<PAGE> 5
and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement
of the Company and the Guarantor that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Holders" shall mean the Holders of Registrable Securities
covered by the Shelf Registration Statement.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of
this Agreement which covers all of the Registrable Securities (but no
other securities unless approved by the Majority Shelf Holders) on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to
such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
"Underwriter" shall have the meaning set forth in Section 3
hereof.
"Underwritten Offering" shall mean a registration under a Shelf
Registration Statement in which Registrable Securities are sold to an
Underwriter for reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the staff of the SEC, the Company and the Guarantor
shall use their best efforts to cause to be filed an Exchange Offer Registration
Statement covering the offer by the Company and the Guarantor to the Holders to
exchange all of the Registrable Securities for Exchange Securities and to have
such Registration Statement remain effective until the closing of the Exchange
Offer. The Company and the Guarantor shall commence the Exchange Offer promptly
after the Exchange Offer Registration Statement has been declared effective by
the SEC and use their best efforts to have the Exchange Offer consummated not
later than 60 days after such effective date. The Company and the Guarantor
shall commence the Exchange Offer by mailing
4
<PAGE> 6
the related exchange offer Prospectus and accompanying documents to each Holder
stating, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is mailed)
(the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their
election, not later than the close of business on the last Exchange
Date, by sending to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the name
of such Holder, the principal amount of Registrable Securities delivered
for exchange and a statement that such Holder is withdrawing its
election to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(i) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Security equal in
principal amount to the principal amount of the Registrable Securities
surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
Offer is made, and the
5
<PAGE> 7
Placement Agents shall have the right, subject to applicable law, to contact
such Holders and otherwise facilitate the tender of Registrable Securities in
the Exchange Offer.
(b) In the event that (i) the Company determines that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of the
Staff of the SEC, (ii) the Exchange Offer is not for any other reason
consummated by September 23, 1999 or (iii) in the opinion of counsel for the
Placement Agents addressed to the Company and the Guarantor a Registration
Statement must be filed and a Prospectus must be delivered by the Placement
Agents in connection with any offering or sale of Registrable Securities by a
Holder that (A) is or was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) may not resell the Exchange
Securities acquired by it in the Exchange Offer to the public without delivering
a prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
is a Broker-Dealer and holds Registrable Securities acquired directly from the
Company or any of its Affiliates, the Company shall use its best efforts to
cause to be filed as soon as practicable after such determination, date or
receipt of such opinion of counsel by the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC. In the event the Company and the Guarantor are required to
file a Shelf Registration Statement solely as a result of the matters referred
to in clause (iii) of the preceding sentence, the Company and the Guarantor
shall use their best efforts to file and have declared effective by the SEC both
an Exchange Offer Registration Statement pursuant to Section 2(a) with respect
to all Registrable Securities and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Securities held by the Placement
Agents after completion of the Exchange Offer. The Company agrees to use its
best efforts to keep the Shelf Registration Statement continuously effective
until the expiration of the period referred to in Rule 144(k) with respect to
the Registrable Securities or such shorter period that will terminate when all
of the Registrable Securities covered by the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement. The Company further
agrees to supplement or amend the Shelf Registration Statement if required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the 1933 Act or by
any other rules and regulations thereunder for shelf registration or if
reasonably requested by a Shelf Holder with respect to information relating to
such Shelf Holder, and to use its best efforts to cause any such amendment to
become effective and such Shelf Registration Statement to become usable as soon
as thereafter practicable. The Company agrees to furnish to the Shelf Holders
copies of any such supplement or amendment promptly after its being used or
filed with the SEC.
(c) The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and Section 2(b). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
6
<PAGE> 8
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume; provided further
that if the offering of Registrable Securities pursuant to a Shelf Registration
Statement is interfered with as described in the previous sentence by reason of
any information relating to a Shelf Holder furnished to the Company in writing
by such Shelf Holder expressly for use in such Shelf Registration Statement,
then the provisions of the following sentence shall be inapplicable with respect
to such Shelf Holder. In the event that either the Exchange Offer is not
consummated or any Shelf Registration Statement required to be filed pursuant to
this Agreement is not declared effective on or prior to September 23, 1999, the
interest rate on the Securities will be increased by 0.5% per annum until the
Exchange Offer is consummated or the Shelf Registration Statement is declared
effective by the SEC; provided that such interest rate shall not be increased
pursuant to this Section 2(d) if the Company and the Guarantor are required to
file the Shelf Registration Statement solely as a result of matters referred to
in clause (iii) of the first sentence of Section 2(b) hereof and the Company and
the Guarantor shall not have received the opinion of counsel referred to in such
clause (iii) upon or prior to the consummation of the Exchange Offer.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, the Company acknowledges that any failure by the Company
to comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect
to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof,
the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement
on the appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be available for
the sale of the Registrable Securities by the selling Holders thereof and (z)
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
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<PAGE> 9
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period and cause
each Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to the
extent required, to keep each Prospectus current during the period described
under Section 4(3) and Rule 174 under the 1933 Act that is applicable to
transactions by brokers or dealers with respect to the Registrable Securities or
Exchange Securities;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, to counsel for the Placement Agents, to
counsel for the Holders and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or Underwriter may
reasonably request, in order to facilitate the public sale or other disposition
of the Registrable Securities; and the Company consents to the use of such
Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue sky" laws
of such jurisdictions as may be required in connection with the Exchange Offer
and, in connection with the Shelf Registration, as any Shelf Holder shall
reasonably request in writing by the time the applicable Registration Statement
is declared effective by the SEC, to cooperate with such Holders in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Shelf Holder to consummate the disposition
in each such jurisdiction of such Registrable Securities owned by such Shelf
Holder; provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3(d), (ii)
file any general consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Shelf
Holder, counsel for the Holders and counsel for the Placement Agents promptly
and, if requested by any such Holder or counsel, confirm such advice in writing
(i) when a Shelf Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Shelf Registration Statement and Prospectus or for additional
information after the Shelf Registration Statement has become effective, (iii)
of the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Shelf Registration Statement or the initiation
of any proceedings for that purpose, (iv) if, between the effective date of a
Shelf Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the Company
contained in any underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the offering
8
<PAGE> 10
cease to be true and correct in all material respects or if the Company receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during the period
a Shelf Registration Statement is effective which makes any statement made in
such Shelf Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such Shelf
Registration Statement or Prospectus in order to make the statements therein not
misleading and (vi) of any determination by the Company that a post-effective
amendment to a Shelf Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of the
withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Shelf Holder, without charge, at least one conformed copy of each Registration
Statement and any post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
Shelf Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends and enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in such names
as the Shelf Holders may reasonably request at least two business days prior to
the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees to notify the
Shelf Holders to suspend use of the Prospectus as promptly as practicable after
the occurrence of such an event, and the Holders hereby agree to suspend use of
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document which is to
be incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Placement Agents and their counsel (and, in the case of a Shelf Registration
Statement, the Shelf Holders and one counsel to be chosen by the Majority Shelf
Holders) and make such of the representatives of the Company as shall be
reasonably requested by the
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<PAGE> 11
Placement Agents or their counsel (and, in the case of a Shelf Registration
Statement, the Shelf Holders or their counsel chosen as provided in this
paragraph) available for discussion of such document, and shall not at any time
file or make any amendment to the Registration Statement, any Prospectus or any
amendment of or supplement to a Registration Statement or a Prospectus or any
document which is to be incorporated by reference into a Registration Statement
or a Prospectus, of which the Placement Agents and their counsel (and, in the
case of a Shelf Registration Statement, the Shelf Holders and their counsel
chosen as provided in this paragraph) shall not have previously been advised and
furnished a copy or to which the Placement Agents or their counsel (and, in the
case of a Shelf Registration Statement, the Shelf Holders or their counsel
chosen as provided in this paragraph) shall reasonably object.
(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the effective date of
a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as the case
may be, cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and execute, and use its best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Shelf Holders designated by the Majority
Shelf Holders, any Underwriter participating in any Underwritten Offering
pursuant to such Shelf Registration Statement, and attorneys and accountants
designated by the Majority Shelf Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by any
such representative, Underwriter, attorney or accountant in connection with a
Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best
efforts to cause all Registrable Securities to be listed on any securities
exchange or any automated quotation system on which similar securities issued by
the Company are then listed if requested by the Majority Shelf Holders, to the
extent such Registrable Securities satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in Rule
436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with respect
to such Holder as such Holder reasonably requests to be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-
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<PAGE> 12
effective amendment as promptly as practicable after the Company has received
notification of the matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the disposition of
such Registrable Securities including, but not limited to, pursuant to an
Underwritten Offering and in such connection, (i) to the extent possible, make
such representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to a representative designated
by the Majority Shelf Holders and such Underwriters and their respective
counsel) addressed to each selling Holder and Underwriter of Registrable
Securities, covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the independent
certified public accountants of the Company (and, if necessary, any other
certified public accountant of any subsidiary of the Company, or of any business
acquired by the Company for which financial statements and financial data are or
are required to be included in the Registration Statement) addressed to each
selling Holder and Underwriter of Registrable Securities, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings, and (iv) deliver
such documents and certificates as may be reasonably requested by the Majority
Shelf Holders or the Underwriters, and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in an
underwriting agreement.
In the case of a Shelf Registration Statement, the Company may
require each Shelf Holder to furnish to the Company such information regarding
the Shelf Holder and the proposed distribution by such Shelf Holder as the
Company may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Shelf Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company, such Shelf Holder will deliver to the Company (at
its expense) all copies in its possession, other than permanent file copies then
in such Shelf Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company shall
give any such notice to suspend the disposition of Registrable Securities
pursuant to a Shelf Registration Statement, the Company shall extend the period
during which
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<PAGE> 13
the Shelf Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date of
the giving of such notice to and including the date when the Shelf Holders shall
have received copies of the supplemented or amended Prospectus necessary to
resume such dispositions.
The Shelf Holders Statement who desire to do so may sell such
Registrable Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
(the "Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer") may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company understands that it is the staff's position that if
the Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Securities, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Securities for their own accounts, so
long as the Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company agrees that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the staff of the
SEC recited in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration Statement,
as would otherwise be contemplated by Section 3(i), for a period
exceeding 180 days after the last Exchange Date and Participating
Broker-Dealers shall not be authorized by the Company to deliver and
shall not deliver such Prospectus after such period in connection with
the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3
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<PAGE> 14
of this Agreement to an Exchange Offer Registration, to the extent not
required by the positions of the staff of the SEC or the 1933 Act and
the rules and regulations thereunder, will be in conformity with the
reasonable request to the Company by the Placement Agents or with the
reasonable request in writing to the Company by one or more
broker-dealers who certify to the Placement Agents and the Company in
writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers,
which shall be Morgan Stanley & Co. Incorporated unless it elects not to
act as such representative, in which case it shall be designated by
Participating Broker-Dealers holding a majority in principal amount of
all Securities held by Participating Broker-Dealers (y) to pay the fees
and expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless
such counsel elects not to so act and (z) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in the
form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
(c) The Placement Agents shall have no liability to the
Company or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
5. Indemnification and Contribution.
(a) The Company and the Guarantor, jointly and severally,
agree and hold harmless the Placement Agents, each Holder and each Person, if
any, who controls any Placement Agent or any Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common
control with, or is controlled by, any Placement Agent or any Holder, from and
against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent, any Holder or any such controlling or affiliated Person in connection
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company or the
Guarantor shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Placement
Agents or any Holder furnished to the Company in writing through Morgan Stanley
& Co. Incorporated or any Holder expressly for use therein, provided, however,
that the foregoing indemnity agreement with respect to any preliminary
Prospectus shall not inure to the benefit of any Holder
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<PAGE> 15
from whom the person asserting any such losses, claims, damages or liabilities
purchased Securities, or any person controlling such Holder, if a copy of the
final Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Securities
to such person, and if the final Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure is the result of the Company to provide such
Holder with as many copies of such final Prospectus as such Holder may
reasonably request. In connection with any Underwritten Offering permitted by
Section 3, the Company and the Guarantor, jointly and severally, will also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the 1933 Act and the 1934 Act) to the same extent as provided above
with respect to the indemnification of the Holders, if requested in connection
with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantor, each Placement Agent and
the other selling Holders, and each of their respective directors, officers of
the Company or the Guarantor who sign the Registration Statement and each
Person, if any, who controls the Company, the Guarantor, any Placement Agent and
any other selling Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from
the Company to the Placement Agents and the Holders, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
The Company may assume at its sole expense the defense of any such litigation or
proceeding; such defense shall be conducted by counsel reasonably satisfactory
to such indemnified person and the Company shall pay the fees and disbursements
of such counsel related to such proceeding. Notwithstanding the foregoing, in
any such proceeding, any indemnified party shall have the right to retain its
own counsel and assume its own defense in such proceeding, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying
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<PAGE> 16
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for (a) the fees and expenses of more than one
separate firm (in addition to any local counsel reasonably satisfactory to the
indemnifying party) for the Placement Agents and all Persons, if any, who
control any Placement Agent within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and each Person, if any, who
controls the Company within the meaning of either such Section and (c) the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Holders and all Persons, if any, who control any Holders within the
meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In such case involving the Placement Agents and
Persons who control the Placement Agents, such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders
and such Persons who control Holders, such firm shall be designated in writing
by the Majority Holders. In all other cases, such firm shall be designated by
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and such indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this
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<PAGE> 17
Section 5(d) are several in proportion to the respective principal amount of
Registrable Securities of such Holder that were registered pursuant to a
Registration Statement.
(e) The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Securities
were sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Placement Agent, any Holder or any Person controlling any Placement Agent
or any Holder, or by or on behalf of the Company, its officers or directors or
any Person controlling the Company, (iii) acceptance of any of the Exchange
Securities and (iv) any sale of Registrable Securities pursuant to a Shelf
Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered
into, and on or after the date of this Agreement will not enter into, any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided, however, that no amendment,
modification, supplement, waiver or consent to any departure from the provisions
of Section 5 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder.
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(c) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Placement Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
or obligation to the Company with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this Agreement.
(e) Purchases and Sales of Securities. The Company shall
not, and shall use its best efforts to cause its affiliates (as defined in Rule
405 under the 1933 Act) not to, purchase and then resell or otherwise transfer
any Securities.
(f) Third Party Beneficiary. The Holders shall be third
party beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Placement Agents, on the other hand, and shall have the right
to enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed
17
<PAGE> 19
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by the
laws of the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
18
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
COAST HOTELS AND CASINOS, INC.
By: /s/ GAGE PARRISH
-------------------------------------
Name: Gage Parrish
Title: Vice President, Chief Financial
Officer and Assistant Secretary
COAST RESORTS, INC.
By: /s/ GAGE PARRISH
-------------------------------------
Name: Gage Parrish
Title: Vice President, Chief Financial
Officer and Assistant Secretary
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
By: Morgan Stanley & Co. Incorporated
By: /s/ BRYAN W. ANDRZEJEWSKI
--------------------------------
Bryan W. Andrzejewski
Vice President
[Signature Page to Registration Rights Agreement]
<PAGE> 1
EXHIBIT 10.47
================================================================================
EXECUTION
LOAN AGREEMENT
Dated as of March 18, 1999
among
COAST HOTELS AND CASINOS, INC.
as Borrower,
The Lenders referred to herein
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1 DEFINITIONS AND ACCOUNTING TERMS................................................1
1.1 Defined Terms..............................................................1
1.2 Use of Defined Terms......................................................29
1.3 Accounting Terms..........................................................30
1.4 Rounding..................................................................30
1.5 Exhibits and Schedules....................................................30
1.6 References to "and its Subsidiaries"......................................30
1.7 References to Times.......................................................30
1.8 Miscellaneous Terms.......................................................30
Article 2 LOANS..........................................................................31
2.1 Loans-General.............................................................31
2.2 Base Rate Loans...........................................................32
2.3 LIBOR Loans...............................................................32
2.4 Letters of Credit.........................................................33
2.5 Voluntary Reduction of Commitment.........................................37
2.6 Scheduled Mandatory Reductions of Commitment..............................37
2.7 Other Mandatory Reductions of Commitment..................................37
2.8 Optional Increases to the Commitment....................................37
2.9 Administrative Agent's Right to Assume Funds Available for Advances.......39
2.10 Swing Line................................................................39
Article 3 PAYMENTS AND FEES..............................................................42
3.1 Principal and Interest....................................................42
3.2 Upfront Fees..............................................................43
3.3 Commitment Fees...........................................................43
3.4 Letter of Credit Fees.....................................................43
3.5 Agency Management Fees....................................................44
3.6 Construction Services Fees................................................44
3.7 Increased Commitment Costs................................................44
3.8 LIBOR Costs and Related Matters...........................................45
3.9 Late Payments.............................................................48
3.10 Computation of Interest and Fees..........................................48
3.11 Non-Banking Days..........................................................49
3.12 Manner and Treatment of Payments..........................................49
3.13 Funding Sources...........................................................50
3.14 Failure to Charge Not Subsequent Waiver...................................50
3.15 Administrative Agent's Right to Assume Payments Will be Made by Borrower..50
3.16 Fee Determination Detail..................................................51
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
3.17 Survival..................................................................51
Article 4 REPRESENTATIONS AND WARRANTIES.................................................52
4.1 Existence and Qualification; Power; Compliance With Laws .................52
4.2 Authority; Compliance With Other Agreements and Instruments and
Government Regulations...................................................52
4.3 No Governmental Approvals Required........................................53
4.4 Subsidiaries..............................................................53
4.5 Financial Statements......................................................53
4.6 No Material Adverse Changes...............................................53
4.7 Title to Property.........................................................53
4.8 Intangible Assets.........................................................54
4.9 Public Utility Holding Company Act........................................54
4.10 Litigation................................................................54
4.11 Binding Obligations.......................................................54
4.12 No Default................................................................54
4.13 ERISA.....................................................................55
4.14 Regulations T, U and X; Investment Company Act............................55
4.15 Disclosure...............................................................55
4.16 Tax Liability.............................................................55
4.17 Projections...............................................................56
4.18 Hazardous Materials.......................................................56
4.19 Gaming Laws...............................................................56
4.20 Security Interests........................................................56
Article 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)..........................................................58
5.1 Payment of Taxes and Other Potential Liens................................58
5.2 Preservation of Existence.................................................58
5.3 Maintenance of Properties.................................................58
5.4 Maintenance of Insurance..................................................58
5.5 Compliance With Laws......................................................59
5.6 Inspection Rights - Completion of Construction............................59
5.7 Keeping of Records and Books of Account...................................59
5.8 Compliance With Agreements................................................59
5.9 Use of Proceeds...........................................................60
5.10 Hazardous Materials Laws..................................................60
5.11 Retirement of Debt........................................................60
5.12 Pledge of Stock...........................................................60
5.13 Sale of Barbary Coast.....................................................60
5.14 Merger of Coast West......................................................61
Article 6 NEGATIVE COVENANTS.............................................................62
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.1 Prepayment of Indebtedness................................................62
6.2 Payment of Subordinated Obligations and the Former Partner Debt...........62
6.3 Disposition of Property...................................................62
6.4 Hostile Tender Offers.....................................................63
6.5 Mergers...................................................................64
6.6 Distributions.............................................................64
6.7 ERISA.....................................................................65
6.8 Change in Nature of Business..............................................65
6.9 Liens, Negative Pledges and Rights of Others..............................66
6.10 Indebtedness and Contingent Obligations...................................66
6.11 Transactions with Affiliates..............................................67
6.12 Senior Leverage Ratio.....................................................68
6.13 Total Leverage Ratio......................................................68
6.14 Fixed Charge Coverage Ratio...............................................68
6.15 Capital Expenditures......................................................68
6.16 Acquisitions and Investments..............................................69
6.17 New Subsidiaries..........................................................70
6.18 Changes to Certain Obligations............................................70
6.19 Construction of the New Project...........................................70
Article 7 INFORMATION AND REPORTING REQUIREMENTS.........................................74
7.1 Financial and Business Information........................................74
7.2 Compliance Certificates...................................................76
Article 8 CONDITIONS.....................................................................77
8.1 Initial Advances on the Closing Date......................................77
8.2 Any Advance...............................................................80
8.3 Conditions to Increase in Commitment......................................81
8.4 Conditions to Advances....................................................84
Article 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT...........................85
9.1 Events of Default.........................................................85
9.2 Remedies Upon Event of Default............................................87
Article 10 THE ADMINISTRATIVE AGENT......................................................91
10.1 Appointment and Authorization.............................................91
10.2 Administrative Agent and Affiliates.......................................91
10.3 Proportionate Interest in any Collateral..................................91
10.4 Lenders' Credit Decisions.................................................92
10.5 Action by Administrative Agent............................................92
10.6 Liability of Administrative Agent.........................................93
10.7 Indemnification...........................................................94
10.8 Successor Administrative Agent............................................94
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
10.9 Foreclosure on Collateral.................................................95
10.10 No Obligations of Borrower................................................95
10.11 Permitted Release of Collateral...........................................96
Article 11 MISCELLANEOUS.................................................................97
11.1 Cumulative Remedies; No Waiver............................................97
11.2 Amendments; Consents......................................................97
11.3 Costs, Expenses and Taxes.................................................98
11.4 Nature of Lenders' Obligations............................................99
11.5 Survival of Representations and Warranties................................99
11.6 Notices...................................................................99
11.7 Execution of Loan Documents...............................................99
11.8 Binding Effect; Assignment...............................................100
11.9 Right of Setoff..........................................................102
11.10 Sharing of Setoffs.......................................................102
11.11 Indemnity by Borrower....................................................103
11.12 Nonliability of the Lenders..............................................104
11.13 No Third Parties Benefited...............................................105
11.14 Confidentiality..........................................................105
11.15 Further Assurances.......................................................105
11.16 Integration..............................................................105
11.17 Governing Law............................................................106
11.18 Severability of Provisions...............................................106
11.19 Headings.................................................................106
11.20 Time of the Essence......................................................106
11.21 Foreign Lenders and Participants.........................................106
11.22 Hazardous Material Indemnity.............................................107
11.23 Gaming Boards............................................................108
11.24 Waiver of Right to Trial by Jury.........................................108
11.25 Purported Oral Amendments................................................108
</TABLE>
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<PAGE> 6
Schedules and Exhibits
Schedule 1.1 Lender Commitments
Schedule 4.3 Governmental Approvals
Schedule 4.8 Intangible Assets
Schedule 4.18 Hazardous Materials
Schedule 6.9 Existing Liens
Schedule 6.10 Existing Indebtedness
Schedule 6.16 Existing Investments
Exhibit A - Assignment Agreement
Exhibit B - Compliance Certificate
Exhibit C - Note
Exhibit D - Request for Letter of Credit
Exhibit E - Request for Loan
-v-
<PAGE> 7
LOAN AGREEMENT
Dated as of March 18, 1999
This Loan Agreement ("Agreement") is entered into by and among Coast
Hotels and Casinos, Inc., a Nevada corporation ("Borrower"), each lender whose
name is set forth on the signature pages of this Agreement and each lender which
may hereafter become a party to this Agreement pursuant to Sections 2.8 or 11.8
(collectively, the "Lenders" and individually, a "Lender") and Bank of America
National Trust and Savings Association, as Administrative Agent.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the meanings set forth below:
"10-7/8% Indenture" means the Indenture, dated as of November
21, 1997, under which was issued Borrower's 10-7/8% First Mortgage Notes
Due 2001.
"10-7/8% First Mortgage Debt" means the Indebtedness outstanding
under the 10-7/8% Indenture.
"13% Indenture" means the Indenture, dated as of January 30,
1996, under which was issued Borrower's 13% First Mortgage Notes Due
2002.
"13% First Mortgage Debt" means the Indebtedness outstanding
under the 13% Indenture.
"1999 Indenture" means the Indenture, dated as of the Closing
Date, under which Borrower's 9.5% Senior Subordinated Notes Due 2009 are
to be issued substantially contemporaneously with the Closing Date.
"1999 Senior Subordinated Debt" means the Indebtedness
outstanding under the 1999 Indenture.
-1-
<PAGE> 8
"Acquisition" means any transaction, or any series of related
transactions, by which Borrower directly or indirectly (i) acquires any
going business or all or substantially all of the assets of any firm,
partnership, joint venture, limited liability company, corporation or
division thereof, whether through purchase of assets, merger or
otherwise, or (ii) acquires (in one transaction or as the most recent
transaction in a series of transactions) control of at least a majority
in ordinary voting power of the securities of a corporation which have
ordinary voting power for the election of directors, or (iii) acquires
control of a 50% or more ownership interest in any partnership, limited
liability company or joint venture.
"Administrative Agent" means Bank of America, when acting in its
capacity as the Administrative Agent under any of the Loan Documents, or
any successor Administrative Agent.
"Administrative Agent's Office" means the Administrative Agent's
address as set forth on the signature pages of this Agreement, or such
other address as the Administrative Agent hereafter may designate by
written notice to Borrower and the Lenders.
"Advance" means any advance made or to be made by any Lender to
Borrower as provided in Article 2, and includes each Base Rate Advance
and each LIBOR Advance.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and
the correlative terms, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership
of securities or partnership or other ownership interests, by contract
or otherwise); provided that, in any event, any Person that owns,
directly or indirectly, 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation that has more than 100 record holders of such securities, or
10% or more of the partnership or other ownership interests of any other
Person that has more than 100 record holders of such interests, will be
deemed to control such corporation, partnership or other Person.
"Aggregate Effective Amount" means, as of any date of
determination and with respect to all Letters of Credit, the sum of (a)
the aggregate effective face amounts of all outstanding Letters of
Credit plus (b) the aggregate amounts paid by the Issuing Lender under
Letters of Credit not then reimbursed to the Issuing Lender by Borrower
pursuant to Section 2.4(d) and not then the subject of Advances made
pursuant to Section 2.4(e).
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<PAGE> 9
"Agreement" means this Loan Agreement, either as originally
executed or as it may from time to time be supplemented, modified,
amended, restated or extended.
"Assignment Agreement" means an Assignment Agreement
substantially in the form of Exhibit A.
"Bank of America" means Bank of America National Trust and
Savings Association, its successors and assigns.
"Banking Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday, other than a day on which banks are authorized or required to be
closed in California or Nevada.
"Barbary Coast" means the Barbary Coast hotel and casino located
at the intersection of Flamingo Road and Las Vegas Boulevard in Las
Vegas, Nevada.
"Barbary Coast Ground Lease" means that certain Lease Agreement
dated May 1, 1992 by and between Empey Enterprises, a Nevada general
partnership, as landlord, and Barbary Coast Hotel & Casino, a Nevada
general partnership, as tenant, as assigned to the Borrower.
"Barbary Coast Parking Lease" means that certain Lease dated
November 1, 1982 by and between Nevada Power Company, a Nevada
corporation, as landlord, and Barbary Coast Hotel and Casino, a Nevada
general partnership, as tenant, as assigned to the Borrower.
"Barbary Coast Property" means the approximately 4 acres of real
property which is the subject of the Barbary Coast Ground Lease and the
Barbary Coast Parking Lease.
"Base Rate" means, as of any date of determination, the rate per
annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to
the higher of (a) the Reference Rate in effect on such date and (b) the
Federal Funds Rate in effect on such date plus 1/2 of 1%.
"Base Rate Advance" means an Advance made hereunder and
specified to be a Base Rate Advance in accordance with Article 2.
"Base Rate Loan" means a Loan made hereunder and specified to be
a Base Rate Loan in accordance with Article 2.
-3-
<PAGE> 10
"Base Rate Margin" means, for each Pricing Period, the
percentage set forth opposite the Total Leverage Ratio as of the last
day of the Fiscal Quarter ending two months prior to the first day of
that Pricing Period:
<TABLE>
<CAPTION>
Total Leverage Ratio Base Rate Margin
- -------------------- ----------------
<S> <C>
Greater than or equal to 4.50:1.00 1.50%
Less than 4.50:1.00 but greater 1.25%
than or equal to 4.00:1.00
Less than 4.00:1.00 but greater 0.75%
than or equal to 3.50:1.00
Less than 3.50:1.00 but greater 0.50%
than or equal to 3.00:1.00
Less than 3.00:1.00 but greater 0.25%
than or equal to 2.50:1.00
Less than 2.50:1.00 0.00%
</TABLE>
"Borrower" means Coast Hotels and Casinos, Inc., a Nevada
corporation, its successors and permitted assigns.
"Budget" means the budget for design, development and
construction of the New Project submitted to and approved by the
Administrative Agent and the Lenders pursuant to Section 8.3, as amended
in accordance with Section 6.19 of this Agreement.
"Capital Expenditure" means any expenditure that is considered a
capital expenditure under Generally Accepted Accounting Principles,
including any amount which is required to be treated as an asset subject
to a Capital Lease Obligation.
"Capital Lease Obligations" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance
with Generally Accepted Accounting Principles, is classified as a
capital lease.
"Cash" means, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated as
cash in accordance with Generally Accepted Accounting Principles,
consistently applied.
"Cash Equivalents" means, when used in connection with any
Person, that Person's Investments in:
-4-
<PAGE> 11
(a) Government Securities due within one year after
the date of the making of the Investment;
(b) readily marketable direct obligations of any
State of the United States of America or any political subdivision of
any such State or any public agency or instrumentality thereof given on
the date of such Investment a credit rating of at least Aa by Moody's
Investors Service, Inc. or AA by Standard & Poor's Ratings Group, in
each case due within one year from the making of the Investment;
(c) certificates of deposit issued by, bank deposits
in, eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any Lender or any
bank incorporated under the Laws of the United States of America, any
State thereof or the District of Columbia and having on the date of such
Investment combined capital, surplus and undivided profits of at least
$250,000,000, in each case due within one year after the date of the
making of the Investment;
(d) certificates of deposit issued by, bank deposits
in, eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any branch or
office located in the United States of America of a bank incorporated
under the Laws of any jurisdiction outside the United States of America
having on the date of such Investment combined capital, surplus and
undivided profits of at least $500,000,000, in each case due within one
year after the date of the making of the Investment; and
(e) readily marketable commercial paper of
corporations doing business in and incorporated under the Laws of the
United States of America or any State thereof or of any corporation that
is the holding company for a bank described in clause (c) or (d) above
given on the date of such Investment a credit rating of at least P-1 by
Moody's Investors Service, Inc. or A-1 by Standard & Poor's Ratings
Group, in each case due within 90 days after the date of the making of
the Investment.
"Certificate of a Responsible Official" means a certificate
signed by a Responsible Official of the Person providing the
certificate.
"Change of Control" means the occurrence of any of the
following:
(a) individuals who on the Closing Date constituted
the Board of Directors of Coast Resorts or Borrower (together with any
new or replacement directors whose election by the Board of Directors,
or whose nomination for election by the Board of Directors for election
by the Coast Resorts' or Borrower's stockholders was approved by a vote
of at least a majority of the directors then still in office who were
either members of the Board of Directors of Coast Resorts or Borrower,
as applicable, on the
-5-
<PAGE> 12
Closing Date or whose election or nomination for reelection was
previously so approved) cease for any reason to constitute a majority of
the directors then in office; or
(b) prior to the consummation of Coast Resorts' first Public
Equity Offering, (i) Michael J. Gaughan and his Related Parties cease to
be the "beneficial owners" (as such term is defined Rule 13d-3 and Rule
13d-5 under the Securities Exchange Act of 1934 (the "Exchange Act")) in
the aggregate of at least 25% of the Voting Stock of Coast Resorts, or
(ii) any Person or "group" (as used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act, including any group acting for the purpose
of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), becomes the "beneficial owner"
(as defined above) directly or indirectly, of more of the Voting Stock
of Coast Resorts than is beneficially owned by the Principals and their
Related Parties;
(c) after the consummation of Coast Resorts' first Public
Equity Offering any Person or group (as defined above), other than the
Principals or their Related Parties, becomes the beneficial owner (as
defined above), directly or indirectly, of (A) more than 40% of the
Voting Stock of Coast Resorts, and (B) more of the Voting Stock of Coast
Resorts than is at that time "beneficially owned" by the Principals and
their Related Parties in the aggregate, provided that in each case there
shall be excluded from the percentage of Voting Stock held by any group,
the Voting Stock owned by any Principal and his Related Parties who are
deemed to be members of that group, provided that such Principal and his
Related Parties own a majority of the total Voting Stock of Coast
Resorts held by such group; or
(d) any event which constitutes a "Change of Control" or
"Change in Control" or similar event with respect to Indebtedness of
Coast Resorts or any of its Subsidiaries in a principal amount which is
in excess of $5,000,000, in the aggregate which permits the holders
thereof to accelerate the maturity of such Indebtedness or require the
prepayment thereof prior to the stated or final maturity thereof.
"Closing Date" means the time and Banking Day on which the
conditions set forth in Section 8.1 are satisfied or waived. The
Administrative Agent shall notify Borrower and the Lenders of the date
that is the Closing Date.
"Coast Resorts" means Coast Resorts, Inc., a Nevada corporation
and direct parent corporation of Borrower.
"Coast Resorts Pledge Agreement" means a pledge agreement to
executed and delivered by Coast Resorts in accordance with Section 5.12,
in a form solely acceptable to the Administrative Agent, either as
originally executed or as it may from time to time be supplemented,
modified, amended, extended or supplanted. The collateral to be
-6-
<PAGE> 13
subject to the Coast Resorts Pledge Agreement includes, without
limitation, all capital stock in Borrower and all other Subsidiaries of
Coast Resorts.
"Coast Resorts Security Agreement" means a security agreement
executed and delivered by Coast Resorts as of the Closing Date in
accordance with Section 8.1, either as originally executed or as it may
from time to time be supplemented, modified, amended, extended or
supplanted.
"Code" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"Collateral" means all of the collateral covered by the
Collateral Documents.
"Collateral Documents" means, collectively, the Security
Agreement, the Coast Resorts Security Agreement, Coast Resorts Pledge
Agreement, the Deeds of Trust, the Guaranty, the Trademark Assignment
and any other security agreement, pledge agreement, deed of trust,
mortgage or other collateral security agreement hereafter executed and
delivered by Coast Resorts, Borrower or any other Obligor to secure the
Obligations.
"Commitment" means, subject to any increase or decrease in the
amount thereof pursuant to Sections 2.5, 2.6, 2.7 or 2.8, $75,000,000.
As of the Closing Date, the Commitments of the Lenders are set forth on
Schedule 1.1.
"Commitment Fee Rate" means, for each Pricing Period, the
percentage set forth opposite the Total Leverage Ratio as of the last
day of the Fiscal Quarter ending two months prior to the first day of
that Pricing Period:
<TABLE>
<CAPTION>
Total Leverage Ratio Commitment Fee Rate
- -------------------- -------------------
<S> <C>
Greater than or equal to 3.50:1.00 0.500%
Less than 3.50:1.00 but greater 0.375%
than or equal to 2.50:1.00
Less than 2.50:1.00 0.300%
</TABLE>
"Commitment Increase Date" means the effective date of any
increase in the Commitment in accordance with Sections 2.8 and 8.3.
"Completion Date" means a date specified by Borrower and
approved by Lenders pursuant to Section 8.3 for completion of the New
Project.
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<PAGE> 14
"Compliance Certificate" means a certificate in the form of
Exhibit B, properly completed and signed by a Senior Officer of
Borrower.
"Construction Progress Report" means a report prepared by CSC or
its designated representative in a form which is reasonably acceptable
to the Borrower and the Administrative Agent.
"Contingent Obligation" means, as to any Person, any (a)
guarantee by that Person of Indebtedness of, or other obligation
performable by, any other Person or (b) assurance given by that Person
to an obligee of any other Person with respect to the performance of an
obligation by, or the condition or maintenance of the financial
condition of, such other Person, whether direct, indirect or contingent,
including any purchase or repurchase agreement covering such obligation,
any interest rate swap agreement, forward contract or other arrangement
of such Person, or any collateral security therefor, any agreement to
provide funds (by means of loans, capital contributions or otherwise) to
such other Person, any agreement to support the solvency or level of any
balance sheet item of such other Person or any "keep-well" or other
arrangement of whatever nature given for the purpose of assuring or
holding harmless such obligee against loss with respect to any
obligation of such other Person; provided, however, that the term
Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation (unless
the Contingent Obligation is limited by its terms to a lesser amount, in
which case to the extent of such amount) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the Person in good faith.
"Contractual Obligation" means, as to any Person, any provision
of any outstanding security issued by that Person or of any material
agreement, instrument or undertaking to which that Person is a party or
by which it or any of its Property is bound.
"Creditors" means, collectively, the Administrative Agent, the
Issuing Lender, the Swing Line Lender and the Lenders.
"CSC" means a Construction Services Consultant designated by the
Administrative Agent and reasonably acceptable to Borrower.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws from time to time in effect affecting the rights of
creditors generally.
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<PAGE> 15
"Deeds of Trust" means the Orleans Deed of Trust, the Gold Coast
Deed of Trust and the New Project Deed of Trust, and each other mortgage
or deed of trust hereafter delivered pursuant to Section 8.3 or
otherwise under this Agreement.
"Default" means any event that, with the giving of any
applicable notice or passage of time specified in Section 9.1, or both,
would be an Event of Default.
"Default Rate" means the interest rate prescribed in Section
3.9.
"Designated Eurodollar Market" means, with respect to any LIBOR
Loan, (a) the London Eurodollar Market, (b) if prime banks in the London
Eurodollar Market are at the relevant time not accepting deposits of
Dollars or if the Administrative Agent determines in good faith that the
London Eurodollar Market does not represent at the relevant time the
effective pricing to the Lenders for deposits of Dollars in the London
Eurodollar Market, the Cayman Islands Eurodollar Market or (c) if prime
banks in the Cayman Islands Eurodollar Market are at the relevant time
not accepting deposits of Dollars or if the Administrative Agent
determines in good faith that the Cayman Islands Eurodollar Market does
not represent at the relevant time the effective pricing to the Lenders
for deposits of Dollars in the Cayman Islands Eurodollar Market, such
other Eurodollar Market as may from time to time be selected by the
Administrative Agent with the approval of Borrower and the Requisite
Lenders.
"Disbursement Account" means a deposit account to be maintained
by Borrower with Bank of America, as from time to time designated by
Borrower by written notification to the Administrative Agent.
