<PAGE> 1
As filed with the Securities and Exchange Commission on June 21, 1996
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE MAJESTIC STAR CASINO, LLC
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
INDIANA 7999 43-1664986
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or
organization)
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ONE BUFFINGTON HARBOR DRIVE
GARY, INDIANA 46406-3000
(219) 977-7777
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
------------------------------
KENNETH L. KRAMER
ONE BUFFINGTON HARBOR DRIVE
GARY, INDIANA 46406-3000
(219) 977-7777
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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copies to:
FRANK K. ZINN, ESQ.
DYKEMA GOSSETT PLLC
400 RENAISSANCE CENTER
DETROIT, MICHIGAN 48243
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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: / /
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
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12 3/4% Senior Exchange Secured
Notes due May 15, 2003.......... $105,000,000 100% $105,000,000 $36,207
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(1) Estimated pursuant to Rule 457(f)(2) solely for the purpose of calculating
the registration fee.
THE REGISTRANTS HEREBY AMEND 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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE MAJESTIC STAR CASINO, LLC
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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FORM S-4 ITEM NUMBER HEADING OR SUBHEADING IN PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration
Outside Front Cover Page of
Prospectus......................... Facing Page of Registration Statement; Cross
Reference Sheet; Outside Front Cover Page of
Prospectus.
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front Cover Page of Prospectus; Outside
Back Cover Page of Prospectus.
3. Risk Factors, Ratio of Earnings
to Fixed Charges, and Other
Information........................ Prospectus Summary; Risk Factors; Business;
Selected Financial Data.
4. Terms of the Transaction........... Prospectus Summary; The Exchange Offer;
Description of the Senior Notes; Senior Notes --
Registration Rights; Material Federal Income Tax
Considerations.
5. Pro Forma Financial Information.... Not Applicable.
6. Material Contracts With the Company
Being Acquired..................... Not Applicable.
7. Additional Information Required For
Reoffering by Persons and Parties
Deemed to be Underwriters.......... Not Applicable.
8. Interests of Named Experts and
Counsel............................ Legal Matters; Experts.
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities.................... Not Applicable.
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3
Registrants........................ Not Applicable.
11. Incorporation of Certain
Information by Reference........... Not Applicable.
12. Information With Respect to S-2 or
S-3 Registrants.................... Not Applicable.
13. Incorporation of Certain
Information by Reference........... Not Applicable.
14. Information With Respect to
Registrants Other Than S-2 or S-3
Companies.......................... Prospectus Summary; Capitalization; Business;
Material Agreements; Regulation; Selected
Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Description of Senior Notes;
Financial Statements.
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FORM S-4 ITEM NUMBER HEADING OR SUBHEADING IN PROSPECTUS
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C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3
Companies.......................... Not Applicable.
16. Information With Respect to S-2 or
S-3 Companies...................... Not Applicable.
17. Information With Respect to
Companies With Than S-2 or S-3
Companies.......................... Not Applicable.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be
Solicited.......................... Not Applicable.
19. Information if Proxies, Consents or
Authorizations Are Not to be
Solicited, or in an Exchange
Offer.............................. Management; Certain Transactions; Principal
Security Holders.
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<PAGE> 4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION DATED JUNE 21, 1996
THE MAJESTIC STAR CASINO, LLC
OFFER TO EXCHANGE
12 3/4% SENIOR EXCHANGE SECURED NOTES DUE 2003, WITH CONTINGENT INTEREST
FOR ALL OUTSTANDING
12 3/4% SENIOR SECURED NOTES DUE 2003, WITH CONTINGENT INTEREST
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME
IN , 1996, UNLESS EXTENDED
The Majestic Star Casino, LLC, an Indiana limited liability company (the
"Company"), hereby offers, upon the terms and subject to conditions set forth in
this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal
(the "Letter of Transmittal", together with the Prospectus, the "Exchange
Offer"), to exchange up to an aggregate principal amount of $105,000,000 of its
12 3/4% Senior Exchange Secured Notes Due 2003, with Contingent Interest (the
"Senior Exchange Notes") for up to an aggregate principal amount of $105,000,000
of its outstanding 12 3/4% Senior Secured Notes Due 2003, with Contingent
Interest (the "Senior Notes"). The terms of the Senior Exchange Notes are
substantially identical in all material respects to those of the Senior Notes,
except for certain transfer restrictions and registration rights relating to the
Senior Notes. The Senior Exchange Notes will be issued pursuant to, and entitled
to the benefits of, the Indenture (as defined herein) governing the Senior
Notes. The Senior Exchange Notes and the Senior Notes are sometimes referred to
collectively as the "Notes".
The Company will accept for exchange of any and all Senior Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time,
on , 1996, unless extended by the Company in its sole discretion (the
"Expiration Date"). The Expiration Date will not in any event be extended to a
date later than , 1996. Tenders of Senior Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Senior Notes with respect to the Exchange Offer, the Company will promptly
return the Senior Notes to the holders thereof. The Exchange Offer is not
conditioned upon any minimum principal amount of Senior Notes being tendered for
exchange, but is otherwise subject to certain customary conditions. The Senior
Notes may be tendered only in integral multiples of $1,000.
Fixed interest is payable on the Senior Exchange Notes at the rate of
12 3/4% per annum, semi-annually on May 15 and November 15 of each year
commencing November 15, 1996. Contingent Interest (as defined herein) is payable
on the Senior Exchange Notes, on each such interest payment date, in an
aggregate amount equal to 5.0% of the Company's Consolidated Cash Flow (as
defined herein) for the six month period ending on March 31 or September 30
(each, a "Semiannual Period") most recently completed prior to such interest
payment date, up to a limit of $60.0 million of the Company's Consolidated Cash
Flow during any two consecutive Semiannual Periods; provided that no Contingent
Interest shall be payable with respect to any period prior to the first day of
the operation of the Majestic Star Casino. The Company, at its option, may defer
payment of all or a portion of any installment of Contingent Interest then
otherwise due subject to certain conditions described herein. See "Description
of Senior Notes -- Principal, Maturity and Interest."
The Senior Exchange Notes will not be redeemable prior to May 15, 2000,
except as otherwise required by the Indiana Gaming Commission or any other
governmental authority or as otherwise permitted out of funds then remaining in
the Interest Reserve Account (as defined herein) after May 15, 1997 and prior to
May 15, 1998. On and after May 15, 2000, the Senior Exchange Notes will be
redeemable at the option of the Company, in whole or in part, at the redemption
prices set forth herein plus accrued and unpaid interest, if any, to the date of
redemption. See "Description of Senior Notes -- Optional Redemption." Upon a
Change in Control (as defined herein), subject to certain limitations, the
Company shall be required to offer to repurchase the Senior Exchange Notes owned
by each holder of Senior Notes at 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase. See "Description
of Senior Notes -- Repurchase at the Option of Holders -- Change of Control."
The Company may not have sufficient funds available to purchase all of the
outstanding Senior Exchange Notes were they to be tendered in response to an
offer made as a result of a Change of Control.
(Continued on following page)
-------------------------
SEE "RISK FACTORS" ON PAGE 11 FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PARTICIPANTS IN EXCHANGE OFFER.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is , 1996
<PAGE> 5
(Continued from front cover)
The Senior Exchange Notes will be senior secured obligations of the Company
and will rank pari passu in right of payment with any existing and future senior
indebtedness of the Company and will rank senior to all existing and future
subordinated indebtedness of the Company. The Senior Exchange Notes will be
secured by, among other things, (i) a pledge of the Company's 50% membership
interest in the Buffington Harbor Riverboats, L.L.C., a Delaware limited
liability company, (ii) a pledge of the entire membership interest in the
Company of Barden Development, Inc., the principal member of the Company, (iii)
a collateral assignment of the Company's interest in the Berthing Agreement (as
defined herein) and (iv) a pledge of all funds in the Cash Collateral Accounts
(as defined herein) into which the proceeds from the offering of Senior Notes,
for which the Senior Exchange Notes are to be exchanged, were deposited pending
their use. Upon delivery of the Permanent Vessel to the Company, the Senior
Exchange Notes will be secured by a duly perfected first preferred ship mortgage
on such Permanent Vessel. See "Description of Senior Notes -- Security."
The Senior Exchange Notes are being offered hereunder in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement dated May 22, 1996 (the "Registration Rights Agreement") by and
between the Company and Wasserstein Perella Securities, Inc., as the initial
purchaser (the "Initial Purchaser"), with respect to the initial sale of the
Senior Notes. Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission"), the Senior Exchange Notes issued
pursuant to the Exchange Offer in exchange for Senior Notes may be offered for
resale, resold and otherwise transferred by respective holder thereof (other
than any such holder which is an "affiliate") of the Company within the meaning
of Rule 405 under the Securities Act, without compliance with the registration
and prospectus delivery provisions of the Securities Act, of 1933, as amended
(the "Securities Act"), provided that the Senior Exchange Notes are acquired in
the ordinary course of such holder's business and such holder has no arrangement
with any person to participate in the distribution of such Senior Exchange Notes
and is not engaged in and does not intend to engage in a distribution of the
Senior Exchange Notes. Each broker-dealer that receives Senior 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 Senior Exchange
Notes. The Letter of Transmittal states that by so acknowledging 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. 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 the Senior Exchange Notes received
in exchange for Senior Notes if such Senior Exchange Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 365 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution." EXCEPT AS
DESCRIBED IN THIS PARAGRAPH, THIS PROSPECTUS MAY NOT BE USED FOR AN OFFER TO
RESELL, RESALE OR OTHER TRANSFER OF NOTES.
Prior to the Exchange Offer, there has been no public market for the Senior
Exchange Notes. The Senior Notes are not, and the Senior Exchange Notes are not
expected to be, listed on any securities exchange or authorized for trading on
the Nasdaq Stock Market. There can be no assurances as to the liquidity of any
markets that may develop for the Senior Exchange Notes, the ability of holders
to sell the Senior Exchange Notes, or the price at which holders would be able
to sell the Senior Exchange Notes. Future trading prices of the Senior Exchange
Notes will depend on many factors, including among other things, prevailing
interest rates, the Company's operating results and the market for similar
securities. Historically, the market for securities similar to the Senior
Exchange Notes, including non-investment grade debt, has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that any market for the Senior Exchange
Notes, if such market develops, will not be subject to similar disruptions. The
Initial Purchaser has advised the Company that it currently intends to make a
market in the Senior Exchange Notes offered hereby. However, the Initial
Purchaser is not obligated to do so and any market making may be discontinued at
any time without notice.
The Senior Notes were initially purchased by accredited investors and
"qualified institutional buyers" (as such term is defined in Rule 144A under the
Securities Act). The Senior Notes purchased by qualified institutional buyers
were initially represented by a single global note in fully registered form (the
"Global Senior Note"), registered in the name of a nominee of The Depository
Trust Company ("DTC"), as depositary. The Senior Exchange Notes exchanged for
Senior Notes represented by the Global Senior Note will be represented by a
single global note in fully registered form (the "Global Senior Exchange Note")
registered in the name of the nominee of DTC. The Global Senior Exchange Note
will be exchangeable for Senior Exchange Notes in registered form, in
denominations of $1,000 and integral multiples thereof as described herein. The
Senior Exchange Notes in global form will trade in DTC's Same-Day Funds
Settlement System, and secondary market trading activity in such Senior Exchange
Notes will therefore settle in immediately available funds. See "Description of
Senior Exchange Notes -- Form, Denomination and Book-Entry Procedures."
The Company will not receive any proceeds from the Exchange Offer. See "Use
of Proceeds". The Company has agreed to pay the expenses incident to the
Exchange Offer.
<PAGE> 6
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the Senior Exchange Notes
being offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made in
this Prospectus as to the contents of any contract, agreement or other document
referred to in the Registration Statement are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
Upon consummation of the Exchange Offer, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Registration Statement, the exhibits forming a part
thereof and the reports and other information filed by the Company with the
Commission in accordance with the Exchange Act may be inspected and copies at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also be
available for inspection and copying at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained upon written
request from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
The Indenture provides that, following the filing date of this Registration
Statement and for so long as any of the Senior Exchange Notes are outstanding,
the Company will file with the Commission the periodic reports required to be
filed with the Commission under the Exchange Act, whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act. The Company will also,
within 15 days of filing each such report with the Commission, provide the
Trustee and the Holders of the Senior Exchange Notes with annual reports
containing the information required to be contained in Form 10-K promulgated
under the Exchange Act, quarterly reports containing the information required to
be contained in Form 10-Q promulgated under the Exchange Act, and from time to
time such other information as is required to be contained in Form 8-K
promulgated under the Exchange Act. If filing such reports with the Commission
is prohibited by the Exchange Act, the Company will also provide copies of such
reports to holders of the Senior Exchange Notes upon written request.
3
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Risk Factors" on page
11 for a discussion of certain factors which should be considered by prospective
participants in the Exchange Offer. All references in this Prospectus to the
"Gaming Complex" shall mean the Majestic Star Casino together with the Pavilion
(as defined herein) and other support facilities for the Majestic Star Casino.
All references in this Prospectus to the "Buffington Harbor Facility" shall mean
the Gaming Complex together with the riverboat casino owned and operated by the
Joint Venture Partner. Other terms not defined in this Prospectus Summary shall
have the meanings set forth elsewhere in this Prospectus.
THE COMPANY
The Company owns and operates the Majestic Star casino (the "Majestic Star
Casino"), a riverboat gaming facility located at Buffington Harbor in Gary,
Indiana, approximately 23 miles southeast of downtown Chicago, pursuant to a
riverboat gaming license granted to the Company by the Indiana Gaming Commission
(the "IGC"). The Majestic Star Casino commenced operations on June 7, 1996 and
contains approximately 26,000 square feet of gaming space with approximately 924
slot machines and 50 table games. In addition to its approximately 1,300 gaming
positions, the Majestic Star Casino offers customers on-board food, beverage and
bar facilities. The Company has chartered the vessel on which the Majestic Star
Casino currently operates (the "Chartered Vessel") and intends to construct a
permanent vessel (the "Permanent Vessel") containing approximately 40,000 square
feet of gaming space with 1,800 to 2,000 gaming positions to replace the
Chartered Vessel. The Company will construct the Permanent Vessel with a portion
of the proceeds from the offering of Senior Notes made in May 1996 (the "Senior
Note Offering"). The Company currently expects that it will take delivery of the
Permanent Vessel in the second half of 1997. The Majestic Star Casino is
conveniently located at the interchange of U.S. 12 and Indiana State Highway 912
and is easily accessible to gaming customers in the Chicago metropolitan area,
Indianapolis, South Bend and Fort Wayne, Indiana, and Kalamazoo and Grand
Rapids, Michigan by major state and federal highways.
The Company and Trump Indiana, Inc. (the "Joint Venture Partner"), an
indirect subsidiary of Trump Hotels and Casino Resorts, Inc., formed Buffington
Harbor Riverboats, L.L.C. (the "BHR Joint Venture") for the purpose of jointly
developing and operating the common areas of the Gaming Complex. The Gaming
Complex includes a two-level, 90,000 square foot pavilion (the "Pavilion")
containing a 400 seat buffet, a 100 seat steakhouse restaurant, several bars and
lounges and areas for staging and ticketing. The Pavilion features granite
floors, unique metallic finishes, two large fountains and a variety of lighting
effects. The Company believes the Pavilion's amenities will help attract
customers to the Majestic Star Casino. The Buffington Harbor Facility is
situated on an approximately one-hundred acre site, contains 3,200 parking
spaces and offers valet parking and convenient bus loading and unloading
facilities.
The Company and its Joint Venture Partner each operates its own riverboat
casino at the Gaming Complex. Currently, as a result of notice given by the IGC,
the Company and the Joint Venture Partner conduct gaming operations through
simulated cruises which permit entrance to the casino during thirty-minute
periods, commencing at scheduled times, and which permit unlimited egress. The
Company and the Joint Venture Partner operate their riverboat casinos on a
staggered cruising schedule. Management expects the staggered cruising schedule
to appeal to customers because it will reduce waiting times to board a casino.
Management expects the Buffington Harbor Facility to be the only site in
northern Indiana which will offer a staggered cruising schedule and that
staggered cruising will be an advantage for casinos at the Buffington Harbor
Facility over other northern Indiana casinos. The Majestic Star Casino and the
Joint Venture Partner's riverboat together offer customers a total of
approximately 3,400 gaming positions, which management believes is significantly
more gaming positions than will exist at any other site in northern Indiana and
is approximately three times the number of gaming positions allowed at any
individual Illinois gaming site, each of which is currently limited by Illinois
gaming laws to 1,200 gaming positions.
The Company expects its target market to consist primarily of drive-in,
middle market customers residing within a 150-mile radius of the Majestic Star
Casino, which includes the Chicago metropolitan area, the third most populated
metropolitan area in the United States. Approximately 12.4 and 6.8 million
adults reside within 150 and 50 miles, respectively, of the Majestic Star
Casino.