"Disposition" means the voluntary sale, transfer or other
disposition of any asset of Borrower or any of its Subsidiaries other
than (a) Cash, Cash Equivalents, inventory or other assets sold, leased
or otherwise disposed of in the ordinary course of business of Borrower
or its Subsidiaries, (b) equipment (including any aircraft) sold or
otherwise disposed of where substantially similar equipment in
replacement thereof has theretofore been acquired, or thereafter within
90 days is acquired, by Borrower or its Subsidiaries, (c) leases of
retail space by Borrower, as lessor, in the ordinary course of the
business of Borrower and in a manner consistent with other similar
hotel-casinos, (d) a disposition to Borrower or any of its Subsidiaries,
and (e) Distributions permitted by Section 6.6. Unless and to the extent
expressly set forth in this definition, neither the granting of a Lien
or Right of Others otherwise permitted hereunder nor the making of any
Investment permitted by Section 6.16 shall be considered a Disposition.
"Distribution" means, with respect to shares of capital stock or
any warrant or option to purchase an equity security or other equity
security issued by a Person, (i) the retirement, redemption, purchase,
or other acquisition for Cash or for Property by such Person of any such
security, (ii) the declaration or (without duplication) payment by
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<PAGE> 16
such Person of any dividend in Cash or in Property on or with respect to
any such security, (iii) any Investment by such Person in the holder of
5% or more of any such security if a purpose of such Investment is to
avoid characterization of the transaction as a Distribution, and (iv)
any other payment in Cash or Property by such Person constituting a
distribution under applicable Laws with respect to such security.
"Dollars" or "$" means United States dollars.
"EBITDA" means, for any fiscal period, the sum of (a) Net Income
for that period, plus (b) any extraordinary loss reflected in such Net
Income, minus (c) any extraordinary gain reflected in such Net Income,
plus (d) Interest Expense for that period, plus (e) the aggregate amount
of federal and state taxes on or measured by income of Coast Resorts and
its Subsidiaries for that period (whether or not payable during that
period), plus (f) depreciation, amortization and all other non-cash
expenses for that period including all non-cash rent expense, plus (g)
expenses classified as "pre-opening expenses" on the applicable
financial statements of Coast Resorts or its Subsidiaries for that
period, in each case determined in accordance with Generally Accepted
Accounting Principles and, in the case of items (d), (e), (f) and (g),
only to the extent deducted in the determination of Net Income for that
period, provided that for each of the first three full Fiscal Quarters
following the Opening, operating results of the New Project will be
annualized on a straight line basis.
"Eligible Assignee" means, (a) another Lender, (b) with respect
to any Lender, any Affiliate of that Lender, (c) any commercial bank
having a combined capital and surplus of $100,000,000 or more, (d) any
(i) savings bank, savings and loan association or similar financial
institution or (ii) insurance company engaged in the business of writing
insurance which, in either case (A) has a net worth of $200,000,000 or
more, (B) is engaged in the business of lending money and extending
credit under credit facilities substantially similar to those extended
under this Agreement and (C) is operationally and procedurally able to
meet the obligations of a Lender hereunder to the same degree as a
commercial bank and (e) any other financial institution (including a
mutual fund or other fund) having total assets of $250,000,000 or more
which meets the requirements set forth in subclauses (B) and (C) of
clause (d) above; provided that (I) each Eligible Assignee must either
(a) be organized under the Laws of the United States of America, any
State thereof or the District of Columbia or (b) be organized under the
Laws of the Cayman Islands or any country which is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of such a country, and (i) act hereunder through a branch,
agency or funding office located in the United States of America and
(ii) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to Section 11.21 and (II) to the
extent required under applicable Gaming Laws, each Eligible Assignee
must be registered with, approved by, or not disapproved by (whichever
may be required under applicable Gaming Laws), all applicable Gaming
Boards.
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<PAGE> 17
"ERISA" means the Employee Retirement Income Security Act of
1974, and any regulations issued pursuant thereto, as amended or
replaced and as in effect from time to time.
"Eurodollar Base Rate" means, with respect to any LIBOR Loan,
the interest rate per annum (rounded upward, if necessary, to the next
1/100 of 1%) at which deposits in Dollars are offered by the
Administrative Agent to prime banks in the Designated Eurodollar Market
at or about 11:00 a.m. local time in the Designated Eurodollar Market,
two Market Days before the first day of the applicable Interest Period
in an aggregate amount approximately equal to the amount of the Advance
made by the Bank of America with respect to such LIBOR Loan and for a
period of time comparable to the number of days in the applicable
Interest Period. The determination of the LIBOR Base Rate by the
Administrative Agent shall be conclusive in the absence of manifest
error.
"Eurodollar Market" means a regular established market located
outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
"Eurodollar Obligations" means eurocurrency liabilities, as
defined in Regulation D.
"Event of Default" shall have the meaning provided in Section
9.1.
"Federal Funds Rate" means, as of any date of determination, the
rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for such date
opposite the caption "Federal Funds (Effective)". If for any relevant
date such rate is not yet published in H.15(519), the rate for such date
will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or
any successor publication, published by the Federal Reserve Bank of New
York (including any such successor, the "Composite 3:30 p.m. Quotation")
for such date under the caption "Federal Funds Effective Rate". If on
any relevant date the appropriate rate for such date is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the
rate for such date will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that date by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative
Agent. For purposes of this Agreement, any change in the Base Rate due
to a change in the Federal Funds Rate shall be effective as of the
opening of business on the effective date of such change.
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<PAGE> 18
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as it may be amended from time to time.
"Fiscal Quarter" means the fiscal quarter of Borrower consisting
of a three-month fiscal period ending on each March 31, June 30,
September 30 and December 31.
"Fiscal Year" means the fiscal year of Borrower consisting of a
twelve-month period ending on each December 31.
"Fixed Charge Coverage Ratio" means, as of any Fiscal Quarter
end, the ratio of (a) EBITDA for the four Fiscal Quarters then ending to
(b) the sum of (i) required payments of principal and interest and
mandatory prepayments made in Cash by Coast Resorts and its Subsidiaries
with respect to Indebtedness (other than mandatory prepayments made with
respect to the Obligations) made during such four Fiscal Quarter period,
(ii) Maintenance Capital Expenditures made during the same period (other
than those which are financed pursuant to Section 6.10(c)), (iii) taxes
paid or payable in cash with respect to income of Coast Resorts and its
Subsidiaries during the same period (including any Permitted Tax
Distributions), and (iv) Distributions made during that period pursuant
to Section 6.6(d).
"Former Partner Debt" means Borrower's 7.5% subordinated notes
due December 31, 2001 issued to certain former partners of the Barbary
Coast Hotel and Casino, a Nevada general partnership, and Gold Coast
Hotel and Casino, Nevada limited partnership, the principal amount of
which are $1,975,000 as of the Closing Date.
"Gaming Board" means, collectively, (a) the Nevada Gaming
Commission, (b) the Nevada State Gaming Control Board, and (c) any other
Governmental Agency that holds regulatory, licensing or permit authority
over gambling, gaming or casino activities conducted by Coast Resorts
and its Subsidiaries within its jurisdiction.
"Gaming Laws" means all Laws pursuant to which any Gaming Board
possesses regulatory, licensing or permit authority over gambling,
gaming or casino activities conducted by Coast Resorts and its
Subsidiaries within its jurisdiction.
"Generally Accepted Accounting Principles" means accounting
principles, as in effect on the Closing Date, as (a) set forth as
generally accepted in the currently effective Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in the currently
effective Statements of the Financial Accounting Standards Board or (c)
that are approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States of
America. The term "consistently
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<PAGE> 19
applied," as used in connection therewith, means that the accounting
principles applied are consistent in all material respects with those
applied at prior dates or for prior periods.
"Gold Coast" means the Gold Coast hotel, casino and
entertainment complex located at 4000 West Flamingo Road, Las Vegas,
Nevada.
"Gold Coast Deed of Trust" means the Deed of Trust, Assignment
of Rents and Fixture Filing executed and delivered by Borrower in favor
of the Lenders as of the Closing Date in accordance with Section 8.1
with respect to the Gold Coast Property, either as originally executed
or as it may from time to time be supplemented, modified, amended,
extended or supplanted.
"Gold Coast Property" means the approximately 25 acres of real
property on which the Gold Coast is located.
"Government Securities" means readily marketable (a) direct full
faith and credit obligations of the United States of America or
obligations guaranteed by the full faith and credit of the United States
of America, or (b) obligations of an agency or instrumentality of, or
corporation owned, controlled or sponsored by, the United States of
America that are generally considered in the securities industry to be
implicit obligations of the United States of America.
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body,
or (c) any court or administrative tribunal of competent jurisdiction.
"Guarantors" means, collectively, Coast Resorts, each Subsidiary
of Coast Resorts (other than Borrower) which exists as of the Closing
Date, and each other direct or indirect Subsidiary of Coast Resorts
which hereafter becomes a Guarantor pursuant to Section 6.17.
"Guaranty" means the unconditional guaranty or guaranties of the
Obligations delivered by Guarantors, either as originally executed or as
it may from time to time be supplemented, modified, amended, or
supplanted.
"Hazardous Materials" means substances regulated as hazardous
substances pursuant to (a) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.,
or as hazardous or toxic wastes or pollutants pursuant to the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
or (b)
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<PAGE> 20
any other Law regulating hazardous substances or hazardous or toxic
wastes or pollutants or regulating the generation, use, storage,
treatment, handling or transportation of any such substances, in each
case as such Laws are amended from time to time.
"Hazardous Materials Laws" means all federal, state or local
laws, ordinances, rules or regulations governing the disposal, transfer,
generation, storage or treatment of Hazardous Materials applicable to
any of the Real Property.
"Indebtedness" means, as to any Person (without duplication),
(a) indebtedness of such Person for borrowed money or for the deferred
purchase price of Property (excluding trade and other accounts payable
in the ordinary course of business in accordance with customary trade
terms), including any Contingent Obligation for any such indebtedness,
(b) indebtedness of such Person of the nature described in clause (a)
that is non-recourse to the credit of such Person but is secured by
assets of such Person, to the extent of the value of such assets, (c)
Capital Lease Obligations of such Person, (d) indebtedness of such
Person arising under bankers' acceptance facilities or under facilities
for the discount of accounts receivable of such Person, (e) any direct
or contingent obligations of such Person under letters of credit issued
for the account of such Person and (f) any net obligations of such
Person under a Swap Agreement.
"Intangible Assets" means assets that are considered intangible
assets under Generally Accepted Accounting Principles, including
customer lists, goodwill, computer software, copyrights, trade names,
trademarks and patents.
"Interest Differential" means, with respect to any prepayment of
a LIBOR Loan on a day other than the last day of the applicable Interest
Period and with respect to any failure to borrow a LIBOR Loan on the
date or in the amount specified in any Request for Loan, (a) the per
annum interest rate payable (or, with respect to a failure to borrow,
the interest rate which would have been payable) pursuant to Section
3.1(c) with respect to the LIBOR Loan minus (b) the LIBOR on, or as near
as practicable to, the date of the prepayment or failure to borrow for a
LIBOR Loan with an Interest Period commencing on such date and ending on
the last day of the Interest Period of the LIBOR Loan so prepaid or
which would have been borrowed on such date.
"Interest Expense" means, as of the last day of any fiscal
period, the sum of (a) all interest, fees, charges and related expenses
paid or payable (without duplication) for that fiscal period to a lender
in connection with borrowed money or the deferred purchase price of
assets that are considered "interest expense" under Generally Accepted
Accounting Principles, plus (b) the portion of rent paid or payable
(without duplication) for that fiscal period under Capital Lease
Obligations that should be treated as interest in accordance with
Financial Accounting Standards Board Statement No. 13.
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<PAGE> 21
"Interest Period" means, as to each LIBOR Loan, the period
commencing on the date specified by Borrower pursuant to Section 2.1(b)
and ending 1, 2, 3 or 6 months thereafter, as specified by Borrower in
the applicable Request for Loan; provided that:
(a) The first day of any Interest Period shall be a
Market Day;
(b) Any Interest Period that would otherwise end on
a day that is not a Market Day shall be extended to the next succeeding
Market Day unless such Market Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding Market
Day;
(c) Borrower may not specify an Interest Period that
extends beyond any Reduction Date unless the sum of (i) the aggregate
principal amount of the LIBOR Loans having a Interest Period ending
after such Reduction Date plus (ii) the aggregate maximum amount
available for drawing under Letters of Credit for which the expiry date
is after such Reduction Date, does not exceed the Commitment (after
giving effect to any reduction thereto scheduled to be made on such
Reduction Date pursuant to Section 2.6); and
(d) No Interest Period shall extend beyond the
Maturity Date.
"Investment" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means
of a loan, advance creating a debt, capital contribution, guaranty or
other debt or equity participation or interest in any other Person,
including any partnership and joint venture interests of such Person.
The amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of
such Investment.
"Issuing Lender" means Bank of America National Trust and
Savings Association, or any successor thereto.
"Laws" means, collectively, all federal, state and local
statutes, rules, regulations, ordinances, codes and administrative or
judicial precedents, or other matters having the force of law and
binding upon the parties hereto.
"Lenders" has the meaning set forth in the preamble hereto.
"Letters of Credit" means any of the Letters of Credit issued by
the Issuing Lender under the Commitment pursuant to Section 2.4, either
as originally issued or as the same may be supplemented, modified,
amended, renewed, extended or supplanted.
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<PAGE> 22
"LIBOR" means, with respect to any LIBOR Loan, an interest rate
per annum (rounded upward, if necessary, to the nearest 1/100 of one
percent) determined pursuant to the following formula:
LIBOR = LIBOR Base Rate
--------------------------
1.00 - Reserve Percentage
"LIBOR Advance" means an Advance made hereunder and specified to
be a LIBOR Advance in accordance with Article 2.
"LIBOR Loan" means a Loan made hereunder and specified to be a
LIBOR Loan in accordance with Article 2.
"LIBOR Margin" means, for each Pricing Period, the percentage
set forth opposite the Total Leverage Ratio as of the last day of the
Fiscal Quarter ending two months prior to the first day of that Pricing
Period:
<TABLE>
<CAPTION>
Total Leverage Ratio LIBOR Margin
- -------------------- -------------
<S> <C>
Greater than or equal to 4.50:1.00 2.75%
Less than 4.50:1.00 but greater than 2.50%
or equal to 4.00:1.00
Less than 4.00:1.00 but greater than 2.00%
or equal to 3.50:1.00
Less than 3.50:1.00 but greater than 1.75%
or equal to 3.00:1.00
Less than 3.00:1.00 but greater than 1.50%
or equal to 2.50:1.00
Less than 2.50:1.00 1.25%
</TABLE>
"LIBOR Office" means, as to each Lender, its office or branch so
designated by written notice the Administrative Agent as its LIBOR
Office. If no LIBOR Office is designated by a Lender, its LIBOR Office
shall be its office at its address for purposes of notices hereunder.
"License Revocation" means the revocation, failure to renew or
suspension of, or the appointment of a receiver, supervisor or similar
official with respect to, any casino, gambling or gaming license issued
by any Gaming Board covering any casino or gaming facility of Coast
Resorts or its Subsidiaries.
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<PAGE> 23
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, lien or charge
of any kind, whether voluntarily incurred or arising by operation of Law
or otherwise, affecting any Property, including any agreement to grant
any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and/or the
filing of or agreement to give any financing statement (other than a
precautionary financing statement with respect to a lease that is not in
the nature of a security interest or customary pre-filings of financing
statements in connection with any refinancing) under the Uniform
Commercial Code or comparable Law of any jurisdiction with respect to
any Property.
"Loan" means the aggregate of the Advances made at any one time
by the Lenders pursuant to Article 2.
"Loan Documents" means, collectively, this Agreement, the Notes,
the Swing Line Documents, the Collateral Documents, any Secured Swap
Agreement, each Request for Letters of Credit, each Request for Loan,
the letters described in Sections 3.2, 3.4, 3.5 and 3.6, each Compliance
Certificate, each Construction Progress Report and any other agreements
of any type or nature hereafter executed and delivered by Borrower or
any of its Subsidiaries or Affiliates to the Administrative Agent or to
any Lender in any way relating to or in furtherance of this Agreement,
in each case either as originally executed or as the same may from time
to time be supplemented, modified, amended, restated, extended or
supplanted.
"Maintenance Capital Expenditures" means any Capital Expenditure
for the maintenance, repair, restoration or refurbishment of (a) any
portion of The Orleans, the Barbary Coast or the Gold Coast existing as
of the Closing Date, (b) following the Opening, the New Project, or (c)
following the opening thereof, any other hotel, casino or resort
property maintained by Coast Resorts or any of its Subsidiaries, but not
any Capital Expenditure which adds to or further improves any such
property.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X.
"Market Day" means any Banking Day on which dealings in Dollar
deposits are conducted by and among banks in the Designated Eurodollar
Market.
"Material Adverse Effect" means any set of circumstances or
events which (a) has or may reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of any
Loan Document, (b) is or may reasonably be expected to be material and
adverse to the condition (financial or otherwise), business operations
or prospects of Coast Resorts and its Subsidiaries, taken as a whole, or
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<PAGE> 24
(c) materially impairs or may reasonably be expected to materially
impair the ability of Coast Resorts and its Subsidiaries, taken as a
whole, to perform the Obligations.
"Maturity Date" means March 31, 2004.
"Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA.
"Negative Pledge" means a Contractual Obligation that contains a
covenant binding on Coast Resorts or any of its Subsidiaries that
prohibits Liens on any of its or their Property, other than (a) any such
covenant contained in a Contractual Obligation granting a Lien permitted
under Section 6.9 which affects only the Property that is the subject of
such permitted Lien and (b) any such covenant that does not apply to
Liens securing the Obligations.
"Net Cash Proceeds" means with respect to any Disposition or any
offerings of Indebtedness or equity securities of Coast Resorts or its
Subsidiaries, the gross sales proceeds received by Coast Resorts and its
Subsidiaries from such Disposition or offering in Cash and Cash
Equivalents net of brokerage commissions, legal expenses and other
transactional costs payable by Coast Resorts and its Subsidiaries with
respect to such Disposition and net of an amount determined in good
faith by Borrower to be the estimated amount of income taxes payable by
Coast Resorts attributable to such Disposition and any reserves required
to be established in accordance with Generally Accepted Accounting
Principles by Coast Resorts or its Subsidiaries as a reserve against any
liabilities associated with such Disposition, including without
limitation pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under
indemnification obligations associated with such Disposition.
"Net Income" means, with respect to any fiscal period, the
consolidated net income of Borrower and its Subsidiaries for that
period, determined in accordance with Generally Accepted Accounting
Principles, consistently applied.
"New Project Deed of Trust" means the Leasehold Deed of Trust,
Assignment of Rents and Fixture Filing executed and delivered by
Borrower in favor of the Administrative Agent for the benefit of the
Lenders as of the Closing Date in accordance with Section 8.1 with
respect to the New Project Property and improvements thereon, either as
originally executed or as it may from time to time be supplemented,
modified, amended, extended or supplanted.
"New Project Ground Lease" means that certain Ground Lease
Agreement dated October 28, 1994 by and between 21 Stars, Ltd., a Nevada
limited liability company, as landlord, and Barbary Coast Hotel and
Casino, a Nevada general
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<PAGE> 25
partnership, as tenant, as assigned to Coast West, Inc., and which shall
be further assigned to Borrower on the Closing Date by operation of
merger.
"New Project" means the proposed design, development and
construction by Borrower of a hotel, casino and entertainment complex on
the New Project Property.
"New Project Property" means the approximately 50 acres of real
property located at the intersection of Rampart and Alta Nevada, which
is the subject of the New Project Ground Lease.
"Note" means any of the promissory notes made by Borrower to a
Lender evidencing Advances under that Lender's Pro Rata Share of the
Commitment, substantially in the form of Exhibit C, either as
originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or supplanted.
"Obligations" means all present and future obligations of every
kind or nature of Borrower or any other Obligor at any time and from
time to time owed to the Administrative Agent or the Lenders or any one
or more of them, under any one or more of the Loan Documents, whether
due or to become due, matured or unmatured, liquidated or unliquidated,
or contingent or noncontingent, including obligations of performance as
well as obligations of payment, and including interest that accrues
after the commencement of any proceeding under any Debtor Relief Law by
or against Borrower or any Subsidiary or Affiliate of Borrower.
"Obligor" means Borrower, Coast Resorts and each other future
guarantor of the Obligations.
"Opening" means the date upon which (a) the New Project,
together with each of the material amenities described in the Plans, is
open and ready to accommodate hotel guests and gaming patrons, (b) a
certificate of occupancy (including any temporary certificate of
occupancy) has been issued with respect to the New Project, and (c)
Borrower has delivered a certificate to the Administrative Agent,
executed by a Senior Officer of Borrower, stating that (i) the New
Project, including all related amenities described in the Plans, has
been substantially completed in accordance with applicable Laws, the
Plans and the Budget (each as amended from time to time in accordance
with Section 6.19), (ii) the New Project is free and clear of all record
Liens and encumbrances (other than Permitted Encumbrances, those
described in Schedule B to the title policy for the New Project Property
described in Section 8.3 and any Liens and encumbrances which relate to
claims in an aggregate amount not in excess of $10,000,000 which are
being contested in good faith by appropriate proceedings diligently
pursued and, to the extent in excess of $1,000,000 in the aggregate, are
the subject of bonds and indemnities which are reasonably acceptable to
the Administrative Agent) and Borrower has paid all known claims against
the New Project, and (iii)
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<PAGE> 26
Borrower has obtained all necessary licenses, permits and approvals
(including without limitation all permits and licenses required under
Gaming Laws) for the operation of the New Project.
"Opinions of Counsel" means the favorable written legal opinions
of Gibson, Dunn & Crutcher LLP, special counsel to the Obligors, and
McDonald Carano Wilson McCune Bergin Frankovich & Hicks, special Nevada
counsel to all Obligors, in each case issued on the Closing Date and in
a form solely acceptable to the Administrative Agent, together with
copies of all factual certificates and legal opinions upon which such
counsel have relied.
"Orleans" means The Orleans hotel, casino and entertainment
complex located at the intersection of Tropicana Avenue and Arville
Street in Las Vegas, Nevada.
"Orleans Deed of Trust" means the Leasehold Deed of Trust,
Assignment of Rents and Fixture Filing executed and delivered by
Borrower in favor of the Lenders as of the Closing Date in accordance
with Section 8.1 with respect to The Orleans Property and improvements
thereon, either as originally executed or as it may from time to time be
supplemented, modified, amended, extended or supplanted.
"Orleans Ground Lease" means that certain Ground Lease dated
October 1, 1995 by and between The Tiberti Company, a Nevada general
partnership, as landlord, and Gold Coast Hotel and Casino, a Nevada
limited partnership, as tenant, as assigned to the Borrower.
"Orleans Property" means the approximately 80 acres of real
property which is the subject of the Orleans Ground Lease.
"Outstanding Obligations" means, as of each date of
determination, and giving effect to the making of any such credit
accommodations requested on that date, the sum of (i) the aggregate
principal amount of the outstanding Loans, plus (ii) the Swing Line
Outstandings, plus (iii) the Aggregate Effective Amount of all Letters
of Credit.
"Pass-through Entity" means any Person taxed as a partnership
for federal income tax purposes, any disregarded entity for federal
income tax purposes, including a qualified Subchapter S subsidiary, an
S-Corporation, or any other entity whose items of income and deductions
are passed through to its equityholders for federal income tax purposes
and retain the same characteristics in the hands of such equityholders.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
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"Pension Plan" means any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), other than a
Multiemployer Plan, which is subject to Title IV of ERISA and is
maintained by Borrower or any of its Subsidiaries or to which Borrower
or any of its Subsidiaries contributes or has an obligation to
contribute.
"Permitted Encumbrances" means:
(a) inchoate Liens incident to construction on or
maintenance of Real Property; or Liens incident to construction on or
maintenance of Real Property now or hereafter filed of record for which
adequate reserves have been set aside (or deposits made pursuant to
applicable Law) and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment, provided
that, by reason of nonpayment of the obligations secured by such Liens,
no such Real Property is subject to a material risk of loss or
forfeiture;
(b) Liens for taxes and assessments on Real Property
which are not yet past due; or Liens for taxes and assessments on Real
Property for which adequate reserves have been set aside and are being
contested in good faith by appropriate proceedings and have not
proceeded to judgment, provided that, by reason of nonpayment of the
obligations secured by such Liens, no such Real Property is subject to a
material risk of loss or forfeiture;
(c) minor defects and irregularities in title to any
Real Property which in the aggregate do not materially impair the fair
market value or use of the Real Property for the purposes for which it
is or may reasonably be expected to be held;
(d) easements, exceptions, licenses, reservations,
or other agreements for the purpose of pipelines, conduits, cables,
telecommunications, wire communication lines, power lines and
substations, streets, trails, walkways, drainage, irrigation, water, and
sewerage purposes, dikes, canals, ditches, the removal of oil, gas,
coal, or other minerals, and other like purposes affecting Real
Property, facilities, or equipment which in the aggregate do not
materially burden or impair the fair market value or use of such Real
Property for the purposes for which it is or may reasonably be expected
to be held;
(e) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, the use of any Real Property;
(f) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, any right, power, franchise, grant,
approval, license, or permit;
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(g) present or future zoning laws and ordinances or
other Laws and ordinances restricting the occupancy, use, or enjoyment
of Real Property;
(h) statutory Liens, other than those described in
clauses (a) or (b) above, arising in the ordinary course of business
with respect to obligations which are not delinquent or are being
contested in good faith by appropriate proceedings, provided that, if
delinquent, adequate reserves have been set aside with respect thereto
and, by reason of nonpayment, no Property is subject to a material risk
of loss or forfeiture;
(i) rights of tenants under leases and rental
agreements covering Real Property entered into in the ordinary course of
business of the Person owning such Real Property;
(j) Liens consisting of pledges or deposits to
secure obligations under workers' compensation laws or similar
legislation, including Liens of judgments thereunder which are not
currently dischargeable;
(k) other non-consensual Liens incurred in the
ordinary course of business but not in connection with an extension of
credit, which do not in the aggregate, when taken together with all
other Liens, materially impair the value or use of the Property of
Borrower and the Subsidiaries of Borrower, taken as a whole;
(l) the matters disclosed on Schedule B to any of
the ALTA lenders policies of title insurance delivered to the
Administrative Agent pursuant to Section 8; and
(m) any attachment or judgment Lien relating to a
judgment of less than $5,000,000 which is in existence less than 30 days
after the entry thereof or with respect to which (a) execution has been
stayed from the date of its entry, (b) payment is covered in full by
insurance, or (c) the Borrower or any of its Subsidiaries is in good
faith prosecuting an appeal or other appropriate proceedings for review
and has set aside cash reserves in the full amount of such judgment or
award.
"Permitted Right of Others" means a Right of Others consisting
of (a) an interest (other than a legal or equitable co-ownership
interest, an option or right to acquire a legal or equitable
co-ownership interest and any interest of a ground lessor under a ground
lease), that does not materially impair the value or use of Property for
the purposes for which it is or may reasonably be expected to be held,
(b) an option or right to acquire a Lien that would be a Permitted
Encumbrance, (c) any licenses or concessions to operate retail
businesses granted in accordance with industry customs,
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or any options to receive any such licenses or concessions, or (d) any
Right of Others granted in connection with a proposed Disposition
permitted by Section 6.3.
"Permitted Tax Distribution" means (a) payments to Coast Resorts
required to be made pursuant to the Tax Sharing Agreement and (b) if and
for so long as Borrower is treated as a Pass-through Entity,
distributions to Coast Resorts (or, if Coast Resorts is a Pass-through
Entity, its equityholders) in an amount not to exceed the Tax Amount;
provided that (i) prior to the first such distribution to equityholders,
Borrower and Coast Resorts deliver to the Administrative Agent an
opinion of counsel reasonably satisfactory to the Administrative Agent
confirming that (y) Borrower (and, in the appropriate case, Coast
Resorts) is a Pass-through Entity and (z) the Lenders will not recognize
income, gain or loss for federal income tax purposes as a result of the
transaction pursuant to which the Borrower or Coast Resorts becomes a
Pass-through Entity and will be subject to federal income tax in the
same manner and at the same times as would have been the case if such
transaction had not occurred and (ii) prior to any such distribution,
Borrower delivers to the Administrative Agent a certificate of
Borrower's Chief Financial Officer to the effect that the Borrower is
taxable as Pass-through Entity.
"Person" means any individual or entity, including a trustee,
corporation, limited liability company, general partnership, limited
partnership, joint stock company, trust, estate, unincorporated
organization, business association, firm, joint venture, Governmental
Agency, or other entity.
"Plans" means all drawings, plans and specifications prepared by
or for Borrower with respect to the New Project, and, if required,
submitted to and approved by the Clark County Building Department, which
Plans have been submitted to and approved by the Administrative Agent
and the Lenders pursuant to Section 8.3, as amended in accordance with
Section 6.19.
"Pricing Period" means (a) the period beginning on the Closing
Date and ending on May 31, 1999, and (b) each of the succeeding three
month periods beginning on each subsequent June 1, September 1, December
1 and March 1.
"Principals" means Michael J. Gaughan, J. Tito Tiberti, Jerry
Herbst and Franklin Toti.
"Project Site" shall mean each of the Orleans Property, the Gold
Coast Property, the Barbary Coast Property, the New Project and any
future hotel-casino sites which Coast Resorts or any of its Subsidiaries
hereafter maintains or operates.
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"Projections" means the financial projections dated December 29,
1998, prepared based on information provided by Borrower and previously
delivered to the Administrative Agent.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Pro Rata Share" means, as of each date of determination and
with respect to each Lender, the percentage of the Commitment owned by
that Lender (or, if the Commitment has been terminated, the percentage
of the Outstanding Obligations owned by that Lender). The records of the
Administrative Agent shall be presumed to correctly reflect the Pro Rata
Share of the Lenders then party to the Loan Agreement.
"Public Equity Offering" means an underwritten public offering
of the common stock of Coast Resorts which is registered under the
Securities Act of 1933 and results in net proceeds to Coast Resorts of
not less than $20,000,000.
"Quarterly Payment Date" means each March 31, June 30, September
30 and December 31 to occur following the date of this Agreement.
"Rancho Property" means the approximately 29 acres of
undeveloped land owned by Borrower and located at the intersection of
Rancho Drive and Carey Avenue in North Las Vegas, Nevada.
"Real Property" means, as of any date of determination, all real
Property then or theretofore owned, leased or occupied by Coast Resorts
or any of its Subsidiaries, including the Project Sites.
"Reduction Amount" means the amount set forth in the matrix
below opposite that Reduction Date in the column headed "Reduction
Amount ($75,000,000 Commitment)," or such lesser amount to which that
Reduction Amount may be reduced in accordance with the second sentence
of Section 2.5:
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<TABLE>
<CAPTION>
Reduction Dates Reduction Amount Reduction Amount
- --------------- ---------------- ----------------
($75,000,000 Commitment) ($200,000,000 Commitment)
<S> <C> <C>
06/30/01 $ 2,100,000 $ 6,000,000
09/30/01 $ 2,100,000 $ 6,000,000
12/31/01 $ 2,100,000 $ 6,000,000
03/31/02 $ 2,100,000 $ 6,000,000
06/30/02 $ 3,200,000 $ 8,500,000
09/30/02 $ 3,200,000 $ 8,500,000
12/31/02 $ 3,200,000 $ 8,500,000
03/31/03 $ 3,200,000 $ 8,500,000
06/30/03 $ 4,300,000 $ 11,500,000
09/30/03 $ 4,300,000 $ 11,500,000
12/31/03 $ 4,300,000 $ 11,500,000
Maturity $40,700,000 $107,500,000
</TABLE>
In the event that the Commitment is hereafter increased pursuant to
Section 2.8, then, as to each Reduction Date which occurs following such
increase, "Reduction Amount" shall mean the amount set forth in the
matrix above opposite that Reduction Date in the column headed
"Reduction Amount ($200,000,000 Commitment)," or such lesser amount to
which that Reduction Amount may thereafter be reduced in accordance with
the second sentence of Section 2.5, provided that if the increase to the
Commitment is to an amount (the "New Commitment") which is less than
$200,000,000, each such Reduction Amount shall be reduced in the same
proportion as the New Commitment bears to $200,000,000.
"Reduction Date" means June 30, 2001, and the last day of each
succeeding September, December, March and June through the Maturity
Date.
"Reference Rate" means the rate of interest publicly announced
from time to time by Bank of America in San Francisco, California, as
its "reference rate." It is a rate set by Bank of America based upon
various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in the Reference Rate announced
by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.
"Regulation D" means Regulation D, as at any time amended, of
the Board of Governors of the Federal Reserve System, or any other
regulation in substance substituted therefor.
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"Regulations T, U and X" means Regulations T, U and X, as at any
time amended, of the Board of Governors of the Federal Reserve System,
or any other regulations in substance substituted therefor.
"Related Parties" means, with respect to any Principal, (a) any
spouse, sibling, parent or lineal descendant of such Principal or any
spouse of any such sibling or lineal descendant, and (b) and trust,
corporation, partnership or other Person, the beneficiaries,
shareholders, partners, owners or Persons beneficially holding 80% or
more controlling interest of which consist of such Principal or Persons
of the type referred to in clause (a).
"Request for Letter of Credit" means a written request for a
Letter of Credit substantially in the form of Exhibit D, signed by a
Responsible Official of Borrower, on its behalf, and properly completed
to provide all information required to be included therein.
"Request for Loan" means a written request for a Loan
substantially in the form of Exhibit E, signed by a Responsible Official
of Borrower and properly completed to provide all information required
to be included therein.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Requisite Lenders" means, as of each date of determination (a)
if the Commitment is then in effect, Lenders having Pro Rata Shares
constituting 51% of the Commitment, and (b) if the Commitment has then
been terminated and there are then any Obligations outstanding, Lenders
holding 51% or more of the Outstanding Obligations.
"Reserve Percentage" means, with respect to any LIBOR Loan, the
maximum reserve percentage (expressed as a decimal, rounded upward, if
necessary, to the nearest 1/100th of 1%) in effect on the date the LIBOR
Base Rate for that LIBOR Loan is determined (whether or not applicable
to any Lender) under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with
respect to eurocurrency funding (currently referred to as "eurocurrency
liabilities") having a term comparable to the Interest Period for such
LIBOR Loan. The determination by the Administrative Agent of any
applicable Reserve Percentage shall be conclusive in the absence of
manifest error.
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"Responsible Official" means (a) when used with reference to a
Person other than an individual, any officer of such Person, general
partner of such Person, officer of a corporate general partner of such
Person, or corporate officer of a corporate general partner of a
partnership that is a general partner of such Person, or any other
responsible official thereof duly acting on behalf thereof, and (b) when
used with reference to a Person who is an individual, such Person. Any
document or certificate hereunder that is signed or executed by a
Responsible Official of another Person shall be conclusively presumed to
have been authorized by all necessary corporate, partnership and/or
other action on the part of such other Person.
"Right of Others" means, as to any Property in which a Person
has an interest, any legal or equitable right, title or other interest
(other than a Lien) held by any other Person in that Property, and any
option or right held by any other Person to acquire any such right,
title or other interest in that Property, including any option or right
to acquire a Lien.
"Secured Swap Agreement" means a Swap Agreement between Borrower
and a Lender.
"Security Agreement" means a security agreement executed and
delivered by Borrower in favor of the Lenders as of the Closing Date in
accordance with Section 8.1, either as originally executed or as it may
from time to time be supplemented, modified, amended, extended or
supplanted.
"Senior Debt" means, as of each date of determination, Total
Debt minus Subordinated Obligations.
"Senior Leverage Ratio" means, as of the last day of each Fiscal
Quarter, the ratio of (a) the average principal amount of the
outstanding Senior Debt as of the last day of each of the three
constituent calendar months in that Fiscal Quarter, to (b) EBITDA for
the four Fiscal Quarter period ending on such date.
"Senior Officer" means the (a) chief executive officer, (b)
president, (c) any vice president, (d) chief financial officer, (e)
treasurer or (f) assistant treasurer of the Person designated.
"Special LIBOR Circumstance" means the application or adoption
after the Closing Date of any Law or interpretation, or any change after
the Closing Date therein or thereof, or any change after the Closing
Date in the interpretation or administration thereof by any Governmental
Agency, central bank or comparable authority charged with the
interpretation or administration thereof, or compliance by any Lender or
its LIBOR Office with any request or directive (whether or not having
the force of Law) of any such Governmental Agency, central bank or
comparable authority issued after
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the Closing Date, or the existence or occurrence after the Closing Date
of circumstances affecting the Designated Eurodollar Market generally
that are beyond the reasonable control of the Lenders.
"Subordinated Obligations" means (a) the 1999 Senior
Subordinated Debt, and (b) any other Indebtedness of Borrower which is
subordinated in right of payment to the Obligations, the terms of which
are approved by the Administrative Agent, acting with the consent of the
Requisite Lenders, in writing. The Former Partner Debt is not a
Subordinated Obligation.
"Subsidiary" means, as of any date of determination and with
respect to any Person, any corporation, limited liability company or
partnership (whether or not, in either case, characterized as such or as
a "joint venture"), whether now existing or hereafter organized or
acquired: (a) in the case of a corporation or limited liability company,
of which a majority of the securities having ordinary voting power for
the election of directors or other governing body (other than securities
having such power only by reason of the happening of a contingency) are
at the time beneficially owned by such Person and/or one or more
Subsidiaries of such Person, or (b) in the case of a partnership, of
which a majority of the partnership or other ownership interests are at
the time beneficially owned by such Person and/or one or more of its
Subsidiaries.
"Subsidiary Guaranty" means an unconditional guaranty in full of
the Obligations delivered by a Subsidiary of Coast Resorts pursuant
hereto, such guaranty to be in substantially the form of the Guaranty,
with such modifications as may be designated by the Administrative
Agent.
"Subsidiary Pledge Agreement" means an agreement granting a
pledge in all property of a Subsidiary of Coast Resorts delivered by
such Subsidiary to secure the Obligations pursuant hereto, such pledge
agreement to be in substantially the form of the Coast Resorts Pledge
Agreement, with such modifications as may be designated by the
Administrative Agent.
"Subsidiary Security Agreement" means an agreement granting a
security interest in all property of a Subsidiary of Coast Resorts
delivered by such Subsidiary to secure the Obligations pursuant hereto,
such security agreement to be in substantially the form of the Coast
Resorts Security Agreement, with such modifications as may be designated
by the Administrative Agent.
"Swap Agreement" means a written agreement between Borrower and
one or more financial institutions providing for "swap", "cap", "collar"
or other interest rate protection with respect to any Indebtedness.