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<PAGE> 8
The market area within 150 miles of the Majestic Star Casino has one of the
highest ratios of adults to gaming positions of any drive-in gaming market in
the United States. Based on the 12,600 gaming positions projected for the
northern Indiana and Chicago area markets, including the five casinos expected
to be opened in northern Indiana, there will be one gaming position for every
984 adults. By comparison, the Atlantic City market has one gaming position for
every 702 adults. The Company believes that it is well positioned to capitalize
on the lower density of gaming positions in its market area relative to
population. The relative proximity of large population centers to Gary, Indiana,
compares favorably to the population centers around Atlantic City. For example,
downtown Chicago is only 23 miles from the Majestic Star Casino while
Philadelphia and New York City are approximately 60 and 120 miles, respectively,
from Atlantic City.
The Company believes that revenues reported by the riverboat casinos
currently operating in northern Illinois indicate that the Chicago area gaming
market is underserved. Revenues for 1995 indicate that the four gaming companies
operating seven riverboat casinos in the Chicago area generated an average win
per slot per day of $353 and an average win per table per day of $3,048, which
surpass the Atlantic City market's performance of average win per slot per day
by over 40% and average win per table per day by over 10% for the same period.
The Company was formed in December 1993 for the purpose of developing,
owning and operating the Majestic Star Casino. See "Business -- Don H. Barden --
Development and Business Experience" and "Business -- Background." The principal
executive offices of the Company are located at One Buffington Drive, Gary,
Indiana, 46406-3000, and its telephone number is 219-977-7777.
THE EXCHANGE OFFER
THE SENIOR EXCHANGE NOTES..... The forms and terms of the Senior Exchange
Notes are substantially identical in all
material respects to the terms of the Senior
Notes for which they may be exchanged pursuant
to the Exchange Offer, except for certain
transfer restrictions and registration rights
relating to the Senior Notes and except for
certain liquidated damages provisions relating
to the Senior Notes described below under "--
Terms of Senior Exchange Notes."
THE EXCHANGE OFFER............ The Company is offering to exchange up to
$105,000,000 aggregate principal amount of
12 3/4% Senior Exchange Secured Notes due 2003,
with Contingent Interest (the "Senior Exchange
Notes") for up to $105,000,000 aggregate
principal amount of its outstanding 12 3/4%
Senior Secured Notes due 2003, with Contingent
Interest (the "Senior Notes"). Senior Notes may
be exchanged only in integral multiples of
$1,000.
EXPIRATION DATE; WITHDRAWAL OF
TENDER........................ The Exchange Offer will expire at 5:00 p.m.,
New York City time, on ,
1996 or such later date and time to which it is
extended by the Company. The tender of Senior
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration
Date. Any Senior Notes not accepted for
exchange for any reason will be returned
without expense to the tendering holder thereof
as promptly as practicable after the expiration
or termination of the Exchange Offer.
CERTAIN CONDITIONS TO THE NOTE
EXCHANGE OFFER................ The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange Offer -- Certain
Conditions to the Exchange Offer."
PROCEDURES FOR TENDERING
SENIOR NOTES.................. Each holder of Senior Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a
5
<PAGE> 9
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
such Senior Notes and any other required
documentation to the Exchange Agent (as
defined) at the address set forth herein. By
executing the Letter of Transmittal, each
holder will represent to the Company that,
among other things, (i) any Senior Exchange
Notes to be received by it will be acquired in
the ordinary course of its business, (ii) it
has no arrangement with any person to
participate in the distribution of the Senior
Exchange Notes and (iii) it is not an
"affiliate," as defined in Rule 405 of the
Securities Act, of the Company.
INTEREST ON THE SENIOR
EXCHANGE NOTES................ 12 3/4% per annum, payable semi-annually in
arrears.
Contingent Interest is payable on the Senior
Exchange Notes, on each interest payment date,
in an aggregate amount equal to 5.0% of the
Company's Consolidated Cash Flow for the
six-month period (a "Semiannual Period") most
recently completed prior to such interest
payment date, up to a limit of $60.0 million of
the Company's Consolidated Cash Flow during any
two consecutive Semiannual Periods; provided
that no Contingent Interest shall be payable
with respect to any period prior to June 7,
1996, the first day the Majestic Star Casino
commenced operations. Payment of all or a
portion of any installment of Contingent
Interest may be deferred, at the option of the
Company, if, and only to the extent that, (i)
the payment of such portion of Contingent
Interest will cause the Company's Adjusted
Fixed Charge Coverage Ratio for the four
consecutive fiscal quarters last completed
prior to such interest payment date to be less
than 2.0 to 1 on a pro forma basis after giving
effect to the assumed payment of such
Contingent Interest and (ii) the principal
amount of the Senior Exchange Notes
corresponding to such Contingent Interest has
not then matured and become due and payable (at
stated maturity, upon acceleration, upon
maturity of a repurchase obligation or
otherwise). The aggregate amount of Contingent
Interest payable in any Semiannual Period will
be reduced pro rata for reductions in the
outstanding principal amount of Senior Exchange
Notes prior to the close of business on the
record date immediately preceding such payment
of Contingent Interest. The payment of
Contingent Interest is subject to certain
restrictions set forth herein. See "Description
of Senior Notes -- Principal, Maturity and
Interest."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. Any beneficial owner whose Senior Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender such Senior Notes in
the Exchange Offer should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to tender on such owner's own behalf, such
owner must, prior to completing and executing
the Letter of Transmittal and delivering his
Senior Notes, either make appropriate
arrangements to register ownership of the
Senior Notes in such owner's name or obtain a
properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time and may
not be completed prior to the Expiration Date.
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<PAGE> 10
GUARANTEED DELIVERY
PROCEDURES.................... Holders of Notes who wish to tender their
Senior Notes and whose Senior Notes are not
immediately available or who cannot deliver
their Senior Notes, the Letter of Transmittal
or any other documents required by the Letter
of Transmittal to the Exchange Agent, prior to
the Expiration Date, must tender their Senior
Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer --
Guaranteed Delivery Procedures."
REGISTRATION OBLIGATIONS...... The Company has agreed to use its best efforts
to consummate by , 1996 the
registered Exchange Offer pursuant to which
holders of the Senior Notes will be offered an
opportunity to exchange their Senior Notes for
the Senior Exchange Notes which will be issued
without legends restricting the transfer
thereof. In the event that applicable
interpretations of the staff of the Commission
do not permit the Company to effect the
Exchange Offer or in certain limited
circumstances, the Company has agreed to file a
shelf registration statement covering resales
of the Senior Notes and to use its best efforts
to cause such shelf registration statement to
be declared effective under the Securities Act
and, subject to certain exceptions, keep such
shelf registration statement effective until
the earlier of three years after following the
date of original issuance of the Senior Notes
and such time as all the Senior Exchange Notes
have been sold thereunder or are otherwise no
longer restricted securities.
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS................ For a discussion of certain federal income tax
considerations relating to the exchange of the
Senior Exchange Notes for the Senior Notes, see
"Material Federal Income Tax Considerations."
USE OF PROCEEDS............... There will no proceeds to the Company from the
exchange of Notes pursuant to the Exchange
Offer.
EXCHANGE AGENT................ IBJ Schroder Bank & Trust Company is the
Exchange Agent. The address and telephone
number of the Exchange Agent are set forth in
"The Exchange Offer -- Exchange Agent."
TERMS OF SENIOR EXCHANGE NOTES
The Exchange Offer applies to up to $105.0 million aggregate principal
amount of the Company's Senior Notes. The Senior Exchange Notes will be
obligations of the Company evidencing the same debt as the Senior Notes and will
be entitled to the benefits of the same Indenture. See "Description of Senior
Notes." The form and terms of the Senior Exchange Notes are the same as the form
and terms of the Senior Notes in all material respects except that the Senior
Exchange Notes have been registered under the Securities Act and hence do not
include certain rights to registration thereunder and do not contain transfer
restrictions or terms with respect to liquidated damages applicable to the
Senior Notes. See "Description of Senior Notes."
SECURITIES OFFERED............ $105,000,000 in aggregate principal amount of
Senior Exchange Secured Notes (the "Senior
Exchange Notes").
MATURITY...................... May 15, 2003.
INTEREST PAYMENT DATES........ May 15 and November 15, commencing November 15,
1996.
FIXED INTEREST................ 12 3/4% per annum, payable semi-annually in
arrears.
CONTINGENT INTEREST........... Contingent Interest is payable on the Senior
Exchange Notes, on each interest payment date,
in an aggregate amount equal to 5.0% of
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<PAGE> 11
the Company's Consolidated Cash Flow for the
Semiannual Period most recently completed prior
to such interest payment date, up to a limit of
$60.0 million of the Company's Consolidated
Cash Flow during any two consecutive Semiannual
Periods; provided that no Contingent Interest
shall be payable with respect to any period
prior to June 7, 1996, the first day the
Majestic Star Casino commences operations.
Payment of all or a portion of any installment
of Contingent Interest may be deferred, at the
option of the Company, if, and only to the
extent that, (i) the payment of such portion of
Contingent Interest will cause the Company's
Adjusted Fixed Charge Coverage Ratio for the
four consecutive fiscal quarters last completed
prior to such interest payment date to be less
than 2.0 to 1 on a pro forma basis after giving
effect to the assumed payment of such
Contingent Interest and (ii) the principal
amount of the Senior Exchange Notes
corresponding to such Contingent Interest has
not then matured and become due and payable (at
stated maturity, upon acceleration, upon
maturity of a repurchase obligation or
otherwise). The aggregate amount of Contingent
Interest payable in any Semiannual Period will
be reduced pro rata for reductions in the
outstanding principal amount of Senior Exchange
Notes prior to the close of business on the
record date immediately preceding such payment
of Contingent Interest. The payment of
Contingent Interest is subject to certain
restrictions set forth herein. See "Description
of Senior Notes -- Principal, Maturity and
Interest."
MANDATORY REDEMPTION.......... None.
OPTIONAL REDEMPTION........... The Senior Exchange Notes will not be
redeemable at the option of the Company prior
to May 15, 2000, except (i) as otherwise
required by a Gaming Regulatory Authority or
(ii) as otherwise permitted out of funds then
remaining in the Interest Reserve Account after
May 15, 1997 and prior to May 15, 1998. See
"Description of Senior Notes -- Optional
Redemption." On and after May 15, 2000, the
Senior Exchange Notes will be redeemable, in
whole or in part, at the option of the Company,
at the redemption prices set forth herein,
together with accrued and unpaid interest, if
any, through the redemption date.
SECURITY...................... The Senior Exchange Notes will be secured by,
among other things, (i) a pledge of the
Company's 50% membership interest in the BHR
Joint Venture, (ii) a pledge of the entire
membership interest in the Company of Barden
Development, Inc. ("BDI" or the "Manager"), the
principal member and the manager of the
Company, (iii) a collateral assignment of the
Company's interest in the Berthing Agreement,
(iv) a pledge of all funds in the Cash
Collateral Accounts into which the proceeds
from the Senior Note Offering were placed
pending their use, (v) a first lien on certain
other assets now owned or hereafter acquired by
the Company after the issuance of Senior
Exchange Notes contemplated hereby, including,
but not limited to, a first preferred ship
mortgage upon completion of construction of the
Permanent Vessel and (vi) a collateral
assignment of the Company's rights to the
service mark "Majestic Star Casino." See
"Description of Senior Notes -- Security."
Certain limitations on the enforcement
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<PAGE> 12
of remedies may make less effective the rights
of the holders of the Senior Notes in the event
of a default thereunder. See "Risk Factors --
Ability to Realize on Note Collateral."
RANKING....................... The Senior Exchange Notes will be senior
obligations of the Company and will rank pari
passu in right of payment with all other senior
indebtedness of the Company and senior in right
of payment to all subordinated indebtedness of
the Company. See "Description of Senior Notes
-- Ranking and Security."
CHANGE OF CONTROL............. Upon a Change of Control, subject to certain
limitations, the Company shall be required to
offer to repurchase the Senior Exchange Notes
owned by each holder at 101% of the principal
amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase.
See "Description of Senior Notes -- Repurchase
at the Option of Holders -- Change of Control."
OTHER OFFERS TO PURCHASE...... Under certain circumstances, the Company may be
required to make an offer to purchase
outstanding Senior Exchange Notes following
certain asset sales. In addition, the Company
may be required to purchase outstanding Senior
Exchange Notes following certain events of
loss, failure to complete construction of the
Gaming Complex by December 31, 1996 or upon the
failure of the Company to take delivery of the
Permanent Vessel by June 30, 1998. See
"Description of Senior Notes -- Repurchase at
the Option of Holders."
COVENANTS..................... The Indenture contains restrictions on, among
other things, the making of certain
distributions and payments, the incurrence of
liens, incurrence of additional Indebtedness
and the issuance of Disqualified Capital Stock,
asset sales, the leasing and dedication of
property, the taking of certain actions in the
Company's capacity as a member of the BHR Joint
Venture, transactions with affiliates, mergers
and consolidation or the transfer of all or
substantially all of the Company's assets and
business activities. See "Description of Senior
Notes -- Certain Covenants."
CASH COLLATERAL AND
DISBURSEMENT AGREEMENT........ The net proceeds from the Senior Note Offering
were placed by the Company into the Cash
Collateral Accounts. Pending disbursement of
the funds, pursuant to the terms of the Cash
Collateral and Disbursement Agreement, the
funds in the Cash Collateral Accounts will be
invested in Cash Equivalents. NBD Bank will
serve as Disbursement Agent under the Cash
Collateral and Disbursement Agreement. See
"Description of Senior Notes -- Cash Collateral
and Disbursement Agreement."
COMPLETION RESERVE ACCOUNT.... $10.8 million of the net proceeds from the
Senior Note Offering, placed by the Company in
the Cash Collateral Accounts, was placed in a
Completion Reserve Account. The Disbursement
Agent will authorize the disbursement of funds
from the Completion Reserve Account only upon
the satisfaction of the disbursement conditions
set forth in the Cash Collateral and
Disbursement Agreement. Such conditions include
that $5.0 million of the funds in such account
will be released to BDI as partial repayment of
the Note to Principal Member if (i) the
Majestic Star Casino has been
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<PAGE> 13
Operating for 90 days, (ii) the Company's Fixed
Charge Coverage Ratio as calculated on the last
day of such 90-day period or on the last day of
any fiscal quarter thereafter is greater than
2.5 to 1, provided that Cash Equivalents (other
than Cash Equivalents then remaining in the
Cash Collateral Accounts) available to the
Company on any such date of calculation exceed
$5.0 million, (iii) guaranteed maximum price
construction contracts to construct and deliver
the Permanent Vessel to the Company in Gary,
Indiana by September 30, 1997 have been entered
into, and (iv) no Event of Default exists or is
continuing under the Indenture at any such date
of calculation. Any funds in the Completion
Reserve Account shall be released to BDI upon
Delivery of the Permanent Vessel.
INTEREST RESERVE ACCOUNT...... Of the net proceeds from the Senior Note
Offering, placed by the Company in the Cash
Collateral Accounts, $12.9 million was placed
in the Interest Reserve Account. Funds from the
Interest Reserve Account will be disbursed by
the Disbursement Agent, if necessary, to fund
the first two scheduled payments of Fixed
Interest with respect to the Senior Exchange
Notes. See "Description of Senior Notes -- Cash
Collateral and Disbursement Agreement."
USE OF PROCEEDS............... The Company will not receive any proceeds from
the Exchange Offer. See "Use of Proceeds."
REGISTRATION RIGHTS AGREEMENT
AND EXCHANGE OFFER............ Holders of Senior Exchange Notes are not
entitled to any exchange rights with respect to
the Senior Exchange Notes. Holders of Senior
Notes are entitled to certain exchange rights
under the terms of the Registration Rights
Agreement. Pursuant to the Registration Rights
Agreement, the Company agreed to file with the
Commission (and use its reasonable best efforts
to cause to become effective) a registration
statement with respect to an issue of senior
secured notes of the Company registered under
the Securities Act that are substantially
identical in all material respects to the
Senior Notes and, upon becoming effective, to
offer the holders of the Senior Notes the
opportunity to exchange their Senior Notes for
a like principal amount of Senior Exchange
Notes. This Exchange Offer is intended to
satisfy such obligation. Once the Exchange
Offer is consummated, the Company will have no
further obligations to register any of the
Senior Notes, not tendered, except pursuant to
a shelf registration statement to be filed
under certain limited circumstances. Such a
shelf registration statement, if filed, will
cover resales of the Senior Notes and the
Company will use its best efforts to cause such
shelf registration statement to be declared
effective under the Securities Act and, subject
to certain exceptions, keep such shelf
registration statement effective until the
earlier of three years after following the date
of original issuance of the Senior Notes and
such time as all the Senior Exchange Notes have
been sold thereunder or are otherwise no longer
restricted securities. See "Senior Notes --
Registration Rights."