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<PAGE> 35
"Swing Line" means the revolving line of credit established by
the Swing Line Lender in favor of Borrower pursuant to Section 2.10.
"Swing Line Advances" means loans made by the Swing Line Lender
to Borrower pursuant to Section 2.10.
"Swing Line Lender" means Bank of America, through its Nevada
Commercial Banking Group, or any successor thereto.
"Swing Line Documents" means the $7,500,000 promissory note of
even date herewith (as at any time amended) and any other documents
executed by Borrower in favor of the Swing Line Lender in connection
with the Swing Line.
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal Indebtedness of Borrower on all
Swing Line Loans then outstanding.
"Tax Agreement" means (a) the Tax Sharing Agreement, and (B) if
and for so long as Borrower and Coast Resorts are treated as a
Pass-Through Entities, any agreement among Borrower, Coast Resorts and
the equity holders of Coast Resorts with respect to distributions of the
Tax Amount.
"Tax Amount" means, with respect to any period during which
Borrower is a Pass-Through Entity, the federal, state and local tax
liability of equityholders of Borrower (or, if Coast Resorts is a
Pass-through Entity, its equityholders), assuming maximum rates, in
respect of their direct or indirect interests in the Borrower for such
period plus any additional amounts payable to such equityholders to
cover taxes arising from ownership of such equity interests.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement
dated January 30, 1996, among Coast Resorts, the Company and Coast West,
Inc., as in existence on the Closing Date.
"Timetable" means the construction timetable for the New Project
specified by Borrower and approved by the Lenders pursuant to Section
8.3, as amended in accordance with Section 6.19.
"Title Company" means Commonwealth Land Title Insurance Company
or such other title insurance company as is reasonably acceptable to the
Administrative Agent.
"Total Debt" means, as of each date of determination, the
aggregate principal Indebtedness, without duplication, of Coast Resorts
and its Subsidiaries.
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<PAGE> 36
"Total Leverage Ratio" means, as of the last day of each Fiscal
Quarter, the ratio of (a) the average principal amount of the
outstanding Total Debt as of the last day of each of the three
constituent calendar months in that Fiscal Quarter, to (b) EBITDA for
the four Fiscal Quarter period ending on such date.
"to the best knowledge of" means, when modifying a
representation, warranty or other statement of any Person, that the fact
or situation described therein is known by the Person (or, in the case
of a Person other than a natural Person, known by a Responsible Official
of that Person) making the representation, warranty or other statement,
or with the exercise of reasonable due diligence under the circumstances
(in accordance with the standard of what a reasonable Person in similar
circumstances would have done) would have been known by the Person (or,
in the case of a Person other than a natural Person, would have been
known by a Responsible Official of that Person).
"Trademark Assignment" means the Trademark Security Interest
Assignment, executed by Borrower and Parent on the Closing Date, either
as originally executed or as it may from time to time be supplemented,
modified, amended, extended or supplanted.
"type", when used with respect to any Loan or Advance, means the
designation of whether such Loan or Advance is a Base Rate Loan or
Advance, or a LIBOR Loan or Advance.
"Voting Stock" means, with respect to any Person, capital stock
of any class or kind ordinarily having the power to vote for the
election of directors, managers or other voting members of the governing
body of such Person.
1.2 Use of Defined Terms. Any defined term used in the
plural shall refer to all members of the relevant class, and any defined term
used in the singular shall refer to any one or more of the members of the
relevant class.
1.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, Generally Accepted Accounting Principles as in effect on the
Closing Date, applied on a consistent basis.
1.4 Rounding. Any financial ratios required to be maintained
by Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
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<PAGE> 37
1.5 Exhibits and Schedules. All Exhibits and Schedules to
this Agreement, either as originally existing or as the same may from time to
time be supplemented, modified or amended, are incorporated herein by this
reference. A matter disclosed on one Schedule shall be deemed disclosed on all
Schedules.
1.6 References to "and its Subsidiaries". Any reference
herein to "and its Subsidiaries" or the like shall refer solely to the subject
Person during such times as the subject Person shall have no Subsidiaries. No
use of the term "Subsidiary" or any derivative thereof in the Loan Documents
shall imply a right in any Person to make any Investments in or Acquisitions of
any other Person.
1.7 References to Times. Each reference to a time of day set
forth in the Loan Documents shall, unless expressly stated to the contrary, be a
reference to the then prevailing California local time.
1.8 Miscellaneous Terms. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.
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<PAGE> 38
Article 2
LOANS
2.1 Loans-General.
(a) Subject to the terms and conditions set forth in
this Agreement, from time to time from the Closing Date through the
Maturity Date each Lender shall, pro rata according to that Lender's Pro
Rata Share of the then applicable Commitment, make revolving Advances to
Borrower under the Commitment in such amounts as Borrower may request
that do not result in the Outstanding Obligations being in excess of the
Commitment. Subject to the limitations set forth herein, Borrower may
borrow, repay and reborrow under the Commitment without premium or
penalty.
(b) Subject to the next sentence, each Loan shall be
made pursuant to a Request for Loan which shall specify the requested
(i) date of such Loan, (ii) type of Loan, (iii) amount of such Loan, and
(iv) in the case of a LIBOR Loan, the Interest Period for such Loan.
Unless the Administrative Agent has previously notified Borrower to the
contrary (which notice may be given in the sole and absolute discretion
of the Administrative Agent), Loans may be requested by telephone by a
Responsible Official of Borrower, in which case Borrower shall confirm
such request by promptly delivering a Request for Loan in person or by
telecopier conforming to the preceding sentence to the Administrative
Agent. Neither the Administrative Agent nor any Lender shall incur any
liability whatsoever hereunder in acting upon any telephonic request for
a Loan purportedly made by a Responsible Official of Borrower, which
hereby agrees to indemnify the Administrative Agent and the Lenders from
any loss, cost, expense or liability as a result of so acting.
(c) Promptly following receipt of a Request for
Loan, the Administrative Agent shall notify each Lender by telephone or
telecopier (and if by telephone, promptly confirmed by telecopier) of
the date and type of the Loan, the applicable Interest Period, and that
Lender's Pro Rata Share of the Loan. Not later than 11:00 a.m. on the
date specified for any Loan (which must be a Banking Day), each Lender
shall make its Pro Rata Share of the Loan in immediately available funds
available to the Administrative Agent at the Administrative Agent's
Office. Upon satisfaction or waiver of the applicable conditions set
forth in Article 8, all Advances shall be credited on that date in
immediately available funds to the Disbursement Account.
(d) Unless the Requisite Lenders otherwise consent,
each Loan shall be in an amount which is an integral multiple of
$1,000,000 and is not less than $2,000,000.
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<PAGE> 39
(e) The Advances made by each Lender shall be
evidenced by that Lender's Note.
(f) A Request for Loan shall be irrevocable upon the
Administrative Agent's receipt thereof (or, in the case of a telephonic
request for Loan referred to in the second sentence of Section 2.1(b),
upon the Administrative Agent's receipt of that telephone call).
(g) If no Request for Loan (or telephonic request
for Loan referred to in the second sentence of Section 2.1(b), if
applicable) has been made within the requisite notice periods set forth
in Section 2.2 or 2.3 in connection with a Loan which, if made and
giving effect to the application of the proceeds thereof, would not
increase the outstanding principal Indebtedness evidenced by the Notes,
then Borrower shall be deemed to have requested, as of the date upon
which the related then outstanding Loan is due pursuant to Section
3.1(e), a Base Rate Loan in an amount equal to the amount necessary to
cause the outstanding principal Indebtedness evidenced by the Notes to
remain the same and the Lenders shall make the Advances necessary to
make such Loan notwithstanding Sections 2.1(b) and 2.2.
(h) If a Loan is to be made on the same date that
another Loan is due and payable, Borrower or the Lenders, as the case
may be, shall at the request of the Administrative Agent make available
to the Administrative Agent the net amount of funds giving effect to
both such Loans and the effect for purposes of this Agreement shall be
the same as if separate transfers of funds had been made with respect to
each such Loan.
2.2 Base Rate Loans. Each request by Borrower for a Base
Rate Loan shall be made pursuant to a Request for Loan (or telephonic or other
request for loan referred to in the second sentence of Section 2.1(b), if
applicable) received by the Administrative Agent, at the Administrative Agent's
Office, not later than 10:00 a.m. on the date (which must be a Banking Day) of
the requested Base Rate Loan. All Loans shall constitute Base Rate Loans unless
properly designated as LIBOR Loans pursuant to Section 2.3.
2.3 LIBOR Loans.
(a) Each request by Borrower for a LIBOR Loan shall
be made pursuant to a Request for Loan (or telephonic or other request
for Loan referred to in the second sentence of Section 2.1(b), if
applicable) received by the Administrative Agent, at the Administrative
Agent's Office, not later than 10:00 a.m. at least three Market Days
before the first day of the applicable Interest Period.
(b) On the date which is two Market Days before the
first day of the applicable Interest Period, the Administrative Agent
shall confirm its determination of
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the applicable LIBOR (which determination shall be conclusive in the
absence of manifest error) and promptly shall give notice of the same to
Borrower and the Lenders by telephone or telecopier (and if by
telephone, promptly confirmed by telecopier).
(c) Unless the Administrative Agent and the
Requisite Lenders otherwise consent, no more than ten LIBOR Loans shall
be outstanding at any one time.
(d) No LIBOR Loan may be requested where a Default
or Event of Default has occurred and remains continuing.
(e) Nothing contained herein shall require any
Lender to fund any LIBOR Advance in the Designated Eurodollar Market.
2.4 Letters of Credit.
(a) Subject to the terms and conditions hereof, at
any time and from time to time from the Closing Date through the Banking
Day immediately prior to the Maturity Date, the Issuing Lender shall
issue such Letters of Credit under the Commitment as Borrower may
request by a Request for Letter of Credit; provided that (i) giving
effect to all such Letters of Credit, the Outstanding Obligations do not
exceed the then applicable Commitment and (ii) the Aggregate Effective
Amount under all outstanding Letters of Credit shall not exceed
$10,000,000. Each Letter of Credit shall be in a form reasonably
acceptable to the Issuing Lender. Unless all the Lenders otherwise
consent in a writing delivered to the Administrative Agent, no Letter of
Credit shall have a term which exceeds one year or extends beyond the
Maturity Date.
(b) Each Request for Letter of Credit shall be
submitted to the Issuing Lender, with a copy to the Administrative
Agent, at least two Banking Days prior to the date upon which the
related Letter of Credit is proposed to be issued. The Administrative
Agent shall promptly notify the Issuing Lender whether such Request for
Letter of Credit, and the issuance of a Letter of Credit pursuant
thereto, conforms to the requirements of this Agreement. Upon issuance
of a Letter of Credit, the Issuing Lender shall promptly notify the
Administrative Agent, who shall promptly notify the Lenders, of the
amount and terms thereof.
(c) Upon the issuance of a Letter of Credit, each
Lender shall be deemed to have purchased a pro rata participation in
such Letter of Credit from the Issuing Lender in an amount equal to that
Lender's Pro Rata Share. Without limiting the scope and nature of each
Lender's participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed by Borrower for any payment
required to be made by the Issuing Lender under any Letter of Credit,
each Lender shall, pro rata according to its Pro Rata Share, pay the
purchase price for such
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participation to the Issuing Lender through the Administrative Agent
promptly upon demand therefor. The obligation of each Lender to so pay
the participation purchase price to the Issuing Lender shall be absolute
and unconditional and shall not be affected by the occurrence of an
Event of Default or any other occurrence or event. Any such payment of
the purchase price shall not relieve or otherwise impair the obligation
of Borrower to reimburse the Issuing Lender for the amount of any
payment made by the Issuing Lender under any Letter of Credit together
with interest as hereinafter provided.
(d) Borrower agrees to pay to the Issuing Lender
through the Administrative Agent an amount equal to any payment made by
the Issuing Lender with respect to each Letter of Credit upon demand by
the Issuing Lender therefor, together with interest on such amount from
the date of any payment made by the Issuing Lender at the Default Rate.
The principal amount of any such payment shall be used to reimburse the
Issuing Lender for the payment made by it under the Letter of Credit
and, to the extent that the Lenders have not reimbursed the Issuing
Lender pursuant to Section 2.4(c), the interest amount of any such
payment shall be for the account of the Issuing Lender. Each Lender that
has paid the participation purchase price to the Issuing Lender pursuant
to Section 2.4(c) shall thereupon acquire a pro rata participation, to
the extent of such payment, in the claim of the Issuing Lender against
Borrower for reimbursement of principal and interest under this Section
2.4(d) and shall share, in accordance with that pro rata participation,
in any principal payment made by Borrower with respect to such claim and
in any interest payment made by Borrower (but only with respect to
periods subsequent to the date such Lender paid the participation
purchase price to the Issuing Lender) with respect to such claim.
(e) Borrower may, pursuant to a Request for Loan,
request that Advances be made pursuant to Section 2.1(a) to provide
funds for the payment required by Section 2.4(d) and, for this purpose,
the conditions precedent set forth in Article 8 shall not apply. The
proceeds of such Advances shall be paid directly to the Issuing Lender
to reimburse it for the payment made by it under the Letter of Credit.
(f) If Borrower fails to make the payment required
by Section 2.4(d) on a timely basis then, in lieu of the payment of the
participation purchase price to the Issuing Lender under Section 2.4(c),
the Issuing Lender may (but is not required to), without notice to or
the consent of Borrower, instruct the Administrative Agent to cause Base
Rate Advances to be made by the Lenders under their Pro Rata Shares of
the Commitment in an aggregate amount equal to the amount paid by the
Issuing Lender with respect to that Letter of Credit and, for this
purpose, the conditions precedent to Advances set forth in Article 8
shall not apply. The proceeds of such Advances shall be paid directly to
the Issuing Lender to reimburse it for the payment made by it under the
Letter of Credit.
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(g) The issuance of any supplement, modification,
amendment, renewal, or extension to or of any Letter of Credit shall be
treated in all respects the same as the issuance of a new Letter of
Credit, provided that this clause (g) shall not require the payment of
any letter of credit fees except to the extent that such
supplementation, modification, amendment, renewal or extension results
in an increase to the amount of the related Letter of Credit or any
extension of its tenor.
(h) The obligation of Borrower to pay to the Issuing
Lender the amount of any payment made by the Issuing Lender under any
Letter of Credit shall be absolute, unconditional, and irrevocable,
subject only to performance by the Issuing Lender of its obligations to
Borrower under Uniform Commercial Code Section 5109, as in effect in the
State of Nevada. Without limiting the foregoing, the obligations of
Borrower to the Issuing Lender shall not be affected by any of the
following circumstances:
(i) any lack of validity or enforceability
of the Letter of Credit, this Agreement, or any other Agreement
or instrument relating thereto;
(ii) any amendment or waiver of the terms of
the Letter of Credit, or any consent to departure from the
Letter of Credit, this Agreement, or any other Agreement or
instrument relating thereto;
(iii) the existence of any claim, setoff,
defense, or other rights which Borrower may have at any time
against any Creditor, any beneficiary of the Letter of Credit
(or any persons or entities for whom any such beneficiary may be
acting) or any other Person, whether in connection with the
Letter of Credit, this Agreement, or any other Agreement or
instrument relating thereto, or any unrelated transactions;
(iv) any demand, statement, or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect
whatsoever so long as any such document appeared to comply with
the terms of the Letter of Credit;
(v) payment by the Issuing Lender in good
faith under the Letter of Credit against presentation of a draft
or any accompanying document which does not strictly comply with
the terms of the Letter of Credit, except to the extent that the
making of such payment has been determined by a court or
arbitrator to result from the gross negligence of the Issuing
Lender;
(vi) the existence, character, quality,
quantity, condition, packing, value or delivery of any Property
purported to be represented by docu-
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ments presented in connection with any Letter of Credit or any
difference between any such Property and the character, quality,
quantity, condition, or value of such Property as described in
such documents;
(vii) the time, place, manner, order or
contents of shipments or deliveries of Property as described in
documents presented in connection with any Letter of Credit or
the existence, nature and extent of any insurance relative
thereto;
(viii) the solvency or financial responsibility
of any party issuing any documents in connection with a Letter
of Credit;
(ix) any failure or delay in notice of
shipments or arrival of any Property;
(x) any error in the transmission of any
message relating to a Letter of Credit, or any delay or
interruption in any such message, not caused by the Issuing
Lender;
(xi) any error, neglect or default of any
correspondent of the Issuing Lender in connection with a Letter
of Credit (but without prejudice to any claim by Borrower
against such correspondent);
(xii) any consequence arising from acts of
God, war, insurrection, civil unrest, disturbances, labor
disputes, emergency conditions or other causes beyond the
control of the Issuing Lender;
(xiii) so long as the Issuing Lender in good
faith determines that the contract or document appears to comply
with the terms of the Letter of Credit, the form, accuracy,
genuineness or legal effect of any contract or document referred
to in any document submitted to the Issuing Lender in connection
with a Letter of Credit; and
(xiv) where the Issuing Lender has acted in
good faith and observed general banking usage, any other
circumstances whatsoever.
(i) The Issuing Lender shall be entitled to the
protection accorded to the Administrative Agent pursuant to Article 10,
mutatis mutandis.
(j) The Uniform Customs and Practice for Documentary
Credits, as published in its most current version by the International
Chamber of Commerce, shall be deemed a part of this Section and shall
apply to all Letters of Credit to the extent not inconsistent with
applicable Law.
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2.5 Voluntary Reduction of Commitment. Borrower shall have
the right, at any time and from time to time, without penalty or charge, upon at
least five Banking Days' prior written notice by Borrower to the Administrative
Agent, to voluntarily reduce, permanently and irrevocably, in amounts which are
not less than $2,000,000 each and are integral multiples of $1,000,000, or to
terminate, all or a portion of the then undisbursed portion of the Commitment,
provided that any such reduction or termination shall be accompanied by payment
of all accrued and unpaid commitment fees with respect to the portion of the
Commitment being reduced or terminated. Concurrently with the making of any such
reduction in the Commitment, Borrower may specify that the Reduction Amounts for
one or more Reduction Dates will be reduced in an aggregate amount which is the
same as the amount of the reduction of the Commitment, provided that in the
absence of a timely specification to this effect by Borrower, each such
reduction shall be applied to Reduction Amounts in the inverse order of their
occurrence. The Administrative Agent shall promptly notify the Lenders of any
reduction or termination of the Commitment under this Section, and of any
changes to the Reduction Amounts.
2.6 Scheduled Mandatory Reductions of Commitment. The
Commitment shall automatically and permanently reduce on each Reduction Date by
the related Reduction Amount.
2.7 Other Mandatory Reductions of Commitment. The Commitment
shall be reduced in the manner and the amount provided in Section 5.13. In the
event of any such reduction, the terms and provisions of Section 2.5 following
the first proviso therein shall be applicable.
2.8 Optional Increases to the Commitment.
(a) Provided that no Default or Event of Default
then exists, Borrower may at any time prior to the first anniversary of
the Closing Date request in writing that the then effective Commitment
be increased to an amount which is not greater than $200,000,000 minus
the amount of any reductions to the Commitment which have then occurred
pursuant to Sections 2.5, 2.6 or 2.7, in accordance with the provisions
of this Section. Any request under this Section shall be submitted by
Borrower to the Lenders through the Administrative Agent not less than
thirty days prior to the proposed increase, specify the proposed
effective date and amount of such increase and be accompanied by (i) a
Certificate of a Responsible Official of Borrower, signed by a Senior
Officer of Borrower, stating that no Default or Event of Default exists
as of the date of the request or will result from the requested
increase, (ii) a written consent to the increase in the amount of the
Commitment executed by each Guarantor and (iii) the satisfaction of all
conditions precedent to such an increase specified in Section 8.3.
Borrower may also specify any fees offered to those Lenders which agree
to an increase in the amount of their Pro Rata Share of the Commitment
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(which fees may be variable based upon the amount which any such Lender
is willing to assume as an increase to the amount of its Pro Rata Share
of the increased Commitment). The consent of the Lenders, as such, shall
not be required for an increase in the amount of the Commitment pursuant
to this Section.
(b) Each Lender may approve or reject a request for
an increase in the amount of the Commitment in its sole and absolute
discretion and, absent an affirmative written response within fifteen
days after receipt of such request, shall be deemed to have rejected the
request. The rejection of such a request by any number of Lenders shall
not affect Borrower's right to increase the Commitment pursuant to this
Section. No Lender which rejects a request for an increase in the
Commitment shall be subject to removal as a Lender.
(c) In responding to a request under this Section,
each Lender which is willing to increase the amount of its Pro Rata
Share of the increased Commitment shall specify the amount of the
proposed increase which it is willing to assume. Each consenting Lender
shall be entitled to participate ratably (based on its Pro Rata Share of
the Commitment before such increase) in any resulting increase in the
Commitment, subject to the right of the Administrative Agent to adjust
allocations of the increased Commitment so as to result in the amounts
of the Pro Rata Shares of the Lenders being in integral multiples of
$1,000,000.
(d) If the aggregate principal amount offered to be
assumed by the consenting Lenders is less than the amount requested,
Borrower may (i) reject the proposed increase in its entirety, (ii)
accept the offered amounts or (iii) designate new lenders who qualify as
Eligible Assignees and which are reasonably acceptable to the
Administrative Agent as additional Lenders hereunder in accordance with
clause (e) of this Section (each, a "New Lender"), which New Lenders may
assume the amount of the increase in the Commitment that has not been
assumed by the consenting Lenders.
(e) Each New Lender designated by Borrower and
reasonably acceptable to the Administrative Agent shall become an
additional party hereto as a New Lender concurrently with the
effectiveness of the proposed increase in the Commitment upon its
execution of an instrument of joinder to this Agreement which is in form
and substance acceptable to the Administrative Agent and which, in any
event, contains the representations, warranties, indemnities and other
protections afforded to the Administrative Agent and the other Lenders
which would be granted or made by an Eligible Assignee by means of the
execution of a Commitment Assignment and Acceptance.
(f) Subject to the foregoing, any increase to the
Commitment requested under this Section shall be effective as of the
date proposed by Borrower and shall be in the principal amount equal to
(i) the amount which consenting Lenders are
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willing to assume as increases to the amount of their Pro Rata Share
plus (ii) the amount offered by any New Lenders. Upon the effectiveness
of any such increase, Borrower shall issue replacement Notes to each
affected Lender and new Notes to each New Lender, and the percentage Pro
Rata Shares of each Lender will be adjusted to give effect to the
increase in the Commitment and set forth in a new Schedule 1.1 issued by
the Administrative Agent.
2.9 Administrative Agent's Right to Assume Funds Available
for Advances. Unless the Administrative Agent shall have been notified by a
Lender no later than the Banking Day prior to the funding by the Administrative
Agent of any Loan that such Lender does not intend to make available to the
Administrative Agent such Lender's Pro Rata Share of that Loan, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on the date of the Loan and the Administrative Agent
may, in reliance upon such assumption, make available to Borrower a
corresponding amount. If the Administrative Agent has made funds available to
Borrower based on such assumption and such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent promptly shall
notify Borrower and Borrower shall pay such corresponding amount to the
Administrative Agent. The Administrative Agent also shall be entitled to recover
from such Lender interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Administrative
Agent to Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (a) the Federal Funds Rate
for the first two days following a demand by the Administrative Agent and (b)
thereafter, the rate of interest then payable by Borrower with respect to Base
Rate Advances. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its share of the Commitment or to prejudice any rights
which the Administrative Agent or Borrower may have against any Lender as a
result of any default by such Lender hereunder.
2.10 Swing Line. Subject to the terms and conditions set
forth herein, from time to time through the day prior to the Maturity Date the
Swing Line Lender shall make Swing Line Advances to Borrower in such amounts as
Borrower may request that do not result in the Outstanding Obligations being in
excess of the then applicable Commitment, provided that (i) giving effect to
such Swing Line Advance, the Swing Line Outstandings shall not exceed $7,500,000
and (ii) without the consent of all of the Lenders, no Swing Line Advance may be
made during the continuation of a Default or an Event of Default. Borrower may
borrow, repay and reborrow under this Section. Unless the Swing Line Lender
otherwise agrees, each Swing Line Advance shall be in an amount which is an
integral multiple of $100,000 and shall be made pursuant to a telephonic request
by a Responsible Official of Borrower made to the Swing Line Lender not later
than 3:00 p.m., Las Vegas time, on the Banking Day of the requested borrowing
(which telephonic request shall be promptly confirmed in writing by telecopier
with a copy submitted by telecopier to the Administrative
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Agent). Promptly after receipt of such a request for borrowing, the Swing Line
Lender shall obtain telephonic verification from the Administrative Agent that,
giving effect to such request, availability for Loans will exist under Section
2.1 (and such verification shall be promptly confirmed in writing by
telecopier). Unless the Swing Line Lender otherwise agrees, each repayment of a
Swing Line Advance shall be in an amount which is an integral multiple of
$100,000. If Borrower instructs the Swing Line Lender to debit its demand
deposit account at the Swing Line Lender in the amount of any payment with
respect to a Swing Line Advance, or the Swing Line Lender otherwise receives
repayment, after 3:00 p.m., Las Vegas time, on a Banking Day, such payment shall
be deemed received on the next Banking Day. The Swing Line Lender shall promptly
notify the Administrative Agent of the Swing Line Outstandings each time there
is a change therein.
Swing Line Advances shall bear interest at a fluctuating rate
per annum equal to the Base Rate plus one quarter of one percent, payable upon
demand or at such intervals as may be specified by the Swing Line Lender and in
any event on the Maturity Date. The Swing Line Lender shall be responsible for
invoicing Borrower for such interest. The interest payable on Swing Line
Advances shall be solely for the account of the Swing Line Lender, except to the
extent that any Lender has funded the participation purchased by that Lender in
accordance with this Section.
The Swing Line Advances shall be payable five Business Days
following any demand made by the Swing Line Lender and in any event on the
Maturity Date.
Upon the making of a Swing Line Advance, each Lender shall be
deemed to have purchased from the Swing Line Lender a participation therein in
an amount equal to that Lender's Pro Rata Share times the amount of the Swing
Line Advance. Upon demand made by the Swing Line Lender through the
Administrative Agent, each Lender shall, according to its Pro Rata Share,
promptly provide to the Administrative Agent for the account of the Swing Line
Lender its purchase price therefor in an amount equal to its participation
therein. The obligation of each Lender to so provide its purchase price to the
Swing Line Lender with respect to any Swing Line Advance made in accordance with
the terms hereof shall be absolute and unconditional and shall not be affected
by the occurrence of a Default or Event of Default or any other occurrence or
event.
In the event that there are Swing Line Outstandings on three
consecutive Banking Days, then on the next Banking Day (unless Borrower has made
other arrangements acceptable to the Swing Line Lender to repay the Swing Line
Outstandings in full), Borrower shall request a Loan pursuant to Section 2.1(a)
in an amount complying with Section 2.1(d) and sufficient to repay the Swing
Line Outstandings in full. The Administrative Agent shall automatically provide
such amount to the Swing Line Lender (which the Swing Line Lender shall then
apply to the Swing Line Outstandings) and credit any balance of the Loan in
immediately available funds to the Disbursement Account. In the event that
Borrower fails to request a Loan within the time specified by Section 2.2 on any
such date, the Administrative
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Agent may, but is not required to, without notice to or the consent of Borrower,
cause Advances to be made by the Lenders under the Commitment in the amount
necessary to comply with Section 2.1(d) and sufficient to repay all Swing Line
Outstandings and, for this purpose, the conditions precedent set forth in
Article 8 shall not apply. The proceeds of such Advances shall be paid to the
Swing Line Lender for application to the Swing Line Outstandings.
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Article 3
PAYMENTS AND FEES
3.1 Principal and Interest.
(a) Interest shall be payable on the outstanding
daily unpaid principal amount of each Advance from the date thereof
until payment in full is made and shall accrue and be payable at the
rates set forth or provided for herein before and after default, before
and after maturity, before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law, with
interest on overdue interest at the Default Rate to the fullest extent
permitted by applicable Laws.
(b) Interest accrued on each Base Rate Loan on each
Quarterly Payment Date, and on the date of any prepayment of the Notes
pursuant to Section 3.1(f), shall be due and payable on that day. Except
as otherwise provided in Section 3.9, the unpaid principal amount of
each Base Rate Loan shall bear interest at a fluctuating rate per annum
equal to the Base Rate plus the Base Rate Margin. Each change in the
interest rate under this Section 3.1(b) due to a change in the Base Rate
shall take effect simultaneously with the corresponding change in the
Base Rate.
(c) Interest accrued on each LIBOR Loan which is for
a term of three months or less shall be due and payable on the last day
of the related Interest Period. Interest accrued on each other LIBOR
Loan shall be due and payable on the date which is three months after
the date such LIBOR Loan was made and on the last day of the related
Interest Period. Except as otherwise provided in Sections 3.1(d) and
3.9, the unpaid principal amount of any LIBOR Loan shall bear interest
at a rate per annum equal to the LIBOR for that LIBOR Loan plus the
LIBOR Margin.
(d) During the existence of a Default or Event of
Default, the Requisite Lenders may determine that any or all then
outstanding LIBOR Loans shall be converted to Base Rate Loans. Such
conversion shall be effective upon notice to Borrower from the Requisite
Lenders (or from the Administrative Agent on behalf of the Requisite
Lenders) and shall continue so long as such Default or Event of Default
continues to exist.
(e) If not sooner paid, the principal Indebtedness
evidenced by the Notes shall be payable as follows:
(i) the principal amount of each LIBOR Loan
shall be payable on the last day of the Interest Period for such
Loan (provided that such principal amount may be paid using the
proceeds of a Base Rate Loan made pursuant to Section 2.1(g));
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(ii) the amount, if any, by which the
Outstanding Obligations at any time exceed the Commitment shall
be payable immediately; and
(iii) the principal Indebtedness evidenced by
the Notes and the Swing Line Documents shall in any event be
payable on the Maturity Date.
(f) The Notes may, at any time and from time to
time, voluntarily be paid or prepaid in whole or in part without premium
or penalty, except that with respect to any voluntary prepayment under
this Section, (i) any partial prepayment shall be not less than
$1,000,000, (ii) the Administrative Agent shall have received written
notice of any prepayment by 10:00 a.m. on the Banking Day of such
prepayment (which must be a Banking Day) in the case of a Base Rate
Loan, and, in the case of a LIBOR Loan, three Market Days before the
date of prepayment, which notice shall identify the date and amount of
the prepayment and the Loans being prepaid, (iii) each prepayment of
principal shall be accompanied by payment of interest accrued to the
date of payment on the amount of principal paid and (iv) any payment or
prepayment of all or any part of any LIBOR Loan on a day other than the
last day of the applicable Interest Period shall be subject to Section
3.8(d).
3.2 Upfront Fees. On the Closing Date, Borrower shall pay to
the Administrative Agent upfront fees in the respective amounts heretofore
agreed upon by a letter agreement between Borrower and the Administrative Agent.
The fees are for the account of the Lenders as specified in such letter
agreement. The upfront fees are for the credit facilities provided to Borrower
under this Agreement, are fully earned as of the Closing Date and are
nonrefundable.
3.3 Commitment Fees. From the Closing Date, Borrower shall
pay to the Administrative Agent, for the ratable accounts of the Lenders
according to their Pro Rata Shares, a commitment fee equal to the then
applicable Commitment Fee Rate per annum times the average daily amount by which
(a) the Commitment exceeds (b) the sum of (i) the aggregate principal
Indebtedness outstanding under the Notes (exclusive of the Swing Line
Outstandings) plus (ii) the Aggregate Effective Amount. Commitment fees shall be
payable quarterly in arrears on each Quarterly Payment Date, on the date of any
termination of the Commitment, and on the Maturity Date.
3.4 Letter of Credit Fees. With respect to each Letter of
Credit, Borrower shall pay the following fees:
(a) to the Issuing Lender for its sole account, a
fronting fee payable in an amount and at such times as set forth in a
letter agreement between Borrower and the Issuing Lender;
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(b) on the issuance date of each Letter of Credit, a
risk participation fee in an amount equal to the face amount of the
Letter of Credit times the then applicable LIBOR Margin, which the
Administrative Agent shall promptly pay to the Lenders in accordance
with their Pro Rata Shares; and
(c) concurrently with each issuance, negotiation,
drawing or amendment of each Letter of Credit, to the Issuing Lender for
the sole account of the Issuing Lender, issuance, negotiation, drawing
and amendment fees in the amounts set forth from time to time as the
Issuing Lender's published scheduled fees for such services.
Each of the fees payable with respect to Letters of Credit under this Section is
earned when due and is nonrefundable.
3.5 Agency Management Fees. Borrower shall pay to the
Administrative Agent an agency management fee in such amounts and at such times
as heretofore agreed upon by letter agreement between Borrower and the
Administrative Agent. This fee is for the services to be performed by the
Administrative Agent in acting as Administrative Agent and is fully earned on
the date paid. The agency fee paid to the Administrative Agent is solely for its
own account and is nonrefundable.
3.6 Construction Services Fees. Borrower shall pay to Bank
of America a construction services fee in such amounts and at such times as may
hereafter be agreed upon by a letter agreement between Borrower and the
Administrative Agent entered into in accordance with Section 8.3(a)(17). All
such construction services fees will be for the services to be performed by CSC
and each installment is fully earned on the date paid. The construction services
fees will be solely for the account of CSC and nonrefundable.
3.7 Increased Commitment Costs. If any Lender shall
determine in good faith that the introduction after the Closing Date of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein or any change in the interpretation or administration thereof by
any central bank or other Governmental Agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its LIBOR Office) or
any corporation controlling the Lender, with any request, guideline or directive
regarding capital adequacy (whether or not having the force of law) of any such
central bank or other authority, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines in good faith that the amount of such
capital is increased, or the rate of return on capital is reduced, as a
consequence of its obligations under this Agreement, then, within ten Banking
Days after demand of such Lender, Borrower shall pay to such Lender, from time
to time as specified in good faith by such Lender, additional amounts sufficient
to compensate such Lender in light of such circumstances, to the extent
reasonably
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allocable to such obligations under this Agreement. Each Lender's determination
of such amounts shall be conclusive in the absence of manifest error.
3.8 LIBOR Costs and Related Matters.
(a) If, after the date hereof, the existence or
occurrence of any Special LIBOR Circumstance:
(1) shall subject any Lender or its LIBOR
Office to any tax, duty or other charge or cost with respect to
any LIBOR Advance, any of its Notes evidencing LIBOR Loans or
its obligation to make LIBOR Advances, or shall change the basis
of taxation of payments to any Lender attributable to the
principal of or interest on any LIBOR Advance or any other
amounts due under this Agreement in respect of any LIBOR
Advance, any of its Notes evidencing LIBOR Loans or its
obligation to make LIBOR Advances, excluding, in the case of
each Lender, the Administrative Agent and each Eligible
Assignee, and any Affiliate or LIBOR Office thereof, (i) taxes
imposed on or measured in whole or in part by its overall net
income, gross income or gross receipts or capital and franchise
taxes imposed on it, by (A) any jurisdiction (or political
subdivision thereof) in which it is organized or maintains its
principal office or LIBOR Office or (B) any jurisdiction (or
political subdivision thereof) in which it is "doing business"
(unless it would not be doing business in such jurisdiction (or
political subdivision thereof) absent the transactions
contemplated hereby), (ii) any withholding taxes or other taxes
based on gross income imposed by the United States of America
(other than withholding taxes and taxes based on gross income
resulting solely from or attributable to any change in any law,
rule or regulation or any change in the interpretation or
administration of any law, rule or regulation by any
Governmental Agency) or (iii) any withholding taxes or other
taxes based on gross income imposed by the United States of
America for any period with respect to which it has failed to
provide Borrower with the appropriate form or forms required by
Section 11.21, to the extent such forms are then required by
applicable Laws;
(2) shall impose, modify or deem applicable
any reserve not applicable or deemed applicable on the date
hereof (including, without limitation, any reserve imposed by
the Board of Governors of the Federal Reserve System, but
excluding the Reserve Percentage taken into account in
calculating the LIBOR), special deposit, capital or similar
requirements against assets of, deposits with or for the account
of, or credit extended by, any Lender or its LIBOR Office; or
(3) shall impose on any Lender or its LIBOR
Office or the Designated LIBOR Market any other condition
affecting any LIBOR Advance,
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any of its Notes evidencing LIBOR Loans, its obligation to make
LIBOR Advances or this Agreement, or shall otherwise affect any
of the same;
and the result of any of the foregoing, as determined in good faith by
such Lender, increases the cost to such Lender or its LIBOR Office of
making or maintaining any LIBOR Advance or in respect of any LIBOR
Advance, any of its Notes evidencing LIBOR Loans or its obligation to
make LIBOR Advances or reduces the amount of any sum received or
receivable by such Lender or its LIBOR Office with respect to any LIBOR
Advance, any of its Notes evidencing LIBOR Loans or its obligation to
make LIBOR Advances (assuming such Lender's LIBOR Office had funded 100%
of its LIBOR Advance in the Designated LIBOR Market), then, within five
(5) Banking Days after demand by such Lender (with a copy to the
Administrative Agent), Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such increased cost
or reduction (determined as though such Lender's LIBOR Office had funded
100% of its LIBOR Advance in the Designated LIBOR Market). Borrower
hereby indemnifies each Lender against, and agrees to hold each Lender
harmless from and reimburse such Lender within ten Banking Days after
demand for (without duplication) all costs, expenses, claims, penalties,
liabilities, losses, reasonable legal fees and damages incurred or
sustained by each Lender in connection with this Agreement, or any of
the rights, obligations or transactions provided for or contemplated
herein, as a direct result of the existence or occurrence of any Special
LIBOR Circumstance. A statement of any Lender claiming compensation
under this subsection and setting forth in reasonable detail the
additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. Each Lender agrees to
endeavor promptly to notify Borrower of any event of which it has actual
knowledge, occurring after the Closing Date, which will entitle such
Lender to compensation pursuant to this Section, and agrees to designate
a different LIBOR Office if such designation will avoid the need for or
reduce the amount of such compensation and will not, in the good faith
judgment of such Lender, otherwise be materially disadvantageous to such
Lender. If any Lender claims compensation under this Section, Borrower
may at any time, upon at least four Market Days' prior notice to the
Administrative Agent and such Lender and upon payment in full of the
amounts provided for in this Section through the date of such payment
plus any prepayment fee required by Section 3.8(d), pay in full the
affected LIBOR Advances of such Lender or request that such LIBOR
Advances be converted to Base Rate Advances.
(b) If, after the date hereof, the existence or occurrence
of any Special LIBOR Circumstance shall, in the good faith opinion of
any Lender, make it unlawful or impossible for such Lender or its LIBOR
Office to make, maintain or fund its portion of any LIBOR Loan, or
materially restrict the authority of such Lender to purchase or sell, or
to take deposits of, Dollars in the Designated LIBOR Market, or to
determine or charge interest rates based upon the LIBOR, and such Lender
shall so notify the Administrative Agent, then such Lender's obligation
to make LIBOR
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Advances shall be suspended for the duration of such illegality or
impossibility and the Administrative Agent forthwith shall give notice
thereof to the other Lenders and Borrower. Upon receipt of such notice,
the outstanding principal amount of such Lender's LIBOR Advances,
together with accrued interest thereon, automatically shall be converted
to Base Rate Advances with Interest Periods corresponding to the LIBOR
Loans of which such LIBOR Advances were a part on either (1) the last
day of the Interest Period(s) applicable to such LIBOR Advances if such
Lender may lawfully continue to maintain and fund such LIBOR Advances to
such day(s) or (2) immediately if such Lender may not lawfully continue
to fund and maintain such LIBOR Advances to such day(s), provided that
in such event the conversion shall not be subject to pay ment of a
prepayment fee under Section 3.8(d). Each Lender agrees to endeavor
promptly to notify Borrower of any event of which it has actual
knowledge, occurring after the Closing Date, which will cause that
Lender to notify the Administrative Agent under this Section 3.8(b), and
agrees to designate a different LIBOR Office if such designation will
avoid the need for such notice and will not, in the good faith judgment
of such Lender, otherwise be materially disadvantageous to such Lender.
In the event that any Lender is unable, for the reasons set forth above,
to make, maintain or fund its portion of any LIBOR Loan, such Lender
shall fund such amount as a Base Rate Advance for the same period of
time, and such amount shall be treated in all respects as a Base Rate
Advance. Any Lender whose obligation to make LIBOR Advances has been
suspended under this Section 3.8(b) shall promptly notify the
Administrative Agent and Borrower of the cessation of the Special LIBOR
Circumstance which gave rise to such suspension.
(c) If, with respect to any proposed LIBOR Loan:
(1) the Administrative Agent reasonably determines
that, by reason of circumstances affecting the Designated LIBOR
Market generally that are beyond the reasonable control of the
Lenders, deposits in Dollars (in the applicable amounts) are not
being offered to any Lender in the Designated LIBOR Market for
the applicable Interest Period; or
(2) the Requisite Lenders advise the Administrative
Agent that the LIBOR as determined by the Administrative Agent
(i) does not represent the effective pricing to such Lenders for
deposits in Dollars in the Designated LIBOR Market in the
relevant amount for the applicable Interest Period, or (ii) will
not adequately and fairly reflect the cost to such Lenders of
making the applicable LIBOR Advances;
then the Administrative Agent forthwith shall give notice thereof to
Borrower and the Lenders, whereupon until the Administrative Agent
notifies Borrower that the circumstances giving rise to such suspension
no longer exist, the obligation of the Lenders to make any future LIBOR
Advances shall be suspended. If at the time of
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such notice there is then pending a Request for Loan that specifies a
LIBOR Loan, such Request for Loan shall be deemed to specify a Base Rate
Loan.
(d) Upon payment or prepayment of any LIBOR Advance
(other than as the result of a conversion required under Section
3.8(b)), on a day other than the last day in the applicable Interest
Period (whether voluntarily, involuntarily, by reason of acceleration,
or otherwise), or upon the failure of Borrower (for a reason other than
the failure of a Lender to make an Advance) to borrow on the date or in
the amount specified for a LIBOR Loan in any Request for Loan, Borrower
shall pay to the appropriate Lender within ten Banking Days after demand
a prepayment fee or failure to borrow fee, as the case may be
(determined as though 100% of the LIBOR Advance had been funded in the
Designated LIBOR Market) equal to the sum of:
(1) the principal amount of the LIBOR
Advance prepaid or not borrowed, as the case may be, times the
number of days between the date of prepayment or failure to
borrow, as applicable, and the last day in the applicable
Interest Period, divided by 360, times the applicable Interest
Differential (provided that the product of the foregoing formula
must be a positive number); plus
(2) all reasonable out-of-pocket expenses
incurred by the Lender reasonably attributable to such payment,
prepayment or failure to borrow.
Each Lender's determination of the amount of any prepayment fee payable
under this Section 3.8(d) shall be conclusive in the absence of manifest
error.
3.9 Late Payments. If any installment of principal or
interest or any fee or cost or other amount payable under any Loan Document to
the Administrative Agent or any Lender is not paid when due, it shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to the
sum of the Base Rate plus the Base Rate Margin plus 2%, to the fullest extent
permitted by applicable Laws. Accrued and unpaid interest on past due amounts
(including, without limitation, interest on past due interest) shall be
compounded monthly, on the last day of each calendar month, to the fullest
extent permitted by applicable Laws.
3.10 Computation of Interest and Fees. Computation of
interest on Base Rate Loans shall be calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed; computation
of interest on LIBOR Loans and all fees under this Agreement shall be calculated
on the basis of a year of 360 days and the actual number of days elapsed.
Borrower acknowledges that such latter calculation method will result in a
higher yield to the Lenders than a method based on a year of 365 or 366 days.
Interest shall accrue on each Loan for the day on which the Loan is made;
interest shall not
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accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid. Any Loan that is repaid on the same day on which it is made
shall bear interest for one day.
3.11 Non-Banking Days. If any payment to be made by Borrower
or any other Obligor under any Loan Document shall come due on a day other than
a Banking Day, payment shall instead be considered due on the next succeeding
Banking Day and the extension of time shall be reflected in computing interest
and fees.
3.12 Manner and Treatment of Payments.
(a) Each payment hereunder (except payments pursuant
to Sections 2.10, 3.7, 3.8, 11.3, 11.11 and 11.22) or on the Notes, on
the Swing Line Documents or under any other Loan Document shall be made
to the Administrative Agent, at the Administrative Agent's Office, for
the account of each of the Lenders or the Administrative Agent, as the
case may be, in immediately available funds not later than 11:00 a.m. on
the day of payment (which must be a Banking Day). All payments received
after 11:00 a.m. on any Banking Day, shall be deemed received on the
next succeeding Banking Day. The amount of all payments received by the
Administrative Agent for the account of each Lender shall be immediately
paid by the Administrative Agent to the applicable Lender in immediately
available funds and, if such payment was received by the Administrative
Agent by 11:00 a.m. on a Banking Day and not so made available to the
account of a Lender on that Banking Day, the Administrative Agent shall
reimburse that Lender for the cost to such Lender of funding the amount
of such payment at the Federal Funds Rate. All payments shall be made in
lawful money of the United States of America.
(b) Each payment or prepayment on account of any
Loan (other than Swing Line Advances) shall be applied pro rata
according to the outstanding Advances made by each Lender comprising
such Loan.
(c) Each Lender shall use its best efforts to keep a
record of Advances made by it and payments received by it with respect
to each of its Notes and, subject to Section 10.6(g), such record shall,
as against Borrower, be presumptive evi dence of the amounts owing.
Notwithstanding the foregoing sentence, no Lender shall be liable to any
Obligor for any failure to keep such a record.
(d) Each payment of any amount payable by Borrower
or any other Obligor under this Agreement or any other Loan Document
shall be made free and clear of, and without reduction by reason of, any
taxes, assessments or other charges imposed by any Governmental Agency,
central bank or comparable authority, excluding, in the case of each
Lender, the Administrative Agent and each Eligible Assignee, and any
Affiliate or LIBOR Office thereof, (i) taxes imposed on or measured
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in whole or in part by its overall net income, gross income or gross
receipts or capital and franchise taxes imposed on it, (ii) any
withholding taxes or other taxes based on gross income imposed by the
United States of America (other than withholding taxes and taxes based
on gross income resulting solely from or attributable to any change in
any law, rule or regulation or any change in the interpretation or
administration of any law, rule or regulation by any Governmental
Agency) or (iii) any withholding taxes or other taxes based on gross
income imposed by the United States of America for any period with
respect to which it has failed to provide Borrower with the appropriate
form or forms required by Section 11.21, to the extent such forms are
then required by applicable Laws (all such non-excluded taxes,
assessments or other charges being hereinafter referred to as "Taxes").
To the extent that Borrower is obligated by applicable Laws to make any
deduction or withholding on account of Taxes from any amount payable to
any Lender under this Agreement, Borrower shall (i) make such deduction
or withholding and pay the same to the relevant Governmental Agency and
(ii) pay such additional amount to that Lender as is necessary to result
in that Lender's receiving a net after-Tax amount equal to the amount to
which that Lender would have been entitled under this Agreement absent
such deduction or withholding. If and when receipt of such payment
results in an excess payment or credit to that Lender on account of such
Taxes, that Lender shall promptly refund such excess to Borrower.
3.13 Funding Sources. Nothing in this Agreement shall be
deemed to obligate any Lender to obtain the funds for any Loan or Advance in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan or Advance in any
particular place or manner.
3.14 Failure to Charge Not Subsequent Waiver. Any decision by
the Administrative Agent or any Lender not to require payment of any interest
(including interest arising under Section 3.9), fee, cost or other amount
payable under any Loan Document, or to calculate any amount payable by a
particular method, on any occasion shall in no way limit or be deemed a waiver
of the Administrative Agent's or such Lender's right to require full payment of
any interest (including interest arising under Section 3.9), fee, cost or other
amount payable under any Loan Document, or to calculate an amount payable by
another method that is not inconsistent with this Agreement, on any other or
subsequent occasion.
3.15 Administrative Agent's Right to Assume Payments Will be
Made by Borrower. Unless the Administrative Agent shall have been notified by
Borrower prior to the date on which any payment to be made by Borrower hereunder
is due that Borrower does not intend to remit such payment, the Administrative
Agent may, in its discretion, assume that Borrower has remitted such payment
when so due and the Administrative Agent may, in its discretion and in reliance
upon such assumption, make available to each Lender on such payment date an
amount equal to such Lender's share of such assumed payment. If Borrower has not
in fact remitted such payment to the Administrative Agent, each Lender shall
forthwith on demand repay to the Administrative Agent the amount of such assumed
payment made
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available to such Lender, together with interest thereon in respect of each day
from and including the date such amount was made available by the Administrative
Agent to such Lender to the date such amount is repaid to the Administrative
Agent at the Federal Funds Rate.
3.16 Fee Determination Detail. The Administrative Agent and
each Lender shall provide reasonable detail to Borrower regarding the manner in
which the amount of any payment of fees or costs to the Administrative Agent and
the Lenders, or that Lender, under Article 3 has been determined, concurrently
with demand for such payment.
3.17 Survival. All of Borrower's obligations under Sections
3.7, 3.8 and 11.22 shall survive for ninety days following the date on which the
Commitment is terminated, and all Loans hereunder are fully paid.
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Article 4
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Creditors that:
4.1 Existence and Qualification; Power; Compliance With
Laws. Borrower is a corporation duly formed, validly existing and in good
standing under the Laws of Nevada. Coast Resorts is a corporation duly formed,
validly existing and in good standing under the Laws of Nevada. Borrower and
each other Obligor is duly qualified or registered to transact business and is
in good standing in each other jurisdiction in which the conduct of its business
or the ownership or leasing of its Properties makes such qualification or
registration necessary, except where the failure so to qualify or register and
to be in good standing may not reasonably be expected to have Material Adverse
Effect. Borrower and each other Obligor has all requi site corporate or other
organizational power and authority to conduct its business, to own and lease its
Properties and to execute and deliver each Loan Document to which it is a party
and to perform its Obligations. All outstanding shares of the capital stock of
Borrower and each other Obligor are duly authorized and validly issued, fully
paid and non-assessable, and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. Borrower and
each other Obligor is in compliance with all Laws and other legal requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all filings,
registrations and qualifications with, or obtained exemptions from any of the
foregoing from, any Governmental Agency that are necessary for the transaction
of its business, except where the failure so to comply, file, register, qualify
or obtain exemptions may not reasonably be expected to have a Material Adverse
Effect.
4.2 Authority; Compliance With Other Agreements and
Instruments and Government Regulations. The execution, delivery and performance
of the Loan Documents by Borrower and each other Obligor have been duly
authorized by all necessary corporate action, and do not and will not:
(a) Require any consent or approval not heretofore
obtained of any director, stockholder, security holder or (in the case
of any Creditor except where the failure to obtain any such creditor's
consent may not reasonably be expected to have any Material Adverse
Effect) any creditor of such Obligor;
(b) Violate or conflict with any provision of such
Obligor's articles of incorporation or bylaws;
(c) Except to the extent contemplated by the Loan
Documents, result in or require the creation or imposition of any Lien
or Right of Others upon or with respect to any Property now owned or
leased or hereafter acquired by such Obligor;
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(d) Violate any Requirement of Law applicable to
such Obligor in any material respect;
(e) Result in a breach of or constitute a default
under, or cause or permit the acceleration of any obligation owed under,
any indenture or loan or credit agreement or any other Contractual
Obligation involving Property or obligations in excess of $5,000,000 to
which such Obligor is a party or by which such Obligor or any of its
Property is bound or affected;
and neither Borrower nor any other Obligor is in violation of, or default under,
any Requirement of Law or Contractual Obligation, or any indenture, loan or
credit agreement described in Section 4.2(e), in any respect that may reasonably
be expected to have a Material Adverse Effect.
4.3 No Governmental Approvals Required. Except as set forth
in Schedule 4.3 or previously obtained or made, no material authorization,
consent, approval, order, license or permit from, or material filing,
registration or qualification with, any Governmental Agency is or will be
required to authorize or permit under applicable Laws the execution, delivery
and performance by Borrower or any other Obligor of the Loan Documents to which
it is a party. All authorizations from, or filings with, any Governmental Agency
described in Schedule 4.3 will be accomplished as of the Closing Date or such
other date as is specified in Schedule 4.3.
4.4 Subsidiaries. As of the Closing Date, Borrower does not
have any Subsidiaries and Borrower does not own any capital stock, equity
interest or debt security which is convertible, or exchangeable, for capital
stock or equity interests in any Person other than Coast West, Inc. As of the
Closing Date, Coast Resorts does not have any Subsidiaries other than Borrower
and Coast West, Inc.
4.5 Financial Statements. Borrower has furnished the audited
consolidated and consolidating financial statements of Coast Resorts and its
Subsidiaries for the Fiscal Year ended December 31, 1998, to the Administrative
Agent and the Lenders, which financial statements fairly present the financial
condition, results of operations and changes in financial position of Coast
Resorts and its Subsidiaries as of such dates and for such periods in conformity
with Generally Accepted Accounting Principles, consistently applied.
4.6 No Material Adverse Changes. As of the Closing Date, no
circumstance or event has occurred that constitutes a Material Adverse Effect
since December 31, 1998, or, as of any date subsequent to the Closing Date,
since the Closing Date.
4.7 Title to Property. On the Closing Date and on each
subsequent date, Borrower (a) holds valid title in fee simple to the Gold Coast
Property and all improvements
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located thereon, other than leased equipment, and (b) holds the lessee's
interest under the Barbary Coast Lease, the Barbary Coast Parking Lease, the
Orleans Lease and the New Lease, in each case, free and clear of all Liens and
Rights of Others, other than Liens or Rights of Others permitted by Section 6.9.
4.8 Intangible Assets. Each Obligor owns, or possesses the
right to use to the extent necessary in its respective business, all material
trademarks, trade names, copyrights, patents, patent rights, computer software,
licenses and other Intangible Assets that are necessary to complete and operate
the Project Sites or which are used in the conduct of its business as now
operated, and no such Intangible Asset, to the best knowledge of Borrower,
conflicts with the valid trademark, trade name, copyright, patent, patent right
or Intangible Asset of any other Person to the extent that such conflict may
reasonably be expected to have a Material Adverse Effect. Without limitation on
the foregoing, Borrower is not legally prohibited from using the names"Gold
Coast," "Barbary Coast," "The Orleans" in Las Vegas, Nevada in connection with
its hotel casinos. Each registered patent, trademark or copyright owned by any
Obligor, or as to which any Obligor is a licensee, is described on Schedule 4.8
or (to the extent acquired after the Closing Date and to the extent that
assignment of any such after-acquired rights to the Administrative Agent is not
legally prohibited), on a supplement to the Trademark Assignment.
4.9 Public Utility Holding Company Act. Neither Coast
Resorts nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.10 Litigation. There are no actions, suits, proceedings or
investigations pending as to which Coast Resorts or any of its Subsidiaries have
been served or have received notice or, to the best knowledge of Borrower,
threatened against or affecting Coast Resorts or any of its Subsidiaries or any
Property of any of them (including the Real Property) before any Governmental
Agency, which may reasonably be expected to have a monetary impact which is in
excess of $1,000,000, and no such action, suit proceeding or investigation may
reasonably be expected to have a Material Adverse Effect.
4.11 Binding Obligations. Each of the Loan Documents to which
Borrower or any other Obligor is a party will, when executed and delivered by
such Obligor, constitute the legal, valid and binding obligation of such
Obligor, enforceable against such Obligor in accordance with its terms, except
as enforcement may be limited by Debtor Relief Laws, Gaming Laws or equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion.
4.12 No Default. No event has occurred and is continuing that
is a Default or Event of Default.
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4.13 ERISA.
(a) With respect to each Pension Plan:
(i) such Pension Plan complies in all
material respects with ERISA and any other applicable Laws to
the extent that noncompliance may reasonably be expected to have
a Material Adverse Effect;
(ii) such Pension Plan has not incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) that may reasonably be expected to have a Material
Adverse Effect;
(iii) no "reportable event" (as defined in
Section 4043 of ERISA) has occurred that may reasonably be
expected to have a Material Adverse Effect; and
(iv) neither Coast Resorts nor any of its
Subsidiaries has engaged in any non-exempt "prohibited
transaction" (as defined in Section 4975 of the Code) that may
reasonably be expected to have a Material Adverse Effect.
(b) Neither Coast Resorts nor any of its
Subsidiaries has incurred or expects to incur any withdrawal liability
to any Multiemployer Plan that may reasonably be expected to have a
Material Adverse Effect.
4.14 Regulations T, U and X; Investment Company Act. No part
of the proceeds of any Loan hereunder will be used to purchase or carry, or to
extend credit to others for the purpose of purchasing or carrying, any Margin
Stock in violation of Regulations T, U and X. Neither Coast Resorts nor any of
its Subsidiaries is or is required to be registered as an "investment company"
under the Investment Company Act of 1940.
4.15 Disclosure. No statement made by Borrower or any of its
Affiliates to the Administrative Agent or any Lender in connection with this
Agreement, or in connection with any Loan, as of the date thereof contained any
untrue statement of a material fact or omitted a material fact necessary to make
the statement made not misleading in light of all the circumstances existing at
the date the statement was made, provided that no representation as to the
Projections is made in this Section (the Projections being the subject of
Section 4.17 hereof).
4.16 Tax Liability. Coast Resorts and its Subsidiaries have
filed all tax returns which are required to be filed, and have paid, or made
provision for the payment of, all taxes with respect to the periods, Property or
transactions covered by said returns, or pursuant to any assessment received by
Coast Resorts or any of its Subsidiaries, except (a) such taxes, if
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any, as are being contested in good faith by appropriate proceedings and as to
which adequate reserves have been established and maintained and (b) immaterial
taxes so long as no material item or portion of Property of Coast Resorts or any
of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited.
4.17 Projections. As of the Closing Date, to the best
knowledge of Borrower, the assumptions set forth in the Projections are
reasonable and consistent with each other and with all facts known to Borrower,
and the Projections are reasonably based on such assumptions. Nothing in this
Section shall be construed as a representation or covenant that the Projections
in fact will be achieved.
4.18 Hazardous Materials. Except as described in Schedule
4.18 or except as would not individually or in the aggregate have a Material
Adverse Effect, (a) none of Coast Resorts nor any of its Subsidiaries nor any of
their affiliated predecessors in interest at any time has disposed of,
discharged, released or threatened the release of any Hazardous Materials on,
from or under any Project Site (or, to the best of Borrower's knowledge, any
other Real Property) in violation of any Hazardous Materials Law, (b) to the
best knowledge of Borrower, no condition exists that violates any Hazardous
Material Law affecting any Real Property, (c) no Project Site nor any portion
thereof (nor, to the best knowledge of Borrower, any other Real Property) is or
has been utilized by Coast Resorts or any of its Subsidiaries as a site for the
manufacture of any Hazardous Materials and (d) to the extent that any Hazardous
Materials are used, generated or stored by Coast Resorts or any of its
Subsidiaries on any Project Site, or transported to or from any Project Site,
such use, generation, storage and transportation are in compliance in all
material respects with all Hazardous Materials Laws.
4.19 Gaming Laws. Coast Resorts and its Subsidiaries are in
compliance in all material respects with all Gaming Laws that are applicable to
them.
4.20 Security Interests. Upon the execution and delivery
thereof, each of the Security Agreement, the Coast Resorts Security Agreement,
the Coast Resorts Pledge Agreement and the Trademark Assignment will create a
valid security interests in the Collateral described therein securing the
Obligations, and all action necessary to perfect the security interests so
created (including without limitation Borrower's ownership of, or license to
use, the marks described in Section 4.8), other than filing of the UCC-1
financing statements delivered to the Administrative Agent pursuant to Section
8.1 with the appropriate Governmental Agency and the filing of the Trademark
Assignment with the United States Patent and Trademark Office, shall have been
taken and completed to the fullest extent that such Liens may be perfected by
filing. Upon the making of such filings, the security interests granted to the
Administrative Agent by the Security Agreement, the Coast Resorts Security
Agreement, the Coast Resorts Pledge Agreement and the Trademark Assignment will
be perfected and of second priority, subject only to the Lien of the Trustee for
the 13% Indenture and the matters disclosed on Schedule 6.9 or permitted by
Section 6.9(e) and (f), to the fullest extent that such Liens may be perfected
by filing. Upon the execution and delivery of the
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Deeds of Trust, the Deeds of Trust will create a valid Lien in the Collateral
described therein to the extent constituting real property, improvements thereto
and fixtures securing the Obligations, other than those arising under Sections
4.18, 5.10 and 11.22 (subject only to Permitted Encumbrances and Permitted
Rights of Others), and all action necessary to perfect the Lien so created,
other than recordation or filing thereof with the appropriate Governmental
Agencies, will have been taken and completed.
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Article 5
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
So long as any Advance remains unpaid, or any Letter of Credit
remains outstanding, or any other Obligation remains unpaid or unperformed, or
any portion of the Commitment remains in force, Borrower shall, and shall cause
each of its Subsidiaries and each other Obligor to, unless the Administrative
Agent (with the written approval of the Requisite Lenders) otherwise consents:
5.1 Payment of Taxes and Other Potential Liens. Pay and
discharge promptly all taxes, assessments and governmental charges or levies
imposed upon any of them, upon their respective Property or any part thereof and
upon their respective income or profits or any part thereof, except that Coast
Resorts and its Subsidiaries shall not be required to pay or cause to be paid
(a) any tax, assessment, charge or levy that is not yet past due, or is being
contested in good faith by appropriate proceedings so long as the relevant
entity has estab lished and maintains adequate reserves for the payment of the
same or (b) any immaterial tax so long as no material item or portion of
Property of Coast Resorts or any of its Subsidiaries is in jeopardy of being
seized, levied upon or forfeited.
5.2 Preservation of Existence. Preserve and maintain their
respective existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business, except where the
failure to so preserve and maintain the existence of any Subsidiary or such
authorizations would not constitute a Material Adverse Effect; and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is necessary in view of their respective business or the ownership
or leasing of their respective Properties except where the failure to so qualify
or remain qualified would not constitute a Material Adverse Effect. Borrower
shall at all times be a wholly-owned Subsidiary of Coast Resorts.
5.3 Maintenance of Properties. Maintain, preserve and
protect all of their respective depreciable Properties in good order and
condition, subject to wear and tear in the ordinary course of business, and not
permit any waste or unreasonable deterioration of their respective Properties,
except that the failure to maintain, preserve and protect a particular item of
depreciable Property that is not of significant value, either intrinsically or
to the operations of Coast Resorts and its Subsidiaries, taken as a whole, shall
not constitute a violation of this covenant.
5.4 Maintenance of Insurance. Maintain liability, casualty
and other insurance (subject to customary deductibles and retentions) with
responsible insurance
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companies in such amounts and against such risks as is carried by responsible
companies engaged in similar businesses and owning similar assets in the general
areas in which Coast Resorts and its Subsidiaries operate and, in any event,
such insurance as may be required under the Deed of Trust.
5.5 Compliance With Laws. Comply, within the time period, if
any, given for such compliance by the relevant Governmental Agency or Agencies
with enforcement authority, with all Requirements of Law noncompliance with
which constitutes a Material Adverse Effect, except that Coast Resorts and its
Subsidiaries need not comply with a Require ment of Law then being contested in
good faith by appropriate proceedings.
5.6 Inspection Rights - Completion of Construction Borrower
hereby agrees to engage the CSC to monitor the construction of the New Project
and, following the Commitment Increase Date, to prepare Construction Progress
Reports for submission to the Administrative Agent. The fees for such services
shall be as set forth in the letter agreement described in Section 8.3(a)(17).
From the Commitment Increase Date through the Opening, Borrower shall provide
CSC with such information and access to the New Project Property and the New
Project and individuals employed by Borrower, the project architect and the
project contractor as it may reasonably request, and shall permit CSC, the
Administrative Agent or any Lender, or any authorized employee, agent or
representative thereof, to examine, audit and make copies and abstracts from the
records and books of account of, and to visit and inspect the Properties of,
Borrower and its Subsidiaries and to discuss the affairs, finances and accounts
of Borrower and its Subsidiaries with any of their officers, key employees or
accountants. All rights of the Administrative Agent and CSC under this Section
may be exercised upon reasonable advance notice and at any time during regular
business hours and as often as reasonably requested (but not so as to materially
interfere with the business of Borrower or any of its Subsidiaries). Except for
the fees set forth in the letter agreement referred to in Section 8.3(a)(17),
the costs of all such monitoring, examining, auditing and inspection by and at
the requests of the Administrative Agent or any Lender shall be borne the
Administrative Agent or such Lender.
5.7 Keeping of Records and Books of Account. Keep adequate
records and books of account reflecting all financial transactions in conformity
with Generally Accepted Accounting Principles, consistently applied, and in
material conformity with all applicable requirements of any Governmental Agency
having regulatory jurisdiction over Coast Resorts or any of its Subsidiaries.
5.8 Compliance With Agreements. Promptly and fully comply
with all Contractual Obligations under all material agreements, indentures,
leases and/or instruments to which any one or more of them is a party, whether
such material agreements, indentures, leases or instruments are with a Lender or
another Person, except for any such Contractual Obligations (a) the performance
of which would cause a Default or (b) then being contested by
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any of them in good faith by appropriate proceedings or if the failure to comply
with such agreements, indentures, leases or instruments does not constitute a
Material Adverse Effect.
5.9 Use of Proceeds. Use the proceeds of the Loans solely
(a) to finance the repurchase and cancellation of the 10-7/8% First Mortgage
Debt and the 13% First Mortgage Debt as specified in Section 8.1(b), (b) to
finance capital improvements and expansion activities at The Orleans, the Gold
Coast and/or the Barbary Coast, (c) to finance development and construction
expenses at the New Project, provided that, until an increase in the Commitment
to not less than $175,000,000, no more than $20,000,000 shall be used for this
purpose and (d) for other working capital and other general corporate purposes.
5.10 Hazardous Materials Laws. Keep and maintain all Real
Property and each portion thereof in compliance in all material respects with
all applicable Hazardous Materials Laws and promptly notify the Administrative
Agent in writing (attaching a copy of any pertinent written material) of (a) any
and all material enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened in writing by a
Governmental Agency pursuant to any applicable Hazardous Materials Laws with
regard to the Real Property, (b) any and all material claims made or threatened
in writing by any Person against Coast Resorts or any of its Subsidiaries
relating to damage, contribution, cost recovery, compensation, loss or injury
resulting from any Hazardous Materials with regard to the Real Property, and (c)
any Senior Officer of Borrower receives written notice or other clear evidence
of any material occurrence or condition on any real property adjoining or in the
vicinity of such Real Property and affecting the Real Property that may
reasonably be expected to cause such Real Property or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability or use
of such Real Property under any applicable Hazardous Materials Laws.
5.11 Retirement of Debt. No later than January 31, 2001,
retire all remaining 13% First Mortgage Debt and make arrangements satisfactory
to the Administrative Agent for the termination of any deeds of trust, financing
statements and other security held with respect thereto.
5.12 Pledge of Stock. Proceed with diligence to obtain all
required governmental approval to the Coast Resorts Pledge Agreement, and in any
event cause Coast Resorts to execute and deliver the Coast Resorts Pledge
Agreement and deliver the certificates representing 100% of the issued and
outstanding capital stock of Borrower to the Administrative Agent in pledge not
later than 120 days following the Closing Date.
5.13 Sale of Barbary Coast. In the event that Borrower should
at any time dispose of the Barbary Coast as permitted by Section 6.3(c),
Borrower agrees to use, within the one year period following such Disposition,
an amount (the "Required Amount") equal to five times EBITDA (calculated solely
with respect to the Barbary Coast) for the 12 full calendar months immediately
preceding such Disposition (but not in excess of the amount of
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Net Cash Proceeds from such Disposition) either (a) to repay Obligations
hereunder and reduce a corresponding amount of the Commitment pursuant to
Section 2.7 hereof, or (b) to pay for Capital Expenditures at The Orleans, the
Gold Coast or the New Project (or some combination of the foregoing causes (a)
and (b) or other Capital Expenditures approved in writing by the Requisite
Lenders). Any Net Cash Proceeds from the Disposition of the Barbary Coast in
excess of the Required Amount may be used for Distributions in accordance with
Section 6.6(c), for Capital Expenditures, Investments or Acquisitions made in
accordance with Sections 6.15(d) or 6.16(i) or in accordance with the first
sentence of this Section.
5.14 Merger of Coast West. Cause the articles of merger of
Coast West with and into Borrower to be filed with the Nevada Secretary of State
within two Business Days following the Closing Date, and provide the
Administrative Agent with evidence thereof.
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Article 6
NEGATIVE COVENANTS
So long as any Advance remains unpaid, or any Letter of Credit
remains outstanding or any other Obligation remains unpaid or unperformed, or
any portion of the Commitment remains in force, Borrower shall not, and shall
not permit any of its Subsidiaries or any other Obligor to, unless the
Administrative Agent (with the written approval of the Requisite Lenders or, if
required by Section 11.2, of all of the Lenders) otherwise consents:
6.1 Prepayment of Indebtedness. Other than as to the
Obligations or as required by Section 5.11, prepay any principal or interest on
any Indebtedness of Coast Resorts or any of its Subsidiaries prior to the date
when due, or make any payment or deposit with any Person that has the effect of
providing for the satisfaction of any Indebtedness of Coast Resorts or any of
its Subsidiaries prior to the date when due, in each case if a Default or Event
of Default then exists or would result therefrom.
6.2 Payment of Subordinated Obligations and the Former
Partner Debt. Except as expressly permitted in the last sentence of this Section
6.2, prepay any principal (including sinking fund payments) or any other amount
with respect to any Subordinated Obligation or the Former Partner Debt, or
purchase or redeem any Subordinated Obligation or the Former Partner Debt except
for (x) regularly scheduled payments of interest made with respect to the 1999
Senior Subordinated Debt in a manner consistent with the subordination
provisions of the 1999 Indenture (as in effect on the Closing Date), (y)
regularly scheduled payments of principal and interest with respect to the
Former Partner Debt in a manner consistent with the subordination provisions of
the Former Partner Debt, and (z) regularly scheduled payments of interest with
respect to other Subordinated Obligations, to the extent permitted by the
subordination provisions thereof. The principal amount of the 1999 Senior
Subordinated Debt may be prepaid or redeemed in a principal amount not to exceed
$62,500,000, but only (a) if (i) an Event of Default does not then exist, it
would not result therefrom and (ii) Borrower has not received written notice
from the Administrative Agent or a Lender that a Default has occurred and such
Default remains uncured; and (b) to the extent of an amount equal to the Net
Cash Proceeds from any public offering by Coast Resorts of its capital stock
provided that such prepayment or redemption is made within three months after
such public offering.
6.3 Disposition of Property. Make any Disposition of its
Property, whether now owned or hereafter acquired, except for the following
Dispositions (including any Right of Others consisting of an option granted with
respect to):
(a) Dispositions of obsolete, worn-out, or damaged
equipment or other personal property no longer necessary to the business
of Coast Resorts and its Subsidiaries;
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(b) Dispositions of easements or minor strips and
gores of property in connection with the construction of the New Project
or other improvements to Real Property and which are approved in advance
by the Administrative Agent as reasonably necessary to the construction
or maintenance thereof, provided that the Administrative Agent shall
concurrently receive any endorsements to its policy of title insurance
as it may reasonably request in connection therewith;
(c) subject to the requirements of Section 5.13, the
Disposition of the Barbary Coast and/or the Rancho Property;
(d) to the extent that the same constitute
Dispositions, Distributions contemplated by Section 6.6(b) and (c);
(e) Disposition of aircraft owned as of the Closing
Date; and
(f) additional Dispositions of equipment or other
Property (other than any Project Site or improvements thereon) having a
cumulative aggregate fair value not in excess of $10,000,000.
provided, however, that this Section shall not apply to prohibit a Disposition
to the extent necessary to prevent a License Revocation if (i) no Default or
Event of Default then exists which is not curable by such Disposition, (ii)
Borrower has notified the Administrative Agent in writing of the necessity to
invoke this proviso at least ten Banking Days (or such shorter period as may be
necessary in order to comply with a regulation or order of the relevant Gaming
Board) in advance and (iii) the Net Cash Proceeds from such Disposition are paid
to the Administrative Agent promptly after receipt and applied to reduce the
principal outstanding under the Notes (first, to Base Rate Loans and thereafter
to LIBOR Loans, shortest Interest Periods first, or to cash collateralize the
Notes in an interest bearing account with the Administrative Agent), and to
correspondingly reduce the Commitment (effective in the case of any cash
collateralization of LIBOR Loans upon the expiration of the related Interest
Period) and provided further that nothing in this Section shall apply to
restrict the Disposition of any of the equity securities of any Person that
holds, directly or indirectly through a holding company or otherwise, a license
under any Gaming Law to the extent such restriction is unlawful under that
Gaming Law.
6.4 Hostile Tender Offers. Make any offer to purchase or
acquire, or consummate a purchase or acquisition of, 5% or more of the capital
stock of any corporation or other business entity if the board of directors or
management of such corporation or business entity has notified Coast Resorts or
Borrower that it opposes such offer or purchase and such notice has not been
withdrawn or superseded.
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6.5 Mergers. Merge or consolidate with or into any Person,
except:
(a) mergers and consolidations of a Subsidiary of
Borrower into Borrower or another Subsidiary of Borrower (in the case of
any such merger or consolidation to which Borrower is a party, with
Borrower as the surviving entity), provided that Borrower and each of
such Subsidiaries have executed such amendments to the Loan Documents as
the Administrative Agent may reasonably determine are appropriate as a
result of such merger; and
(b) mergers or consolidations of Borrower or any of
its Subsidiaries with any other Person, provided that (i) either (A)
Borrower or such Subsidiary is the surviving entity, or (B) the
surviving entity is a corporation organized under the Laws of a State of
the United States of America or the District of Columbia and, as of the
date of such merger or consolidation, expressly assumes, by an
appropriate instrument, the Obligations of Borrower or such Subsidiary,
as the case may be, (ii) giving effect thereto on a pro-forma basis, no
Default or Event of Default exists or would result therefrom, and (iii)
as a result thereof, no Change of Control has occurred.
6.6 Distributions. Make any Distribution, whether from
capital, income or otherwise, and whether in Cash or other Property, other than:
(a) Distributions from any Subsidiary of Borrower to
Borrower;
(b) Provided that no Default or Event of Default
shall have occurred or be continuing or would result therefrom,
Distributions (by Borrower to Coast Resorts and by Coast Resorts,
without duplication) (i) made prior to the Opening in an aggregate
amount not to exceed $5,000,000, and (ii) made following the Opening,
during any Fiscal Year (including that in which the Opening occurs) in
an amount which does not exceed 40% of Net Income for the prior Fiscal
Year (minus in the case of the Fiscal Year in which the Opening occurs,
the amount actually distributed pursuant to clause (i)), provided that
in the case of any Distribution made pursuant to clause (ii) of this
paragraph, that (A) after giving pro forma effect to the making of such
Distribution as of the last day of the then most recent Fiscal Quarter,
Borrower is in pro forma compliance with the Fixed Charge Coverage
Ratio, and (B) as of the last day of the most recent Fiscal Quarter, the
Total Leverage Ratio is not greater than 4.00:1.00;
(c) Distributions from Borrower to Coast Resorts
permitted under the last sentence of Section 5.13;
(d) Distributions payable solely in capital stock of
Coast Resorts of the same class as to which such Distributions are
payable;
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(e) Dividends or other payments by Borrower to Coast
Resorts in an aggregate amount not to exceed $500,000 per fiscal year to
pay accounting, legal, corporate reporting and other administrative
expenses of Coast Resorts in the ordinary course of business;
(f) Payments of amounts required for any repurchase,
redemption, retirement or other acquisition of any Capital Stock of the
Borrower or Coast Resorts (and the payment of dividends by the Borrower
to Coast Resorts to fund any such payments) or any options or rights to
acquire such Capital Stock of the Borrower or Coast Resorts owned by any
director, officer or employee of the Borrower or any of its Subsidiaries
pursuant to any management equity subscription agreement, stock option
agreement or similar agreement, or otherwise upon the death, disability,
retirement or termination of employment or departure from the Borrower;
provided that the aggregate price paid for all such repurchased,
redeemed, retired or acquired Capital Stock of the Borrower or options
shall not exceed in the aggregate $2,000,000;
(g) Permitted Tax Distributions, provided that not
less than 10 Business Days prior to the making thereof, Borrower has
provided to the Administrative Agent calculations thereof which are in
form and detail reasonably acceptable to the Administrative Agent;
(h) Distributions to the former partners of the Gold
Coast Hotel and Casino, a Nevada partnership, or the Barbary Coast Hotel
and Casino, a Nevada partnership, in an aggregate amount not to exceed
$1,500,000 during the term of this Agreement to pay income tax liability
incurred as such partners and assessed after the Closing Date; and
(i) Distributions in an aggregate amount not to
exceed $1,000,000 during the term of this Agreement consisting of the
redemption or repurchase of any debt or equity securities of Coast
Resorts or any Subsidiary thereof required by, and in accordance with,
any order of any Gaming Board, provided that Coast Resorts or such
Subsidiary has used its reasonable best efforts to effect a disposition
of such securities to a third-party and has been unable to do so.