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<PAGE> 14
RISK FACTORS
An investment in the Senior Exchange Notes involves a high degree of risk.
Prior to making an investment in the securities, prospective investors should
carefully consider the following risk factors, in addition to the other
information set forth elsewhere in this Prospectus.
RISK OF NEW VENTURE
The Company is a start-up development company formed in December 1993. The
Company commenced operations on June 7, 1996 and has yet to report any history
of operations. Prior to the Majestic Star Casino, the Company has never been
involved in developing, constructing or operating a riverboat casino project.
The Company's management has only limited experience developing and operating a
project of the anticipated size and complexity of the Gaming Complex.
The operation of the Majestic Star Casino by the Company is contingent upon
the hiring and training of sufficient personnel and the maintenance of all
regulatory licenses, permits, allocations and authorizations, including without
limitation, the necessary riverboat gaming license. The failure by the Company
or the BHR Joint Venture to maintain such approvals could result in the closing
of the Majestic Star Casino. In addition, if the Company is unable to generate
sufficient cash flow, it could be required to adopt one or more alternatives to
fund its operations, such as obtaining additional financing (to the extent
permitted by the Indenture), reducing or delaying planned capital expenditures,
restructuring debt or obtaining additional equity capital. There can be no
assurance that any of these alternatives could be effected on satisfactory terms
or on a timely basis. Further, any resort to alternative sources of funds could
impair the Company's financial position and reduce its future cash flow.
The Company's operations are subject to significant business, economic,
regulatory and competitive uncertainties and contingencies, many of which are
beyond the control of the Company. No assurances can be given that the Company
will be able to pay the principal of and interest on the Senior Exchange Notes.
RISKS OF NEW CONSTRUCTION
Construction projects, like the Gaming Complex, entail significant risks,
including shortages of materials or labor, unforeseen engineering, environmental
and/or geological problems and work stoppages. Inability to procure construction
equipment, staffing problems or difficulties in obtaining any of the requisite
licenses, permits, allocations and authorizations from regulatory authorities
could increase the total cost of the project or could delay or prevent the
construction or opening of the remaining part of the Gaming Complex or otherwise
affect the design and features of the Gaming Complex. Although most of the
construction contracts relating to the Gaming Complex are at fixed prices, such
contracts are subject to cost increases as a result of changes in the scope of
work. If the construction cost to the BHR Joint Venture exceeds $81.6 million,
the Company and the Joint Venture Partner will be required to make additional
contributions to the BHR Joint Venture. There can be no assurance that either
the Company or the Joint Venture Partner will be able to satisfy any
requirements for additional contributions.
The anticipated costs for the Majestic Star Casino are based on budgets,
concept design documents and schedule estimates prepared by the Company with the
assistance of the contractors described herein. See "Business -- Design and
Construction." There is no assurance that construction costs for the Gaming
Complex will not exceed budgeted amounts. Failure to complete the Gaming Complex
on schedule or within the budget may have a material adverse effect on the
results of operations and financial condition of the Company.
The BHR Joint Venture is currently negotiating the terms of several
agreements with certain railroad companies which have rights-of-way on or
adjacent to the Buffington Harbor Facility. These agreements will provide for
the exchange of parcels of lands, the relocation of certain railroad spurs and
the clarification of the BHR Joint Venture's rights-of-way across certain
property owned by such railroads. In the event that the BHR Joint Venture is
unable to finalize such agreements, the BHR Joint Venture's alternatives for
11
<PAGE> 15
configuration and construction of a new harbor to replace the existing harbor
may be limited, which could have a material adverse effect on the Company.
HIGH LEVERAGE; ABILITY TO SERVICE DEBT
Upon completion of this Exchange Offer, the Company will continue to have
substantial indebtedness, consisting of $105.0 million of Senior Exchange Notes
offered hereby and $6.3 million of equipment financing. In addition, under the
terms of the Indenture, the Company may, subject to certain limitations, incur
additional Indebtedness (as defined herein) for working capital and other
purposes. This high level of indebtedness poses a substantial risk to the
holders of the Senior Exchange Notes, including the risk that the Company might
not generate sufficient cash flow to service debt and the risk that the Company
would have limited financial capacity to respond to market conditions,
extraordinary or unanticipated capital needs, shortfalls in projected cash flow
from operations or other changes. The Company's ability to meet its debt service
requirements will be entirely dependent upon the future performance of the
Majestic Star Casino, which is subject to financial, economic, political,
competitive, regulatory and other factors, many of which are beyond the
Company's control. These uncertainties are compounded by the fact that the
Majestic Star Casino has only recently commenced operations and has yet to
report any operating results. While the Company expects that its operating cash
flow will be sufficient to cover its expenses, including interest costs, the
Company can make no assurances with respect thereto.
RISK IN REFINANCING AND REPAYMENT OF INDEBTEDNESS; NEED FOR ADDITIONAL FINANCING
The ability of the Company to repay the Senior Exchange Notes when due will
depend upon the ability of the Company to generate cash from operations
sufficient for such purpose or to refinance such indebtedness on or before the
date on which it becomes due. Management currently anticipates being able to
generate sufficient cash flow from operations to repay the Senior Exchange Notes
when due. However, there is no assurance that such cash flow will be generated
and, accordingly, the repayment of the Senior Exchange Notes could depend
primarily upon the ability to refinance the Senior Exchange Notes when due. The
future operating performance and the ability to refinance the Senior Exchange
Notes will be subject to the then prevailing economic conditions, industry
conditions and numerous other financial, business and other factors, many of
which are beyond the control of the Company. There can be no assurance that the
future operating performance of the Company will be sufficient to meet these
repayment obligations or that the general state of the economy, the state of the
capital markets generally or the receptiveness of the capital markets to the
gaming industry and to the Company will be conducive to refinancing the Senior
Exchange Notes. In the event that the Company is unable to refinance the Senior
Exchange Notes when due, the Company would be materially and adversely affected.
The Company has obtained an aggregate of approximately $6.3 million of
equipment financing in connection with the acquisition of slot machines and
related equipment for the Majestic Star Casino. Based on competitive pressures
and market conditions, the Company or the BHR Joint Venture may determine that
additional entertainment and other facilities are necessary, which may require
the incurrence of additional financing. The failure of the Company to obtain all
or a significant portion of such additional financing could have a material
adverse effect on the Company.
RISK ASSOCIATED WITH CONSTRUCTION OF THE PERMANENT VESSEL; PREFERRED MARITIME
LIENS
The anticipated cost of constructing a Permanent Vessel is based on
estimates prepared by the Company. The Company has not entered into any
agreement to construct the Permanent Vessel other than an agreement for
preliminary design work. There can be no assurance that the Company will be able
to construct a Permanent Vessel by the second half of 1997. The Indenture
requires the Company to take delivery of the Permanent Vessel by June 30, 1998.
If the anticipated cost of the Permanent Vessel exceeds funds available to the
Company, construction of the Permanent Vessel would not be feasible without
additional financing. In addition, the transition of the Company's operations
from the Chartered Vessel to the Permanent Vessel could disrupt or temporarily
shut-down the Company's operations and during such disruption or shut-down the
Company would lose revenue.
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<PAGE> 16
Under the provisions of Title 46 of the U.S. Code, the design and
construction of a Permanent Vessel are subject to regulation and approval by the
Coast Guard. As a condition to issuing such approval, the Coast Guard could
require, among other things, changes in the design and construction of the
Permanent Vessel which could materially increase the cost of construction and/or
materially delay the completion of construction. Furthermore, maritime
construction is susceptible to certain difficulties in addition to ordinary
construction risks which could have a material adverse effect on the Company to
complete construction on schedule or within the projected cost. Failure to
construct a Permanent Vessel within budget or on schedule could have a material
adverse effect on the Company.
A first preferred ship mortgage will be filed upon completion of
construction of the Permanent Vessel on behalf of the Trustee for the ratable
benefit of the holders of the Senior Exchange Notes. Certain maritime liens are
defined by federal statute to constitute "preferred maritime liens." In the
event of foreclosure of the first preferred ship mortgage relating to the
Permanent Vessel, preferred maritime liens would have priority over the lien of
the first preferred ship mortgage. Under federal law, a tort claim against a
vessel or the furnishing of services or materials to a vessel generally gives
rise to a maritime lien against the vessel. Except for preferred ship mortgages,
there is no requirement that maritime liens be recorded. Maritime liens may be
enforced by the commencement of an action in a United States District Court
which could result in the seizure of the vessel and, if the lien is not bonded
or otherwise disposed of, sale of the vessel.
ABILITY TO REALIZE ON NOTE COLLATERAL
The Senior Exchange Notes will be secured by, among other things, (i) a
pledge of the Company's 50% membership interest in the Joint Venture, (ii) a
pledge of BDI's entire membership interest in the Company; (iii) a collateral
assignment of the Company's interest in the Berthing Agreement and (iv) a pledge
of all funds in the Cash Collateral Accounts into which the proceeds from the
Senior Note Offering were deposited pending their use. The Senior Exchange Notes
will not be secured by the Company's riverboat gaming license nor any assets of
the BHR Joint Venture, including any real property or leasehold interests in the
Gaming Complex. In addition, the Senior Exchange Notes will not be secured by a
first preferred ship mortgage on the Chartered Vessel. If an event of default
occurs with respect to the Senior Exchange Notes, whether prior to or after
completion of construction, there can be no assurance that the liquidation of
the collateral securing the Senior Exchange Notes would produce proceeds in an
amount sufficient to pay the principal of or accrued and unpaid interest, if
any, on the Senior Exchange Notes.
In the event of an event of default by the Company under the Indenture,
before the Trustee or the holders of the Senior Exchange Notes can foreclose or
take possession of certain of the pledged assets, the Trustee or such holders
may have to file applications with the IGC and be investigated and licensed by
the IGC. This process could substantially delay or impair the ability of the
Trustee or any holder of the Senior Exchange Notes to foreclose on the note
collateral. Moreover, no assurance can be given that either the Trustee or any
holder of the Senior Exchange Notes will be found suitable by the IGC.
Additionally, the Trustee and the holders of the Senior Exchange Notes may be
prohibited from taking possession of that portion of the collateral that
constitutes gaming equipment and machinery by applicable state and federal law.
Upon an event of default by the Company under the Indenture, before the Trustee
or holders of the Senior Exchange Notes can take possession of or sell any
collateral constituting security for the Senior Exchange Notes, the Trustee or
such holders, in addition to complying with applicable state gaming laws, will
have to comply with all applicable state judicial or non-judicial foreclosure
and sale laws. Such laws may include cure provisions, mandatory sale notice
provisions, manner of sale provisions and redemption period provisions. Such
provisions may significantly increase the time associated with taking possession
or the sale of any collateral. Failure to comply with any applicable provision
could void the foreclosure on or sale of such collateral. In addition, licensing
requirements may limit the number of potential bidders in a foreclosure sale,
may delay the sale and may adversely affect the sale price of the Company's
assets.
JOINT VENTURE WITH TRUMP INDIANA, INC.
The Company formed the BHR Joint Venture with the Joint Venture Partner to
jointly develop and operate the common areas of the Gaming Complex. See
"Material Agreements -- Joint Venture Agreement."
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<PAGE> 17
Completion of the Gaming Complex is dependent on the ability of the BHR Joint
Venture and its members to obtain their requisite licenses and approvals and to
fund their respective financial obligations under the Joint Venture Agreement.
If the Joint Venture Partner is unable to satisfy its joint venture obligations,
the Company may be required to satisfy such obligations, alter its current plans
for the Majestic Star Casino or risk failure of the BHR Joint Venture, each of
which could adversely affect the Company.
The operations of the BHR Joint Venture and the Company is dependent upon
the financial condition of the Joint Venture Partner. The bankruptcy or
insolvency of the Joint Venture Partner or any default by the Joint Venture
Partner on its indebtedness could result in disruption of the operations of the
BHR Joint Venture or the Company or otherwise could have a material adverse
effect on the BHR Joint Venture or the Company.
The operations of the BHR Joint Venture also depend on the ability of the
Company and the Joint Venture Partner to reach agreement on and to fund the
day-to-day operations of the Gaming Complex on a continuing basis. Although the
Joint Venture Agreement provides for arbitration to resolve certain disputes
arising thereunder, there is no assurance that such mechanism will apply to all
material disputes, will be administered in a timely manner or in a manner that
is beneficial to the Company. Further, the interest of the Joint Venture Partner
could, in certain circumstances, conflict with the interest of the Company. See
"Material Agreements -- Joint Venture Agreement."
LOSS OF THE MAJESTIC STAR CASINO
The Company's revenues will be generated solely by gaming operations
conducted at the Majestic Star Casino. The Chartered Vessel (or, upon
construction, the Permanent Vessel) could be lost from service for a variety of
reasons, including casualty, forces of nature, mechanical failure or extended or
extraordinary maintenance or inspection. In addition, Coast Guard regulations
will require a hull inspection for the vessel at five-year intervals. To comply
with this inspection requirement, the vessel must be taken to a Coast Guard
approved dry docking facility. The loss of the vessel from service or the
inability to use a dockside facility could have a material adverse effect on the
Company's financial results.
RISK ASSOCIATED WITH HARBOR LEASE
The BHR Joint Venture is leasing the harbor and certain other property on
which the Buffington Harbor Facility is located from Lehigh Portland Cement
Company ("Lehigh Cement") pursuant to a Harbor Lease Agreement dated as of June
29, 1995 (the "Harbor Lease"). The initial term of the Harbor Lease expires on
December 29, 1997. During such initial term, the Harbor Lease requires the BHR
Joint Venture to obtain permits for construction of, and to construct, a new
harbor to replace the existing harbor. The lease term will be extended if the
BHR Joint Venture successfully obtains the permits to build the new harbor or if
the BHR Joint Venture, upon a requisite showing of due diligence (as determined
by Lehigh Cement), has failed to obtain the permits. If the BHR Joint Venture
does not procure the permits, as a result of failing to use due diligence in
seeking the same, Lehigh Cement is not obligated to extend the term of the
Harbor Lease and the Majestic Star Casino would not have a harbor from which to
conduct its business after December 29, 1997. There is no assurance that the BHR
Joint Venture will be able to satisfy the conditions to its right to extend the
Harbor Lease. Furthermore, even if the BHR Joint Venture is able to extend the
Harbor Lease and procure the required permits, the possibility exists that the
costs associated with the construction of the new harbor improvements would be
more than the Joint Venture Partner or the Company would be able to pay. See
"Material Agreements -- Harbor Lease Agreement."
In the event that the Company is required to construct the new harbor, the
Company may also have to construct new land-based facilities to support the new
harbor. Furthermore, in connection with constructing new land-based facilities,
or in the event of a termination of the Harbor Lease, the Company will need to
remove (or possibly relocate or reconfigure) the part of the Pavilion located on
the leased property. Such construction could entail significant risks, including
shortages of materials or labor, unforeseen engineering, environmental and/or
geological problems, work stoppages, weather interference, unanticipated cost
increases and nonavailability of construction equipment, and could disrupt the
Company's operations.
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RELIANCE ON SINGLE MARKET AND OPERATION
The Company does not intend to have operations other than the Majestic Star
Casino and therefore will be entirely dependent upon the Majestic Star Casino
for its revenues. Because the Company will be entirely dependent on a single
gaming site for its revenues, it will consequently be subject to greater risks
than a more diversified gaming operation, including, but not limited to, risks
related to local economic and competitive conditions, changes in local
governmental regulations and natural and other disasters. Any decline in the
number of residents in the Company's gaming market, a downturn in the overall
economy of the Company's gaming market, changes in regulation, an increase in
competition, or other factors affecting the Company's market could have a
material adverse effect on the Company. See "Business -- The Chicago Area and
Northern Indiana Riverboat Casino Markets."
TAXATION AND REGULATION BY GAMING AND OTHER GOVERNMENTAL AUTHORITIES
The Company is subject to various governmental rules and regulations with
respect to the operation of a passenger vessel and a gaming casino, including
regulations relating to the Company's maintenance of its riverboat gaming
license. In addition, the Company's agreements require the Company to invest
significant amounts in the Gaming Complex, and in certain economic development
projects, to pay certain revenue sharing fees based on percentages of gaming
revenues to the City of Gary, Indiana, and to post a $12.5 million bond, letter
of credit or other form of guaranty (the "IGC Bond") to guarantee the Company's
performance of certain of its obligations to the City of Gary and the State of
Indiana. In May 1996, the Company was named as a defendant in a class action
lawsuit in which the plaintiffs seek, among other remedies, an injunction
against the issuance of a riverboat gaming license to the Company. The Company
believes that such lawsuit is without merit and has filed a motion to dismiss
such lawsuit. See "Business -- Litigation." On June 3, 1996, the Company
received a riverboat gaming license. The riverboat gaming license is for an
initial term of five years and renewable annually thereafter. The Company is
also subject to regulation with respect to the cruising of vessels on Lake
Michigan, and, if it is determined that certain federal statutory restrictions
are applicable to the Majestic Star Casino, then the Company will be required to
comply with such laws by not cruising on Lake Michigan. See "Regulation --
Federal Law" and "Material Agreements -- Agreement with City of Gary, Indiana."