6.7 ERISA. At any time, permit any Pension Plan to: (i)
engage in any non-exempt "prohibited transaction" (as defined in Section 4975 of
the Code); (ii) fail to comply with ERISA or any other applicable Laws; (iii)
incur any material "accumulated funding deficiency" (as defined in Section 302
of ERISA); or (iv) terminate in any manner, which, with respect to each event
listed above, may reasonably be expected to result in a Material Adverse Effect,
or (b) withdraw, completely or partially, from any Multiemployer Plan if to do
so may reasonably be expected to result in a Material Adverse Effect.
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6.8 Change in Nature of Business. Make any material change
in the nature of the business of Coast Resorts and the its Subsidiaries, taken
as a whole.
6.9 Liens, Negative Pledges and Rights of Others. Create,
incur, assume or suffer to exist any Lien, Negative Pledge prohibiting the
granting of Liens to the Lenders or any Right of Others of any nature upon or
with respect to any of their respective Properties, or engage in any sale and
leaseback transaction with respect to any of their respective Properties,
whether now owned or hereafter acquired, except:
(a) Liens and Negative Pledges described on Schedule
6.9;
(b) Permitted Encumbrances and Permitted Rights of
Others;
(c) Liens and Negative Pledges held by the trustee
for the holders of the 13% Mortgage Debt securing 13% Mortgage Debt
permitted by Section 6.10(a)
(d) Liens and Negative Pledges in favor of the
Administrative Agent and the Lenders under the Loan Documents;
(e) To the extent that the same constitute Liens or
Rights of Others, the exceptions reflected on Schedule B to the ALTA
Lender's policies of title insurance described in Section 8.1;
(f) purchase money Liens securing Indebtedness,
including any interest or title of a lessor under any Capital Lease
Obligation and the obligations under any Swap Agreement so provided,
permitted by Section 6.10(c) on and limited to the Property acquired,
constructed or financed with the proceeds of such Indebtedness and
Negative Pledges in favor of the holders of such Indebtedness with
respect to such Property;
(g) Liens on Property acquired by Borrower and its
Subsidiaries following the Closing Date securing Indebtedness permitted
by Section 6.10, which are in existence at the time of such acquisition
and not created in contemplation thereof; and
(h) any Lien or Negative Pledge to the extent
constituting a renewal, extension, refunding, refinancing or replacement
of any Lien or Negative Pledge referred to in clauses (a), (f) or (g) of
this Section, provided that (i) such Lien or Negative Pledge relates
solely to the Property which was subject to the Lien or Negative Pledge
securing the obligation so renewed, extended, refunded, refinanced or
replaced and (ii) no Lien or Negative Pledge in favor of the Holders of
the 13% Mortgage Debt shall be so extended, refunded, refinanced or
replaced.
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6.10 Indebtedness and Contingent Obligations. Create, incur,
assume or suffer to exist any Indebtedness or Contingent Obligation except:
(a) Indebtedness and Contingent Obligations existing
on the Closing Date and disclosed in Schedule 6.10, and renewals,
extensions or amendments that do not increase the amount thereof,
provided that the 13% Mortgage Debt shall be retired when and as
required by Section 5.11;
(b) Indebtedness and Contingent Obligations under
the Loan Documents;
(c) purchase money Indebtedness and Capital Lease
Obligations incurred when no Default or Event of Default has occurred
and remains continuing, provided that the aggregate principal amount of
such Indebtedness and Capital Lease Obligations outstanding at any time
does not exceed $25,000,000 and Swap Agreements relating to any such
Indebtedness;
(d) Indebtedness consisting of one or more Swap
Agreements entered into with respect to the Obligations;
(e) Subordinated Obligations incurred when no
Default or Event of Default exists;
(f) amendments, renewals, extensions and
refinancings of any of the Indebtedness and Capital Lease Obligations
described in the foregoing clauses of this Section (other than
amendments, renewals, extensions and refinancings after the Closing Date
of the 13% Mortgage Debt), provided that the principal amount thereof is
not increased;
(g) unsecured Indebtedness in respect to
performance, surety, or appeal bonds, completion guarantees or similar
instruments provided in the ordinary course of business and in an
aggregate amount not to exceed $10,000,000; and
(h) unsecured Indebtedness (i) of Borrower and its
Subsidiaries to Coast Resorts and its Subsidiaries, and (ii) of Coast
Resorts and its other Subsidiaries to Borrower and its Subsidiaries to
the extent that the funding of such Indebtedness would have been
permitted by Section 6.6 had it been a Distribution, provided that in
the case of any Indebtedness permitted under this clause (ii), the
amount of Distributions permitted under Section 6.6 shall be reduced by
the principal amount of any such outstanding Indebtedness.
6.11 Transactions with Affiliates. Enter into any transaction
of any kind with any Affiliate of Borrower other than (a) salary, bonus and
other compensation arrangements,
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including employee benefit plans, with directors, officers, partners or
employees, and customary directors fees and indemnities, in each case in the
ordinary course of business and those no more favorable than those in existence
as of the Closing Date, (b) transactions between or among any of Coast Resorts
and its Subsidiaries, (c) transactions on overall terms at least as favorable to
Coast Resorts or its Subsidiaries as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power, (d) loans to
employees of Coast Resorts and its Subsidiaries in the ordinary course of their
business, provided that any loan in excess of $200,000 shall have been approved
by the disinterested members of the Board of Directors of Borrower; (e) any
Construction and Design Contract for the New Project approved by the
disinterested members of the board of directors of Coast Resorts and the
relevant Subsidiaries thereof, the terms of which are disclosed to the
Administrative Agent, (f) Distributions by Coast Resorts permitted by Section
6.6, and (g) any Tax Agreement providing for cash payments to the equityholders
of Coast Resorts not in excess of the Tax Amount.
6.12 Senior Leverage Ratio. Permit the Senior Leverage Ratio
as of the last day of any Fiscal Quarter to exceed 1.75:1.00 provided that,
should the Commitment be increased to the amount of at least $175,000,000 (a)
such required ratio shall immediately increase to 2.00:1.00, (b) Borrower may
elect, concurrently with the Commitment Increase Date, to have such required
ratio thereafter increased to 2.75:1.00 as of the last days of six consecutive
Fiscal Quarters (provided that no more than two of such selected Fiscal Quarters
end after the Completion Date) and (c) following such six Fiscal Quarters (and
in any event not later than the end of the second full Fiscal Quarter following
the Opening) such required ratio shall be changed to 2.50:1.00.
6.13 Total Leverage Ratio. Permit the Total Leverage Ratio as
of the last day of any Fiscal Quarter to exceed 4.50:1.00 provided that, should
the Commitment be increased to the amount of at least $175,000,000 (a) Borrower
may elect, concurrently with the Commitment Increase Date, to have such required
ratio thereafter increased to 5.00:1.00 for a period of five consecutive Fiscal
Quarters (provided that no more than one of such selected Fiscal Quarter ends
after the Completion Date) and (b) following such five Fiscal Quarter period
(and in any event not later than the end of the first full Fiscal Quarter
following the Opening) such required ratio shall be returned to 4.50:1.00.
6.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio as of the last day of any Fiscal Quarter to be less than
1.25:1.00.
6.15 Capital Expenditures. Make or commit to make any Capital
Expenditure other than:
(a) Maintenance Capital Expenditures not to exceed
$15,000,000 per annum, increasing, from and after the Opening, to
$22,000,000 per annum;
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(b) other Capital Expenditures in an aggregate
amount that do not, when aggregated with the outstanding amount of any
Acquisitions and Investments made under Section 6.16(i), exceed (i)
$40,000,000 between the Closing Date and the Maturity Date, plus (ii) an
additional $60,000,000 following the Opening;
(c) following an increase in the Commitment to an
amount of at least $175,000,000, other Capital Expenditures for the
development of the New Project in an amount not to exceed $150,000,000
(excluding capitalized interest);
(d) other Capital Expenditures in an amount
expressly permitted by the first sentence of Section 5.13, and
(e) following an increase in the Commitment to an
amount of at least $175,000,000, other Capital Expenditures in an amount
equal to any Net Cash Proceeds from the Disposition of the Rancho
Property and/or the Barbary Coast that are not used or to be used as
specified in the first sentence of Section 5.13.
6.16 Acquisitions and Investments. Make any Acquisition or
make or suffer to exist any Investment, other than:
(a) Investments consisting of Cash and Cash
Equivalents;
(b) Investments consisting of advances to officers,
directors, partners and employees of Borrower and its Subsidiaries for
travel, entertainment, relocation and analogous ordinary business
purposes;
(c) Investments in Subsidiaries engaged solely in
businesses reasonably related to the conduct of the business of the
Borrower's hotel and casino properties existing as of the Closing Date
(and/or the New Project) and which are made in compliance with Section
6.17; and
(d) Investments consisting of credit extended to
customers in the ordinary course of business and in accordance with past
practices;
(e) Investments existing as of the Closing Date and
described on Schedule 6.16 and renewals and extensions thereof, limited
to the amount of such Investment described on such Schedule;
(f) Advances and loans to employees of the Borrower
or any of its Subsidiaries in the ordinary course of business; provided
that the aggregate amount of such Investments does not exceed
$1,000,000;
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(g) Investments made as a result of the receipt of
non-cash consideration from any Disposition permitted under Section 6.1;
(h) Investments entered into in the ordinary course
of business consisting of (i) Swap Agreements not prohibited hereby,
(ii) utility or security deposits and similar prepaid expenses, and
(iii) stock, obligations or securities received in satisfaction of
judgments against third parties, foreclosure of Liens or good faith
settlement of litigation, disputes or other debts;
(i) Other Investments and Acquisitions made
following the Opening, provided that the aggregate amount of such
Investments outstanding at any time does not, when aggregated with
Capital Expenditures under Section 6.15(b), exceed $100,000,000; and
(j) Other Investments made following the Opening and
acquired solely in exchange for permanent equity capital stock of Coast
Resorts.
6.17 New Subsidiaries. Make or suffer to exist any Investment
in any Subsidiary, or form or acquire any Subsidiary, unless concurrently with
such Investment, acquisition or formation, (a) Borrower and each Affiliate of
Borrower has pledged its interest in the capital stock and debt securities of
such Subsidiary to the Administrative Agent and the Lenders, (b) such Subsidiary
has issued a guaranty of the Obligations and has granted perfected first
priority Liens in substantially all of its Property, in each case pursuant to a
Subsidiary Guaranty, a Subsidiary Security Agreement and/or a Subsidiary Pledge
Agreement which are in form and substance acceptable to the Administrative
Agent, and (c) Borrower and such Subsidiary have provided to the Administrative
Agent such other opinions, assurances and the like as the Administrative Agent
or the Requisite Lenders have reasonably requested.
6.18 Changes to Certain Obligations. Make any changes,
amendments or modifications to the terms of the 13% Indenture or the 1999
Indenture, or any other Subordinated Obligations which are materially adverse to
the interests of the Creditors.
6.19 Construction of the New Project. Each of the following
shall be applicable only following the Commitment Increase Date.
(a) Fail to proceed diligently and without material
interruption to construct and furnish the New Project in accordance in
all material respects with the Plans, the Budget and the Timetable (as
amended from time to time in accordance with the provisions of this
Section 6.19), and in any event on or before the Completion Date.
(b) Make any change to the Plans or Budget which
would (i) allocate or require the allocation of more than $2,000,000 (in
the aggregate of all
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such allocations) of the "contingency" line item in the Budget to any
line item not included in the Budget as of the Commitment Increase Date
without the prior written consent of the Requisite Lenders (not to be
unreasonably withheld or delayed), (ii) increase the overall Budget
(when established pursuant to Section 8.3) by more than 10%, or make any
change to the Timetable which would result in any benchmark described
therein being delayed for more than six months from the date established
therein, or, in any event make any change to the Plans, the Budget or
the Timetable which would cause the Completion Date to occur after
January 1, 2001, (iii) result in any change in the scope of the New
Project so that the square footage of the casino area would be decreased
by more than 5%, or (iv) delete or amend any of the material amenities
described in the Plans or Budget.
(c) Fail to construct the New Project in a good and
workmanlike manner in accordance with sound building practices and
without material deviation from the Plans, and comply in all material
respects with all existing Laws and requirements of all Governmental
Agencies having jurisdiction over the New Project Property or the New
Project and in all material respects with all future Laws and
requirements that become applicable to the New Project Property or the
New Project prior to the Completion Date.
(d) Purchase or contract for any materials,
equipment, furnishings, fixtures or articles of personal property to be
placed or installed on the New Project Property under any security
agreement or other agreement where the seller reserves or purports to
reserve title or the right of removal or repossession (except for such
reservations as may arise solely by operation of Law), or the right to
consider such materials personal property after their incorporation in
the work of construction (except to the extent permitted by Section 6.9
hereof), unless the Administrative Agent in each instance has authorized
Borrower to do so in writing.
(e) Fail to promptly pay prior to delinquency
(subject to applicable retentions) or otherwise discharge all claims and
Liens for labor done and materials and services furnished in connection
with the construction of the New Project, except for claims contested in
good faith by appropriate proceedings and without prejudice to the
Timetable, provided that any such claims are covered by such payment
bonds or title insurance policy endorsements as may be reasonably
requested by the Administrative Agent.
(f) Fail to promptly provide to the Administrative
Agent and CSC such information and documents respecting the New Project
as either may reasonably request from time to time, including detailed
identification of each significant subcontractor or supplier to the New
Project and the nature and dollar amount of the related subcontract or
supply contract.
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(g) Fail to properly obtain, comply with and keep in
effect all permits, licenses and approvals which are customarily
required to be obtained from Governmental Agencies in order to construct
and occupy the New Project as of the then current stage of construction,
and deliver copies of all such permits, licenses and approvals to the
Administrative Agent promptly following a written request therefor.
(i) Fail to provide any and all information which is
reasonably required for the preparation of a monthly Construction
Progress Report, to cooperate in the preparation of each Construction
Progress Report and, if requested by the Administrative Agent, cause the
New Project architect and general contractor to certify that the
improvements constructed as of the date of any Construction Progress
Report conform to the Plans in all material respects;
(j) Fail to maintain a full set of working drawings
at the New Project Property for review by CSC;
(k) Fail, within 15 days following any written
request by the Administrative Agent, to deliver (i) then current
construction plans for the New Project certified as true and correct by
the New Project architect and the project engineer, (ii) a then current
list of the names, addresses and telephone numbers of each contractor,
subcontractor and material supplier with respect to the New Project and
the dollar value and amounts paid with respect to the related contracts,
and (iii) then current versions of the construction schedule for all
uncompleted work on the New Project and all executed contracts and
subcontracts for such work;
(l) Fail to promptly notify the Administrative Agent
if it purchases any construction materials for the New Project having a
value in excess of $1,000,000 that are not located on the New Project
Property, or will not be delivered to the New Project Property within
fifteen days after purchase (describing such construction materials, the
purchase price therefor and the location thereof) and, if requested by
the Administrative Agent, provide to the Administrative Agent the
written acknowledgment of the Person having custody of such construction
materials of the existence of the Administrative Agent's Lien on such
construction materials and the right of the Administrative Agent to have
access to and to remove such construction materials when an Event of
Default has occurred and remains continuing.
(m) On or before the Opening, fail to provide the
Administrative Agent with a written certificate executed by the project
architect and contractor certifying that the New Project has been
completed in all material respects in accordance with the Plans and
complies in all material respects with all applicable zoning, building
and land use Laws and that the New Project is ready to be opened for
business together with a Certificate executed by a Senior Officer to
that effect.
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(n) Fail, as soon as practicable after completion of
the New Project, provide the Administrative Agent with an ALTA survey of
the New Project Property that (i) demonstrates compliance of the New
Project in all material respects with all applicable Laws and
requirements of Governmental Agencies, (ii) sets forth all recorded
easements and licenses burdening the New Project Property, (iii)
reflects no encroachments onto the New Project Property and no
encroachments by the New Project onto adjoining real property (other
than as reflected on the ALTA Survey described in the definition of New
Project Property) and (iv) certifies the legal description of the New
Project Property to be the same as that set forth in the title insurance
policy referred to in Section 8.3.
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Article 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information. So long as any
Advance remains unpaid, or any Letter of Credit remains outstanding, or any
other Obligation remains unpaid or unperformed, or any portion of the Commitment
remains in force, Borrower shall, unless the Administrative Agent (with the
written approval of the Requisite Lenders) otherwise consents, at Borrower's
sole expense, deliver to the Administrative Agent, a sufficient number of copies
for all of the Lenders, of the following:
(a) As soon as practicable, and in any event within
45 days after the end of each Fiscal Quarter, (i) the consolidated and
consolidating balance sheet, statement of income and cash flows for the
portion of the Fiscal Year ended with such Fiscal Quarter, all in
reasonable detail, and (ii) a quarterly operating report with a
narrative description in a format which is mutually acceptable to
Borrower and the Administrative Agent. Such financial statements shall
be certified by the Chief Financial Officer or Treasurer of Coast
Resorts as fairly presenting the financial condition, results of
operations and cash flows of Coast Resorts and its Subsidiaries in
accordance with Generally Accepted Accounting Principles (other than
footnote disclosures), consistently applied, as at such date and for
such periods, subject only to normal year-end accruals and audit
adjustments;
(b) As soon as practicable, and in any event within
90 days after the end of each Fiscal Year, the consolidated and
consolidating balance sheet, statements of operations and cash flows, in
each case of Coast Resorts and its Subsidiaries for such Fiscal Year, in
each case as at the end of and for the Fiscal Year, all in reasonable
detail. Such financial statements shall be prepared in accordance with
Generally Accepted Accounting Principles, consistently applied, and such
consolidated balance sheet and consolidated statements shall be
accompanied by a report and opinion of independent public accountants of
recognized standing selected by Coast Resorts and reasonably
satisfactory to the Requisite Lenders, which report and opinion shall be
prepared in accordance with generally accepted auditing standards as at
such date, and shall not be subject to any qualifications or exceptions
which are not acceptable to the Requisite Lenders. Such accountants'
report shall be accompanied by a certificate stating that, in making the
examination pursuant to generally accepted auditing standards necessary
for the certification of such financial statements and such report, such
accountants have obtained no knowledge of any Default or, if, in the
opinion of such accountants, any such Default shall exist, stating the
nature and status of such Default, and stating that such accountants
have reviewed Borrower's financial calculations as at the end of such
Fiscal Year (which shall accompany such certificate) under Sections
6.12, 6.13, 6.14 and 6.15 have read such Sections (including the
definitions of all defined terms used therein) and that nothing has come
to the attention
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of such accountants in the course of such examination that would cause
them to believe that the same were not calculated by Borrower in the
manner prescribed by this Agreement;
(c) As soon as practicable, and in any event within
90 days after the commencement of each Fiscal Year, a budget and
projection by Fiscal Quarter for that Fiscal Year and by Fiscal Year for
the four succeeding Fiscal Years, including projected consolidated
balance sheets, statements of operations and statements of cash flow of
Coast Resorts and its Subsidiaries, all in reasonable detail;
(d) Promptly after the same are available, copies of
each material change to the Plans (whether such changes require the
consent of the Lenders or not). Without limitation on the foregoing,
Borrower shall promptly provide CSC with (i) copies of all change orders
with respect to the Plans including plans and specifications indicating
the proposed change, a written description of the proposed change and
related work drawings and a written estimate of the cost of the proposed
change and the time necessary to complete it, and (ii) any and all other
information and documents with respect thereto reasonably requested by
CSC;
(e) Promptly after request by the Administrative
Agent or any Lender, copies of any detailed audit reports, management
letters or recommendations submitted to Coast Resorts by independent
accountants in connection with the accounts or books of Coast Resorts or
any of its Subsidiaries, or any audit of any of them;
(f) Promptly after the same are available, copies of
each annual report, proxy or financial statement or other report or
communication sent to the stockholders of Coast Resorts, and copies of
all annual, regular, periodic and special reports and registration
statements which Borrower may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and not otherwise required
to be delivered to the Lenders pursuant to other provisions of this
Section 7.1;
(g) Promptly after the same are available, copies of
the Nevada "Regulation 6.090 Report" and "6-A Report" and copies of any
written communication to Borrower or any other Obligor from any Gaming
Board advising it of a violation of or non-compliance with any Gaming
Law by Borrower or any other Obligor;
(h) Promptly after request by the Administrative
Agent or any Lender, copies of any other material report or other
document that was filed by Coast Resorts or any of its Subsidiaries with
any Governmental Agency;
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(i) Promptly, and in any event within ten Banking
Days upon a Senior Officer becoming aware, of the occurrence of any (i)
"reportable event" (as such term is defined in Section 4043 of ERISA) or
(ii) "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) in connection with any Pension Plan
or any trust created thereunder, telephonic notice specifying the nature
thereof, and, no more than five Banking Days after such telephonic
notice, written notice again specifying the nature thereof and
specifying what action Coast Resorts or any of its Subsidiaries is
taking or proposes to take with respect thereto, and, when known, any
action taken by the Internal Revenue Service with respect thereto;
(j) As soon as practicable, and in any event within
three Banking Days after a Senior Officer becomes aware of the existence
of any condition or event which constitutes a Default, telephonic notice
specifying the nature and period of existence thereof, and, no more than
two Banking Days after such telephonic notice, written notice again
specifying the nature and period of existence thereof and specifying
what action Borrower is taking or proposes to take with respect thereto;
(k) Promptly upon a Senior Officer becoming aware
that (i) any Person has commenced a legal proceeding with respect to a
claim against Coast Resorts or any of its Subsidiaries that is
$1,000,000 or more in excess of the amount thereof that is fully covered
by insurance, (ii) any creditor or lessor under a written credit
agreement involving Indebtedness in excess of $1,000,000 or a material
lease has asserted a default thereunder on the part of Coast Resorts or
any of its Subsidiaries, (iii) any Person has commenced a legal
proceeding with respect to a claim against Coast Resorts or any of its
Subsidiaries under a contract that is not a credit agreement or material
lease in excess of $1,000,000 or which otherwise may reasonably be
expected to result in a Material Adverse Effect, (iv) any labor union
has notified Coast Resorts or Borrower of its intent to strike Coast
Resorts or any of its Subsidiaries on a date certain and such strike
would involve more than 100 employees of Coast Resorts and its
Subsidiaries, or (v) any Gaming Board has indicated its intent to
consider or act upon a License Revocation or a fine or penalty of
$1,000,000 or more with respect to Coast Resorts or any of its
Subsidiaries, a written notice describing the pertinent facts relating
thereto and what action Coast Resorts or its Subsidiaries are taking or
propose to take with respect thereto; and
(l) Such other data and information as from time to
time may be reasonably requested by the Administrative Agent, any Lender
(through the Administrative Agent) or the Requisite Lenders.
7.2 Compliance Certificates. For so long as any Advance
remains unpaid, any Letter of Credit remains outstanding, any other Obligation
remains unpaid or unperformed, or any portion of the Commitment remains
outstanding, Borrower shall deliver to the
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Administrative Agent for distribution
by it to the Lenders concurrently with the financial statements required
pursuant to Sections 7.1(a) a properly completed Compliance Certificate signed
by a Senior Officer.
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Article 8
CONDITIONS
8.1 Initial Advances on the Closing Date. The obligation of
each Lender to make the initial Advance to be made by it on the Closing Date,
and the obligation of the Issuing Lender to issue the initial Letter of Credit,
are each subject to the following conditions precedent, each of which shall be
satisfied prior to the making of the initial Advances and the issuance of the
initial Letter of Credit (unless all of the Lenders, in their sole and absolute
discretion, shall agree otherwise):
(a) The Administrative Agent shall have received all
of the fol lowing, each of which shall be originals unless otherwise
specified, each properly executed by a Responsible Official of each
party thereto, each dated as of the Closing Date and each in form and
substance satisfactory to the Administrative Agent and its legal counsel
(unless otherwise specified or, in the case of the date of any of the
following, unless the Administrative Agent otherwise agrees or directs):
(1) executed counterparts of this Agreement,
sufficient in number for distribution to the Lenders and
Borrower;
(2) a Note executed by Borrower in favor of
Bank of America National Trust and Savings Association, in the
principal amount of $75,000,000;
(3) the Swing Line Documents executed by
Borrower in favor of the Swing Line Lender;
(4) the Deeds of Trust, executed and
acknowledged by Borrower;
(5) the Security Agreement executed by
Borrower and the Coast Resorts Security Agreement executed by
Coast Resorts;
(6) such financing statements on Form UCC-1
executed by Borrower and Coast Resorts with respect to the
Security Agreement and the Coast Resorts Security Agreement, as
the Administrative Agent may request;
(7) the Trademark Assignment, executed by
Borrower;
(8) the Guaranty, executed by the
Guarantors;
(9) an amendment to the Escrow Agreement
dated as of January 30, 1996 among Borrower, Coast Resorts, Bank
of America Nevada
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and American Bank National Association which is in form and
substance acceptable to the Administrative Agent;
(10) a certified execution copy of each of
the 13% Indenture, the 1999 Indenture, the Former Partner Debt,
the Orleans Lease, the New Lease, the Barbary Coast Lease, the
Barbary Coast Parking Lease and the Tax Sharing Agreement;
(11) the fee letters with respect to certain
fees as described in Article 3, executed by Borrower;
(12) such documentation with respect to
Borrower and each other Obligor as the Administrative Agent may
require to establish its due organization, valid existence and
good standing, its qualification to engage in business in each
material jurisdiction in which it is engaged in business or
required to be so qualified, its authority to execute, deliver
and perform the Loan Documents, the identity, authority and
capacity of each Responsible Official thereof authorized to act
on its behalf, including certified copies of articles of
incorporation and amendments thereto, bylaws and amendments
thereto, certificates of good standing and/or qualification to
engage in business, tax clearance certificates, certificates of
corporate resolutions, and incumbency certificates;
(13) an estoppel certificate and
nondisturbance agreement executed by the landlord for each of
the Orleans Lease and the New Lease (containing any
modifications to such leases reasonably required by the Lenders)
to ensure the Lenders' ability to realize its security interest
in such leasehold estates;
(14) a "Phase I" environmental report with
respect to the Gold Coast and The Orleans;
(15) a written appraisal by a qualified
independent appraiser acceptable to the Administrative Agent and
complying in all respects with FIRREA of each of The Orleans
that reflects a fair market value of $100,000,000;
(16) a certificate of insurance issued by
Borrower's insurance carrier or agent with respect to the
insurance required to be maintained pursuant to the Deeds of
Trust, including without limitation flood insurance and a policy
or policies of bailer's "all risk" insurance in non-reporting
form and in an amount not less than the then current value of
the improvements located on the Project Sites, on a replacement
cost basis, together with lenders' loss
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payable endorsements thereof on Form 438BFU or other form
acceptable to the Administrative Agent;
(17) assurances acceptable to the
Administrative Agent that Commonwealth Land Title Insurance
Company is prepared to issue its ALTA lenders policy, insuring
that Borrower (a) is the owner of the Gold Coast Property in fee
simple absolute, subject only to Permitted Encumbrances and (b)
holds the leasehold interest under each of the Orleans Lease and
the New Lease, and insuring the Lien of each Deed of Trust in an
amount not less than the amount of the Commitment, subject only
to the exceptions to title described on Schedule 6.9 and with
endorsements to coverage as are reasonably acceptable to the
Administrative Agent or as are reasonably requested by the
Requisite Lenders (including any endorsements providing coverage
as to exceptions to title described on Schedule 6.9 as may be
reasonably requested by the Administrative Agent with respect
thereto), with such assurances as the Administrative Agent may
reasonably require from title re-insurers acceptable to the
Administrative Agent;
(18) the Opinions of Counsel;
(19) evidence satisfactory to the Requisite
Lenders of such zoning (including variances and use permits) and
other land use entitlements as may be necessary to permit the
use of the New Project as a hotel, casino and resort property;
(20) such assurances as the Administrative
Agent deems appropriate that the relevant Gaming Boards have
approved the transactions contemplated by the Loan Documents
(other than as to the proposed pledge of the stock of Borrower
to the Administrative Agent) to the extent that such approval is
required by applicable Gaming Laws;
(21) a Certificate of a Responsible Official
signed by a Senior Officer of Borrower certifying that the
conditions specified in Sections 8.1(e) and 8.1(f) have been
satisfied;
(22) such other assurances, certificates,
documents, consents or opinions as the Administrative Agent
reasonably may require.
(b) Borrower shall concurrently purchase and cancel
not less than 90% of the outstanding principal amounts of the 13% First
Mortgage Debt and all of the 10-7/8% First Mortgage Debt pursuant to
agreements acceptable to the Administrative Agent, and for any such debt
that has been terminated in full, shall have
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made arrangements satisfactory to the Administrative Agent for the
termination of any deeds of trust, financing statements and other
security held with respect thereto.
(c) Evidence that the security interests of the
Administrative Agent in the personal property of Borrower are of first
priority, except as set forth in Section 4.20 or otherwise contemplated
by the Loan Documents.
(d) The reasonable costs and expenses of the
Administrative Agent in connection with the preparation of the Loan
Documents payable pursuant to Section 11.3, and invoiced to Borrower no
less than two days prior to the Closing Date, shall have been paid.
(e) The representations and warranties of Borrower
contained in Article 4 shall be true and correct.
(f) Borrower and any other Obligors shall be in
compliance with all the terms and provisions of the Loan Documents, and
after giving effect to the initial Advance, no Default or Event of
Default shall have occurred and be continuing.
(g) The fees due and payable on the Closing Date
pursuant to Article 3 shall have been paid.
(h) Borrower shall have received, or shall
concurrently receive, the net proceeds of the issuance of the 1999
Senior Subordinated Notes.
(i) All legal matters relating to the Loan Documents
shall be satisfactory to Sheppard, Mullin, Richter & Hampton, LLP,
special counsel to the Administrative Agent.
8.2 Any Advance. The obligation of each Lender to make any
Advance which would increase the outstanding principal Indebtedness evidenced by
the Notes, the obligation of the Lenders to make any LIBOR Loan, the obligation
of the Issuing Lender to issue any Letter of Credit, and the obligation of the
Swing Line Lender to make any Swing Line Advance, are each subject to the
conditions precedent that:
(a) except as disclosed by Borrower and approved in
writing by the Requisite Lenders, the representations and warranties
contained in Article 4 (other than the representations set forth in
Sections 4.4, 4.10 and 4.17) shall be true and correct on the date of
such Advance as though made on that date;
(b) There shall not be any pending or threatened
action, suit, proceeding or investigation affecting Coast Resorts or any
of its Subsidiaries before any Governmental Agency that constitutes a
Material Adverse Effect;
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(c) except as provided for in Section 2.1(g), the
Administrative Agent shall have timely received a Request for Loan in
compliance with Article 2 (or telephonic or other request for Loan
referred to in the second sentence of Section 2.1(b), if applicable) or
the Issuing Lender shall have received a Request for Letter of Credit,
as the case may be, in compliance with Article 2;
(d) no Default or Event of Default shall have
occurred and remain continuing or will result from such Advance or Swing
Line Advance or the issuance of such Letter of Credit;
(e) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, such other
assurances, certificates, documents or consents related to the foregoing
as the Administrative Agent or the Requisite Lenders reasonably may
require.
8.3 Conditions to Increase in Commitment. The effectiveness
of any increase in the Commitment above $75,000,000 is subject to the following
conditions precedent:
(a) The Administrative Agent shall have received all
of the following, each of which shall be originals unless otherwise
specified, each properly executed by a Responsible Official of each
party thereto, and each in form and substance satisfactory to the
Administrative Agent and its legal counsel:
(1) Replacement Notes executed by Borrower
in favor of each Lender, each in a principal amount equal to
that Lender's Pro Rata Share of the revised Commitment;
(2) A Leasehold Deed of Trust, Assignment of
Rents and Fixture Filing (the "Barbary Coast Deed of Trust")
executed and delivered by Borrower in favor of the Lenders with
respect to Borrower's interest under the Barbary Coast Ground
Lease and the Barbary Coast Parking Lease;
(3) If requested by the Lenders, an estoppel
certificate and non-disturbance agreement executed by the
landlord for each of the Barbary Coast Ground Lease and the
Barbary Coast Parking Lease (containing any modifications to
such lease as recently required by the Lenders) to ensure the
Lenders' ability to realize its security interest in such
leasehold estates (it being understood that the Administrative
Agent shall not require attornment agreements from tenants under
customary retail leases);
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(4) Such environmental reports and
assessments as may have been requested by the Administrative
Agent or the Lenders in connection with the New Project or the
Barbary Coast;
(5) Written appraisals of the Project Sites
conducted by appraisers acceptable to the Administrative Agent
showing that the aggregate fair market values of the Project
Sites (including any "as-built" appraisal of the New Project)
are not less than $300,000,000;
(6) A certificate of insurance issued by
Borrower's insurance carrier or agent with respect to the
insurance required to be maintained pursuant to the Barbary
Coast Deed of Trust, including without limitation, flood
insurance and a policy or policies of bailer's "all risk"
insurance in non-reporting form and in an amount not less than
the then current value of the improvements located on the
Barbary Coast Property, on a replacement cost basis, together
with lender's loss payable endorsements thereof on Form 438BFU
or other form acceptable to the Administrative Agent;
(7) Assurances acceptable to the
Administrative Agent that Commonwealth Land Title Insurance is
prepared to issue its ALTA lenders policies, insuring that
Borrower holds the leasehold interest under each of the Barbary
Coast Ground Lease and the Barbary Coast Parking Lease and
insuring the Lien of the Barbary Coast Deed of Trust in amount
not less than the amount of the Commitment (subject to tie-in
endorsements as to the policies referred to in the next
paragraph), subject only to Permitted Encumbrances and
exceptions acceptable to the Administrative Agent and with
endorsements to coverage as are acceptable to the Administrative
Agent, with such assurances as the Administrative Agent may
reasonably require from title re-insurers acceptable to the
Administrative Agent;
(8) Endorsements from applicable title
insurance companies with respect to any title insurance policies
otherwise held by the Lenders pursuant to the Loan Documents
increasing the insured amounts thereunder to the then effective
amount of the Commitment (subject to tie-in endorsements as to
the policies referred to in the preceding paragraph) and
otherwise as the Administrative Agent may reasonably require.
(9) Updates, restatements or replacements
for the Opinions of Counsel and the estoppels provided pursuant
to Section 8.1(a)(13) as the Administrative Agent may require.
(10) an ALTA survey which (i) shows all
"set-backs" and other restrictions applicable to the New Project
Property pursuant to
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requirements of Governmental Agencies and applicable covenants,
conditions and other private restrictions, (ii) shows all
easements, licenses and other rights of way, (iii) shows no
encroachments onto the New Project Property or from the New
Project Property onto adjoining property, and (iv) certifies the
legal description of the New Project Property as insured in the
Lenders' title policy with respect to the New Project Property.
(11) a certificate pursuant to which the
person who prepared such ALTA survey certifies to Lender and the
applicable title insurer that the survey was made on the ground
and in accordance with the Minimum Standard Detail Requirements
of Land Title Surveys established by the A.L.T.A. and A.C.S.M.,
and is correct and complete; that access to the New Project
Property, and utilities shown on the survey, are sufficient and
in accordance with applicable requirements; that the New Project
Property does not fall within a designated flood hazard area;
and as to such other matters as the Administrative Agent
requires.
(12) a Certificate of a Responsible Official
of Borrower stating that attached thereto and incorporated
therein by reference are true, correct and complete copies of
the architect contract for the New Project;
(13) The Timetable, the Budget, the Plans and
the Completion Date shall have been approved by the
Administrative Agent and the Lenders;
(14) a geotechnical report by a qualified
licensed soils engineer satisfactory to the Lenders and
certified as applicable to the improvements of the New Project
Property contemplated by the New Project;
(15) evidence satisfactory to the
Administrative Agent of such zoning (including variances and use
permits) and other land use entitlements as may be necessary to
permit the use of the improvements on the New Project Property
as a hotel, casino and resort property;
(16) Such assurances as the Administrative
Agent deems appropriate that the relevant Gaming Boards have
approved the increase in the Commitment and associated
transactions contemplated by any revisions to the Loan Documents
to the extent that such approval is required by applicable
Gaming Laws;
(17) A letter agreement with the
Administrative Agent setting forth the fees to be payable to CSC
in connection with the New Project (which fees shall be mutually
acceptable to the Administrative Agent and the Borrower);
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(18) A certificate of a Responsible Official
signed by a Senior Officer of Borrower certifying that the
conditions specified in Sections 8.2(a) and 8.2(d) have been
satisfied and setting forth (i) the six Fiscal Quarters selected
by Borrower for a 2.75:1.00 maximum Senior Leverage Ratio
requirement (as set forth in Section 6.12), and (ii) the five
Fiscal Quarters selected by Borrower for a 5.00:1.00 maximum
Total Leverage Ratio requirement (as set forth in Section 6.13);
(19) Such other assurances, certificates,
documents, consents or opinions as the Administrative Agent may
require;
(b) The reasonable costs and expenses of the
Administrative Agent in connection with its preparation and review of
materials associated with the increase in the Commitment shall have been
paid in accordance with Section 11.3.
(c) Borrower shall have paid to the Administrative
Agent, for the account of the Lenders, any fees as may have been agreed
upon in connection with any increase to the Commitment upon the
Commitment Increase Date (it being understood that such fees may not be
proportionately equal as to each Lender).
8.4 Conditions to Advances. Unless the Requisite Lenders
have otherwise agreed in writing, the making by any Lender of any Advance with
the knowledge that any condition to such Advance is not fulfilled shall
constitute a waiver of such condition only with respect to the Advance made, and
such condition shall be a condition to all further Advances until fulfilled. In
addition, and regardless of whether Borrower thereafter requests any further
Advance, the making by any Lender of any Advance requested by Borrower shall
obligate Borrower to promptly and diligently fulfill any conditions to such
Advance that were not fulfilled at the time such Advance was made.