An admission tax of $3.00 for each person admitted to the Majestic Star
Casino will be imposed upon the gaming operation. An additional twenty percent
tax will be imposed on the "adjusted gross receipts" received from the Company's
gaming operations, which are defined under the Indiana gambling laws as the
total of all cash and property (including checks received by the licensee
whether or not collected) received, less the total of all cash paid out as
winnings to patrons and uncollected gaming receivables (not to exceed two
percent). The Company is required to remit the admission and wagering taxes
before the close of business on the day following the day on which the taxes
were incurred. Riverboat casinos in the State of Indiana are also subject to
property taxes. A significant increase in the Company's property or other tax
rates could materially adversely affect the Company. See "Regulation -- State of
Indiana."
RISK OF ADVERSE TAX TREATMENT
The Senior Exchange Notes provide for payment of both fixed interest and
contingent interest, which is based on a percentage of the Company's
consolidated cash flow following commencement of operations. The Senior Exchange
Notes and the Indenture have legal and other economic terms typically contained
in instruments evidencing indebtedness and are intended to create a
debtor-creditor relationship between the Company and the holders of the Senior
Exchange Notes. The Company intends to treat the Senior Exchange Notes as
indebtedness for Federal income tax purposes. Such treatment, however, is not
binding on the Internal Revenue Service (or the courts), and there can be no
assurance that the Internal Revenue Service will not assert that the Senior
Exchange Notes should be recharacterized, in whole or in part, as equity of the
Company for Federal income tax purposes. If the Internal Revenue Service were
successful in such an assertion, (i) the Company would be unable to deduct all
or a portion of the interest on the Senior Exchange Notes and (ii) the Company
would likely not be treated as a "pass-through" entity for federal income tax
purposes, with the result that it would be subject to an entity level tax the
same as if it were a C-corporation. The combination of these factors could have
a material adverse effect on the Company's after-tax cash flow.
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Moreover, such a recharacterization would cause all or a portion of the interest
payments on the Senior Exchange Notes to be taxable either as dividends received
from an entity taxable as a C-corporation or as a distributable share of a
partnership's profits. In either case, such treatment could adversely affect the
timing, character and amount of income includible in a Senior Exchange Note
holder's income.
COMPETITION
The Company's operations are subject to intense competition from other
gaming operations. The Company believes it competes primarily with riverboats
and other casinos in the northern Indiana and Chicago areas and, to a lesser
extent, throughout the Great Lakes region. In addition to competing with the
Joint Venture Partner's riverboat located at the Buffington Harbor Facility, the
Company competes directly with riverboat casinos to be opened at each of East
Chicago, Hammond and Michigan City, Indiana, and the gaming companies operating
riverboat casinos in Elgin and Aurora, Illinois and the two gaming companies
operating riverboat casinos in Joliet, Illinois, as well as any future casinos
in the Chicago and northern Indiana areas. Although the Company believes that
there is sufficient demand in its market area to support the Company's
operations, there can be no assurance to that effect. There can also be no
assurance that either Indiana or Illinois will not authorize additional gaming
licenses, including additional licenses for the Chicago metropolitan area.
In recent years, legislation has been introduced on numerous occasions to
provide for land-based casinos in Chicago and to expand riverboat gaming in
Illinois, including to authorize additional operators or to authorize existing
operators to move to new sites in the Chicago area and by otherwise to modify
existing regulations to decrease or eliminate certain restrictions, such as
limitations on the number of gaming positions. To date, no such legislation has
been enacted. The Company is unable to predict whether any such legislation, in
Illinois or elsewhere, will be enacted or whether, if passed, it would have a
material adverse impact on the Company's operations.
The Company also expects future competition from a federally recognized
Indian tribe which is negotiating with various cities in southwestern Michigan
and/or Indiana to develop land-based casinos.
Many of the Company's competitors, including its Joint Venture Partner and
the casino to be owned and operated by Showboat Marina Casino Partnership in
East Chicago, Indiana, will have larger and, prior to the completion of
construction of the Permanent Vessel, more modern casino vessels. In addition,
many of the Company's competitors will have greater gaming industry experience
and financial resources. The Company believes that its ability to successfully
compete in the riverboat gaming industry will be primarily based on the quality
and location of its gaming facilities, the effectiveness of its marketing
efforts and its overall level of customer service and satisfaction. See
"Business -- Competition."
NEW GAMING JURISDICTION
Although the Company's market includes the existing Chicago metropolitan
area, the existence of riverboat casinos located and operating in northern
Indiana is new. Accordingly, the number of customers, the propensity of these
customers to wager, and the amount of revenues realized cannot be predicted with
any degree of certainty. There can be no assurance that the Company will be able
to operate the Majestic Star Casino in a profitable manner.
SEASONALITY
Because of the climate in the Chicago metropolitan and northern Indiana
areas, the Company anticipates that the operations of the Majestic Star Casino
will be seasonal with stronger results expected during the period from May
through September. Accordingly, the Company's results of operations are likely
to fluctuate from quarter to quarter and the results for any fiscal quarter may
not be indicative of results for future fiscal quarters.
RELIANCE ON KEY AND EXPERIENCED PERSONNEL
The Company's ability to proceed with the project is largely dependent upon
the efforts of officers of the Manager, including Don H. Barden, Chairman and
President of the Manager, Thomas C. Bonner, Executive
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<PAGE> 20
Vice President of the Manager, Paul W. Sykes, Vice President of the Manager and
the Company's General Manager, Michael E. Kelly, Vice President and Chief
Financial Officer of the Manager and Thomas P. Burke, Director of Finance of the
Company. The Company has entered into three-year employment agreements with each
of Messrs. Bonner and Sykes and into a two-year employment agreement with Mr.
Kelly. The unavailability or loss of any of these key employees would adversely
affect the Company's operations unless appropriate replacements could be
promptly found. The Company and the BHR Joint Venture will be required to engage
additional management and staff in connection with operating the Majestic Star
Casino and the Gaming Complex, respectively. While the Company believes that it
and the BHR Joint Venture will be able to attract qualified personnel, a
shortage of experienced labor exists in the gaming industry which could make it
difficult and expensive to attract and retain additional qualified employees.
The Company has developed and is implementing training programs for its
employees. However, hiring and training of such personnel will be done at a time
when other major new facilities may be approaching completion and also
recruiting new employees. No assurance can be given that the necessary employees
will be available to the Company or to the BHR Joint Venture.
MARITIME AND WEATHER CONSIDERATIONS
The Majestic Star Casino operates on the Chartered Vessel or the Permanent
Vessel. These vessels will operate on Lake Michigan and require, among other
things, Coast Guard hull inspections at five year intervals. The Majestic Star
Casino will be exposed to marine hazards such as unpredictable currents, winds,
storms or other weather conditions. Gaming activities and revenues could also be
adversely affected by severe weather conditions, including high water levels,
high wave action or rough water conditions, which could make the vessel more
difficult or impossible to operate, or could result in a prolonged or total loss
of the vessel, either of which could have a material adverse effect on the
Company. Although the Company expects to maintain insurance against casualty
losses resulting from severe weather, such coverage may not adequately
compensate the Company for losses, including loss of profits, resulting from
severe weather.
Under the provisions of Title 46 of the U.S. Code, the design, construction
and operation of the Majestic Star Casino are subject to regulation and approval
by the Coast Guard. The Majestic Star Casino must obtain and maintain the
required certification in order to continue gaming operations. The Company has
received a temporary certificate of inspection from the Coast Guard which
requires modification of certain equipment and fixtures before permanent
certification is granted for the Chartered Vessel. All shipboard personnel
employed on Coast Guard regulated vessels, including those not involved with the
actual operation of the vessel, such as dealers, service and security personnel,
may be subject to certain federal regulations relating to maritime activity
which, among other things, exempts those employees from state limits on workers'
compensation awards. The Company expects that it will have adequate insurance to
cover employee claims.
ENVIRONMENTAL RISKS
The Buffington Harbor Facility is located in an area on Lake Michigan known
as Buffington Harbor. Buffington Harbor has previously been the site of
industrial operations and activities, which prior operations or activities may
have resulted in pollution or contamination of the environment. As an owner and
operator of the Majestic Star Casino and a member of the BHR Joint Venture, the
Company could be held liable under certain legal theories for the costs of
addressing any pollution or contamination, as well as certain damages resulting
from such pollution or contamination. Based on the results set forth in Phase I
and Phase II environmental reports regarding the Buffington Harbor Facility,
asbestos and occasional contaminated soils required special handling in the
course of development, but no other indications of widespread material
contamination have been identified to the Company. However, there can be no
assurance that further development of the Buffington Harbor Facility will not
identify any pollution or contamination, the remediation of which could have a
material adverse impact on the Joint Venture and the Company. Further, neither
the Company nor the BHR Joint Venture is entitled to indemnification from any
prior owners or operators of the Buffington Harbor Facility site with respect to
environmental matters.
In addition, there can be no assurance that the operation of the Chartered
Vessel or the Permanent Vessel will not result in the discharge of oil, sewage
or other materials into the waters of Lake Michigan causing the Company to
violate environmental or other laws.
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CONSEQUENCES OF FAILURE TO EXCHANGE; POSSIBLE ADVERSE EFFECT ON TRADING MARKET
FOR SENIOR NOTES
Holders of Senior Notes who do not exchange their Senior Notes for Senior
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Senior Notes as set forth in the legend thereon
as a consequence of the issuance of the Senior Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Senior
Notes may not be offered or sold unless registered under the Securities Act and
applicable state laws, or pursuant to an exemption therefrom. Subject to the
obligation by the Company to file a shelf registration statement covering
resales of Senior Notes in certain limited circumstances, the Company does not
intend to register the Senior Notes under the Securities Act and, after
consummation of the Exchange Offer, will not be obligated to do so. In addition,
any holder of Senior Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Senior Exchange Notes may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Additionally, as a result of the
Exchange Offer, it is expected that a substantial decrease in the aggregate
principal amount of Senior Notes outstanding will occur. As a result, it is
unlikely that a liquid trading market will exist for the Senior Notes at any
time. This lack of liquidity will make transactions more difficult and may
reduce the trading price of the Senior Notes. See "The Exchange Offer" and
"Senior Notes -- Registration Rights."
LIMITED PUBLIC MARKET FOR THE NOTES
The Senior Exchange Notes constitute a new issue of securities, have no
established trading market and may not be widely distributed. The Initial
Purchaser has informed the Company that it currently intends to make a market in
the Senior Exchange Notes as permitted by applicable laws and regulations;
however, the Initial Purchaser is not obligated to do so and may discontinue
market making at any time without notice. Accordingly, there can be no assurance
that a trading market for the Senior Exchange Notes will develop. If a market
does develop, the price of such securities may fluctuate and liquidity may be
limited. If a market for such securities does not develop, purchasers may be
unable to resell such securities for an extended period of time. Future trading
prices of such securities will depend upon many factors, including, among other
things, prevailing interest rates, the Company's operating results, and the
market for similar securities which is subject to various pressures, including,
but not limited to, fluctuating interest rates. In addition, the market for
"high yield" securities (of which the Senior Exchange Notes may be deemed a
part) has been characterized by certain periods of relative instability and
illiquidity, and no assurance can be given as to the status of the market for
"high yield" securities in the future. The Company does not intend to list the
Senior Exchange Notes on a national securities exchange nor to apply for trading
of the Senior Exchange Notes on the Nasdaq Stock Market.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Pursuant to the Registration Rights Agreement, the Company agreed (i) to
file a registration statement with respect to a registered offer to exchange the
Senior Notes for the Senior Exchange Notes, which will have with terms
substantially identical in all material respects to the Senior Notes (except
that the Senior Exchange Notes will not contain terms with respect to transfer
restrictions) within 45 days after the date of original issuance of the Senior
Notes and (ii) to use reasonable best efforts to cause such registration
statement to become effective under the Securities Act at the earliest possible
time but in any event no later than 120 days after the filing with the
Commission. In the event that applicable law or interpretations of the staff of
the Commission do not permit the Company to file the registration statement
containing this Prospectus or to effect the Exchange Offer, or if certain
holders of the Senior Notes notify the Company that they are prohibited by law
or Commission policy from participating in the Exchange Offer, or subject to
certain other restrictions the Company will use its reasonable best efforts to
cause to become effective the shelf registration statement with respect to the
resale of the Senior Notes and to keep the shelf registration statement
effective until the earlier of three years following the date of original issue
and such time as all the Senior Notes have been sold thereunder or are otherwise
not restricted securities. See "Senior Notes -- Registration Rights."
Each holder of the Senior Notes who wishes to exchange such Senior Notes
for Senior Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in the distribution of the
Senior Exchange Notes, and (iii) it is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company. See "Senior Notes -- Registration
Rights."
RESALE OF SENIOR EXCHANGE NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third-parties, the Company believes that, except as
described below, Senior Exchange Notes issued pursuant to the Exchange Offer in
exchange for Senior Notes may be offered for resale, resold and otherwise
transferred by any holder thereof (other than a holder which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Senior Exchange Notes are acquired in the
ordinary course of such holder's business and such holder does not intend to
participate and has no arrangement or understanding with any person to
participate in the distribution of such Senior Exchange Notes. Any holder who
tenders in the Exchange Offer with the intention or for the purpose of
participating in a distribution of the Senior Exchange Notes cannot rely on such
interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Unless an exemption from
registration is otherwise available, any such resale transaction should be
covered by an effective registration statement containing the information
required by the Securities Act. This Prospectus may be used for an offer to
resell, resale or other retransfer of Senior Exchange Notes only as specifically
set forth herein. Each broker-dealer that receives Senior Exchange Notes for its
own account in exchange for Senior Notes, where such Senior Notes were acquired
by such 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 such Senior Exchange Notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept for exchange any and
all Senior Notes properly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. The Company will issue $1,000 principal
amount of Senior Exchange Notes in exchange for each $1,000 principal amount of
outstanding Senior Notes
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surrendered pursuant to the Exchange Offer. Senior Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the Senior Exchange Notes will be the substantially
identical in all material respects to as the form and terms of the Senior Notes
except the Senior Exchange Notes will be registered under the Securities Act and
hence will not bear legends restricting the transfer thereof. The Senior
Exchange Notes will evidence the same debt as the Senior Notes. The Senior
Exchange Notes will be issued under and entitled to the benefits of the
Indenture, which also authorized the issuance of the Senior Notes, such that
both series will be treated as a single class of debt securities under the
Indenture.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Senior Notes being tendered for exchange.
As of the date of this Prospectus, $105,000,000 aggregate principal amount
of the Senior Notes are outstanding. This Prospectus, together with the Letter
of Transmittal, is being sent to all registered holders of Senior Notes. There
will be no fixed record date for determining registered holders of Senior Notes
entitled to participate in the Exchange Offer.
The Company intends 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 thereunder.
Senior Notes which are not tendered for exchange in the Exchange Offer will
remain outstanding and continue to accrue interest and will be entitled to the
rights and benefits such holders have under the Indenture and the Registration
Rights Agreement.
The Company shall be deemed to have accepted for exchange properly tendered
Senior Notes when, as and if, the Company shall have given written notice
thereof to the Exchange Agent and complied with the provisions of Section 6 of
the Registration Rights Agreement. The Exchange Agent will act as agent for the
tendering holders for the purpose of receiving the Senior Exchange Notes from
the Company. The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Senior Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions specified
below under "-- Certain Conditions to the Exchange Offer."
Holders who tender Senior Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Senior
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expense, other than certain applicable taxes described below, in connection with
the Exchange Offer. See "The Exchange Offer -- Fees and Expenses."
EXPIRATION DATE, EXTENSIONS; AMENDMENTS
The term "Expiration Date," shall mean 5:00 p.m., New York City time on
, 1996, unless the Company, in its sole discretion, extends
the Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by written notice, prior to 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date,
and will mail to the registered holders of Senior Notes an announcement thereof.
The Company reserves the right, in its sole discretion, (i) to delay
accepting for exchange any Senior Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth below under "The
Exchange Offer -- Conditions" shall not have been satisfied, by giving oral or
written notice of such delay, extension or termination to the Exchange Agent or
(ii) to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by written notice thereof to the registered holders of Senior Notes.