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Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 Events of Default. The existence or occurrence of any
one or more of the following events, whatever the reason therefor and under any
circumstances whatsoever, shall constitute an Event of Default:
(a) Borrower (i) fails to pay any principal on any
of the Notes, or any portion thereof, on the date when due, (ii) fails
to make any payment with respect to any Letter of Credit when due, or
(iii) fails to make any payment of principal with respect to any Swing
Line Advance when due; or
(b) Borrower fails to pay any interest on any of the
Notes, or any fees under Sections 3.2, 3.3, 3.4, 3.5 or 3.6 or any
portion thereof, within two Banking Days after the date when due; or
fails to pay any other fee or amount payable to the Lenders under any
Loan Document, or any portion thereof, within five Banking Days after
demand therefor; or
(c) Borrower fails to comply with any of the
covenants contained in Article 6;
(d) Borrower or any other Obligor fails to perform
or observe any other covenant or Agreement (not specified in clauses
(a), (b) or (c) above) contained in any Loan Document on its part to be
performed or observed within twenty-five Banking Days after the giving
of notice by the Administrative Agent on behalf of the Requisite Lenders
of such Default; or
(e) Any representation or warranty of Borrower or
any other Obligor made in any Loan Document proves to have been
incorrect when made or reaffirmed, or in any certificate or other
writing delivered by Borrower pursuant to any Loan Document, proves to
have been incorrect when made or reaffirmed; or
(f) Coast Resorts or any of its Subsidiaries (i)
fails to pay the principal, or any principal installment, of any present
or future Indebtedness for borrowed money of $5,000,000 or more, or any
guaranty of present or future Indebtedness for borrowed money of
$5,000,000 or more, on its part to be paid, when due (or within any
stated grace period), whether at the stated maturity, upon acceleration,
by reason of required prepayment, the exercise of any "put" exercised by
the holder of such Indebtedness or otherwise or (ii) fails to perform or
observe any other term, covenant or Agreement on its part to be
performed or observed, or suffers any event to occur, in connection with
any present or future Indebtedness for borrowed money of $5,000,000 or
more, or of any guaranty of present or future indebtedness for
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borrowed money of $5,000,000 or more, if as a result of such failure or
sufferance any holder or holders thereof (or an agent or trustee on its
or their behalf) has the right to declare such indebtedness due before
the date on which it otherwise would become due; or
(g) Any event occurs which gives the holder or
holders of any Subordinated Obligation (or an agent or trustee on its or
their behalf) the right to declare such Subordinated Obligation due
before the date on which it otherwise would become due, or the right to
require the issuer thereof to redeem or purchase, or offer to redeem or
purchase, all or any portion of any Subordinated Obligation; or
(h) Any Loan Document, at any time after its
execution and delivery and for any reason other than the agreement of
the Lenders or satisfaction in full of all the Obligations ceases to be
in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any
respect which, in any such event in the reasonable opinion of the
Requisite Lenders, is materially adverse to the interests of the
Lenders; or any Obligor thereto denies that it has any or further
liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind same; or
(i) A final judgment against Coast Resorts or any of
its Subsidiaries is entered for the payment of money in excess of
$5,000,000 (other than any money judgment covered in full by insurance)
and, absent procurement of a stay of execution, such judgment remains
unsatisfied for sixty calendar days after the date of entry of judgment,
or in any event later than five days prior to the date of any proposed
sale thereunder; or any writ or warrant of attachment or execution or
similar process is issued or levied against all or any part of the
Property of any such Person and is not released, vacated or fully bonded
within sixty calendar days after its issue or levy; or
(j) Coast Resorts or any of its Subsidiaries
institutes or consents to the institution of any proceeding under a
Debtor Relief Law relating to it or to all or any part of its Property,
or is unable or admits in writing its inability to pay its debts as they
mature, or makes an assignment for the benefit of creditors; or applies
for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for
all or any part of its Property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of that Person and the appointment
continues undischarged or unstayed for sixty calendar days; or any
proceeding under a Debtor Relief Law relating to any such Person or to
all or any part of its Property is instituted without the consent of
that Person and continues undismissed or unstayed for sixty calendar
days; or
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(k) The occurrence of an Event of Default (as such
term is or may hereafter be specifically defined in any other Loan
Document) under any other Loan Document; or
(l) Any determination is made by a court of
competent jurisdiction that any Subordinated Obligation is not
subordinated in accordance with its terms to the Obligations; or
(m) Any Pension Plan maintained by Coast Resorts or
any of its Subsidiaries is determined to have an "accumulated funding
deficiency" as that term is defined in Section 302 of ERISA and the
result is a Material Adverse Effect; or
(n) The occurrence of any License Revocation that
continues for five consecutive calendar days at any of The Orleans, Gold
Coast, Barbary Coast, or New Project (after it begins operations);
provided that the Borrower or any of its Subsidiaries may relinquish a
Gaming License with respect to any of its hotel casinos other than The
Orleans, the Gold Coast or the New Project if such relinquishment is, in
the reasonable, good faith judgment of the Board of Directors of the
Borrower or any of its Subsidiaries, as applicable, both desirable in
the conduct of the business of the Borrower and its Subsidiaries, taken
as a whole, and not disadvantageous in any material respect to the
Administrative Agent or the Lenders;
(o) The occurrence of any Change of Control; or
(p) Any amendment is made to the terms of the 1999
Indenture or any instrument, document or Agreement governing
Subordinated Obligations in violation of Section 6.18, or any payment of
principal is made with respect to the 1999 Senior Subordinated Debt is
made in violation of the subordination provisions of the 1999 Indenture.
9.2 Remedies Upon Event of Default. Without limiting any
other rights or remedies of the Administrative Agent or the Lenders provided for
elsewhere in this Agreement, or the other Loan Documents, or by applicable Law,
or in equity, or otherwise:
(a) Upon the occurrence, and during the continuance,
of any Event of Default other than an Event of Default described in
Section 9.1(j):
(1) the Commitment to make Advances, the
obligation of the Issuing Lender to issue Letters of Credit, the
obligation of the Swing Line Lender to make Swing Line Advances
and all other obligations of the Creditors to the Obligors and
all rights of Borrower and the other Obligors under the Loan
Documents shall be suspended without notice to or demand upon
Borrower, which are expressly waived by Borrower, except that
all of the Lenders
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or the Requisite Lenders (as the case may be, in accordance with
Section 11.2) may waive an Event of Default or, without waiving,
determine, upon terms and conditions satisfactory to the Lenders
or Requisite Lenders, as the case may be, to reinstate the
Commitment and make further Advances, and cause the Issuing
Lender to issue further Letters of Credit, which waiver or
determination shall apply equally to, and shall be binding upon,
all the Lenders;
(2) the Issuing Lender may, with the
approval of the Administrative Agent on behalf of the Requisite
Lenders, demand immediate payment by Borrower of an amount equal
to the aggregate amount of all outstanding Letters of Credit to
be held by the Issuing Lender as cash collateral hereunder; and
(3) the Requisite Lenders may request the
Administrative Agent to, and the Administrative Agent thereupon
shall, terminate the Commitment and may declare all or any part
of the unpaid principal of the Notes, all interest accrued and
unpaid thereon and all other amounts payable under the Loan
Documents to be forthwith due and payable, whereupon the same
shall become and be forthwith due and payable, without protest,
present ment, notice of dishonor, demand or further notice of
any kind, all of which are expressly waived by Borrower.
(b) Upon the occurrence of any Event of Default
described in Section 9.1(j):
(1) the Commitment to make Advances, the
obligation of the Issuing Lender to issue Letters of Credit, the
obligation of the Swing Line Lender to make Swing Line Advances
and all other obligations of the Creditors to the Obligors and
all rights of Borrower and any other Obligors under the Loan
Documents shall terminate without notice to or demand upon
Borrower, which are expressly waived by Borrower, except that
all the Lenders may waive the Event of Default or, without
waiving, determine, upon terms and conditions satisfactory to
all the Lenders, to reinstate the Commitment and make further
Advances and to cause the Issuing Lender to issue further
Letters of Credit, which determination shall apply equally to,
and shall be binding upon, all the Lenders;
(2) an amount equal to the aggregate amount
of all outstanding Letters of Credit shall be immediately due
and payable to the Issuing Lender without notice to or demand
upon Borrower, which are expressly waived by Borrower, to be
held by the Issuing Lender in an interest-bearing account as
collateral hereunder; and
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(3) the unpaid principal of all Notes, all
interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents shall be forthwith due and
payable, without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are expressly
waived by Borrower.
(c) Upon the occurrence and during the continuance
of any Event of Default, the Lenders and the Administrative Agent, or
any of them, without notice to (except as expressly provided for in any
Loan Document) or demand upon Borrower, which are expressly waived by
Borrower (except as to notices expressly provided for in any Loan
Document), may proceed (but only with the consent of the Requisite
Lenders) to protect, exercise and enforce their rights and remedies
under the Loan Documents against Borrower and any other Obligor and such
other rights and remedies as are provided by Law or equity. Without
limitation upon the foregoing, if any Event of Default occurs after any
Commitment Increase Date and before the Opening and is continuing, the
Administrative Agent shall have the right (to the extent not prohibited
by applicable Laws) in the sole discretion of the Requisite Lenders to
enter and take possession of the New Project, whether in person, by
agent or by court-appointed receiver, and to take any and all actions
which the Administrative Agent in its sole discretion after consultation
with the Lenders may consider necessary to complete construction of the
New Project, including making changes in the Plans, work or materials
and entering into, modifying or terminating any contractual
arrangements, all subject to the Administrative Agent's and the Lenders'
right at any time to discontinue any work without liability, provided
that the Administrative Agent shall promptly discontinue the exercise of
the rights provided by this sentence if the Event of Default is cured to
the satisfaction of the Requisite Lenders. If the Administrative Agent
and the Requisite Lenders choose to complete the New Project, neither
the Administrative Agent nor the Lenders shall assume any liability to
Borrower or any other Person for completing the New Project, or for the
manner or quality of construction of the New Project, and Borrower
expressly waives any such liability not associated with the gross
negligence and willful misconduct of the Administrative Agent or the
Lenders. If the Administrative Agent exercises any of the rights or
remedies provided in this paragraph on behalf of the Lenders, that
exercise shall not make the Administrative Agent or the Lenders, or
cause the Administrative Agent or the Lenders to be deemed to be, a
partner or joint venturer of Borrower. The Administrative Agent in its
sole discretion may choose to complete construction in its own name. All
sums which are expended by the Administrative Agent and/or the Lenders
in completing construction shall be considered to have been disbursed to
Borrower and shall be secured by the Collateral; any sums of principal
shall be considered to be additional Loans to Borrower bearing interest
at the Default Rate, and shall be secured by the Collateral. For these
purposes the Administrative Agent, in its sole discretion, may
reallocate any line item or cost category of the Budget.
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(d) The order and manner in which the Lenders'
rights and remedies are to be exercised shall be determined by the
Requisite Lenders in their sole discretion, and all payments received by
the Administrative Agent and the Lenders, or any of them, shall be
applied first to the costs and expenses (including reasonable attorneys'
fees and disbursements and the reasonably allocated costs of attorneys
employed by the Administrative Agent or by any Lender) of the
Administrative Agent and of the Lenders, and thereafter paid pro rata to
the Lenders in the same proportions that the aggregate Obligations owed
to each Lender under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Lenders, without
priority or preference among the Lenders. Regardless of how each Lender
may treat payments for the purpose of its own accounting, for the
purpose of computing Borrower's Obligations hereunder and under the
Notes, payments shall be applied first, to the costs and expenses of the
Administrative Agent and the Lenders, as set forth above, second, to the
payment of accrued and unpaid interest due under any Loan Documents to
and including the date of such application (ratably, and without duplica
tion, according to the accrued and unpaid interest due under each of the
Loan Documents), and third, to the payment of all other amounts
(including principal and fees) then owing to the Administrative Agent or
the Lenders under the Loan Documents. No application of payments will
cure any Event of Default, or prevent acceleration, or continued
acceleration, of amounts payable under the Loan Documents, or prevent
the exercise, or continued exercise, of rights or remedies of the
Lenders hereunder or thereunder or at Law or in equity.
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Article 10
THE ADMINISTRATIVE AGENT
10.1 Appointment and Authorization. Subject to Section 10.8,
each Creditor hereby irrevocably appoints and authorizes the Administrative
Agent to take such action as administrative agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Administrative
Agent by the terms thereof or are reasonably incidental, as determined by the
Administrative Agent, thereto. This appointment and authorization is intended
solely for the purpose of facilitating the servicing of the Loans and does not
constitute appointment of the Administrative Agent as a trustee or agent for any
Lender or as representative of any Lender for any other purpose and, except as
specifically set forth in the Loan Documents to the contrary, the Administrative
Agent shall take such action and exercise such powers only in an administrative
and ministerial capacity.
10.2 Administrative Agent and Affiliates. Bank of America
(and each successor Administrative Agent) has the same rights and powers under
the Loan Documents as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the term "Lender" or "Lenders" includes
Bank of America in its individual capacity. Bank of America (and each successor
Administrative Agent) and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with
Borrower, any Subsidiary thereof, or any Affiliate of Borrower or any Subsidiary
thereof, as if it were not the Administrative Agent and without any duty to
account therefor to the other Creditors. Bank of America (and each successor
Administrative Agent) need not account to any other Creditor for any monies
received by it for reimbursement of its costs and expenses as Administrative
Agent hereunder, or for any monies received by it in its capacity as a Lender
hereunder. The Administrative Agent shall not be deemed to hold a fiduciary
trust or other special relationship or any other special relationship with any
other Creditor and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Administrative Agent.
10.3 Proportionate Interest in any Collateral. The
Administrative Agent, on behalf of all the Creditors, shall hold in accordance
with the Loan Documents all items of any collateral or interests therein
received or held by the Administrative Agent. Subject to the Administrative
Agent's right to reimbursement for its costs and expenses hereunder (including
reasonable attorneys' fees and disbursements and other professional services and
the reasonably allocated costs of attorneys employed by the Administrative
Agent) and subject to the application of payments in accordance with Section
9.2(d), each Lender shall have an interest in the Collateral or interests
therein in the same proportions that the aggregate Obligations owed such Lender
under the Loan Documents bear to the aggregate Obligations owed under the Loan
Documents to all the Lenders, without priority or preference among the Lenders,
except that Obligations owed to any Lender under a Secured Swap Agreement shall
be secured on a pari passu basis with all other Obligations up to an amount
equal to the Administrative
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Agent's then customary credit risk factor for Swap Agreements times the notional
amount of Indebtedness covered by such Secured Swap Agreement and shall be
secured on a subordinate basis as to amounts in excess of such amount.
10.4 Lenders' Credit Decisions. Each Creditor agrees that it
has, independently and without reliance any other Creditor or the directors,
officers, agents, employees or attorneys thereof, and instead in reliance upon
information supplied to it by or on behalf of Borrower and upon such other
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement. Each Lender agrees that it
shall, independently and without reliance upon any other Creditor or the
directors, officers, agents, employees or attorneys thereof, continue to make
its own independent credit analyses and decisions in acting or not acting under
the Loan Documents.
10.5 Action by Administrative Agent.
(a) Absent actual knowledge of the Administrative
Agent of the existence of a Default or Event of Default, the
Administrative Agent may assume that no Default or Event of Default has
occurred and is continuing, unless the Administrative Agent has received
notice from Borrower stating the nature of the Default or has received
notice from a Lender stating the nature of the Default and that such
Lender considers the Default to have occurred and to be continuing.
(b) The Administrative Agent has only those
obligations under the Loan Documents as are expressly set forth therein.
(c) Except for any obligation expressly set forth in
the Loan Documents and as long as the Administrative Agent may assume
that no Event of Default has occurred and is continuing, the
Administrative Agent may, but shall not be required to, exercise its
discretion to act or not act, provided that (i) the Administrative Agent
shall be required to act or not act upon the instructions of the
Requisite Lenders (or of all the Lenders, to the extent required by
Section 11.2) and those instructions shall be binding upon the
Administrative Agent and all of the other Creditors, and (ii) the
Administrative Agent shall not be required to act or not act if to do so
would be contrary to any Loan Document or to applicable Law or would
result, in the reasonable judgment of the Administrative Agent, in
substantial risk of liability to the Administrative Agent.
(d) If the Administrative Agent has received a
notice specified in clause (a), the Administrative Agent shall
immediately give notice thereof to the Lenders and shall act or not act
upon the instructions of the Requisite Lenders (or of all the Lenders,
to the extent required by Section 11.2), provided that (i) the
Administrative Agent shall not be required to act or not act if to do so
would be contrary to any Loan Document or to applicable Law or would
result, in the reasonable
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judgment of the Administrative Agent, in substantial risk of liability
to the Administrative Agent, and (ii) if the Requisite Lenders (or all
the Lenders, if required under Section 11.2) fail, for five Banking Days
after the receipt of notice from the Administrative Agent, to instruct
the Administrative Agent, then the Administrative Agent, in its sole
discretion, may act or not act as it deems advisable for the protection
of the interests of the Lenders.
(e) The Administrative Agent shall have no liability
to any Creditor for acting, or not acting, as instructed by the
Requisite Lenders (or all the Lenders, if required under Section 11.2),
notwithstanding any other provision hereof.
10.6 Liability of Administrative Agent. Neither the
Administrative Agent nor any of its directors, officers, agents, employees or
attorneys shall be liable for any action taken or not taken by them under or in
connection with the Loan Documents, except for their own gross negligence or
willful misconduct. Without limitation on the foregoing, the Administrative
Agent and its directors, officers, agents, employees and attorneys:
(a) May treat the payee of any Note as the holder
thereof until the Administrative Agent receives notice of the assignment
or transfer thereof, in form satisfactory to the Administrative Agent,
signed by the payee, and may treat each Lender as the owner of that
Lender's interest in the Obligations for all purposes of this Agreement
until the Administrative Agent receives notice of the assignment or
transfer thereof, in form satisfactory to the Administrative Agent,
signed by that Lender.
(b) May consult with legal counsel (including
in-house legal counsel), accountants (including in-house accountants)
and other professionals or experts selected by it, or with legal
counsel, accountants or other professionals or experts for Coast Resorts
or its Subsidiaries or the Lenders, and shall not be liable for any
action taken or not taken by it in good faith in accordance with any
advice of such legal counsel, accountants or other professionals or
experts.
(c) Shall not be responsible to any Creditor for any
statement, warranty or representation made in any of the Loan Documents
or in any notice, certificate, report, request or other statement
(written or oral) given or made in connection with any of the Loan
Documents.
(d) Except to the extent expressly set forth in the
Loan Documents, shall have no duty to ask or inquire as to the
performance or observance by any Obligor of any of the terms, conditions
or covenants of any of the Loan Documents or to inspect any Collateral
or the Property, books or records of Obligor.
(e) Will not be responsible to any Creditor for the
due execution, legality, validity, enforceability, genuineness,
effectiveness, sufficiency or value of any
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Loan Document, any other instrument or writing furnished pursuant
thereto or in connection therewith, or any Collateral.
(f) Will not incur any liability by acting or not
acting in reliance upon any Loan Document, notice, consent, certificate,
statement, request or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties.
(g) Will not incur any liability for any
arithmetical error in computing any amount paid or payable by any
Obligor or paid or payable to or received or receivable from any Lender
under any Loan Document, including, without limitation, principal,
interest, commitment fees, Advances and other amounts; provided that,
promptly upon discovery of such an error in computation, the
Administrative Agent, the Lenders and (to the extent applicable)
Borrower and/or its Subsidiaries or Affiliates shall make such
adjustments as are necessary to correct such error and to restore the
parties to the position that they would have occupied had the error not
occurred.
10.7 Indemnification. Each Lender shall, ratably in
accordance with its Pro Rata Share (if the Commitment is then in effect) or in
accordance with its proportion of the aggregate Indebtedness then evidenced by
the Notes (if the Commitment has then been terminated), indemnify and hold the
Administrative Agent, and each of its directors, officers, agents, employees and
attorneys harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, attorneys' fees
and disbursements and reasonably allocated costs of attorneys employed by the
Administrative Agent) that may be imposed on, incurred by or asserted against it
or them in any way relating to or arising out of the Loan Documents (other than
losses incurred by reason of the failure of Borrower to pay the Indebtedness
represented by the Notes) or any action taken or not taken by such indemnitee
thereunder, except such as result from its own gross negligence or willful
misconduct. Without limitation on the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for that Lender's Pro Rata Share of any
out-of-pocket cost or expense incurred by the Administrative Agent in connection
with the negotiation, preparation, execution, delivery, amendment, waiver,
restructuring, reorganization (including a bankruptcy reorganization),
enforcement or attempted enforcement of the Loan Documents, to the extent that
Borrower or any other Obligor is required by Section 11.3 to pay that cost or
expense but fails to do so upon demand. Nothing in this Section 10.7 shall
entitle the Administrative Agent to recover any amount from the Lenders if and
to the extent that such amount has theretofore been recovered from Borrower or
any of its Subsidiaries. To the extent that the Administrative Agent is later
reimbursed such cost or expense by Borrower or any of its Subsidiaries, it shall
return the amounts paid to it by the Lenders in respect of such cost or expense.
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10.8 Successor Administrative Agent. The Administrative Agent
may, and at the request of the Requisite Lenders shall, resign as Administrative
Agent upon thirty days' notice to the Lenders and Borrower. If the
Administrative Agent resigns as Administrative Agent under this Agreement, the
Requisite Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent shall
be approved by Borrower (and such approval shall not be unreasonably withheld or
delayed or, if any Event of Default exists, required). If no successor
administrative agent is appointed prior to the effective date of the resignation
of the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and Borrower, a successor administrative agent from
among the Lenders. Upon the acceptance of its appointment as successor
administrative agent hereunder, such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article 10, and Sections 11.3, 11.11 and 11.22, shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent. If (a) the Administrative Agent has not been paid its
agency fees under Section 3.5 or has not been reimbursed for any expense
reimbursable to it under Section 11.3, in either case for a period of at least
one year and (b) no successor administrative agent has accepted appointment as
Administrative Agent by the date which is thirty days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor
administrative agent as provided for above.
10.9 Foreclosure on Collateral. In the event of foreclosure
or enforcement of the Lien created by any of the Collateral Documents, title to
the Collateral covered thereby shall be taken and held by the Administrative
Agent (or any designee thereof) pro rata for the benefit of the Lenders in
accordance with their Pro Rata Share of the Commitment and shall be administered
in accordance with the standard form of collateral holding participation
agreement used by the Administrative Agent in comparable syndicated credit
facilities.
10.10 No Obligations of Borrower. Nothing contained in this
Article 10 shall be deemed to impose upon Borrower any obligation in respect of
the due and punctual performance by the Administrative Agent of its obligations
to the Lenders under any provision of this Agreement, and Borrower shall have no
liability to the Administrative Agent or any of the Lenders in respect of any
failure by the Administrative Agent or any Lender to perform any of its
obligations to the Administrative Agent or the Lenders under this Agreement.
Without limiting the generality of the foregoing, where any provision of this
Agreement relating to the payment of any amounts due and owing under the Loan
Documents provides that such payments shall be made by Borrower to the
Administrative Agent for the account of the Lenders, Borrower's obligations to
the Lenders in respect of such payments shall be deemed to
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be satisfied upon the making of such payments to the Administrative Agent in the
manner provided by this Agreement.
10.11 Permitted Release of Collateral. The Administrative
Agent is hereby authorized to release its Lien on any Collateral which is the
subject of a Disposition permitted hereunder, and each Lender shall confirm upon
request the authority of the Administrative Agent to make any such release of
Collateral.
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Article 11
MISCELLANEOUS
11.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of the Creditors provided herein, in the Notes and in
the other Loan Documents are cumulative and not exclusive of any right, power,
privilege or remedy provided by Law or equity. No failure or delay on the part
of any Creditor in exercising any right, power, privilege or remedy may be, or
may be deemed to be, a waiver thereof; nor may any single or partial exercise of
any right, power, privilege or remedy preclude any other or further exercise of
the same or any other right, power, privilege or remedy. The terms and
conditions of Article 8 are inserted for the sole benefit of the Creditors; the
same may be waived in whole or in part, with or without terms or conditions, in
respect of any Loan or Letter of Credit without prejudicing the Creditors'
rights to assert them in whole or in part in respect of any other Loan.
11.2 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement
or any other Loan Document, no approval or consent thereunder, and no consent to
any departure by Borrower or any other Obligor therefrom, may in any event be
effective unless in writing signed or approved in writing by the Requisite
Lenders or by the Administrative Agent with the consent of the Requisite Lenders
(and, in the case of any amendment, modification or supplement to (i) Article
10, signed by the Administrative Agent, and (ii) to any Loan Document, signed by
the Obligors party thereto), and then only in the specific instance and for the
specific purpose given; and, without the approval in writing of all the Lenders
affected thereby, no amendment, modification, supplement, termination, waiver or
consent may be effective:
(a) Except as provided by Section 2.8, to amend or
modify the principal of, or the amount of principal, principal
prepayments or the rate of interest payable on, any Note, or the amount
of the Commitment or the Pro Rata Share of any Lender (except in
connection with any assignments made in accordance with Section 11.8
with the consent of all necessary parties) or to decrease the amount of
any commitment fee payable to any Lender, or to decrease any other fee
or amount payable to any Lender under the Loan Documents;
(b) To postpone any date fixed for any payment of
principal of, prepayment of principal of or any installment of interest
on, any Note or any installment of any commitment fee or letter of
credit fee, or to extend the term of the Commitment, or to release the
Guaranty (except as otherwise provided in any Loan Document);
(c) To permit the term of any Letter of Credit to
exceed one year or extend beyond the Maturity Date;
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(d) to release any portion of the Collateral having
an aggregate value in excess of $500,000 (except as expressly provided
in any Loan Document);
(e) To amend the provisions of the definition of
"Requisite Lenders", Section 8.2 or this Section 11.2; or
(f) To amend any provision of this Agreement that
expressly requires the consent or approval of all the Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all of
the Creditors.
11.3 Costs, Expenses and Taxes. Borrower shall pay within
five Banking Days after demand, accompanied by an invoice therefor:
(a) the reasonable out-of-pocket costs and expenses
of the Administrative Agent in connection with the negotiation,
preparation, syndication, administration, execution and delivery of the
Loan Documents;
(b) the reasonable out-of-pocket costs and expenses
of the Administrative Agent in connection with any amendment to the Loan
Documents or any waiver of the terms thereof; and
(c) the reasonable costs and expenses of the
Administrative Agent and, after a Default, the Lenders in connection
with the refinancing, restructuring, reorganization (including a
bankruptcy reorganization) and enforcement or attempted enforcement of
the Loan Documents, and any matter related thereto.
The foregoing costs and expenses shall include the actual environmental review
fees, filing fees, recording fees, title insurance premiums and fees, appraisal
fees, search fees, and other out-of-pocket expenses and the reasonable fees and
out-of-pocket expenses of any legal counsel (including reasonably allocated
costs of legal counsel employed by the Administrative Agent or any Lender),
independent public accountants and other outside experts retained by the
Administrative Agent or any Lender, whether or not such costs and expenses are
incurred or suffered by the Administrative Agent or any Lender in connection
with or during the course of any bankruptcy or insolvency proceedings of any
Obligor. Such costs and expenses shall also include, in the case of any
amendment or waiver of any Loan Document requested by Borrower, the
administrative costs of the Administrative Agent reasonably attributable
thereto. Borrower shall pay any and all documentary, recording, stamp and other
taxes, and all costs, expenses, fees and charges payable or determined to be
payable in connection with the filing or recording of this Agreement, any other
Loan Document or any other instrument or writing to be delivered hereunder or
thereunder, or in connection with any transaction pursuant hereto or thereto.
Any amount payable to the Administrative Agent or any Lender under this
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Section 11.3 shall bear interest from the fifth Banking Day following the date
of demand for payment at the Default Rate.
11.4 Nature of Lenders' Obligations. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Loan Document and no action taken by
any Creditor pursuant hereto or thereto may, or may be deemed to, make any of
the Creditors a partnership, an association, a joint venture or other entity,
either among themselves or with Borrower or any Affiliate of Borrower. Each
Lender's obligation to make any Advance pursuant hereto is several and not joint
or joint and several, and in the case of the initial Advance only, is
conditioned upon the performance by all other Lenders of their obligations to
make initial Advances. A default by any Lender will not increase the Pro Rata
Share of the Commitment attributable to any other Lender. Any Lender not in
default may, if it desires, assume in such proportion as the nondefaulting
Lenders agree the obligations of any Lender in default, but is not obligated to
do so.
11.5 Survival of Representations and Warranties. All
representations and warranties contained herein or in any other Loan Document,
or in any certificate or other writing delivered by or on behalf of any one or
more of the Obligors, will survive the making of the Loans hereunder and the
execution and delivery of the Notes, and have been or will be relied upon by
each Creditor, notwithstanding any investigation made by the Creditors or on
their behalf.
11.6 Notices. Except as otherwise expressly provided in the
Loan Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document must be
in writing and must be mailed, telecopied, dispatched by commercial courier or
delivered to the appropriate party at the address set forth on the signature
pages of this Agreement or other applicable Loan Document or, as to any party to
any Loan Document, at any other address as may be designated by it in a written
notice sent to all other parties to such Loan Document in accordance with this
Section. Except as otherwise expressly provided in any Loan Document, if any
notice, request, demand, direction or other communication required or permitted
by any Loan Document is given by mail it will be effective on the earlier of
receipt or the third calendar day after deposit in the United States mail with
first class or airmail postage prepaid; if given by telecopier, when sent; if
dispatched by commercial courier, on the scheduled delivery date; or if given by
personal delivery, when delivered.
11.7 Execution of Loan Documents. Unless the Administrative
Agent otherwise specifies with respect to any Loan Document, (a) this Agreement
and any other Loan Document may be executed in any number of counterparts and
any party hereto or thereto may execute any counterpart, each of which when
executed and delivered will be deemed to be an original and all of which
counterparts of this Agreement or any other Loan Document, as the case may be,
when taken together will be deemed to be but one and the same
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instrument and (b) execution of any such counterpart may be evidenced by a
telecopier transmission of the signature of such party. The execution of this
Agreement or any other Loan Document by any party hereto or thereto will not
become effective until counterparts hereof or thereof, as the case may be, have
been executed by all the parties hereto or thereto.
11.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents to
which Borrower is a party will be binding upon and inure to the benefit
of Borrower and the Creditors, and their respective successors and
assigns, except that Borrower may not assign its rights hereunder or
thereunder or any interest herein or therein without the prior written
consent of all the Lenders. Each Lender represents that it is not
acquiring its Note with a view to the distribution thereof within the
meaning of the Securities Act of 1933, as amended (subject to any
requirement that disposition of such Note must be within the control of
such Lender). Any Lender may at any time pledge its Note or any other
instrument evidencing its rights as a Lender under this Agreement to a
Federal Reserve Bank, but no such pledge shall release that Lender from
its obligations hereunder or grant to such Federal Reserve Bank the
rights of a Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date,
each Lender may assign to one or more Eligible Assignees all or any
portion of its Pro Rata Share; provided that (i) such Eligible Assignee,
if not then a Lender or an Affiliate of the assigning Lender, shall be
approved by the Administrative Agent and Borrower (neither of which
approvals shall be unreasonably withheld or delayed), provided that the
consent of Borrower to assignments shall not be required when any
Default or Event of Default has occurred and remains continuing, (ii)
such assignment shall be evidenced by an Assignment Agreement, a copy of
which shall be furnished to the Administrative Agent as provided below,
(iii) except in the case of an assignment to an Affiliate of the
assigning Lender, to another Lender or of the entire remaining
Commitment of the assigning Lender, the assignment shall not assign a
Pro Rata Share of the Commitment equivalent to less than $10,000,000,
and (iv) the effective date of any such assignment shall be as specified
in the Assignment Agreement, but not earlier than the date which is five
Banking Days after the date the Administrative Agent has received the
Assignment Agreement. Upon the effective date of such Assignment
Agreement, the Eligible Assignee named therein shall be a Lender for all
purposes of this Agreement, with the Pro Rata Share therein set forth
and, to the extent of such Pro Rata Share, the assigning Lender shall be
released from its further obligations under the Loan Documents. Borrower
agrees that it shall execute and deliver (against delivery by the
assigning Lender to Borrower of its Note) to such assignee Lender, a
Note evidencing that assignee Lender's Pro Rata Share, and to the
assigning Lender, a Note evidencing the remaining balance Pro Rata Share
retained by the assigning Lender.
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(c) By executing and delivering an Assignment
Agreement, the Eligible Assignee thereunder acknowledges and agrees
that: (i) other than the representation and warranty that it is the
legal and beneficial owner of the Pro Rata Share being assigned thereby
free and clear of any adverse claim, the assigning Lender has made no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection
with this Agreement or the execution, legality, validity,
enforceability, genuineness or sufficiency of this Agreement or any
other Loan Document; (ii) the assigning Lender has made no
representation or warranty and assumes no responsibility with respect to
the financial condition of Borrower or the performance by Borrower of
the Obligations; (iii) it has received a copy of this Agreement,
together with copies of the most recent financial statements delivered
pursuant to Section 7.1 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment Agreement; (iv) it will, independently and
without reliance upon the Administrative Agent or any Lender and based
on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) it appoints and authorizes the
Administrative Agent to take such action and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to
the Administrative Agent by this Agreement; and (vi) it will perform in
accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at the
Administrative Agent's Office a copy of each Assignment Agreement
delivered to it. After receipt of a completed Assignment Agreement
executed by any Lender and an Eligible Assignee, and receipt of an
assignment fee of $3,500 from such Eligible Assignee, the Administrative
Agent shall, promptly following the effective date thereof, provide to
Borrower and the Lenders a revised list of the Pro Rata Shares of the
Lenders giving effect thereto.
(e) Each Lender may from time to time grant
participations to one or more banks or other financial institutions
(including another Lender) in a portion of its Pro Rata Share; provided,
however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii)
the participating banks or other financial institutions shall not be a
Lender hereunder for any purpose except, if the participation Agreement
so provides, for the purposes of Sections 3.7, 3.8, 11.11 and 11.22 but
only to the extent that the cost of such benefits to Borrower does not
exceed the cost which Borrower would have incurred in respect of such
Lender absent the participation, (iv) Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations
under this Agreement, (v) the participation interest
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shall be expressed as a percentage of the granting Lender's Pro Rata
Share as it then exists and shall not restrict an increase in the
Commitment, or in the granting Lender's Pro Rata Share, so long as the
amount of the participation interest is not affected thereby and (vi)
the consent of the holder of such participation interest shall not be
required for amendments or waivers of provisions of the Loan Documents
other than those which (A) extend the Maturity Date or any other date
upon which any payment of money is due to the Lenders, (B) reduce the
rate of interest on the Notes, any fee or any other monetary amount
payable to the Lenders, (C) reduce the amount of any installment of
principal due under the Notes, (D) change the definition of "Requisite
Lenders" or (E) release any material portion of the Collateral.
(f) Notwithstanding anything in this Section 11.8 to
the contrary, the rights of the Lenders to make assignments of, and
grant participations in, their Pro Rata Shares of the Commitment shall
be subject to the approval of any Gaming Board (including the approval
of the identity of any proposed assignee or participant), to the extent
required by applicable Gaming Laws.
11.9 Right of Setoff. If an Event of Default has occurred and
is continuing, each Creditor may (but only with the consent of the Requisite
Lenders) exercise its rights under Article 9 of the Uniform Commercial Code and
other applicable Laws and, to the extent permitted by applicable Laws, apply any
funds in any deposit account maintained with it by Borrower or any Property of
Borrower in its possession against the Obligations.
11.10 Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower, or otherwise, receives payment of the Obligations held by it
that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable Laws
(a) the Lender exercising the right of setoff, banker's lien or counterclaim or
otherwise receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from the other Lender a participation in the
Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obliga tions held by each
Lender after the exercise of the right of setoff, banker's lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien or counterclaim or receipt of
payment; and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Borrower or any Person claiming through or succeeding
to the rights of Borrower, the purchase of a participation shall be rescinded
and the purchase price thereof shall be restored to the extent of the recovery,
but without interest. Each Lender that purchases a participation
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in the Obligations pursuant to this Section 11.10 shall from and after the
purchase have the right to give all notices, requests, demands, directions and
other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased. Bor rower expressly consents to
the foregoing arrangements and agrees that any Lender holding a participation in
an Obligation so purchased may exercise any and all rights of setoff, banker's
lien or counterclaim with respect to the participation as fully as if the Lender
were the original owner of the Obligation purchased.
11.11 Indemnity by Borrower. Borrower agrees to indemnify,
save and hold harmless the Creditors and their directors, officers, agents,
attorneys and employees (collec tively the "Indemnitees") from and against: (a)
any and all claims, demands, actions or causes of action, if the claim, demand,
action or cause of action arises out of or relates to any act or omission (or
alleged act or omission) of Borrower, any other Obligor, their respective
Affiliates or any of their respective partners, officers, directors or
stockholders relating to the Commitment, the use or contemplated use of proceeds
of any Loan, Letter of Credit or Swing Line Advance, or the relationship between
any such Person and the Creditors under this Agreement; (b) any administrative
or investigative proceeding by any Governmental Agency arising out of or related
to a claim, demand, action or cause of action described in clause (a) above; and
(c) any and all liabilities, losses, costs or expenses (including reasonable
attorneys' fees and the reasonably allocated costs of attorneys employed by any
Indemnitee and disbursements of such attorneys and other professional services)
that any Indemnitee suffers or incurs as a result of the assertion of any
foregoing claim, demand, action or cause of action; provided that no Indemnitee
shall be entitled to indemnification for any loss caused by its own gross
negligence or willful misconduct or as to any claim asserted by that Indemnitee
against Borrower to the extent that Borrower prevails on that claim in a final
and non-appealable determination by a court of competent jurisdiction or an
arbitrator appointed in accordance herewith. If any claim, demand, action or
cause of action is asserted against any Indemnitee, such Indemnitee shall
promptly notify Borrower, but the failure to so promptly notify Borrower shall
not affect Borrower's obligations under this Section unless such failure
materially prejudices Borrower's right to participate in the contest of such
claim, demand, action or cause of action, as hereinafter provided. Each
Indemnitee may contest the validity, applicability and amount of such claim,
demand, action or cause of action with counsel of its own choosing and shall
permit Borrower to participate in such contest. Any Indemnitee that proposes to
settle or compromise any claim or proceeding for which Borrower may be liable
for payment of indemnity hereunder shall give Borrower written notice of the
terms of such proposed settlement or compromise reasonably in advance of
settling or compromising such claim or proceeding. In connection with any claim,
demand, action or cause of action covered by this Section 11.11 against more
than one Indemnitee, all such Indemnitees shall be represented by the same legal
counsel (which may be a law firm engaged by the Indemnitees or attorneys
employed by an Indemnitee or a combination of the foregoing) selected by the
Indemnitees and reasonably acceptable to Borrower; provided, that if such legal
counsel deter mines in good faith that representing all such Indemnitees would
or could result in a conflict of
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interest under Laws or ethical principles applicable to such legal counsel or
that a defense or counterclaim is available to an Indemnitee that is not
available to all such Indemnitees, then to the extent reasonably necessary to
avoid such a conflict of interest or to permit unqualified assertion of such a
defense or counterclaim, each Indemnitee shall be entitled to separate
representation by legal counsel selected by that Indemnitee and reasonably
acceptable to Borrower, with all such legal counsel using reasonable efforts to
avoid unnecessary duplication of effort by counsel for all Indemnitees; and
further provided that the Administrative Agent (as an Indemnitee) shall at all
times be entitled to representation by separate legal counsel. Any obligation or
liability of Borrower to any Indemnitee under this Section 11.11 shall survive
the expiration or termination of this Agreement, the repayment of all Loans, the
expiration or termination of all Letters of Credit and the payment and
performance of all other Obligations owed to the Lenders.
11.12 Nonliability of the Lenders. Borrower acknowledges and
agrees that:
(a) Any inspections of any Property of Borrower made
by or through the Creditors are for purposes of administration of the
Loans and Letters of Credit only and Borrower is not entitled to rely
upon the same (whether or not such inspections are at the expense of
Borrower);
(b) By accepting or approving anything required to
be observed, performed, fulfilled or given to the Creditors pursuant to
the Loan Documents, no Creditor shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of
the same, or of any term, provision or condition thereof, and such
acceptance or approval thereof shall not constitute a warranty or
representation to anyone with respect thereto by any Creditor;
(c) The relationship between each Obligor and
Creditors is, and shall at all times remain, solely that of borrower and
lenders; no Creditor shall under any circumstance be construed to be a
partner or joint venturer with Borrower or its Affiliates; no creditor
shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary or other special relationship with
Borrower or its Affiliates, or to owe any fiduciary duty or other
special duty to Borrower or its Affiliates; no Creditor undertakes or
assumes any responsibility or duty to Borrower or its Affiliates to
select, review, inspect, supervise, pass judgment upon or inform
Borrower or its Affiliates of any matter in connection with their
Property or the operations of Borrower or its Affiliates; Borrower and
its Affiliates shall rely entirely upon their own judgment with respect
to such matters; and any review, inspection, supervision, exercise of
judgment or supply of information undertaken or assumed by the Creditors
in connection with such matters is solely for the protection of the
Creditors and neither Borrower nor any other Person is entitled to rely
thereon; and
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(d) The Creditors shall not be responsible or liable
to any Person for any loss, damage, liability or claim of any kind
relating to injury or death to Persons or damage to Property caused by
the actions, inaction or negligence of Borrower or its Affiliates and
Borrower hereby indemnifies and holds each Creditor harmless from any
such loss, damage, liability or claim.
11.13 No Third Parties Benefited. This Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties
of Borrower and the Creditors in connection with the Loans, Letters of Credit
and Swing Line Advances and is made for the sole benefit of Borrower, the
Creditors and the Creditors' successors and assigns. Except as provided in
Sections 11.8, 11.11 and 11.14, no other Person shall have any rights of any
nature hereunder or by reason hereof.
11.14 Confidentiality. Each Lender agrees to hold any
confidential information that it may receive from Borrower pursuant to this
Agreement in confidence, except for disclosure: (a) to other Lenders; (b) to
legal counsel and accountants for Borrower or any Lender; (c) to other
professional advisors to Borrower or any Lender, provided that the recipient has
accepted such information subject to a confidentiality Agreement substantially
similar to this Section 11.14; (d) to regulatory officials having jurisdiction
over that Lender; (e) to any Gaming Board having regulatory jurisdiction over
Coast Resorts or its Subsidiaries; (f) as required by Law or legal process or in
connection with any legal proceeding to which that Lender and Borrower are
adverse parties; and (g) to another financial institution in connection with a
disposition or proposed disposition to that financial institution of all or part
of that Lender's interests hereunder or a participation interest in its Note,
provided that the recipient has accepted such information subject to a written
confidentiality Agreement. For purposes of the foregoing, "confidential
information" shall mean any information respecting Borrower reasonably
considered by Borrower to be confidential, other than (i) information previously
filed with any Governmental Agency and available to the public, (ii) information
previously published in any public medium from a source other than, directly or
indirectly, that Lender, and (iii) information previously disclosed by Borrower
to any Person not associated with themselves without a confidentiality Agreement
or obligation substantially similar to this Section 11.14. Nothing in this
Section shall be construed to create or give rise to any fiduciary duty or other
special duty on the part of any Creditor to Borrower.
11.15 Further Assurances. Borrower covenants that Borrower and
each other Obligor shall, at their expense and without expense to the Creditors,
do, execute and deliver such further acts and documents as any Creditor from
time to time reasonably requires for the assuring and confirming unto the
Creditors of the rights hereby created or intended now or hereafter so to be, or
for carrying out the intention or facilitating the performance of the terms of
any Loan Document.
11.16 Integration. This Agreement, together with the other
Loan Documents and the letter agreements referred to in Article 3, comprises the
complete and integrated
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Agreement of the parties on the subject matter hereof and supersedes all prior
agreements, written or oral, on the subject matter hereof. In the event of any
conflict between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control and govern; provided
that the inclusion of supplemental rights or remedies in favor of the Creditors
in any other Loan Document shall not be deemed a conflict with this Agreement.
Each Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.
11.17 Governing Law. Except to the extent otherwise provided
therein, each Loan Document shall be governed by, and construed and enforced in
accordance with, the local Laws of California, without reference to the choice
of law or conflicts of laws provisions thereof.
11.18 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
11.19 Headings. Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.
11.20 Time of the Essence. Time is of the essence of the Loan
Documents.
11.21 Foreign Lenders and Participants. Each Lender, and each
holder of a participation interest herein, that is incorporated or otherwise
organized under the Laws of a jurisdiction other than the United States of
America or any State thereof or the District of Columbia shall deliver to
Borrower (with a copy to the Administrative Agent) on the Closing Date (or after
accepting an assignment or receiving a participation interest herein pursuant to
Section 11.8, if applicable) two duly completed copies, signed by a Responsible
Official, of either Form 1001 (relating to such Person and entitling it to a
complete exemption from with holding on all payments to be made to such Person
by Borrower pursuant to this Agreement) or Form 4224 (relating to all payments
to be made to such Person by Borrower pursuant to this Agreement) of the United
States Internal Revenue Service or such other evidence (including, if reasonably
necessary, Form W-9) satisfactory to Borrower and the Administrative Agent that
no withholding under the federal income tax laws is required with respect to
such Person. Thereafter and from time to time, each such Person shall (a)
promptly submit to Borrower (with a copy to the Administrative Agent) such
additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then
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current United States laws and regulations to avoid, or such evidence as is
satisfactory to Borrower and the Administrative Agent of any available exemption
from, United States with holding taxes in respect of all payments to be made to
such Person by Borrower pursuant to this Agreement and (b) take such steps as
shall not be materially disadvantageous to it, in the reasonable judgment of
such Lender, and as may be reasonably necessary (including the re-designation of
its LIBOR Office, if any) to avoid any requirement of applicable Laws that
Borrower make any deduction or withholding for taxes from amounts payable to
such Person.
11.22 Hazardous Material Indemnity. Borrower hereby agrees to
indemnify, hold harmless and defend (by counsel reasonably satisfactory to the
Administrative Agent) the Creditors and their respective directors, officers,
employees, agents, successors and assigns from and against any and all claims,
losses, damages, liabilities, fines, penalties, charges, administrative and
judicial proceedings and orders, judgments, remedial action requirements,
enforcement actions of any kind, and all reasonable costs and expenses incurred
in connection therewith (including but not limited to reasonable attorneys' fees
and the reasonably allocated costs of attorneys employed by any of the
Creditors, and expenses to the extent that the defense of any such action has
not been assumed by Borrower), arising directly or indirectly out of:
(a) the presence on, in, under or attributable to
any Real Property of any Hazardous Materials, or any releases or
discharges of any Hazardous Materials on, under or from any Real
Property; and
(b) any activity carried on or undertaken on any
Real Property by Borrower, any of its Subsidiaries, or any of their
respective predecessors in title, whether prior to or during the term of
this Agreement (but not after the Obligations are paid in full and the
Commitment terminated), and whether by Borrower, its Subsidiaries or any
predecessor in title or any employees, agents, contractors or
subcontractors of Borrower, its Subsidiaries or any predecessor in
title, or any third persons at any time prior to the payment in full of
the Obligations and the termination of the Commitment occupying or
present on any Real Property, in connection with the handling,
treatment, removal, storage, decontamination, clean-up, transport or
disposal of any Hazardous Materials at any time located or present on,
in, under or affecting any Real Property.
The foregoing indemnity shall further apply to any residual contamination
remaining on, in, under or affecting any Real Property, or affecting any natural
resources, and to any contamination of any Real Property or related natural
resources arising from the generation, use, handling, storage, transport or
disposal of any such Hazardous Materials, and irrespective of whether any of
such activities were or will be undertaken in accordance with applicable
Hazardous Materials Laws, but the foregoing indemnity shall not apply to
Hazardous Materials on any Real Property, the presence of which is caused by the
relevant Creditor. Borrower hereby acknowledges and agrees that, notwithstanding
any other provision of this Agreement or any of the other Loan Documents to the
contrary, the obligations of Borrower under this
-109-
<PAGE> 116
Section shall be unlimited obligations of Borrower and shall not be secured by
any mortgage or deed of trust on any Real Property. Any obligation or liability
of Borrower to any Indemnitee under this Section shall survive the expiration or
termination of this Agreement and the repayment of all of the Obligations until
(but not beyond) the date upon which the applicable statute of limitations for
the related cause of action shall have expired.
11.23 Gaming Boards. The Administrative Agent and each of the
Lenders agree to cooperate with all Gaming Boards in connection with the
administration of their regulatory jurisdiction over Coast Resorts and its
Subsidiaries, including the provision of such documents or other information as
may be requested by any such Gaming Board relating to Coast Resorts or any of
its Subsidiaries or to the Loan Documents.
11.24 Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
11.25 Purported Oral Amendments. BORROWER EXPRESSLY
ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE
AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES
THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL
OR WRITTEN STATEMENTS BY ANY CREDITOR OR ITS REPRESENTATIVES THAT DOES NOT
COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT,
-110-
<PAGE> 117
MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
COAST HOTELS AND CASINOS, INC.,
a Nevada corporation
By: /s/ [Signature Illegible}
-------------------------------------
----------------------------------------
Printed Name and Title
Address for notices:
Coast Hotels and Casinos, Inc.
4500 West Tropicana Road
Las Vegas, Nevada 89103
Attention: Gage Parrish
Vice President and Chief
Financial Officer
702/365-7002 direct
702/365-7111 general
702/365-7566 FAX
-111-
<PAGE> 118
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
and Issuing Lender
By: /s/ JANICE HAMMONG
-------------------------------------
Janice Hammond
Vice President Agency Specialist
----------------------------------------
Printed Name and Title
Address:
Bank of America National Trust
and Savings Association
555 South Flower Street
Los Angeles, California 90071
Attn: Janice Hammond, Vice President
Telecopier: (213) 228-2299
Telephone: (213) 222-9861
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender
By: /s/ JON M. VARNELL
-------------------------------------
Jon M. Varnell, Managing Director
----------------------------------------
Printed Name and Title
Address:
Bank of America National Trust
and Savings Association
555 South Flower Street, #3283
Los Angeles, California 90071
Attn: Scott Faber, Vice President
Telecopier: (213) 228-2641
Telephone: (213) 228-2768
-112-
<PAGE> 119
With a copy to:
Bank of America National Trust and
Savings Association
555 South Flower Street (LA-5777)
Los Angeles, California 90071
Attn: William Newby, Managing Director
Telecopier: (213) 228-3145
Telephone: (213) 228-2438
-113-
<PAGE> 120
Schedule 1.1
<TABLE>
<CAPTION>
Lender Amount Pro Rata Share
- ------ ------ --------------
<S> <C> <C>
Bank of America National Trust
and Savings Association $75,000,000 100%
- ------------------------------------------------------------------------
Total $75,000,000 100%
</TABLE>
-114-
<PAGE> 121
SCHEDULE 4.3
GOVERNMENT APPROVALS
Gaming Board approval is required for Coast Resorts to pledge the capital
stock of the Borrower.
<PAGE> 122
SCHEDULE 4.8
INTANGIBLE ASSETS
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION
MARK CLASS NUMBER DATE OWNER
- ---------------------- ----- ------------ ------------ -----
<S> <C> <C> <C> <C>
Gone Country 41 2,123,611 12/23/97 Coast Resorts
Super Sequential 41 2,163,477 06/08/98 Borrower
Party Poker 41 2,127,100 01/06/98 Borrower
Cajun Quarters 41 2,163,476 06/09/98 Borrower
Paycheck Party Machine 41 2,116,281 11/25/97 Borrower
Crawfish Quarters 41 2,127,099 01/06/98 Borrower
</TABLE>
<PAGE> 123
SCHEDULE 4.18
HAZARDOUS MATERIALS
Petroleum contamination exists in the groundwater in the far southwestern
corner of the real property located at the northeast corner of Rancho Drive and
Carey Avenue in North Las Vegas, Nevada. The contamination is emanating from a
facility located immediately west of the southern portion of the property.
<PAGE> 124
SCHEDULE 6.9
EXISTING LIENS
Liens evidenced by the UCC financing statements listed on the attached
appendices to this Schedule 6.9 as filed against Coast Hotels and Casinos,
Inc., Coast Resorts, Inc. and Coast West, Inc. Copies of each filing referred
to herein have been provided to the Administrative Agent.
<PAGE> 125
Secretary of State Nevada Uncertified UCC Search
-------------------------------------------------------------
LIST OF STATEMENTS FOR COAST HOTELS & CASINOS INC
DEBTOR NR: 123632 4OO W. FLAMINGO RD
TAX ID: 88-034-5706 LAS VEGAS NV 89103
<TABLE>
<CAPTION>
FILE NBR DATE TIME PRINCIPAL DEBTOR
- -------- -------- ------- -----------------
<S> <C> <C> <C>
96-01891 02/06/96 04:01PM COAST HOTELS & CASINOS INC
96-01892 02/06/96 04:03PM COAST HOTELS & CASINOS INC
96-13822 08/29/96 04:02PM COAST HOTELS & CASINOS
96-16306 10/07/96 09:17AM COAST HOTELS & CASINOS INC
96-17862 11/01/96 03:15PM COAST HOTELS & CASINOS INC
96-18737 11/18/96 04:54PM COAST HOTELS & CASINOS INC
96-18739 11/18/96 04:55PM COAST HOTELS & CASINOS INC
96-19027 11/22/96 04:43PM COAST HOTELS & CASINOS INC
97-00474 01/13/97 04:40PM COAST HOTELS & CASINOS
97-01280 01/24/97 04:32PM COAST HOTELS & CASINOS INC
97-01363 01/27/97 04:12PM COAST HOTELS & CASINOS INC
97-02388 02/11/97 04:26PM COAST HOTELS & CASINOS
97-03514 03/03/97 04:54PM COAST HOTELS & CASINOS INC
97-09283 05/30/97 01:20PM COAST HOTELS & CASINOS INC
97-12572 07/25/97 04:23PM COAST HOTELS & CASINOS INC
97-13797 08/12/97 02:33PM COAST HOTELS & CASINOS INC
97-14095 08/18/97 03:13PM COAST HOTELS & CASINOS INC
97-14635 08/27/97 01:54PM COAST HOTELS & CASINOS INC
97-14932 09/03/97 12:40PM COAST HOTELS & CASINOS INC
97-15184 09/08/97 04:01PM COAST HOTELS & CASINOS INC
97-15538 09/15/97 04:22PM COAST HOTELS & CASINOS INC
97-18303 11/03/97 02:15PM COAST HOTELS & CASINOS INC
97-18795 11/10/97 03:35PM COAST HOTELS & CASINOS INC
97-19409 11/21/97 02:02PM COAST HOTELS & CASINOS INC
97-19410 11/21/97 02:04PM COAST HOTELS & CASINOS INC
97-19515 11/24/97 03:32PM COAST HOTELS & CASINOS
97-20517 12/12/97 03:47PM COAST HOTELS & CASINOS
97-20932 12/22/97 03:00PM COAST HOTELS & CASINOS INC
98-00436 01/12/98 01:04PM COAST HOTELS & CASINOS INC
98-01387 01/26/98 02:08PM COAST HOTELS & CASINOS INC
98-01717 02/02/98 02:52PM COAST HOTELS & CASINOS INC
98-02435 02/17/98 01:50PM COAST HOTELS & CASINOS INC
98-03242 03/03/98 03:26PM COAST HOTELS & CASINOS INC
98-07013 05/04/98 02:01PM COAST HOTELS & CASINOS INC
98-09489 06/15/98 01:23PM COAST HOTELS & CASINOS INC
98-14306 09/08/98 02:25PM COAST HOTELS & CASINOS INC
98-14443 09/09/98 01:32PM COAST HOTELS & CASINOS INC
98-14745 09/15/98 01:07PM COAST HOTELS & CASINOS INC
98-18849 11/25/98 01:34PM COAST HOTELS & CASINOS INC
98-20354 12/28/98 03:22PM COAST HOTELS & CASINOS INC
</TABLE>
______________
Page 1
<PAGE> 126
SECRETARY OF THE NEVADA UNCERTIFIED UCC SEARCH
----------------------------------------------
FILING NR: 96 01891 FILED ON: 02/06/96 AT: 04:01PM EXPIRES: 02/06/01
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 150 FRAME 570 PAGES 16
SECURED PARTY............. AMERICAN BANK AS TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
FILING NR: 96 01891 FILED ON: 02/06/96 AT: 04:01PM EXPIRES: 02/06/01
RELEASE.......11/01/96 09:26AM
0165 0125 002
FILING NR: 96 01892 FILED ON: 02/06/96 AT: 04:03PM EXPIRES: 02/06/01
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 150 FRAME 571 PAGES 5
SECURED PARTY............. AMERICAN BANK AS TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
FILING NR: 96 01892 FILED ON: 02/06/96 AT: 04:03PM EXPIRES: 02/06/01
RELEASE.......11/01/96 09:26AM
0165 0126 002
AMENDMENT.....11/12/96 02:08PM AMEND COLLATERAL
0167 1150 003
RELEASE.......11/12/96 02:08PM
0167 1150 003
FILING NR: 96 13822 FILED ON: 08/29/96 AT: 04:02PM EXPIRES: 08/29/01
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 160 FRAME 622 PAGES 1
ADDITIONAL DEBTOR NR 18266 GOLD COAST HOTEL & CASINO (DBA)
4000 W FLAMINGO RD
LAS VEGAS NV 89103
SECURED PARTY............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................. BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
----------
Page 2
<PAGE> 127
SECRETARY OF STATE NEVADA UNCERTIFIED UCC SEARCH
------------------------------------------------
FILING NR: 96 16306 FILED ON: 10/07/96 AT: 09:17AM EXPIRES: 10/07/01
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 165 FRAME 127 PAGES 2
SECURED PARTY.............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W. COLLEGE DR
MARSHALL MN 56258
FILING NR: 96 17862 FILED ON: 11/01/96 AT: 03:15PM EXPIRES: 11/01/01
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 167 FRAME 1151 PAGES 2
ADDITIONAL DEBTOR NR 132292 ORLEANS HOTEL & CASINO, THE
4500 W TROPICANA AV
LAS VEGAS NV 89103
SECURED PARTY............... C I T GROUP EQUIPMENT FINANCING INC, THE
900 ASHWOOD PKWY 6TH FL
ATLANTA GA 30338
FILING NR: 96 17862 FILED ON: 11/01/96 AT: 03:15PM EXPIRES: 11/01/01
AMENDMENT.....01/28/97 04:09PM ADD ADDITIONAL DEBTOR & AMEND COLLATERAL
0171 0682 041
FILING NR: 96 18737 FILED ON: 11/18/96 AT: 04:54PM EXPIRES: 11/18/01
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 165 FRAME 1152 PAGES 3
SECURED PARTY.............. C I T GROUP EQUIPMENT FINANCING INC, THE
900 ASHWOOD PKWY 6TH FL
ATLANTA GA 30338
FILING NR: 96 18735 FILED ON: 11/18/96 AT: 04:55 PM EXPIRES: 11/18/01
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 167 FRAME 1153 PAGES 7
SECURED PARTY.............. C I T GROUP EQUIPMENT FINANCING INC, THE
900 ASHWOOD PKWY 6TH FL
ATLANTA GA 30338
FILING NR: 96 19027 FILED ON: 11/22/96 AT: 04:43 PM EXPIRES: 11/22/01
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 167 FRAME 1154 PAGES 3
SECURED PARTY.............. C I T GROUP EQUIPMENT FINANCING INC, THE
TAX ID:00-000-0536 900 ASHWOOD PKWY 6TH FL
ATLANTA GA 30338
---------------
Page 3
<PAGE> 128
SECRETARY OF STATE NEVADA UNCERTIFIED UCC SEARCH
------------------------------------------------
FILING NR: 97 00474 FILED ON: 01/13/97 AT: 04:40PM EXPIRES: 01/13/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 171 FRAME 683 PAGES 1
SECURED PARTY.............. SKIPCO
6029 W CHARLESTON BLVD.
LAS VEGAS NV 89103
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 01280 FILED ON: 01/24/97 AT: 04:32PM EXPIRES: 01/24/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO AV
LAS VEGAS NV 89103
MICROFILM-ROLL 171 FRAME 684 PAGES 4
SECURED PARTY.............. SKIPCO INC
6029 W CHARLESTON BLVD.
LAS VEGAS NV 89102
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 01363 FILED ON: 01/27/97 AT: 04:12PM EXPIRES: 01/27/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 171 FRAME 685 PAGES 2
SECURED PARTY.............. SKIPCO
6029 W CHARLESTON BLVD.
LAS VEGAS NV 89102
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 02388 FILED ON: 02/11/97 AT: 04:26PM EXPIRES: 02/11/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS
TAX ID:88-034-5706 4000 W FLAMINGO
LAS VEGAS NV 89103
MICROFILM-ROLL 171 FRAME 686 PAGES 1
SECURED PARTY.............. SKIPCO INC
6029 W CHARLESTON BLVD.
LAS VEGAS NV 89102
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
---------------
Page 4
<PAGE> 129
Secretary of State Nevada Uncertified UCC Search
-------------------------------------------------------
FILING NR: 97 03514 FILED ON: 03/03/97 AT: 04:54PM EXPIRES: 03/03/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO
LAS VEGAS NV 89103
MICROFILM-ROLL 174 FRAME 63 PAGES 2
SECURED PARTY............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 09283 FILED ON: 05/30/97 AT: 01:20PM EXPIRES: 05/30/02
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
4000 W FLAMINGO RD
LAS VEGAS NV 89109
MICROFILM-ROLL 179 FRAME 1311 PAGES 1
ADDITIONAL DEBTOR NR 18267 GOLD COAST HOTEL & CASINO (DBA)
4000 W FLAMINGO
LAS VEGAS NV 89109
SECURED PARTY............... I G T
TAX ID:88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 97 12572 FILED ON: 07/25/97 AT: 04:23PM EXPIRES: 07/25/02
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
3595 LAS VEGAS BLVD S
LAS VEGAS NV 89109
MICROFILM-ROLL 185 FRAME 616 PAGES 1
ADDITIONAL DEBTOR NR 3132 BARBARY COAST HOTEL & CASINO (DBA)
3595 LAS VEGAS BLVD S
LAS VEGAS NV 89109
SECURED PARTY............... I G T
TAX ID:88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 97 13797 FILED ON: 08/12/97 AT: 02:33PM EXPIRES: 08/12/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 185 FRAME 617 PAGES 1
SECURED PARTY............... SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
----------
Page 5
<PAGE> 130
SECRETARY OF STATE NEVADA UNCERTIFIED UCC SEARCH
------------------------------------------------
FILING NR: 97 14095 FILED ON: 08/18/97 AT: 03:13PM EXPIRES: 08/18/02
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 185 FRAME 618 PAGES 1
ADDITIONAL DEBTOR NR 18267 GOLD COAST HOTEL & CASINO (DBA)
4000 W FLAMINGO RD
LAS VEGAS NV 89103
SECURED PARTY............. I G T
TAX ID:88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 97 14635 FILED ON: 08/27/97 AT: 01:54PM EXPIRES: 08/27/02
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 185 FRAME 619 PAGES 3
ADDITIONAL DEBTOR NR 132292 ORLEANS HOTEL & CASINO
TAX ID:88-032-5706 4500 W TROPICANA
LAS VEGAS NV 89103
SECURED PARTY............. C D S GAMING CO
TAX ID: 88-032-3265 3300 BIRTCHER DR
LAS VEGAS NV 89118
FILING NR: 97 14932 FILED ON: 09/03/97 AT: 12:40PM EXPIRES: 09/03/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
4500 TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 185 FRAME 620 PAGES 3
SECURED PARTY............. C I T GROUP EQUIPMENT FINANCING INC, THE
TAX ID:00-000-0536 POB 27248
TEMPE AZ 85285-7248
FILING NR: 97 15184 FILED ON: 09/03/97 AT: 04:01PM EXPIRES: 09/08/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO
LAS VEGAS NV 89103
MICROFILM-ROLL 185 FRAME 621 PAGES 4
SECURED PARTY............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................. BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
----------
Page 6
<PAGE> 131
Secretary of State Nevada Uncertified UCC Search
-------------------------------------------------------
FILING NR: 97 15538 FILED ON: 09/15/97 AT: 04:22PM EXPIRES: 09/15/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 185 FRAME 622 PAGES 2
SECURED PARTY.............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 18303 FILED ON: 11/03/97 AT: 02:15PM EXPIRES: 11/03/02
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
3598 LAS VEGAS BLVD S
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 85 PAGES 1
ADDITIONAL DEBTOR NR 3132 BARBARY COAST HOTEL & CASINO (DBA)
3595 LAS VEGAS BLVD S
LAS VEGAS NV 89109
SECURED PARTY.............. I G T
TAX ID: 88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 97 18795 FILED ON: 11/10/97 AT: 03:35PM EXPIRES: 11/10/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 86 PAGES 3
SECURED PARTY.............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 19409 FILED ON: 11/21/97 AT: 02:02PM EXPIRES: 11/21/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 87 PAGES 3
SECURED PARTY.............. FIRSTAR BANK OF MINNESOTA TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
FILING NR: 97 19410 FILED ON: 11/21/97 AT: 02:04PM EXPIRES: 11/21/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4500 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 88 PAGES 19
SECURED PARTY.............. FIRSTAR BANK OF MINNESOTA TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
------------
Page 7
<PAGE> 132
Secretary of State Nevada Uncertified UCC Search
------------------------------------------------
FILING NR: 97 19515 FILED ON: 11/24/97 AT: 03:32PM EXPIRES: 11/24/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS
TAX ID: 88-034-5706 4000 W FLAMINGO AV
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 89 PAGES 3
SECURED PARTY .............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE ................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 20517 FILED ON: 12/12/97 AT: 03:47PM EXPIRES: 12/12/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS
TAX ID: 88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 90 PAGES 3
SECURED PARTY .............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE ................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 97 20932 FILED ON: 12/22/97 AT: 03:00PM EXPIRES: 12/22/02
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 193 FRAME 98 PAGES 2
SECURED PARTY .............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE ................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 98 00438 FILED ON: 01/12/98 AT: 01:04PM EXPIRES: 01/12/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO AV
LAS VEGAS NV 89103
MICROFILM-ROLL 193 FRAME 99 PAGES 4
SECURED PARTY .............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE ................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
-------------
Page 8
<PAGE> 133
Secretary of State Nevada Uncertified UCC Search
-------------------------------------------------------
FILING NR: 98 01387 FILED ON: 01/26/98 AT: 02:08PM EXPIRES: 01/26/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4500 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 194 FRAME 1104 PAGES 3
SECURED PARTY............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 98 01717 FILED ON: 02/02/98 AT: 02:52PM EXPIRES: 02/02/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO AV
LAS VEGAS NV 89103
MICROFILM-ROLL 194 FRAME 1105 PAGES 1
SECURED PARTY............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 98 02435 FILED ON: 02/17/98 AT: 01:50PM EXPIRES: 02/17/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO AV
LAS VEGAS NV 89103
MICROFILM-ROLL 194 FRAME 1106 PAGES 3
SECURED PARTY............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 98 03242 FILED ON: 03/03/98 AT: 03:26PM EXPIRES: 03/03/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID: 88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 194 FRAME 1107 PAGES 2
SECURED PARTY............. SKIPCO
TAX ID: 00-000-1111 6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
TAX ID: 00-000-0608 115 W COLLEGE DR
MARSHALL MN 56258
----------
Page 9
<PAGE> 134
SECRETARY OF STATE NEVADA UNCERTIFIED UCC SEARCH
-------------------------------------------------------
FILING NR: 98 07013 FILED ON: 05/04/98 AT: 02:01PM EXPIRES: 05/04/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 203 FRAME 346 PAGES 2
SECURED PARTY............. SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 98 09489 FILED ON: 06/15/98 AT: 01:23PM EXPIRES: 06/15/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 203 FRAME 347 PAGES 2
SECURED PARTY............. SKIPCO
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE................... BUSINESS CREDIT LEASING
115 W COLLEGE DR
MARSHALL MN 56258
FILING NR: 98 14306 FILED ON: 09/08/98 AT: 02:25PM EXPIRES: 09/08/03
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 208 FRAME 834 PAGES 1
ADDITIONAL DEBTOR NR 132292 ORLEANS HOTEL & CASINO
4500 W TROPICANA AV
LAS VEGAS NV 89103
SECURED PARTY............... I G T
TAX ID:88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 98 14443 FILED ON: 09/09/98 AT: 01:32PM EXPIRES: 09/09/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO
LAS VEGAS NV 89103
MICROFILM-ROLL 208 FRAME 835 PAGES 3
SECURED PARTY............... SKIPCO INC
6029 W CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................... B C L CAPITAL
115 W COLLEGE DR
MARSHALL MN 56258
----------
Page 10
<PAGE> 135
SECRETARY OF THE NEVADA UNCERTIFIED UCC SEARCH
----------------------------------------------
FILING NR: 98 14745 FILED ON: 09/15/98 AT: 01:07PM EXPIRES: 09/15/03
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
4500 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 208 FRAME 860 PAGES 1
ADDITIONAL DEBTOR NR 132292 ORLEANS HOTEL & CASINO
4500 W TROPICANA AV
LAS VEGAS NV 89103
SECURED PARTY............. I G T
TAX ID:88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 98 18849 FILED ON: 11/25/98 AT: 01:34PM EXPIRES: 11/25/03
THERE IS 1 ADDITIONAL DEBTOR
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL FRAME PAGES
ADDITIONAL DEBTOR NR 18267 GOLD COAST HOTEL & CASINO
4000 W FLAMINGO
LAS VEGAS NV 89103
SECURED PARTY............. I G T
TAX ID:88-006-2109 9295 PROTOTYPE DR
RENO NV 89511
FILING NR: 98 20354 FILED ON: 12/28/98 AT: 03:22PM EXPIRES: 12/28/03
PRINCIPAL DEBTOR NR 123632 COAST HOTELS & CASINOS INC
TAX ID:88-034-5706 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL FRAME PAGES
SECURED PARTY............. SKIPCO INC
6029 CHARLESTON BLVD
LAS VEGAS NV 89102
ASSIGNEE.................. B C L CAPITAL
115 W COLLEGE DR
MARSHALL MN 56258
----------
Page 11
<PAGE> 136
SECRETARY OF STATE NEVADA UNCERTIFIED UCC SEARCH
-------------------------------------------------------
LIST OF STATEMENTS FOR COAST WEST INC
DEBTOR NR: 123633 4000 W FLAMINGO RD
TAX ID: 88-034-5708 LAS VEGAS NV 89103
FILE NBR DATE TIME PRINCIPAL DEBTOR
96-01893 02/06/96 04:04PM COAST WEST INC
96-01894 02/06/96 04:05PM COAST WEST INC
FILING NR: 96-01893 FILED ON: 02/06/96 AT: 04:04PM EXPIRES: 02/06/01
PRINCIPAL DEBTOR NR 123633 COAST WEST INC
TAX ID:88-034-5708 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 150 FRAME 572 PAGES 3
SECURED PARTY............. AMERICAN BANK AS TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
FILING NR: 96 01894 FILED ON: 02/06/96 AT: 04:05PM EXPIRES: 02/06/01
PRINCIPAL DEBTOR NR 123633 COAST WEST INC
TAX ID:88-034-5708 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 150 FRAME 573 PAGES 10
SECURED PARTY............. AMERICAN BANK AS TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
----------
Page 1
<PAGE> 137
SECRETARY OF STATE NEVADA UNCERTIFIED UCC SEARCH
-------------------------------------------------------
LIST OF STATEMENTS FOR COAST RESORTS INC
DEBTOR NR: 123634 4000 W FLAMINGO RD
TAX ID: 41-012-2055 LAS VEGAS NV 89103
FILE NBR DATE TIME PRINCIPAL DEBTOR
96-01895 02/06/96 04:06PM COAST RESORTS INC
97-19411 11/21/97 02:05PM COAST RESORTS INC
FILING NR: 96-01895 FILED ON: 02/06/96 AT: 04:06PM EXPIRES: 02/06/01
PRINCIPAL DEBTOR NR 123634 COAST RESORTS INC
TAX ID:41-012-2055 4000 W FLAMINGO RD
LAS VEGAS NV 89103
MICROFILM-ROLL 150 FRAME 574 PAGES 2
SECURED PARTY............. AMERICAN BANK AS TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
FILING NR: 97 19411 FILED ON: 11/21/97 AT: 02:05PM EXPIRES: 11/21/02
PRINCIPAL DEBTOR NR 123634 COAST WEST INC
TAX ID:41-012-2055 4000 W TROPICANA AV
LAS VEGAS NV 89103
MICROFILM-ROLL 191 FRAME 91 PAGES 3
SECURED PARTY............. FIRSTAR BANK OF MINNESOTA TRUSTEE
101 E 5TH ST
ST PAUL MN 55101-1860
----------
Page 1
<PAGE> 138
[LOGO]
CAPITOL DOCUMENT SERVICES, INC.
Date : FEBRUARY 9, 1999 Page 1
Subject : COAST HOTELS & CASINOS, INC.
Jurisdiction : CLARK CO., NV (LAS VEGAS)
Type of Search : UCC
Searched Through : JANUARY 14, 1999
- -------------------------------------------------------------------------------
File Date File Number Type of Filing Reference
- -------------------------------------------------------------------------------
THROUGH OUR CORRESPONDENT, A SEARCH OF THE UCC RECORDS HAS BEEN MADE REGARDING
THE ABOVE-NAMED DEBTOR. THIS SEARCH INDICATES THAT THERE ARE OUTSTANDING
FILINGS OF RECORD IN THIS SPECIFIC JURISDICTION.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
JAN 30, 1996 BD 960130 DEED American Bank National Association
I 00397 St. Paul, MN.
PURSUANT TO INSTRUCTIONS RECEIVED, WE HAVE PROVIDED ONLY FIRST FIVE PAGES AND
LAST PAGE OF THE ABOVE DEED DOCUMENT.
JAN 30, 1996 BK 960130 UCC-1 American Bank NA, as Trustee
I 00399 St. Paul, MN
MAR 12, 1996 BK 960312 UCC-1 CDS Gaming Company
I 00892 Las Vegas, NV
NOV 4, 1996 BK 961104 UCC-1 The CIT Group/Equipment Financing, Inc.
I 00587 Atlanta, GA
NOV 26, 1996 BK 961126 AMENDMENT
I 01530
NOV 4, 1996 BK 961104 UCC-1 The CIT Group/Equipment Financing, Inc.
I 00588 Atlanta, GA
</TABLE>
- -------------------------------------------------------------------------------
CAPITOL DOCUMENT SERVICES, INC. makes no representations, warranties or
guaranties as to the accuracy or completeness of this report. Because the
records are public information maintained by government officials, we cannot
independently verify their accuracy, and our involvement is limited to
assisting in expediting the retrieval of this information.
- -------------------------------------------------------------------------------
PO Box 3100 Carson City, NV 89702
(702) 884-0490
<PAGE> 139
[LOGO]
CAPITOL DOCUMENT SERVICES, INC.
Date : FEBRUARY 9, 1999
Subject : COAST HOTEL & CASINOS, INC.
Jurisdiction : CLARK CO., NV (LAS VEGAS)
Type of Search : UCC
Search Through : JANUARY 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
File Date File Number Type of Filing Reference
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NOV 26, 1996 BK 961126 AMENDMENT
I 01531
DEC 4, 1996 BK 961204 UCC-1 The CIT Group/Equipment Financing, Inc.
I 01585 Atlanta, GA
DEC 30, 1996 BK 961230 AMENDMENT The CIT Group/Equipment Financing, Inc.
I 00644 Atlanta, GA
NOV 21, 1997 BK 971121 DEED Firstar Bank of Minnesota, N.A.
I 00617 St. Paul, MN
PURSUANT TO INSTRUCTIONS RECEIVED, WE HAVE PROVIDED ONLY FIRST FIVE PAGES AND LAST PAGE OF THE ABOVE DEED DOCUMENT.
NOV 21, 1997 BK 971121 UCC-1 Firstar Bank of Minnesota, N.A. as Trustee
I 00619 St. Paul, MN
</TABLE>
- -------------------------------------------------------------------------------
CAPITOL DOCUMENT SERVICES, INC. makes no representations, warranties or
guaranties as to the accuracy or completeness of this report. Because the
records are public information maintained by government officials, we cannot
independently verify their accuracy, and our involvement is limited to
assisting in expediting the retrieval of this information.