If the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such amendment
in a manner reasonably calculated to inform the holders of the Senior Notes of
such amendment and the Company will extend the Exchange Offer as necessary to
provide the
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holders with a period of five to ten business days, after such amendment,
depending upon the significance of the amendment and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during such
period.
INTEREST ON THE SENIOR EXCHANGE NOTES
Each Senior Exchange Note bears interest at the rate of 12 3/4% per annum
of the principal amount then outstanding (the "Fixed Interest") from the
Issuance Date to the date of payment of such principal amount of such Senior
Exchange Note. Installments of Fixed Interest become due and payable
semi-annually in arrears on each May 15 and November 15 of each year to the
holders of record at the close of business on the preceding May 1 or November 1.
Additionally, installments of accrued and unpaid Fixed Interest become due and
payable with respect to any principal amount of the Senior Exchange Notes that
matures (whether at stated maturity, upon acceleration, upon maturity of
repurchase obligation or otherwise) upon such maturity of such principal amount
of the Senior Exchange Notes. Fixed Interest on the Senior Exchange Notes will
be computed on the basis of a 360-day year, consisting of twelve 30-day months.
Each installment of Fixed Interest is or will be calculated to accrue from and
including the most recent date to which Fixed Interest has been paid or provided
for (or from and including the Issuance Date if no installment of Fixed Interest
has been paid) to, but not including, the date of payment.
In addition, the Senior Exchange Notes will bear Contingent Interest,
calculated as described below, from the Commencement Date to the date of payment
of the Senior Exchange Notes. Installments of accrued or deferred Contingent
Interest will become due and payable semi-annually on each May 15 and November
15 after the Commencement Date to the holders of record at the close of business
on the preceding May 1 or November 1; provided that no Contingent Interest is
payable with respect to any period prior to the Commencement Date and that such
installment of Contingent Interest is not permitted to be deferred on such date.
Additionally, all installments of accrued or deferred Contingent Interest will
become due and payable (and may not be further deferred) with respect to any
principal amount of the Senior Exchange Notes that matures (whether at stated
maturity, upon acceleration, maturity of repurchase obligation or otherwise)
upon such maturity of such principal amount of the Senior Exchange Notes.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the extent
that, (a) the payment of such portion of Contingent Interest will cause the
Company's Adjusted Fixed Charge Coverage Ratio for the four consecutive fiscal
quarters last completed prior to such interest payment date to be less than 2.0
to 1 on a pro forma basis after giving effect to the assumed payment of such
Contingent Interest and (b) the principal amount of the Senior Exchange Notes
corresponding to such Contingent Interest has not then matured and become due
and payable (at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise). Contingent Interest that is deferred shall become due
and payable, in whole or in part, on the earlier of (i) the next succeeding
interest payment date on which all or a portion of such Contingent Interest is
not permitted to be deferred, and (ii) upon the maturity of the corresponding
principal amount of the Senior Exchange Notes (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or otherwise). No interest
will accrue on any Contingent Interest deferred and which does not become due
and payable. To the extent permitted by law, interest will accrue on overdue
Fixed Interest or Contingent Interest at the same rate as the Fixed Interest
plus one percent (1%) per annum.
Each installment of Contingent Interest is calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to, and including, either (a) the last day of the next
Semiannual Period if the corresponding principal amount of the Senior Exchange
Notes has not become due and payable or (b) the date of payment if the
corresponding principal amount of the Senior Exchange Notes has become due and
payable (whether at stated maturity, upon acceleration, upon maturity of
repurchase obligation or otherwise). With respect to each Accrual Period,
interest will accrue daily on the principal amount of each Senior Exchange Note
outstanding during such period as follows: (i) for any portion of an Accrual
Period which consists of all or part of a Semiannual Period that ends during
such Accrual Period, 1/180 of the Base Contingent Interest with respect to such
principal amount for such
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Semiannual Period until fully accrued and (ii) for any other portion of an
Accrual Period, 1/180 of the Base Contingent Interest with respect to such
principal amount for the Semiannual Period that began and last ended after the
Commencement Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange any Senior Exchange Notes for,
any Senior Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of any Senior Notes for exchange, if:
(a) 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 the Company's sole judgment, might materially impair the ability
of the Company to proceed with the Exchange Offer, or
(b) 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, which, in the Company's sole judgment, might
materially impair the ability of the Company to proceed with the Exchange
Offer, or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Senior Notes, by giving written
notice of such extension to the holders thereof. During any such extensions, all
Senior Notes previously tendered will remain subject to the Exchange Offer and
may be accepted for exchange by the Company. Any Senior Notes not accepted for
exchange for any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Senior Notes not theretofore accepted
for exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified above under "-- Certain Conditions to the Exchange Offer." The Company
will give written notice of any extension, amendment, non-acceptance or
termination to the holders of the Senior Notes as promptly as practicable, such
notice in the case of any extension to be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Senior Notes
tendered, and no Senior Exchange Notes will be issued in exchange for any such
Senior Notes, if at such time any stop order shall be threatened or in effect
with respect to the Registration Statement of which this Prospectus constitutes
a part or the qualification of the Indenture under the Trust Indenture Act of
1939 (the "TIA").
PROCEDURES FOR TENDERING
Only a holder of Senior Notes may tender such Senior Notes in the Exchange
Offer. To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or facsimile thereof, have the signature thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date. In addition, either
(i) Senior Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Senior Notes, if such procedure is available, into the
Exchange Agent's account at the Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
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below must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below. To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under "The Exchange Offer -- Exchange Agent" prior to 5:00 p.m., New York City
time, on the Expiration Date.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF SENIOR NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR SENIOR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Senior Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder of Senior Notes to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of Transmittal and delivering
such owner's Senior Notes, either make appropriate arrangements to register
ownership of the Senior Notes in such owner's name or obtain a properly
completed bond power from the registered holder of Senior Notes. The transfer of
registered ownership may take considerable time and may not be able to be
completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as defined
below) unless the Senior Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter Transmittal or a notice of withdrawal, as the case may be, are required
to be guaranteed, such guarantor must be 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 which is a member of one of the recognized
signature guarantee programs identified in the Letter of Transmittal (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Senior Notes listed therein, such Senior Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Senior Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Senior Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorney-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Senior Notes and withdrawal of tendered Senior
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Senior Notes not properly tendered or any Senior Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Senior Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal)
23
<PAGE> 27
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Senior Notes must be cured within
such time as the Company shall determine. Although the Company intends to notify
holders of defects or irregularities with respect to tenders of Senior Notes,
neither the Company, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Senior Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Senior Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In all cases, issuance of Senior Exchange Notes for Senior Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of Notes or a timely Book-Entry
Confirmation of such Senior Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Senior Notes are
not accepted for exchange for any reason set forth in the terms and conditions
of the Exchange Offer or if Senior Notes are submitted for a greater principal
amount than the holder desires to exchange, such unaccepted or non-exchanged
Senior Notes will be returned without expense to the tendering holder thereof
(or, in the case of Senior Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described below, such non-exchanged Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Senior Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Senior Notes by causing the
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Notes may be
effected through book-entry at the Book-Entry Transfer Facility, the Letter of
Transmittal or facsimile thereof, with any required signature guarantees and any
other required documents, must, in any case, be transmitted to and received by
the Exchange Agent at the address set forth below under "The Exchange
Offer -- Exchange Agent" on or prior to the Expiration Date or, if the
guaranteed delivery procedures described below are to be complied with, within
the time period provided under such procedures. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Senior Notes and (i) whose Senior Notes
are not immediately available or (ii) who cannot deliver their Senior Notes, the
Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent received from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the registered number(s)
of such Senior Notes and the principal amount of Senior Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
three (3) New York Stock Exchange trading days after the Expiration Date,
the Letter of Transmittal (or facsimile thereof) together with the Senior
Notes or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within three (3) New York Stock Exchange trading days after
the Expiration Date.
24
<PAGE> 28
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Senior Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Senior Notes may be drawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Senior Notes to be withdrawn, identify the Senior
Notes to be withdrawn (including the principal amount of such Senior Notes), and
(where certificates for Senior Notes have been transmitted) specify the name in
which such Senior Notes were registered, if different from that of the
withdrawing holder. If certificates for Senior Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Senior Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Senior Notes and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Senior Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Senior Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Senior Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Senior Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Senior Notes) as soon
as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Senior Notes may be retendered by following
one of the procedures described under "-- Procedures for Tendering Senior Notes"
above at any time on or prior to the Expiration Date.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as Exchange Agent of
the Exchange Offer. Questions and requests for assistance, request for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<CAPTION>
By Overnight Courier or Hand Delivery: By Mail:
- ---------------------------------------------------- -------------------------------------------
<S> <C>
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
One State Street P.O. Box 84
New York, New York 10004 Bowling Green Station
Attention: Securities Processing Window Subcellar New York, New York 10274-0084
One Attention: Reorganization Operations Dept.
By Facsimile:
IBJ Schroder Bank & Trust Company
Attention: Reorganization Operations Dept.
(212) 858-2611
(For Eligible Institutions Only)
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telephone, telephone or in person by officers and regular
employees of the Company and its affiliates.
25
<PAGE> 29
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$99,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, and
related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Notes pursuant to the Exchange Offer. If, however, certificates representing
Senior Notes for principal amounts not tendered or accepted for exchange are to
be delivered to, or are to be issued in the name of, any person other than the
registered holder of Notes tendered, or if tendered Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder.
TRANSFER TAXES
Holders who tender their Senior Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register Senior Exchange Notes in the name of, or request that
Senior Notes not tendered or not accepted in the Exchange Offer be returned to,
a person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Senior Notes who do not exchange their Senior Notes for Senior
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Senior Notes, as set forth in the legend
thereon as a consequence of the issuance of the Senior Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Senior Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. The
Company does not currently anticipate that it will register the Senior Notes
under the Securities Act. Based on interpretations by the staff of the
Commission, Senior Exchange Notes issued pursuant to the Exchange Offer may be
offered for resale, resold or otherwise transferred by holders thereof (other
than any such holder which is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such
Senior Exchange Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement or understanding with respect to
the distribution of the Senior Exchange Notes to be acquired pursuant to the
Exchange Offer. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Senior Exchange Notes (i) could not rely
on the applicable interpretations of the staff of the Commission and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. In addition,
to comply with the securities laws of certain jurisdictions, if applicable, the
Senior Exchange Notes may not be offered or sold unless they have been
registered or complied with. The Company has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the Senior Exchange Notes for offer or sale
under the securities or blue sky laws of such jurisdictions as are necessary to
consummate the Exchange Offer.
26
<PAGE> 30
USE OF PROCEEDS
USE OF PROCEEDS OF SENIOR EXCHANGE NOTES
This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any proceeds from the issuance of the Senior Exchange Notes offered hereby. In
consideration for issuing the Senior Exchange Notes as contemplated in this
Prospectus, the Company will receive, in exchange, Senior Notes in like
principal amount. The form and terms of the Senior Exchange Notes are
substantially identical in all material respects to the form and terms of the
Senior Notes, except as otherwise described herein under "The Exchange Offer --
Terms of the Exchange Offer." The Senior Notes surrendered in exchange for the
Senior Exchange Notes will be retired and cancelled and cannot be reissued.
Accordingly, issuance of the Senior Exchange Notes will not result in any
increase in the outstanding debt of the Company.
USE OF PROCEEDS OF SENIOR NOTES
The net proceeds from the Senior Note Offering will be, or have been, used,
among other things, to finance the development, construction, equipping and
opening of the Majestic Star Casino and the Gaming Complex and to finance the
construction of the Permanent Vessel. The net proceeds from the Senior Note
Offering were placed in the Cash Collateral Accounts and were invested in Cash
Equivalents, or disbursed of such funds in accordance with the Cash Collateral
and Disbursement Agreement. The portion of the net proceeds designated for the
repayment of the Note to Principal Member was placed in the Completion Reserve
Account and invested in Cash Equivalents. Upon satisfaction of certain
conditions, $5.0 million in the Completion Reserve Account will be disbursed to
repay a portion of the Note to Principal Member. Any funds remaining in the
Completion Reserve Account will be disbursed to repay the Note to Principal
Member upon delivery of the Permanent Vessel to the Company, in accordance with
the Cash Collateral and Disbursement Agreement. Subject to certain limitations,
qualifications and exceptions, such funds will be made available to the Company
for the payment of costs owing prior to completion of the Majestic Star Casino
project and the delivery of the Permanent Vessel if funds in the other Cash
Collateral Accounts are insufficient to cover such costs. See "Description of
Senior Notes -- Cash Collateral and Disbursement Agreement."
27
<PAGE> 31
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1996 and as adjusted for the Company as of such date to give effect to
the Senior Note Offering and certain equipment financing. This table should be
read in conjunction with the more detailed information and Financial Statements,
including the notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1996
---------------------
ACTUAL AS ADJUSTED
------ -----------
UNAUDITED
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................................ $ 4.1 $ 105.3
===== ======
Long-term debt:
Senior Notes........................................................... -- 105.0
Equipment financing.................................................... -- 6.3
----- ------
Total long-term debt................................................ -- 111.3
Other debt -- Note to Principal Member................................... 10.8 10.8
Capital contribution..................................................... 24.3 24.3
----- ------
Total capitalization................................................ $ 35.1 $ 146.4
===== ======
</TABLE>
28
<PAGE> 32
SELECTED FINANCIAL DATA
The Company was organized on December 8, 1993 for the purpose of developing
and operating the Majestic Star Casino and holds a riverboat gaming license
granted by the IGC. The selected audited financial data presented below for the
period from December 8, 1993 to December 31, 1995 and the selected unaudited
financial data for the period from January 1, 1996 to March 31, 1996 have been
derived from financial statements of the Company. This information is qualified
in its entirety by, and should be read in conjunction with, Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
Financial Statements and notes thereto, and other financial information included
elsewhere in this Prospectus. Until June 6, 1996, the Company was in the
development stage and had capitalized all pre-opening, licensing and
organizational costs. The Company commenced operations on June 7, 1996 and,
accordingly, the Company has yet to report any operating results.
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
BEGINNING BEGINNING
DECEMBER 8, 1993 JANUARY 1, 1996
AND ENDING AND ENDING
DECEMBER 31, 1995 MARCH 31, 1996
----------------- ---------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues(1).................................................. -- --
Development expenses......................................... -- --
Operating income (loss)...................................... -- --
Interest income, net......................................... $ 0.2 $ 0.1
Net income (loss)............................................ 0.2 0.1
Earnings to fixed charges(2)................................. -- --
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995 AT MARCH 31, 1996
-------------------- -----------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 8.4 $ 4.1
Investment in Buffington Harbor Riverboats, L.L.C.......... 21.8 22.3
Property and equipment..................................... 0.1 3.4
Deferred expenses.......................................... 4.5 5.3
Deposits................................................... 0.3 0.3
Total assets............................................... 35.1 35.4
Note to Principal Member................................... -- 10.8
Long-term debt............................................. -- --
Total liabilities.......................................... 0.1 11.1
Members' equity............................................ 35.0 24.3
</TABLE>
- -------------------------
(1) The Company was in the development stage and, accordingly, had no operating
revenues during the periods presented.
(2) Ratio of earnings to fixed charges is not applicable as the Company was in
the development stage and, accordingly, had no operating earnings during the
periods presented.
29
<PAGE> 33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Company's Financial Statements, the notes
thereto, and certain other financial information included elsewhere in this
Prospectus.
DEVELOPMENT ACTIVITIES
Prior to the opening of the Majestic Star Casino on June 7, 1996, the
activities of the Company had been limited to applying for appropriate gaming
licenses, finalizing the design and obtaining financing for the Majestic Star
Casino, forming the BHR Joint Venture to acquire the land for, and arranging for
the construction and operation of the Gaming Complex (as a member of the BHR
Joint Venture). The Majestic Star Casino commenced operations on June 7, 1996 on
the Chartered Vessel which contains approximately 26,000 square feet of gaming
space with approximately 924 slot machines and 50 table games. Although the
Company has commenced operations, certain portions of the Gaming Complex have
not been completed. The Company and its Joint Venture Partner expect to complete
lighting, landscaping, the steakhouse restaurant, the railroad transfer building
and the porte cochere in the near future.
RESULTS OF OPERATIONS
Through June 6, 1996, the Company was in the development stage and
capitalized costs associated with obtaining the licenses. Accordingly, the
Company does not have any historical operating income. The capitalized costs
consist primarily of personnel costs, economic development payments, vessel
design costs, financing and commitment fees, gaming application fees and other
consulting fees.