- -------------------------------------------------------------------------------
PO Box 3100 Carson City, NV 89702
(702) 884-0490
<PAGE> 140
CAPITAL DOCUMENT SERVICES, INC.
Date : FEBRUARY 9, 1999 PAGE 1
Subject : COAST WEST, INC.
Jurisdiction : CLARK CO., NV (LAS VEGAS)
Type of Search : UCC
Searched Through : JANUARY 14, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
File Date File Number Type of Filing Reference
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THROUGH OUR CORRESPONDENT, A SEARCH OF THE UCC RECORDS HAS BEEN MADE REGARDING
THE ABOVE-NAMED DEBTOR. THIS SEARCH INDICATES THAT THERE ARE OUTSTANDING FILINGS
OF RECORD IN THIS SPECIFIC JURISDICTION.
JAN 30, 1996 BK 960130 DEED American Bank National Association
I 00398 St. Paul, MN
PURSUANT TO INSTRUCTIONS RECEIVED, WE HAVE PROVIDED ONLY FIRST FIVE PAGES AND
LAST PAGE OF ABOVE DEED DOCUMENT
JAN 30, 1996 BK 960130 UCC-1 American Bank National Association
I 00400 St. Paul, MN
</TABLE>
- --------------------------------------------------------------------------------
CAPITOL DOCUMENT SERVICES, INC. makes no representations, warranties or
guaranties as to the accuracy or completeness of this report. Because the
records are public information maintained by government officials, we cannot
independently verify their accuracy, and our involvement is limited to
assisting in expediting the retrieval of this information.
- --------------------------------------------------------------------------------
PO Box 3100 Carson City, NV 89702
(702) 884-0490
<PAGE> 141
SCHEDULE 6.10
EXISTING INDEBTEDNESS
See UCC search results for each of Coast Hotels and Casinos, Inc., Coast
Resorts, Inc. and Coast West, Inc. as described in Schedule 6.9.
<PAGE> 142
SCHEDULE 6.16
EXISTING INVESTMENTS
None.
<PAGE> 143
EXHIBIT A
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of
______________, _______is made with reference to that certain Loan Agreement
dated as of March 18, 1999 (as amended from time to time, the "Loan Agreement")
by and among Coast Hotels and Casinos, Inc., a Nevada corporation ("Borrower"),
the Lenders therein named, and Bank of America National Trust and Savings
Association, as Administrative Agent, and is entered into between the "Assignor"
described below, in its capacity as a Lender under the Loan Agreement, and the
"Assignee" described below.
Assignor and Assignee hereby represent, warrant and agree as
follows:
1. Definitions. Capitalized terms defined in the Loan
Agreement are used herein with the meanings set forth for such terms in the Loan
Agreement. As used in this Agreement, the following capitalized terms shall have
the meanings set forth below:
"Assignee" means ________________________.
"Assigned Pro Rata Share" means ______________% of the Commitment of the
Lenders under the Loan Agreement which equals $________________as of the date
hereof.
"Assignor" means ________________________.
"Effective Date" means ____________________, ______, the effective date
of this Agreement determined in accordance with Section 11.8 of the Loan
Agreement.
2. Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee as follows:
a. As of the date hereof, the Pro Rata Share of the
Assignor is _____% of the Commitment (without giving effect to assignments
thereof which have not yet become effective). The Assignor is the legal and
beneficial owner of the Assigned Pro Rata Share and the Assigned Pro Rata Share
is free and clear of any adverse claim.
b. As of the date hereof, the outstanding principal
balance of Advances made by the Assignor under the Assignor's Note is $________.
c. The Assignor has full power and authority, and
has taken all action necessary, to execute and deliver this Agreement and any
and all other documents required or permitted to be executed or delivered by it
in connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this
-1-
<PAGE> 144
Agreement, and no governmental authorizations or other authorizations are
required in connection therewith; and
d. This Agreement constitutes the legal, valid and
binding obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrower or the performance by
Borrower of the Obligations, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Agreement or the execution, legality, validity, enforceability, genuineness, or
sufficiency of the Loan Agreement or any Loan Document other than as expressly
set forth above.
3. Representations and Warranties of the Assignee. The
Assignee hereby represents and warrants to the Assignor as follows:
(a) The Assignee has full power and authority, and has taken
all action necessary, to execute and deliver this Agreement, and any and all
other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith;
(b) This Agreement constitutes the legal, valid and binding
obligation of the Assignee;
(c) The Assignee has independently and without reliance upon
the Administrative Agent or Assignor and based on such documents and information
as the Assignee has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. The Assignee will, independently and
without reliance upon the Administrative Agent or any Lender, and based upon
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Agreement;
(d) The Assignee has received copies of such of the Loan
Documents delivered pursuant to Section 8.1 of the Loan Agreement as it has
requested, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 of the Loan Agreement;
(e) The Assignee will perform in accordance with their
respective terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender; and
(f) The Assignee is an Eligible Assignee.
-2-
<PAGE> 145
4. Assignment. On the terms set forth herein, the Assignor,
as of the Effective Date, hereby irrevocably sells, assigns and transfers to the
Assignee all of the rights and obligations of the Assignor under the Loan
Agreement, the other Loan Documents and the Assignor's Note to the extent of the
Assigned Pro Rata Share, and the Assignee irrevocably accepts such assignment of
rights and assumes such obligations from the Assignor on such terms and
effective as of the Effective Date. Assignee acknowledges that the foregoing
assignment is subject to the approval of Administrative Agent and may be subject
to the approval of the Borrower pursuant to the Loan Agreement. As of the
Effective Date, the Assignee shall have the rights and obligations of a "Lender"
under the Loan Documents, except to the extent of any arrangements with respect
to payments referred to in Section 5 hereof. Assignee hereby appoints and
authorizes the Administrative Agent to take such action and to exercise such
powers under the Loan Agreement as are delegated to the Administrative Agent by
the Loan Agreement.
5. Payment. On the Effective Date, the Assignee shall pay
to the Assignor, in immediately available funds, an amount equal to the purchase
price of the Assigned Pro Rata Share, as agreed between the Assignor and the
Assignee pursuant to a letter agreement of even date herewith. Such letter
agreement also sets forth the agreement between the Assignor and the Assignee
with respect to the amount of interest, fees, and other payments with respect to
the Assigned Pro Rata Share which are to be retained by the Assignor.
The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Notes or any other Loan Documents which is for
the account of the other, it shall hold the same in trust for such party to the
extent of such party's interest therein and shall promptly pay the same to such
party.
6. Principal, Interest, Fees, etc. Any principal that would
be payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Loan Agreement and the Note shall be payable to or for the account of the
Assignor and the Assignee, in accordance with their respective interests as
adjusted pursuant to this Agreement.
7. Notes. The Assignor and the Assignee shall make
appropriate arrangements with Borrower concurrently with the execution and
delivery hereof so that a replacement Note is issued to the Assignor and a new
Note is issued to the Assignee, in each case in principal amounts reflecting
their Pro Rata Shares of the Commitment or their outstanding Advances (as
adjusted pursuant to this Agreement).
8. Further Assurances. Concurrently with the execution of
this Agreement, the Assignor shall execute two counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transac tions contemplated by this
Agreement, and the Assignor specifically agrees to cause the
-3-
<PAGE> 146
delivery of (i) two original counterparts of this Agreement and (ii) the Request
for Registration, to the Administrative Agent for the purpose of registration of
the Assignee as a "Lender" pursuant to Section 11.8 of the Loan Agreement.
9. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA. FOR
ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA.
10. Notices. All communications among the parties or notices
in connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.
11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
under this Agreement without the prior written consent of the Assignor and any
purported assignment, absent such consent, shall be void. Nothing contained in
this Section shall restrict the assignment by Assignee of its rights under the
Loan Documents following the Effective Date.
12. Interpretation. The headings of the various sections
hereof are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
-4-
<PAGE> 147
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.
"Assignor"" "Assignee"
- ------------------------------ ------------------------------
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
Address: Address:
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
Telecopier: Telecopier:
------------------- -------------------
Telephone: Telephone:
-------------------- --------------------
-5-
<PAGE> 148
Exhibit A to Assignment Agreement
REQUEST FOR REGISTRATION
To: Bank of America National Trust and Savings Association, as
Administrative Agent, and Coast Hotels and Casinos, Inc.
THIS REQUEST FOR REGISTRATION OF ASSIGNEE is made as of the date
of the enclosed Assignment Agreement with reference to that certain Amended and
Restated Loan Agreement of even date herewith by and among Coast Hotels and
Casinos, Inc., a Nevada corporation ("Borrower"), the Lenders therein named, and
Bank of America National Trust and Savings Association, as Administrative Agent
(as amended as of the date hereof, the "Loan Agreement").
The Assignor and Assignee described below hereby request that
Administrative Agent register the Assignee as a Lender pursuant to Section 11.8
of the Loan Agreement effective as of the Effective Date described in the
Assignment Agreement.
The Assignor and Assignee hereby jointly request that
Administrative Agent cause Borrower to issue a replacement Note, dated as of the
Effective Date, pursuant to Section 11.8 of the Loan Agreement in favor of
Assignor in the principal amount of the remainder of its Pro Rata Share of the
Commitment and a new Note in favor of the Assignee in the amount of the Assigned
Pro Rata Share.
The Assignee is concurrently making payment of the $3,500 fee
payable to the Administrative Agent pursuant to Section 11.8 of the Loan
Agreement.
-6-
<PAGE> 149
IN WITNESS WHEREOF, the Assignor and Assignee have executed this
Request for Registration by their duly authorized officers as of even date with
the enclosed Assignment Agreement.
"Assignor"" "Assignee"
- ------------------------------ ------------------------------
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
-7-
<PAGE> 150
CONSENT OF ADMINISTRATIVE AGENT AND BORROWER
[When Required Pursuant to Loan Agreement]
TO: The Assignor and Assignee referred to in the above Request for
Registration
When countersigned by both Borrower and Administrative Agent below, this
document shall certify that:
1. Borrower has consented, pursuant to the terms of the Loan Documents,
to the assignment by the Assignor to the Assignee of the Assigned Pro Rata
Share.
2. Administrative Agent has registered the Assignee as a Lender under
the Loan Agreement, effective as of the Effective Date described above, with a
Pro Rata Share of the Commitment corresponding to the Assigned Pro Rata Share
and has adjusted the registered Pro Rata Share of the Commitment of the Assignor
to reflect the assignment of the Assigned Pro Rata Share.
Approved:
Coast Hotels and Casinos, Inc., Bank of America National Trust and
a Nevada corporation Savings Association, as Administrative
Agent
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- ----------------------------
-8-
<PAGE> 151
EXHIBIT B
COMPLIANCE CERTIFICATE
To: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS
ADMINISTRATIVE AGENT
This Compliance Certificate is delivered with reference to the
Loan Agreement dated as of March 18, 1999, by and among Coast Hotels and
Casinos, Inc., as Borrower (the "Borrower"), the Lenders referred to therein,
and Bank of America National Trust and Savings Association, as Administrative
Agent (as amended, extended, renewed, supplemented or otherwise modified from
time to time, the "Loan Agreement"). Terms defined in the Loan Agreement and not
otherwise defined in this Compliance Certificate ("Certificate") shall have the
meanings defined for them in the Loan Agreement. Section references herein
relate to the Loan Agreement unless stated otherwise. In the event of any
conflict between the calculations set forth in this Certificate, and the manner
of calculation required by the Loan Agreement, the terms of the Loan Agreement
shall govern and control.
This Certificate is delivered in accordance with Section 7.2 of
the Loan Agreement by a Senior Officer of Borrower. This Certificate is
delivered with respect to the Fiscal Quarter (the "Test Fiscal Quarter") ended
______________, _____ (the "Test Date"). Computations indicating compliance with
respect to the covenants contained in Sections 6.12, 6.13, 6.14 and 6.15 of the
Loan Agreement are set forth below:
I. SECTION 6.12 - SENIOR LEVERAGE RATIO. As of the Test Date, the Senior
Leverage Ratio was ________: 1.00.
The Senior Leverage Ratio was computed as follows:
(a) the average principal amount of the outstanding Total Debt as of the last
day of each of the three constituent calendar months in the Test Fiscal Quarter
<TABLE>
<S> <C>
Month One $______________
Month Two $______________
Month Three $______________
Average Total Debt $______________
minus Subordinated Obligations
Month One $______________
Month Two $______________
Month Three $______________
Average Subordinated
Obligations $______________
equals Average Senior Debt $______________
divided by $______________
</TABLE>
-1-
<PAGE> 152
<TABLE>
<S> <C>
(b) EBITDA for the four Fiscal Quarter
period ending on the Test Date $______________
equals Senior Leverage Ratio [(a)/(b)] ____: 1.00
</TABLE>
EBITDA - Calculation
In the calculation of EBITDA, for each of the first three full Fiscal
Quarters following the Opening, operating results of the New Project will be
annualized on a straight line basis. EBITDA for the four Fiscal Quarter period
ending on the Test Date (the "Test Period") was calculated as follows, in each
case as determined in accordance with Generally Accepted Accounting Principles:
<TABLE>
<S> <C>
(a) Net Income for the Test Period $_______________
plus (b) any extraordinary loss reflected in such Net Income, $_______________
minus (c) any extraordinary gain reflected in such Net Income, $_______________
plus (d) Interest Expense for the Test Period (to the extent
deducted in the determination of Net Income for the Period), $_______________
plus (e) the aggregate amount, if any, of federal and state taxes on
or measured by income of Coast Resorts and its Subsidiaries for the
Test Period (whether or not payable during the Test Period and to the
extent deducted in the determination of Net Income for the
Test Fiscal Period), $________________
plus (f) depreciation, amortization and all other non-cash expenses
for the Test Period (including all non-cash rent expense and to the
extent deducted in the determination of Net Income for
the Test Period), $________________
plus (g) expenses classified as "pre-opening expenses" on the
applicable financial statements of Coast Resorts or its Subsidiaries
for the Test Period (to the extent deducted in the
determination of Net Income for the Test Period) $________________
equals EBITDA [(a)+(b)-(c)+(d)+(e)+(f)+(g)] $________________
-------------
</TABLE>
-2-
<PAGE> 153
II. SECTION 6.13 - TOTAL LEVERAGE RATIO. As of the Test Date, the Total
Leverage Ratio was ________: 1.00.
<TABLE>
<S> <C>
The Total Leverage Ratio was computed as follows:
(a) the average principal amount of the outstanding Total Debt as of the last
day of each of the three constituent calendar months
in the Test Fiscal Quarter (as set forth in I above) $_______________
divided by
(b) EBITDA for the four Fiscal Quarter period
ending on the Test Date $_______________
equals Total Leverage Ratio [(a)/(b)] ____: 1.00
III. SECTION 6.14 - FIXED CHARGE COVERAGE RATIO. As of the Test Date, the
Fixed Charge Coverage Ratio was ________: 1.00.
Minimum Ratio Permitted 1.25:1.00
The Fixed Charge Coverage Ratio was computed as follows:
(a) EBITDA for the four Fiscal Quarter period ending on the Test Date $_______________
divided by (b) the sum of:
(i) required payment of principal and interest and
mandatory prepayments to the extent made in Cash by Coast
Resorts and its Subsidiaries with respect to Indebtedness
(other than mandatory prepayments made with respect to the
Obligations) during such four Fiscal Quarter period, $_______________
plus (ii) Maintenance Capital Expenditures made during such
four Fiscal Quarter period (other than those which are
financed pursuant to Section 6.10(c) of the Loan Agreement), $_______________
plus (iii) taxes paid or payable in cash with respect to
income of Coast Resorts and its Subsidiaries for such four
Fiscal Quarter period (including any Permitted Tax
Distributions), $_______________
plus (iv) Distributions made during such four Fiscal
Quarter period pursuant to Section 6.6(d) of the Loan
Agreement, $_______________
equals Fixed Charge Coverage Ratio [(a)/(b)] ____: 1.00
</TABLE>
-3-
<PAGE> 154
IV. SECTION 6.15 - CAPITAL EXPENDITURES.
A. Borrower has not made, or become legally obligated to make, any
Capital Expenditure except as permitted under subsections (a) through (e),
inclusive, of Section 6.15.
B. If the Test Date is before the Opening: As of the Test Date, the
aggregate amount of Maintenance Capital Expenditures made pursuant to Section
6.15(a) of the Loan Agreement during the Fiscal Year in which the Test Date
occurs is $___________.
Maximum Permitted: $15,000,000 in any Fiscal Year
C. If the Test Date is after the Opening: As of the Test Date, the
aggregate amount of Maintenance Capital Expenditures made pursuant to Section
6.15(a) of the Loan Agreement during the Fiscal Year in which the Test Date
occurs is $___________.
Maximum Permitted: $22,000,000 in any Fiscal Year
D. As of the Test Date, the aggregate amount of Capital
Expenditures made pursuant to Section 6.15(b) of the Loan Agreement is
$___________________ and, when aggregated with the outstanding amount of any
Acquisitions and Investments made pursuant to Section 6.16(i) of the Loan
Agreement, is $____________________.
Maximum Permitted: $40,000,000, increasing after the Opening to
$100,000,000
E. If the Test Date is after an increase in the Commitment to an
amount of at least $175,000,000: As of the Test Date, the aggregate amount of
Capital Expenditures made for the development of the New Project (excluding
capitalized interest) pursuant to Section 6.15(c), is $___________.
Maximum Permitted: $150,000,000
F. If the Test Date is after an increase in the Commitment to an
amount of at least $175,000,000: As of the Test Date, the aggregate amount of
Capital Expenditures expressly permitted by the first sentence of Section 5.13
of the Loan Agreement is $_______________.
<TABLE>
<S> <C>
Maximum Permitted: $_______________.
(fill in the Net Cash Proceeds
from the Disposition of the
Barbary Coast that are used in
accordance with the first
sentence of Section 5.13 of the
Loan Agreement)
</TABLE>
-4-
<PAGE> 155
G. If the Test Date is after an increase in the Commitment to an
amount of at least $175,000,000: As of the Test Date, the aggregate amount of
Capital Expenditures other than those expressly permitted in accordance with the
first sentence of Section 5.13 of the Loan Agreement is
$_________________
Maximum Permitted: $__________________
(fill in the Net Cash Proceeds
from the Disposition of the
Barbary Coast that are NOT used
or to be used in the first
sentence of Section 5.13 of the
Loan Agreement)
V. A review of the activities of Borrower during the Test Fiscal Quarter
has been made under the supervision of the undersigned with a view to
determining whether during the Test Fiscal Quarter Borrower performed and
observed all of its obligations under the Loan Agreement and the Notes. To the
best knowledge of the undersigned, during the Test Fiscal Quarter, all covenants
and conditions have been so performed and observed and no Default or Event of
Default has occurred and is continuing, with the exceptions set forth below in
response to which Borrower has taken (or caused to be taken) or proposes to take
(or cause to be taken) the following actions (if none, so state).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VI. The undersigned Senior Officer of Borrower certifies that the
calculations made and the information contained herein are derived from the
books and records of Borrower and that each and every matter contained herein
correctly reflects those books and records.
Dated: _______________, ______
COAST HOTELS AND CASINOS, INC.
By:
-------------------------------------
-------------------------------------
Printed Name and Title
-5-
<PAGE> 156
EXHIBIT C
NOTE
$75,000,000 March 18, 1999
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order
of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender"), the
principal amount of SEVENTY FIVE MILLION DOLLARS ($75,000,000) or such lesser
aggregate amount of Advances as may be made by the Lender with respect to the
Commitment under the Loan Agreement referred to below, together with interest on
the principal amount of each Advance made hereunder and remaining unpaid from
time to time from the date of each such Advance until the date of payment in
full, payable as hereinafter set forth.
Reference is made to the Loan Agreement dated as of March 18,
1999, by and among the undersigned, as Borrower, and Bank of America National
Trust and Savings Association, as Administrative Agent and sole initial Lender
(the "Loan Agreement"). Terms defined in the Loan Agreement and not otherwise
defined herein are used herein with the meanings defined for those terms in the
Loan Agreement. This is one of the Notes referred to in the Loan Agreement, and
any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified or amended. The Loan Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events upon the terms and conditions
therein specified.
The principal indebtedness evidenced by this Note shall be
payable as provided in the Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid
principal amount of Advances from the date of each such Advance until payment in
full and shall accrue and be payable at the rates and on the dates set forth in
the Loan Agreement both before and after default and before and after maturity
and judgment, with interest on overdue principal and interest to bear interest
at the rate set forth in Section 3.9 of the Loan Agreement, to the fullest
extent permitted by applicable Law.
Each payment hereunder shall be made to the Administrative Agent
at the Administrative Agent's Office for the account of the Lender in
immediately available funds not later than 11:00 a.m., California local time, on
the day of payment (which must be a Banking Day). All payments received after
11:00 a.m., California
-1-
<PAGE> 157
local time, on any particular Banking Day shall be deemed received on the next
succeeding Banking Day. All payments shall be made in lawful money of the United
States of America.
The Lender shall use its best efforts to keep a record of
Advances made by it and payments received by it with respect to this Note, and
such record shall, be presumptive evidence of the amounts owing under this Note.
The undersigned hereby promises to pay all costs and expenses of
any holder hereof incurred in collecting the undersigned's obligations hereunder
or in enforcing or attempting to enforce any of such holder's rights hereunder,
including reasonable attorneys' fees and disbursements, whether or not an action
is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Note shall be delivered to and accepted by the Lender in
the State of Nevada, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
COAST HOTELS AND CASINOS , INC.,
a Nevada corporation
By:
-------------------------------------
Gage Parrish, Vice President and Chief
Financial Officer
-2-
<PAGE> 158
SCHEDULE OF COMMITTED ADVANCES AND
PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount Amount of Unpaid
of Interest Principal Principal Notation
Date Advance Period Paid Balance Made by
- ---- ------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
</TABLE>
-3-
<PAGE> 159
EXHIBIT D
REQUEST FOR LETTER OF CREDIT
This Request for Letter of Credit is executed and delivered by the
undersigned Borrower with reference to the Loan Agreement (as amended, modified
or extended, the "Loan Agreement") dated as of ________, 1999 by and among
Borrower, the Lenders therein named and Bank of America National Trust and
Savings Association, as Administrative Agent and Issuing Lender. Any terms used
herein and not defined herein shall have the meanings set forth for such terms
in the Loan Agreement.
The undersigned Borrower hereby requests that the Issuing Lender issue a
Letter of Credit pursuant to the Loan Agreement as follows:
AMOUNT OF REQUESTED LETTER OF CREDIT: _____________
DATE OF REQUESTED LETTER OF CREDIT: ________________
TENOR OF LETTER OF CREDIT: _________________
In connection with the request, the undersigned Borrower certifies that:
(a) Except as disclosed by Borrower and approved in writing
by the Requisite Lenders, the representations and warranties contained
in Article 4 of the Loan Agreement (other than the representations set
forth in Sections 4.4, 4.10 and 4.17) shall be true and correct on the
date of such Advance as though made on that date;
(b) There is not any pending or threatened action, suit,
proceeding or investigation affecting Borrower or any of its
Subsidiaries before any Governmental Agency that constitutes a Material
Adverse Effect; and
(c) The Loan requested herein will not cause Borrower to
violate the terms of the Indenture dated as of _______, 1999, among
Borrower, Coast Resorts, Inc., as Guarantor, and Firstar Bank of
Minnesota, N.A., as Trustee, including without limitation Section [__]
thereof.
-1-
<PAGE> 160
This Request for Letter of Credit is executed on __________, _____, by a
Responsible Official of the undersigned Borrower. The undersigned, in such
capacity, hereby certifies each and every matter contained herein to be true and
correct.
COAST HOTELS AND CASINOS, INC.,
a Nevada corporation
By:
-------------------------------------
Title:
----------------------------------
-2-
<PAGE> 161
EXHIBIT E
REQUEST FOR LOAN
1. This Request for Loan is executed and delivered by Coast
Hotels and Casinos, Inc., a Nevada corporation ("Borrower"), to Bank of America
National Trust and Savings Association, as Administrative Agent, pursuant to the
Loan Agreement (as amended, modified or extended, the "Loan Agreement") dated as
of March 18, 1999, among Borrower, the Lenders therein named, and Bank of
America National Trust and Savings Association, as Administrative Agent. Any
terms used herein and not defined herein shall have the meanings set forth for
such terms in the Loan Agreement.
2. Borrower hereby requests that the Lenders make a Loan
pursuant to the Loan Agreement as follows:
a. AMOUNT OF REQUESTED LOAN: $______________
b. DATE OF REQUESTED LOAN: _________________
c. TYPE OF REQUESTED LOAN (Check one box only):
[ ] BASE RATE
[ ] LIBOR, FOR AN INTEREST PERIOD OF
------------------
3. In connection with the request, Borrower certifies that:
a. Except as disclosed by Borrower and approved in
writing by the Requisite Lenders, the representations and warranties contained
in Article 4 of the Loan Agreement (other than the representations set forth in
Sections 4.4, 4.10 and 4.17) shall be true and correct on the date of such
Advance as though made on that date;
b. There is not any pending or threatened action,
suit, proceeding or investigation affecting Borrower or any of its Subsidiaries
before any Governmental Agency may reasonably be expected to have a Material
Adverse Effect; and
c. The Loan requested herein will not cause
Borrower to violate the terms of the Indenture dated as of March 23, 1999, among
Borrower, Coast Resorts, Inc., as Guarantor, and Firstar Bank of Minnesota,
N.A., as Trustee, including without limitation Section 4.07(a)(i) thereof.
-1-
<PAGE> 162
4. This Request for Loan is executed on __________, _____,
by a Responsible Official of Borrower. The undersigned, in such capacity, hereby
certifies each and every matter contained herein to be true and correct.
COAST HOTELS AND CASINOS, INC.,
a Nevada corporation
By:
-------------------------------------
Title:
----------------------------------
-2-
<PAGE> 1
EXHIBIT 12
COAST RESORTS, INC.
COMPUTATION OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma(3)
Three months --------------------------
Ended Three months
Years Ended December 31, March 31, Year Ended Ended
------------------------------------------- --------------- December 31, March 31,
1994 1995 1996(1) 1997(2) 1998 1998 1999 1998 1999
------ ------ ------- ------- ------ ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes and
extraordinary item .................. 14,963 14,226 11,436 (4,733) 13,983 4,443 9,336 19,492 10,756
Add, fixed charges .................... 462 4,612 32,320 30,088 30,838 7,470 7,492 25,329 6,120
Add, amortization of capitalized
interest ............................ -- -- 18 218 218 55 55 218 55
Subtract, interest capitalized ........ -- (235) (7,464) (1,016) (58) -- -- (58) --
------ ------ ------ ------ ------ ----- ----- ------ ------
15,425 18,603 36,310 24,557 44,981 11,968 16,883 44,981 16,931
------ ------ ------ ------ ------ ----- ----- ------ ------
Fixed charges:
Interest expense ...................... 345 3,886 22,236 26,342 27,323 6,764 6,514 22,243 5,231
Interest capitalized .................. -- 235 7,464 1,016 58 -- -- 58 --
Amortization of debt financing costs .. -- -- 1,005 1,113 1,204 301 256 775 167
Interest factor on rentals ............ 117 491 1,615 1,617 2,253 405 722 2,253 722
------ ------ ------ ------ ------ ----- ----- ------ ------
462 4,612 32,320 30,088 30,838 7,470 7,492 25,329 6,120
------ ------ ------ ------ ------ ----- ----- ------ ------
Ratio of earnings to fixed charges ...... 33.4 4.0 1.1 -- 1.5 1.6 2.3 1.8 2.8
====== ====== ====== ====== ====== ===== ===== ====== ======
</TABLE>
- ------------------------
(1) The Orleans opened in 1996.
(2) Earnings in 1997 were insufficient to cover fixed charges by $5,531,000.
Accordingly, such ratio has not been presented.
(3) Pro forma to reflect the offering of outstanding notes, initial borrowings
of $47.0 million under the new credit facility, and the repurchase of
substantially all of the 13% first mortgage notes and the repurchase of all
of the 10-7/8% first mortgage notes. The pro forma data assume that such
transactions occurred on January 1, 1998 and reflect a net reduction in
interest expense and amortization of debt issue costs.
<PAGE> 1
EXHIBIT 21
Subsidiary of Coast Resorts, Inc.
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- ---- ---------------
<S> <C>
Coast Hotels and Casinos, Inc. Nevada
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement on Form S-4 of Coast
Hotels and Casinos, Inc. of our report dated February 5, 1999, except for Note
15 as to which the date is March 4, 1999 relating to the financial statements
of Coast Hotels and Casinos, Inc. and our report dated February 5, 1999, except
for Note 2 as to which the date is March 4, 1999 relating to the financial
statements of Coast Resorts, Inc. (parent company only), which appear in such
Registration Statement.
PricewaterhouseCoopers LLP
Las Vegas, Nevada
May 26, 1999
<PAGE> 1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
(Exact name of Trustee as specified in its charter)
A National Banking Association 41-0122055
(State of incorporation if not a (IRS Employer
national bank) Identification No.)
101 East Fifth Street
Corporate Trust Department
St. Paul, Minnesota 55101
(Address of principal (Zip Code)
executive offices)
FIRSTAR BANK OF MINNESOTA, N.A.
101 East Fifth Street
St. Paul, Minnesota 55101
(612) 229-2600
(Exact name, address and telephone number of agent for service)
------------------------
COAST HOTELS AND CASINOS, INC.
COAST RESORTS, INC.
Nevada 88-0345706
Nevada 88-0345704
(State of incorporation (IRS Employer
or other jurisdiction) Identification No.)
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
(Address of principal (Zip Code)
executive offices)
------------------------
9 1/2% Senior Subordinated Notes due 2009
(Title of Indenture securities)
<PAGE> 2
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, DC
Federal Deposit Insurance Corporation
Washington, DC
The Board of Governors of the Federal Reserve System
Washington, DC
(b) The Trustee is authorized to exercise corporate trust powers.
GENERAL
Item 2. Affiliations with Obligor and Underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe
each such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's knowledge
the obligor is not in default under any Indenture for which the Trustee acts as
Trustee.
Item 16. List of Exhibits. Listed below are all the exhibits filed as a part
of this statement of eligibility and qualification. Exhibits 1-4 are
incorporated by reference from filing 333-48849.
Exhibit 1. Copy of Articles of Association of the trustee now in
effect.
Exhibit 2. a. A copy of the certificate of the Comptroller of
Currency dated June 1, 1965, authorizing Firstar
Bank of Minnesota, N.A. to act as fiduciary.
b. A copy of the certificate of authority of the
trustee to commence business issued June 9, 1903,
by the Comptroller of the Currency to Firstar Bank
of Minnesota, N.A.
<PAGE> 3
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued by the Federal Reserve
Board.
Exhibit 4. Copy of the By-Laws of the trustee as now in effect.
Exhibit 5. Copy of each Indenture referred to in Item 4.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervision or examining authority.
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligor, or affiliates, are based
upon information furnished to the Trustee by the obligor. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, a national banking association organized and existing under the laws
of the Unites States, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City
of Saint Paul and State of Minnesota on the 6th day of May, 1999.
FIRSTAR BANK OF MINNESOTA, N.A.
(Seal) /s/ FRANK P. LESLIE III
--------------------------------
Frank P. Leslie III
Vice President
<PAGE> 4
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, Firstar Bank of Minnesota, N.A., hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
FIRSTAR BANK OF MINNESOTA, N.A.
Dated: May 6, 1999
/s/ FRANK P. LESLIE III
--------------------------------
Frank P. Leslie III
Vice President
<PAGE> 5
EXHIBIT 7
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Firstar Bank Milwaukee, N.A. Call Date: 12/31/98 ST-BK: 55-9180 FFIEC 031
Address: 777 East Wisconsin Avenue
City, State, Zip: Milwaukee, Wisconsin 53202
FDIC Certificate No.: 0/5/3/0/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC -- BALANCE SHEET
<TABLE>
<CAPTION>
/ C400 \
Dollar Amounts in Thousands RCFD Bil Mil Thou
--------------------------- -----------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balanced due from depository institutions (from Schedule RC-A) ..... /////////////////
a. Noninterest-bearing balances and currency and coin(1) ................... 0081 96,643 1.a.
b. Interest-bearing balances(2) ............................................ 0071 1,055 1.b.
2. Securities .................................................................. /////////////////
a. Held-to-maturity securities (from Schedule RC-B, Column A) .............. 1754 0 2.a.
b. Avaliable-for-sale securities (from Schedule RC-B, Column D) ............ 1773 396,617 2.b.
3. Federal funds sold and securities purchased under agreements to resell ...... 1350 532,733 3.
4. Loans and lease financing receivables ....................................... /////////////////
a. Loans and leases, net of unearned income ................................ /////////////////
(from Schedule RC-C) ............................ RCFD 2122 5,832,760 ///////////////// 4.a.
b. LESS: Allowance for loan and lease losses ....... RCFD 3123 84,275 ///////////////// 4.b.
c. LESS: Allocated transfer risk reserve ........... RCFD 3128 0 ///////////////// 4.c.
d. Loans and leases, net of unearned income, allowance, and reserve ........ /////////////////
(Item 4.a. minus 4.b. and 4.c.) ......................................... 2125 0 4.d.
5. Trading assets (from Schedule RC-D) ......................................... 3545 32,317 5.
6. Premises and fixed assets (including capitalized leases) .................... 2145 1,458 6.
7. Other real estate owned (from Schedule RC-M) ................................ 2150 88 7.
8. Investments in unconsolidated subsidiaries and associated companies ......... /////////////////
(from Schedule RC-M) ........................................................ 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding ................ 2155 0 9.
10. Intangible assets (from Schedule RC-M) ...................................... 2143 104,559 10.
11. Other assets (from Schedule RC-F) ........................................... 2160 47,834 11.
12. Total assets (sum of items 1 through 11) .................................... 2170 2,592,894 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held for trading
<PAGE> 6
LIABILITIES
<TABLE>
<CAPTION>
/ C400 \
Dollar Amounts in Thousands RCFD Bil Mil Thou
--------------------------- -----------------
<S> <C> <C> <C> <C> <C>
13. Deposits .................................................................... /////////////////
a. In domestic offices (sum of totals of columns A and C from .............. /////////////////
Schedule RC-E, part 1) .................................................. RCON 2200 2,023,758 13.a.
(1) Noninterest-bearing(1) ..................... RCON 6631 149,315
(2) Interest-bearing ........................... RCON 6636 1,874,443 ///////////////// 13.a.(1)
b. In foreign offices, Edge and Agreement .................................. ///////////////// 13.b.(2)
subsidiaries, and IBFs (from Schedule RC-E, part II) .................... RCFN 2200 404,324 13.b.
(1) Noninterest-bearing ........................ RCFN 6631 0 ///////////////// 13.b.(1)
(2) Interest-bearing ........................... FCFN 6636 0 ///////////////// 13.b.(2)
14. Fed funds purchased & securities sold under agreements to repurchase ........ RCON 2800 27,351 14.
15. a. Demand notes issued to the U.S. Treasury ................................ RCON 2840 0 15.a.
b. Trading liabilities (From Schedule RC-D) ................................ RCFD 3548 0 15.b.
16. Other borrowed money (including mortgage indebtedness and ................... /////////////////
obligations under capitalized leases) ....................................... /////////////////
a. With a remaining maturity of 1 year or less ............................. RCFD 2332 150,001 16.a.
b. With a remaining maturity of more than 1 year through 3 years ........... RCFD A547 85,418 16.b.
c. With a remaining maturity of more than 3 years .......................... RCFD A547 0 16.c.
17. Not applicable .............................................................. /////////////////
18. Bank's liability on acceptances executed and outstanding .................... RCFD 2920 0 18.
19. Subordinated notes and debentures(2) ........................................ RCFD 3200 10,000 19.
20. Other liabilities (from Schedule RC-G) ...................................... RCFD 2930 32,900 20.
21. Total liabilities (sum of items 13 through 20) .............................. RCFD 2948 2,329,428 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus ............................... RCFD 3838 0 23.
24. Common stock ................................................................ RCFD 3230 35,730 24.
25. Surplus (exclude all surplus related to preferred stock) .................... RCFD 3839 220,556 25.
26. a. Undividided profits and capital reserves ................................ RCFD 3632 (396) 26.a.
b. Net unrealized holding gains (losses) on ................................ /////////////////
available-for-sale securities ........................................... RCFD 8434 7,576 26.b.
27. Cumulative foreign currency translation adjustments ......................... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) ........................... RCFD 3210 263,466 28.
29. Total liabilities and equity capital (sum of items 21 and 28) ............... RCFD 3300 2,592,894 29.
</TABLE>
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 7
MEMORANDUM
To be reported only with the March Report of Condition.
RCFD 6724 N/A M.1.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent
external auditors as of any date during 1997.
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank.
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately).
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting (may be
required by state chartering authority).
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority).
5 = Review of the bank's financial statements by external auditors.
6 = Compilation of the bank's financial statements by external auditors.
7 = Other audit procedures (excluding tax preparation work).
8 = No external audit work.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001013559
<NAME> COAST HOTELS & CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 35,697
<SECURITIES> 0
<RECEIVABLES> 5,590
<ALLOWANCES> 767
<INVENTORY> 4,556
<CURRENT-ASSETS> 56,575
<PP&E> 407,687
<DEPRECIATION> 104,795
<TOTAL-ASSETS> 372,314
<CURRENT-LIABILITIES> 42,111
<BONDS> 176,980
0
0
<COMMON> 1
<OTHER-SE> 82,233
<TOTAL-LIABILITY-AND-EQUITY> 372,314
<SALES> 0
<TOTAL-REVENUES> 90,066
<CGS> 0
<TOTAL-COSTS> 74,431
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,299
<INCOME-PRETAX> 9,336
<INCOME-TAX> 3,013
<INCOME-CONTINUING> 6,323
<DISCONTINUED> 0
<EXTRAORDINARY> (27,007)
<CHANGES> 0
<NET-INCOME> (20,684)
<EPS-BASIC> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>FOR THE PURPOSES OF THIS EXHIBIT, PRIMARY MEANS BASIC.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001001865
<NAME> COAST RESORTS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 82,373
<CURRENT-LIABILITIES> 1,131
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 81,227
<TOTAL-LIABILITY-AND-EQUITY> 82,373
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (20,684)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (20,684)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,684)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,684)
<EPS-BASIC> (13.89)
<EPS-DILUTED> (13.89)
</TABLE>