Future operating results will be subject to significant business, economic,
regulatory and competitive uncertainties and contingencies, many of which are
beyond the control of the Company. While the Company believes that the Majestic
Star Casino will be able to attract a sufficient number of customers and
generate a sufficient amount of revenues to meet its payment obligations in
connection with the Senior Exchange Notes, there can be no assurance with
respect thereto.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has met its capital requirements through
capital contributions and loans including the Senior Notes. The $135.6 million
necessary for the design, development, construction, equipping and opening of
the Gaming Complex, including the Majestic Star Casino, and the Permanent Vessel
is derived from the $24.3 million capital contribution from the Company's
members, the gross proceeds of the Senior Note Offering and approximately $6.3
million of equipment financing. The funds provided by these sources are expected
to be sufficient to develop and operate the Majestic Star Casino and to provide
a reserve for the estimated first two scheduled Fixed Interest payments on the
Senior Exchange Notes. However, there can be no assurance that such funds will
be sufficient to operate the Majestic Star Casino. The net proceeds of the
Senior Note Offering were deposited into the Cash Collateral Accounts and
invested in Cash Equivalents. Such proceeds will be disbursed pursuant to the
Cash Collateral and Disbursement Agreement for the construction of the Gaming
Complex and the Permanent Vessel and for certain other disbursements permitted
pursuant to the Cash Collateral and Disbursement Agreement. The portion of the
Senior Note Offering proceeds which is designated to repay the Note to Principal
Member was placed in the Completion Reserve Account and, pending disbursement
thereof, is invested in Cash Equivalents. Subject to certain limitations,
qualifications and exceptions contained in the Cash Collateral and Disbursement
Agreement, such funds will be made available to the Company for the payment of
costs owing prior to completion of the Majestic Star Casino and the delivery of
the Permanent Vessel, if funds in the Cash Collateral Accounts are insufficient
to complete construction. See "Description of Senior Notes -- Cash Collateral
and Disbursement Agreement."
The Company expects to fund its debt service, capital needs and its
remaining economic development incentives to the City of Gary from operating
cash flow. Based upon the Company's anticipated future
30
<PAGE> 34
operations, management believes that available cash flow from the Majestic Star
Casino's future operations and certain equipment financing, together with the
proceeds from the Senior Note Offering, will be adequate to meet the Company's
anticipated future requirements for working capital, capital expenditures and
scheduled payments of interest and principal on the Senior Exchange Notes and
other permitted indebtedness for the foreseeable future. No assurance can be
given, however, that operating cash flow will be sufficient for such purposes.
The Company intends to establish initial working capital reserves to provide for
anticipated short-term liquidity needs. The Company will seek, if necessary and
to the extent permitted under the Indenture, additional financing through
borrowings and debt or equity financings. There can be no assurance that
additional financing, if needed, will be available to the Company, or that, if
available, the financing will be on terms favorable to the Company. There is no
assurance that the Company's estimate of its reasonably anticipated liquidity
needs is accurate or that unforeseen events will not occur, resulting in the
need to raise additional funds. See "Risk Factors -- High Leverage; Ability to
Service Debt."
COSTS EXPENDED TO DATE
Through March 31, 1996, approximately $3.4 million had been expended by the
Company on the purchase of personal property and equipment, approximately $2.5
million had been expended on preopening, licensing and organizational costs,
$22.3 million was paid as a capital contribution to the BHR Joint Venture and
approximately $2.8 million had been expended on required economic development
incentives to the City of Gary, Indiana. Through March 31, 1996, the BHR Joint
Venture had expended approximately $48.1 million to construct the Gaming
Complex.
SEASONALITY
Because operations commenced on June 7, 1996, the Company has no reported
operating history. The Company anticipates that activity at the Majestic Star
Casino will be affected by weather conditions, with stronger results expected
from May through September. Accordingly, the Company's results of operations may
fluctuate from quarter to quarter and the results for any fiscal quarter may not
be indicative of results for future fiscal quarters. See "Risk Factors --
Seasonality."
31
<PAGE> 35
BUSINESS
OVERVIEW
The Company operates the Majestic Star Casino, a riverboat gaming facility
located at Buffington Harbor in Gary, Indiana, approximately 23 miles southeast
of downtown Chicago pursuant to a riverboat gaming license granted to it by the
IGC. Buffington Harbor is located at the interchange of U.S. 12 and Indiana
State Highway 912, a divided freeway which connects Interstate Highways 90 and
80/94. The Majestic Star Casino's convenient location at Buffington Harbor
provides customers easy and direct access to and from major state and federal
highways.
The Majestic Star Casino commenced operations on June 7, 1996 and will
operate on the Chartered Vessel until the Permanent Vessel is delivered. The
Majestic Star Casino is part of the Gaming Complex which is being developed at
Buffington Harbor. The Company and its Joint Venture Partner formed the BHR
Joint Venture to jointly develop and operate the common areas of the Gaming
Complex. The Gaming Complex includes the land-based Pavilion which will contain,
in its common areas, restaurants, cocktail lounges, a gift shop, and a ticketing
area for each casino. The Company believes that the Pavilion's amenities will
help attract customers to the Majestic Star Casino. The Company and its Joint
Venture Partner each operates its own riverboat casino at the Gaming Complex on
a staggered cruise schedule which will reduce waiting times to board a casino.
The Majestic Star Casino on the Chartered Vessel contains approximately
26,000 square feet of gaming space on four levels, with 924 slot machines and 50
table games. The Majestic Star Casino is certified to accommodate 1,700
passengers and 200 employees and crew members and also contains food, beverage
and bar facilities. The casino area of the Chartered Vessel contains a large
two-story atrium which has been added to enhance the casino's atmosphere and
which, with the casino's conveniently placed elevators and stairwells, is
expected to encourage traffic flow to other levels of the casino. The Company
will emphasize a high level of customer service to enhance its customers' gaming
experience and to complement the Majestic Star Casino's amenities. The Chartered
Vessel was originally designed as an ocean-going vessel and is, therefore,
expected to provide a smooth and comfortable ride to customers during cruises on
Lake Michigan and while dockside during inclement weather. Management believes
that providing superior customer service, on-board food, beverage and bar
facilities, state-of-the-art gaming equipment and the comfortable design of the
Majestic Star Casino should attract patrons to the Majestic Star Casino and
create customer loyalty.
The Company believes that the number of existing vessels available for
purchase which are capable of cruising on Lake Michigan and suitable for the
operation of a casino are limited. Therefore, in October 1995, the Company
engaged a naval architect to begin design work on the Permanent Vessel. The
Company anticipates that the Permanent Vessel will be designed to be a
state-of-the-art gaming vessel containing approximately 40,000 square feet of
gaming space on three levels with 1,800 to 2,000 gaming positions. The Company
expects that the Permanent Vessel will be designed to allow maximum visibility
and mobility throughout the casino and will contain escalators and elevators to
move customers between gaming levels. The Company estimates that the Permanent
Vessel will cost approximately $40.0 million and can be designed, engineered and
constructed so that it can be delivered to Buffington Harbor by the second half
of 1997.
The Buffington Harbor Facility is situated on an approximately one-hundred
acre site containing approximately 3,200 surface parking spaces. The Buffington
Harbor Facility also offers valet parking and convenient bus loading and
unloading adjacent to the porte cochere of the Pavilion. The 90,000 square foot
Pavilion, which includes the entry barge to the casinos, consists of two levels
containing a 400 seat buffet, a 100 seat steakhouse restaurant, several bars and
lounges, a gift shop and areas for staging, ticketing and other customer
services. The Pavilion features granite floors, unique metallic finishes, two
large fountains and a variety of special lighting effects.
The Majestic Star Casino is be permitted, by law, to operate 24-hours per
day, 365 days per year. However, on June 3, 1996, the IGC stipulated that the
Company and the Joint Venture Partner would operate a maximum of 22 hours per
day, with no gaming being conducted during the hours of 5:00 a.m. and 6:30 a.m.
The Company believes that the IGC will re-consider expanding the Company's hours
of operations at some time in the near future. The Majestic Star Casino will be
able to extend credit to its customers and customers will not be subject to any
legally imposed loss or wagering limits. While the Majestic Star Casino is
32
<PAGE> 36
required to cruise on the open waters of Lake Michigan, gaming is permitted if
weather or other conditions, as determined by the captain of vessel, require the
vessel to remain dockside. In June 1996, the Company was informed by the IGC,
that due to the interpretation by the United States Department of Justice of
applicable federal law, all gaming vessels, including the Chartered Vessel, will
not cruise on Lake Michigan. Accordingly, the Company and its Joint Venture
Partner are conducting simulated cruises dockside on a staggered entry schedule.
These simulated cruises permit entrance to the casinos only during certain
thirty-minute periods which commence at such times as stated on the schedule and
which allow for unlimited egress. The Company has successfully completed high
wave testing to confirm that the Majestic Star Casino will provide a safe and
comfortable environment to the Company's customers at such time as the Chartered
Vessel is permitted to cruise on Lake Michigan.
The Company and the Joint Venture Partner will operate their riverboat
casinos on a staggered cruising schedule in compliance with United States Coast
Guard regulations. Management expects the staggered cruising schedule to appeal
to customers because it will reduce waiting times to board a casino. Management
expects the Buffington Harbor Facility to be the only site in northern Indiana
which will offer a staggered cruising schedule and that staggered cruising will
be an advantage for casinos at the Buffington Harbor Facility over other
northern Indiana casinos. The Majestic Star Casino and the Joint Venture
Partner's riverboat together will offer customers at the Buffington Harbor
Facility a total of approximately 3,400 gaming positions initially and
approximately 4,000 gaming positions upon the opening of the Permanent Vessel,
which management believes is significantly more gaming positions than will exist
at any other site in northern Indiana and is approximately three times the
number of gaming positions allowed at any individual Illinois gaming site, each
of which is currently limited by Illinois gaming laws to 1,200 gaming positions.
The Company also expects that a riverboat casino owned and operated by the
Showboat Marina Casino Partnership ("Showboat") will be opened in close
proximity to the Majestic Star Casino in East Chicago, Indiana, in 1997. The
Company believes that the opening of this third gaming facility will create a
"gaming corridor" which will contain a greater concentration of gaming positions
than currently exists in the Illinois market or is expected to exist in the
northern Indiana market. Management believes that within the "gaming corridor",
customers will be attracted to the Buffington Harbor Facility because of the
high frequency of cruises resulting from the staggered cruising schedule, the
availability of 3,400 gaming positions, and high quality, value oriented
service.
THE CHICAGO AREA AND NORTHERN INDIANA RIVERBOAT CASINO MARKETS
The Chicago metropolitan area is the third most populated metropolitan
region in the United States. Approximately 12.4 million adults reside within a
150-mile radius of the Buffington Harbor Facility, of which approximately 6.8
million adults reside within a 50-mile radius of the Buffington Harbor Facility.
The Chicago downtown area is 23 miles from the Buffington Harbor Facility, as
compared to approximately 40 miles from each of the existing riverboat gaming
companies in Aurora and Elgin and the two riverboat gaming companies in Joliet,
Illinois. Other major cities within a 150-mile radius of the Buffington Harbor
Facility include Indianapolis, South Bend and Fort Wayne, Indiana, and Kalamazoo
and Grand Rapids, Michigan.
The market area within 150 miles of the Majestic Star Casino has one of the
highest ratios of adults to gaming positions of any drive-in gaming market in
the United States. Based on the 12,600 gaming positions projected for the
northern Indiana and Chicago area market, including the five casinos planned for
northern Indiana, there will be one gaming position for every 984 adults. By
contrast, the Atlantic City market has one gaming position for every 702 adults.
In addition, the Company believes that it is well positioned to capitalize on
the lower density of gaming positions in its market area relative to population.
The relative proximity of large population centers to Gary, Indiana, compares
favorably to the population centers around Atlantic City. For example, downtown
Chicago is only 23 miles from the Majestic Star Casino while Philadelphia and
New York City are approximately 60 and 120 miles, respectively, from Atlantic
City.
The Company believes that revenues reported by the riverboat casinos
currently operating in northern Illinois indicate that the Chicago gaming area
market is underserved. Revenues for 1995 indicate that the four gaming companies
operating seven riverboat casinos in the Chicago area generated an average win
per slot per day of $353 and an average win per table per day of $3,048, which
surpass the Atlantic City market's
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performance of average win per slot per day by over 40% and average win per
table per day by over 10% for the same period.
The following table compares the demographic and certain key operating
statistics of the Chicago area gaming market to other major day-trip gaming
markets for the twelve months ended December 31, 1995.
<TABLE>
<CAPTION>
NUMBER NUMBER ADULT POP. WIN/ WIN/
OF OF TO SLOT/ TABLE/
METROPOLITAN AREA SLOTS TABLES POSITIONS(1)(2) DAY(1) DAY(1)
- --------------------------------------------- ------ ------ --------------- ------- ------
<S> <C> <C> <C> <C> <C>
Chicago, Illinois............................ 3,875 230 2,583 $352.51 $3,048
Foxwoods, Connecticut........................ 3,920 -- (3) --(3) 407.64 --(3)
Lake Charles, Louisiana...................... 4,468 220 876 236.26 1,391
Atlantic City, New Jersey.................... 28,916 1,342 702 248.78 2,742
Bossier/Shreveport, Louisiana................ 2,933 168 498 291.50 2,188
Biloxi, Mississippi.......................... 7,882 410 348 112.13 1,027
New Orleans, Louisiana....................... 7,301 312 347 131.13 1,171
</TABLE>
- -------------------------
(1) Data represent the Company's estimates based on publicly available tax and
gaming information and published industry reports.
(2) Based on the adult population within the 150 mile radius of the stated
metropolitan area.
(3) Data are not publicly available.
MARKETING STRATEGY
The Company expects to compete effectively with existing Chicago area and
proposed northern Indiana casinos due to (i) the staggered cruising schedule at
the Buffington Harbor Facility which will reduce waiting times between cruises;
(ii) the existence of significantly more gaming positions at the Buffington
Harbor Facility than at any one location proposed for northern Indiana or
existing in the Chicago area, which are currently limited by Illinois gaming law
to 1,200 gaming positions; (iii) direct access to the Buffington Harbor Facility
from major state and federal highways; (iv) high quality, value oriented
services; and (v) abundant surface parking. The unique attributes of the
Buffington Harbor Facility will be featured in the Company's marketing and
promotional materials, which will be primarily directed toward the drive-in,
middle market customers who the Company believes constitute a majority of casino
patrons in the Company's market area.
Through the use of a systematic marketing program, the Company will
encourage initial and repeat visits to the Majestic Star Casino. The Company's
marketing programs will consist of a variety of advertising, direct mail and
promotional programs which are expected to promote awareness of the Majestic
Star Casino at Buffington Harbor. In addition to the Company's marketing plans,
the Company and its Joint Venture Partner may develop joint programs to promote
the Buffington Harbor Facility and its attributes, such as the presence of two
casinos at one site containing over 3,400 combined gaming positions, its easily
accessible location and limited waiting time for cruises.
The Company's marketing program includes:
Slot Club: The Company has established the Club M-Star slot club
through which participating customers can earn points, based on their level
of slot play, that may be redeemed for prizes, which may include cash,
complimentary food and beverages, merchandise and transportation to and
from the Majestic Star Casino. Through the use of a computerized tracking
system, Club M-Star will enable the Company to maintain a comprehensive
database of the gaming levels, duration of play, preferences of, and other
information about its patrons and tailor marketing programs to encourage
repeat visits by these customers.
Direct Mail: In order to develop and maintain high levels of
patronage, the Company will utilize a direct mail, quick response program
whereby qualified customers receive promotional literature within several
days of a visit. Such mailings will be devised to generate and build
customer loyalty and to encourage frequent visits. Other periodic mailings
will be designed to generate and maintain high customer awareness of the
name "Majestic Star."
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Food and Beverage: The Buffington Buffet, will be located in the
Pavilion, features a 400-seat buffet offering a diversified selection of
hot and cold entrees at competitive prices. The Harbor Steakhouse, also
located in the Pavilion, and seats for 80 persons. The Harbor Steakhouse is
intended to offer patrons a full-service, up-scale alternative to the
buffet. The Star Gate Express, located onboard the Majestic Star Casino,
seats 30 persons and offers a light fare menu. Management believes that by
providing variety, excellent quality and well-valued food services it will
attract patrons to the Buffington Harbor Facility and the Majestic Star
Casino and will promote repeat visits.
Motor Coach/Group Sales: The Company has established a motor
coach/group sales department to implement a regional program to take
advantage of the large population within 150 miles of Buffington Harbor.
This department intends to focus on maintaining a high volume of customers
primarily during non-peak periods.
Cooperative Programs: The Company intends to build relationships with
Chicago area hotels, restaurants, convention centers and entertainment and
sports venues to develop tie-in and other cooperative programs.
Although the Company's marketing efforts will focus on middle market
customers, the Company also intends to develop personal relationships with
premium players through staff trained to provide customer satisfaction.
COMPETITION
The Majestic Star Casino is dependent primarily on adults residing within
150 miles of the Buffington Harbor Facility, which includes the Chicago
metropolitan area. Currently, four riverboat casinos operate in northern
Illinois within 50 miles of the Buffington Harbor Facility. In addition to the
riverboat to be operated by the Joint Venture Partner, the Company expects
competition in northern Indiana from proposed riverboat casinos which have been
authorized in each of East Chicago, Hammond and Michigan City, Indiana. The
Company also expects to compete in Indiana, to a lesser extent, with six
additional riverboats in southern Indiana. Although the Company believes that
there is sufficient demand in the market to sustain the operations of the
Majestic Star Casino, there can be no assurance to that effect. See "Risk
Factors -- Competition."
The Company believes that competition in the gaming industry is based on
the quality and location of the gaming facilities, the effectiveness of
marketing efforts and overall levels of customer service and satisfaction.
Although management believes that the location and amenities of the Majestic
Star Casino will enable the Company to compete effectively with other casinos in
the immediate area, the Company expects intense competition to develop in its
market area.
There can be no assurance that Indiana or Illinois will not authorize
additional gaming licenses in the future. Legislation has been introduced on
numerous occasions in recent years to provide for land-based casinos in Chicago
and to expand riverboat gaming in Illinois, including to authorize additional
operators or to authorize existing operators to move to new sites or otherwise
to modify existing regulations to decrease or eliminate certain restrictions,
such as limitations on the number of gaming positions. To date, no such
legislation has been enacted. The Company is unable to predict whether any such
legislation, in Illinois, Indiana or elsewhere, will be enacted or whether, if
passed, it would have a material adverse impact on the results of operations or
financial condition of the Company.
The Company also expects future competition from a federally recognized
Indian tribe which is negotiating with various cities in southwestern Michigan
and/or Indiana to develop land-based casinos.
Many of the Company's competitors, including its Joint Venture Partner and
Showboat, the owner of the casino to be opened in East Chicago, Indiana, will
have larger and, prior to the delivery of the Permanent Vessel, more modern
casino vessels. In addition, many of such competitors will have greater gaming
industry management experience and financial resources. The Company believes
that its ability to compete successfully in the riverboat gaming industry will
be primarily based on the quality and location of its gaming facilities, the
effectiveness of its marketing efforts, and overall levels of customer service
and satisfaction. These factors will
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<PAGE> 39
become more important as competition in the casino gaming industry becomes more
intense with the opening of additional casino operations.
DESIGN AND CONSTRUCTION
Planning for the Majestic Star Casino began in 1993 with the study of
potential harbors, design concepts, construction costs and schedules, permit
requirements, and environmental issues. Landside construction work began in
August 1995 after the acquisition of real property interests by the Joint
Venture Partner at Buffington Harbor. The Army Corps of Engineers and the
Indiana Department of Natural Resources issued the necessary permits for the
required harbor modifications in October 1995 and harbor construction commenced
shortly thereafter.
A physical wave study was performed to assist in the design of the harbor
specifications, mooring systems and structures and a weather monitoring system.
This study, undertaken at the Canadian National Research Center, involved the
construction of a scale model of the harbor, including the proposed
modifications to test wave and wind conditions on Lake Michigan and the
effectiveness of the harbor and proposed modifications in protecting the vessel
and providing the Majestic Star Casino's customers with a comfortable ride. The
study concluded that the harbor, as modified, would provide a safe and
comfortable cruising environment. After conclusion of the study, the Company
received Coast Guard approval of the harbor specifications.
In October 1995, the Company engaged Guido Perla & Associates, naval
architects in Seattle, Washington to begin design work on the Permanent Vessel.
Guido Perla & Associates has designed several riverboat casinos, including
casinos owned by Showboat and Harrah's and the Grand Victoria casino in Elgin,
Illinois developed by Hyatt Corporation. Other independent specialists and
professional firms have been, or will be, engaged to assist in the design and
construction of the Permanent Vessel.
DON H. BARDEN -- DEVELOPMENT AND BUSINESS EXPERIENCE
The Majestic Star Casino is being developed by Don H. Barden. Mr. Barden's
business career spans 25 years and involves the successful establishment,
development and operation of several enterprises in the cable, real estate, and
media industries. Highlights of Mr. Barden's career include:
Cable Television: Beginning in the early 1980's, Mr. Barden's
companies built and operated cable television systems in Detroit and three
of its suburbs: Inkster, Romulus, and Van Buren Township. The Detroit
system, of which Mr. Barden owned 51%, was developed through a partnership
with MacLean Hunter Cable TV, Inc. and encompassed over 2,000 miles of
plant passing 400,000 homes. The construction cost of the Detroit system,
which is one of the largest single city urban cable systems in the country,
exceeded $100 million. In 1988, Mr. Barden sold the Romulus and Van Buren
Township cable systems. In 1995, Mr. Barden sold Barden Communications,
Inc., which owned partnership interests in the Detroit and Inkster systems,
to Comcast Corporation.
Real Estate: Mr. Barden's real estate organization, Waycor Development
Company, served as the developer for a $61 million, 840 bed detention
facility in Wayne County, Michigan. Other completed projects include a
Veteran's Administration clinic in Canton, Ohio and a 144-unit apartment
complex in Detroit, Michigan. Mr. Barden is currently involved in the
development of a 42-unit single family housing subdivision in the City of
Detroit.
Broadcasting: Mr. Barden, through Barden Broadcasting, Inc., owns and
operates four FM radio stations and one AM radio station in the State of
Illinois. Three of the stations are located in Joliet, Illinois.
Computer-based Education System and Communications Network: Mr.
Barden, through Barden Companies, Inc., is the majority owner of University
Communications, Inc. which provides computer-based educational and
communications services to approximately five hundred school districts,
adult educational programs and corporate users.
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<PAGE> 40
BACKGROUND
The Company was formed, under the name Barden PRC-Gary, LLC, in December
1993 by companies controlled by Don H. Barden and a subsidiary of President
Casinos, Inc. ("President Casinos") for the purpose of developing a riverboat
casino project in Gary, Indiana. The Company received a Certificate of
Suitability from the IGC in December 1994. Pursuant to an agreement between BDI
and President Casinos, President Casinos committed to contribute $20.0 million
and a vessel to the Company. After President Casinos elected not to fund its
$20.0 million commitment, BDI and President Casinos entered into an agreement on
June 30, 1995, providing for the Company to redeem President Casinos' membership
interest in the Company for a nominal amount and to receive the right to charter
the vessel from President Casinos on which the Majestic Star Casino will operate
pursuant to the Charter Agreement (as defined herein). See "Material Agreements
- -- Charter Agreement."
In July 1995, the Company entered into an agreement with Davis Gaming Co.
("Davis Gaming"), an affiliate of Marvin Davis, whereby Davis Gaming agreed to
contribute $25.0 million to the Company and BDI agreed to contribute $10.0
million to the Company. The Company's Certificate of Suitability was extended in
June 1995, with the IGC indicating that it would grant a further extension
beyond September 30, 1995 provided that (i) the Company and the Joint Venture
Partner form the BHR Joint Venture to develop the Buffington Harbor Facility and
(ii) the BHR Joint Venture entered into a ground lease with the City of Gary. In
September 1995, Davis Gaming elected not to enter into the BHR Joint Venture and
to commit capital to the BHR Joint Venture prior to completing negotiations with
the City of Gary and consequently withdrew from the Company. The BHR Joint
Venture was then formed between the Company and the Joint Venture Partner and
the IGC granted an extension to the Company after agreement was reached with the
City of Gary. See "Material Agreements -- Agreement with City of Gary, Indiana."
REGULATION
The Company is subject to various governmental rules and regulations with
respect to the operation of a passenger vessel and gaming casino, including
regulation by the IGC, and has recently received a riverboat gaming license from
the IGC. See "Risk Factors -- Taxation and Regulation by Gaming and Other
Governmental Authorities" and "Regulation."
Either the Company, the Joint Venture Partner or the BHR Joint Venture has
obtained, applied for or will apply for, all requisite permits and approvals for
the construction of the Gaming Complex. The Company believes that the BHR Joint
Venture will be able to acquire such further permits and approvals in a timely
manner and that the Company will be able to obtain all other necessary licenses,
permits and approvals in order to construct and operate the Majestic Star Casino
and the Gaming Complex. However, no assurances can be given that all of the
requisite licenses, permits or approvals will be issued or that all of such
licenses, permits or approvals will be issued without certain conditions or
restrictions that could adversely affect the construction and operation of the
Majestic Star Casino and the Gaming Complex. The failure to maintain any of
these licenses, permits or approvals in a timely manner may delay, restrict or
prevent the Buffington Harbor Facility from operating as contemplated herein.
LITIGATION
On May 1, 1996, a class action complaint was filed in the Lake Superior
Court in Gary, Indiana against the Joint Venture Partner and certain of its
affiliates, the Company and certain of its affiliates, the IGC, the City of Gary
and the Mayor of the City of Gary and certain other parties affiliated with the
City of Gary. The plaintiffs are comprised of two local contractors, a former
city employee, and five persons who claim that they were to be investors in the
riverboat casinos to be operated in Gary, Indiana. The complaint alleges, among
other things, that the Joint Venture Partner and the Company each have failed to
meet certain obligations with respect to minority hiring goals, utilization of
minority and/or women contractors, investment in city projects and providing
certain residents of the City of Gary with the right to acquire a 15% equity
interest in their respective projects. Plaintiffs seek various remedies
including damages and injunctive relief in the form of an order to enjoin the
IGC from issuing gaming licenses to the Company and the Joint Venture Partner
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until they have complied with these conditions. The Company believes the
complaint is without merit, denies all of the plaintiffs' allegations and
intends to vigorously defend its interests. The Company has been advised that
the City of Gary and its officials also intend to vigorously defend the City's
interest in the matter. The Company and other defendants have filed a motion to
dismiss the plaintiffs' complaint. Although the Company believes that, to date,
it has met its commitments to the City of Gary and complied with the conditions
required to obtain a riverboat gaming license, it is not possible to predict the
outcome of this matter and its potential effect upon the Company's operations or
its riverboat gaming license. See "Risk Factors -- Taxation and Regulation by
Gaming and Other Governmental Authorities."
EMPLOYEES
The Company employs approximately 900 full-time equivalent persons and that
the BHR Joint Venture employs approximately 400 full-time equivalent persons.
The Company believes that it and the BHR Joint Venture can continue to attract
and retain a sufficient number of qualified individuals to operate and maintain
the Majestic Star Casino and the Gaming Complex. The Company does not know
whether or to what extent its employees will be covered by collective bargaining
agreements, although it expects that certain of its employees will be covered by
collective bargaining agreements.
In recruiting personnel, the Company is obligated, under the terms of its
agreement with the City of Gary, to use its best efforts to have an employee
base which is comprised of fifty-two percent women, seventy percent from
racial/ethnic minority groups, sixty-seven percent residents of the City of Gary
and ninety percent residents of Lake County, Indiana. The Company is working
closely with representatives of the City of Gary to comply with these
objectives.
The Company conducts training programs to teach its employees necessary
technical skills as well as to instill a commitment to a high level of customer
service.
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MATERIAL AGREEMENTS
Set forth below are summaries of the material terms of certain material
agreements to which the Company is or will be a party. The following summaries
do not purport to be complete and are qualified in their entirety by reference
to the relevant agreements. Copies of such agreements (whether in preliminary or
executed form) are available upon request to the Company. Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the agreement being described (unless otherwise indicated).
THE COMPANY'S OPERATING AGREEMENT
The Company is a limited liability company organized under Indiana law. The
members of the Company, BDI and Gary Riverboat Gaming, LLC, an Indiana limited
liability company ("GRG"), have entered into an Amended and Restated Operating
Agreement dated March 29, 1996 (the "Operating Agreement"). BDI and GRG hold 85%
and 15%, respectively, of the membership interests in the Company.
The Company is currently managed by BDI which is controlled by Don H.
Barden. In the event that BDI ceases to be the Manager of the Company, as a
result of its removal or resignation, the Operating Agreement specifies that the
Company's successor manager shall be Barden Management, Inc., an Indiana
corporation ("BMI"), which is wholly owned and controlled by Don H. Barden, and
is the current manager of GRG.
The Company is controlled, and the Company's assets and operations will be
directed, by the Manager. Subject to certain exceptions, the Operating Agreement
affords the members no right to participate in the management of the Company.
The members are unable to remove the Manager, except upon supermajority approval
in limited circumstances involving serious misfeasance. BDI may resign from its
status as the Company's manager upon 60 days' notice.
The Manager is not liable to the Company or to any member for any loss or
damage arising out of the management of the Company, or any other activities in
its capacity as a Manager, unless caused by the Manager's (i) receipt of a
financial benefit to which it is not entitled, (ii) assenting to a distribution
in violation of the Operating Agreement or the Indiana Limited Liability Act,
(iii) commission of a crime, or (iv) material willful violations of the
Operating Agreement. Further, the Operating Agreement generally provides that
the Company will indemnify the Manager (and its agents and employees) from all
loss or damage incurred by the Manager in connection with management of the
Company, unless such loss or damage is caused by such person's gross negligence
or bad faith.
The death, insolvency or dissolution of any member, or any other event
resulting in the withdrawal by a member from the Company (whether pursuant to
the transfer of his interest or otherwise), will result in the dissolution of
the Company, unless the Manager and a majority of the remaining members (based
on percentage interests in profits and capital) agree in their discretion to
continue the business of the Company. Dissolution of the Company will also occur
on the earlier of (i) December 31, 2043, (ii) the disposition of all or
substantially all of the Company's assets, (iii) the written consent of the
Manager and all members, (iv) the death, retirement, resignation, withdrawal,
expulsion, bankruptcy, mental incapacity or dissolution of the incumbent Manager
(provided, however, that the Company shall not terminate if within 30 days after
such event a new person assumes the role of Manager in accordance with the
Operating Agreement), or (v) entry of a decree of judicial dissolution.
JOINT VENTURE AGREEMENT
The Company and its Joint Venture Partner are each fifty percent members in
the BHR Joint Venture. The terms of the Joint Venture Agreement require each
member to make capital contributions to the BHR Joint Venture equal to one-half
of the amounts required for the BHR Joint Venture to fund the acquisition of
property and construct the contemplated common amenities in accordance with an
agreed upon budget. The Joint Venture Agreement required each member to make
capital contributions in an aggregate amount of $40,816,433; as of the date of
this Prospectus, each member has contributed such amount. The estimated costs to
the BHR Joint Venture to construct the Gaming Complex are as follows: $14
million to acquire the
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land; $12 million for harbor construction, $52 million for landside development
(including approximately $19 million for the Pavilion) and $4 million for an
operating reserve. The Joint Venture Agreement allows the BHR Joint Venture to
borrow funds with the approval of both members, although no significant
borrowings are contemplated at the current time.
The general affairs of the BHR Joint Venture are governed by an Operating
Committee. The Operating Committee consists of four representatives, two
appointed by each member, and all four representatives must concur in any
action. If the Operating Committee is not able to agree upon a matter, the
matter is to be referred to a vote of the members. In addition, the members also
must decide on certain fundamental matters as specified in the Joint Venture
Agreement.
The Joint Venture Agreement establishes a Construction Committee consisting
of two representatives, one appointed by each member. The Construction Committee
is authorized to make decisions relating to routine construction matters. The
Construction Committee can only act upon the approval of both representatives.
If the representatives are not able to agree on a matter, the matter is to be
referred to a vote of the Operating Committee.
The Joint Venture Agreement also establishes a subcommittee to the
Operating Committee, consisting of the general managers of each of Majestic Star
Casino and the Joint Venture Partner's gaming operation. This subcommittee is
authorized to make decisions involving the day-to-day operations of BHR Joint
Venture. The subcommittee can act only upon the approval of both general
managers. If the general managers are not able to agree on a matter, the matter
is to be referred to the Operating Committee.
A member loses its right to approve (or have its representatives on any of
the aforementioned committees or subcommittees approve) actions of the BHR Joint
Venture, during any period in which the member suffers an event of default under
the Joint Venture Agreement. Furthermore, decisions of the BHR Joint Venture
directly involving one member (such as the enforcement of the BHR Joint
Venture's rights against the member under the corresponding Berthing Agreement
(as defined below)) do not require the approval of both members, but rather may
be made solely by the other member.
Events of default under the Joint Venture Agreement include a failure by a
member to make the capital contributions referred to above, bankruptcy, an event
of default under the Berthing Agreement, and any other failure of a member to
perform its obligations under the Joint Venture Agreement within 30 days after
written notice of default from the other member. The remedies for any such event
of default include (i) the loss by the member of its voting rights as described
above, (ii) if the event of default continues for 270 days, the non-defaulting
member may acquire the interest of the defaulting member in the BHR Joint
Venture (and its Berthing Agreement) for $1.0 million, and (iii) other remedies
available at law or in equity. Furthermore, if the event of default involves a
failure to make required capital contributions, the other member may withdraw
its capital contribution, or be entitled to receive interest on its incremental
capital contribution, or require the defaulting member to pay interest in
respect of the capital contributions on which it defaulted.
Most disputes arising out of the Joint Venture Agreement that are not
resolved by the members are subject to resolution by arbitration. Excluded from
the arbitration process are decisions relative to changing the common amenities
currently under construction, changes in (or decisions involving the enforcement
of rights under) the Berthing Agreements, and increases in capital contribution
obligations.
BERTHING AGREEMENT
The Company and the Joint Venture Partner, each an operator, each entered
into a berthing agreement on April 23, 1996 (each a "Berthing Agreement") with
the BHR Joint Venture. Each Berthing Agreement obligates the BHR Joint Venture
to construct the common area improvements (including parking lots, access roads,
harbor improvements, other infrastructure improvements and the Pavilion) which
are required for each operator's gaming operations. The BHR Joint Venture has
made substantial progress in the construction of these common area improvements,
with the Gaming Complex commencing operations on June 7, 1996. Each Berthing
Agreement also requires the BHR Joint Venture to carry insurance on the common
area improvements, at replacement value, and to reconstruct or repair the common
area improvements in the event
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of an insured casualty (subject to certain dollar limitations as to
reconstruction or repairs costing more than available insurance proceeds).
Under its Berthing Agreement, each operator has the right to dock its
vessel at the mooring barge and the right to use substantially all of the other
common area improvements being constructed by the BHR Joint Venture. Each
Berthing Agreement also obligates the BHR Joint Venture to provide specified
services to each of the operators in connection with the common area
improvements, including valet parking, shuttle buses, security, maintenance and
food and beverage services. Each operator is obligated to pay certain of these
expenses that are specific to its gaming operations. Furthermore, each operator
is obligated to pay a license fee equal to one-half of the amount by which the
expenses of the BHR Joint Venture exceed the revenues of the BHR Joint Venture.
The expenses of the BHR Joint Venture are expected to significantly exceed its
revenues.
Each Berthing Agreement imposes certain restrictions on the operations of
the operator, including a limitation on cruising rights so as to avoid
scheduling conflicts between the operators (so long as cruising is required by
the IGC). Each Berthing Agreement also provides certain remedies if the operator
defaults in its obligations thereunder, including, among other things, a 100%
increase in the license fee during any period in which an operator has defaulted
in the payment of its license fee for more than 30 days, a suspension of gaming
operations and other rights if an event of default continues for more than 120
days, and a buyout of the operator's rights in the BHR Joint Venture and the
Berthing Agreement if an event of default continues for more than 270 days.
CHARTER AGREEMENT
The Company has entered into a Charter Agreement, dated August 17, 1995
(the "Charter Agreement") with New Yorker Acquisition Corporation ("NYAC"), a
subsidiary of President Casinos, to charter the Chartered Vessel. The Charter
Agreement will terminate on May 3, 2001 unless terminated by the Company upon
180 days' notice of termination. The Charter Agreement provides for a payment of
$125,000 per month for the first 24 months of the term, which amount is to be
adjusted annually for each year of the term thereafter to a fair market rental,
as determined by a nationally recognized appraiser or by agreement of the
Company and NYAC. Pursuant to the Charter Agreement, before delivery, certain
alterations are to be made by NYAC, at its expense, to the Chartered Vessel, and
certain other alterations are to be completed at the Company's expense. These
alterations are substantially complete and the Company's cost will be
approximately $3.7 million. The Charter Agreement also requires the Company, any
subcharterer or any assignee of the charterer to maintain a net worth of not
less than $10.0 million during the term of the Charter Agreement.
HARBOR LEASE AGREEMENT
On June 29, 1995, the Joint Venture Partner entered into the Harbor Lease
with Lehigh Cement. The Harbor Lease was subsequently assigned by the Joint
Venture Partner to the BHR Joint Venture. Pursuant to the Harbor Lease, the BHR
Joint Venture is leasing certain property which is integral to the Company's
gaming operations. The property subject to the Harbor Lease includes certain
property abutting Buffington Harbor and on which the docking and other support
facilities for the Buffington Harbor Facility are to be located.
The Harbor Lease authorizes the BHR Joint Venture to construct the harbor
improvements, including docking facilities, that are required to open and
conduct the contemplated gaming operations. The Harbor Lease also imposes
certain limitations on the use of Buffington Harbor and certain of its docks by
the Company and the Joint Venture Partner, including limitations on riverboat
cruises that would interfere with Lehigh Cement's use of the harbor or with
certain rights Lehigh Cement has granted to Marblehead Lime Company to use the
harbor. The Harbor Lease also requires the BHR Joint Venture to reimburse Lehigh
Cement for certain increases in its operational costs caused by the BHR Joint
Venture's use of Buffington Harbor. The Company does not believe that any of
these limitations or requirements would have a material adverse effect on its
operations in light of the current and anticipated uses of the docks and
Buffington Harbor by Lehigh Cement and Marblehead Lime Company, although no
assurance can be given with respect thereto because neither the Company nor the
BHR Joint Venture has control over these factors.
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<PAGE> 45
The initial term of the Harbor Lease expires on December 29, 1997. The
Harbor Lease requires the BHR Joint Venture or its members to apply for the
governmental permits necessary for construction of, and to construct, a
permanent harbor on the shoreline of Lake Michigan lying immediately to the west
of the existing harbor. Construction of a new harbor will require the BHR Joint
Venture to acquire permits from the U.S. Army Corps of Engineers, the Coast
Guard and the Indiana Department of Natural Resources, among others. The term of
the Harbor Lease may be extended, if prior to the expiration of the initial
term, the BHR Joint Venture procures, or employs due diligence in seeking to
procure, certain governmental permits necessary to construct a new harbor on a
part of the shoreline of Lake Michigan lying to the west of Buffington Harbor.
If the permits are procured prior to the expiration of the initial term, Lehigh
Cement is obligated to extend the term for the period of time reasonably
necessary, as determined by Lehigh Cement, to permit the BHR Joint Venture to
complete construction of the new harbor improvements. If the permits are not
procured, prior to the expiration of the initial term, and the BHR Joint Venture
has exercised due diligence (as determined in the opinion of Lehigh Cement) in
attempting to obtain the permits, Lehigh Cement is obligated to extend the term
until the earlier of (i) December 31, 2005, and (ii) the date the BHR Joint
Venture acquires the permits and completes the new harbor improvements. See
"Risk Factors -- Risk Associated with Harbor Lease."
If the term of the Harbor Lease is extended beyond its initial thirty month
period in accordance with the terms thereof, rent becomes payable commencing
January 1, 1998 at the rate of $125,000 per month.
AGREEMENT WITH CITY OF GARY, INDIANA
Prior to receiving the riverboat gaming license, the Company was authorized
to develop the Majestic Star Casino pursuant to a certificate of suitability
granted to the Company by the IGC (the "Certificate of Suitability"). In
accordance with the Certificate of Suitability, the City of Gary and the Company
entered into a Development Agreement dated as of March 26, 1996 (the
"Development Agreement"). The Development Agreement requires the Company, among
other things, to (i) invest $116.0 million in various on-site and off-site
improvements, of which $91.5 million are expected to be satisfied at or prior to
commencement of operations, (ii) pay the City of Gary an amount equal to 3% of
the Majestic Star Casino's adjusted gross receipts, as defined in the Indiana
Riverboat Gambling Act (the "Riverboat Gambling Act"), (iii) obtain the
insurance, bonds and/or letters of credit required by the Riverboat Gambling
Act, (iv) endeavor to meet certain minority and local employment, union and
vendor goals and (v) pay a default payment in the amount of damages for failure
to complete certain on-site developments, the maximum amount of which is $12.0
million. The remaining $24.5 million of the $116.0 million commitment is
required to be expended over a five year period.
On September 29, 1995, the Company entered into an agreement with the City
of Gary, whereby certain obligations of the Company and the BHR Joint Venture
were terminated in consideration for the payment of $5.0 million. One half of
this amount was paid by the Company to the City of Gary in October 1995 and the
balance of such amount is due 90 days following the commencement of gaming
operations at the Majestic Star Casino. The aggregate of these payments will
satisfy $5.0 million of the Company's $116.0 million investment commitment under
the Development Agreement.
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<PAGE> 46
REGULATION
STATE OF INDIANA
The following is a summary of the applicable provisions of the Riverboat
Gambling Act of the State of Indiana and certain other laws and regulations. It
does not purport to be a full description thereof and is qualified in its
entirety by reference to the Riverboat Gambling Act and such other laws and
regulations.
In 1993, the State of Indiana passed the Riverboat Gambling Act which
created the IGC. The IGC is given extensive powers and duties for the purposes
of administering, regulating and enforcing riverboat gaming in Indiana and has
been authorized to award up to eleven gaming licenses to operate riverboat
casinos in the State of Indiana, including five to counties contiguous to Lake
Michigan in northern Indiana, five to counties contiguous to the Ohio River and
one to a county contiguous to Patola Lake in southern Indiana.
The Riverboat Gambling Act requires that referenda be approved by municipal
and county residents to authorize gaming for cities on Lake Michigan. Since the
City of Gary conducted a successful referendum in 1989, the Act exempts the City
of Gary from the referendum requirement. At the present time, the required
referenda have been conducted and gaming has been authorized for the cities of
Hammond and East Chicago (in addition to Gary) in Lake County, Indiana, and for
Michigan City in LaPorte County, to the east of Lake County.
The IGC has jurisdiction and supervision over all riverboat gaming
operations in Indiana and all persons on riverboats where gaming operations are
conducted. These powers and duties include authority to (i) investigate all
applicants for riverboat gaming licenses, (ii) select among competing applicants
those that promote the most economic development in a home dock area and that
best serve the interests of the citizens of Indiana, (iii) establish fees for
licenses and (iv) prescribe all forms used by applicants. The IGC is authorized
to adopt rules for administering the gaming statute and the conditions under
which riverboat gaming in Indiana may be conducted. The IGC has promulgated
certain formal rules and has proposed additional rules governing the application
procedure. The IGC may suspend or revoke the license of a licensee or impose
civil penalties, in some cases without notice or hearing, for any act in
violation of the Riverboat Gambling Act or for any other fraudulent act. In
addition, the IGC may revoke an owner's license if the licensee has not begun
regular excursions prior to the end of the twelve month period following receipt
of a license or if it is determined by the IGC that revocation is in the best
interests of the State of Indiana. The IGC will (i) authorize the route of the
riverboat and the stops that the riverboat may make, (ii) establish minimum
amounts of insurance and (iii) after consulting with the United States Army
Corps of Engineers, determine which waterways are navigable waterways for
purposes of the Riverboat Gambling Act and determine which navigable waterways
are suitable for the operation of riverboats. Additionally, the IGC may adopt
emergency orders concerning navigability of waters for extreme weather
conditions or other extreme circumstances.
The Riverboat Gambling Act requires an extensive disclosure of records and
other information concerning an applicant, including disclosure of all
directors, officers and persons holding a five percent or more direct or
indirect beneficial interest in an applicant.
In determining whether to grant an owner's license to an applicant, the IGC
shall consider (i) the character, reputation, experience and financial integrity
of the applicant and any person who (a) directly or indirectly controls the
applicant, or (b) is directly or indirectly controlled by either the applicant
or a person who directly or indirectly controls the applicant, (ii) the
facilities or proposed facilities for the conduct of riverboat gaming, (iii) the
highest total prospective revenue to be collected by the state from the conduct
of riverboat gaming, (iv) the good faith affirmative action plan to recruit,
train and upgrade minorities in all employment classifications, (v) the
financial ability of the applicant to purchase and maintain adequate liability
and casualty insurance, (vi) whether the applicant has adequate capitalization
to provide and maintain the riverboat for the duration of the license and (vii)
the extent to which the applicant meets or exceeds other standards adopted by
the IGC. The IGC may also give favorable consideration to applicants for
economically depressed areas and applicants who provide for significant
development of a large geographic area. A person holding an owner's gaming
license issued by the IGC may not own more than a ten percent interest in
another such license. An owner's license expires five years after the effective
date of the license. Unless the license has expired or has been terminated or
revoked, the gaming license may be renewed if the
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<PAGE> 47
IGC determines that the licensee has satisfied all statutory and regulatory
requirements. A gaming license is a revocable privilege and is not a property
right pursuant to the Riverboat Gambling Act. There can be no assurance that the
Majestic Star Casino will obtain a gaming license from the IGC.
Minimum and maximum wagers on games are left to the discretion of the
licensee and are not established by regulation. Wagering is required to be
conducted with tokens, chips or electronic cards instead of cash or coins. Each
riverboat gaming excursion is limited to a duration of four hours unless a
longer excursion is expressly approved by the IGC. No gaming may be conducted
while the boat is docked except (i) for 30-minute time periods at the beginning
and end of a cruise while the passengers are embarking and disembarking, (ii) if
the master of the riverboat reasonably determines that specific weather or water
conditions present a danger to the riverboat, its passengers or crew, (iii) if
either the vessel or the docking facility is undergoing mechanical or structural
repair, (iv) if water traffic conditions present a danger to (a) the riverboat,
its passengers or crew or (b) other vessels on the water, or (v) if the master
has been notified that a condition exists that would cause a violation of
federal law if the riverboat were to cruise. See "Regulation -- Federal Law."
An admission tax of $3.00 for each person admitted to the gaming excursion
is imposed upon each license owner. An additional twenty percent tax is imposed
on the "adjusted gross receipts" received from gaming operations, which is
defined under the Riverboat Gambling Act as the total of all cash and property
(including checks received by the licensee whether or not collected) received,
less the total of all cash paid out as winnings to patrons and uncollected
gaming receivables (not to exceed two percent). The gaming license owner shall
remit the admission and wagering taxes before the close of business on the day
following the day on which the taxes were incurred. Legislation was recently
enacted in Indiana permitting the imposition of property taxes on Indiana
riverboats at rates to be determined by local taxing authorities of the
jurisdiction in which a riverboat operates.
The IGC is authorized to license suppliers and certain occupations related
to riverboat gaming. Gaming equipment and supplies customarily used in
conducting riverboat gaming may be purchased or leased only from licensed
suppliers.
The Riverboat Gambling Act places special emphasis upon minority and
women's business enterprise participation in the riverboat industry. Any person
issued a gaming owners' license must establish goals of expending at least ten
percent of the total dollar value of the licensee's contracts for goods and
services with minority business enterprises and five percent of the total dollar
value of the licensee's contracts for goods and services with women's business
enterprises. The IGC may suspend, limit or revoke a gaming owner's license or
impose a fine for failure to comply with these statutory requirements.
FEDERAL LAW
In October 1994, the U.S. Attorney General's Office in Indiana notified the
IGC that federal law, U.S.C. 15 sec. 1171 to 1178, commonly known as the Johnson
Act, prohibits gaming vessels from cruising on waters within federal maritime
jurisdiction and prohibits gaming on such vessels. A member of the U.S. House of
Representatives has notified the Department of Justice that the Johnson Act may
prohibit gaming on vessels on the Great Lakes because the Great Lakes are within
federal maritime jurisdiction. The U.S. attorney for the Northern District of
Indiana asked the Justice Department for an opinion with respect to the
applicability of the Johnson Act to casino boats on Lake Michigan. In June 1996,
the Department of Justice informed the State of Indiana that federal law
prohibits all gaming vessels from cruising on Lake Michigan. Currently, Congress
has legislation pending that contains an amendment to the Johnson Act which
would specifically allow gaming on vessels in the Indiana waters of Lake
Michigan. The Johnson Act contains an exception to such prohibitions if a state
adopts a law that provides an exemption for the state from the provisions of the
Johnson Act or if the state adopts a law providing for the transportation of
specifically enumerated gambling devices in such state. The Riverboat Gambling
Act specifically provides that Indiana is exempt from the provisions of the
Johnson Act and that all shipments of gambling devices which have been
registered, recorded and labelled in accordance with the Johnson Act would be
legal shipments into the State of Indiana under the Johnson Act. Notwithstanding
such statutes, there can be no assurance that gaming operations by the Company
would not be challenged as a violation of Indiana law or federal law.
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<PAGE> 48
MANAGEMENT
MANAGEMENT
The Company is managed by the Manager. The management team assembled by the
Manager to oversee the development and operation of the Company and the Majestic
Star Casino include:
Don H. Barden, age 52. Mr. Barden is Chairman and President of the Manager
and the Company and is employed by the Company. Since 1981, Mr. Barden has also
been the President and Chief Executive Officer of a group of companies which are
wholly-owned by Mr. Barden and which operate in the real estate development,
broadcast, and entertainment industries. Over the past 25 years, Mr. Barden has
successfully established and developed a number of enterprises in the real
estate, cable television and media industries. See "Business -- Don H. Barden
Development and Business Experience".
Thomas C. Bonner, age 43. Mr. Bonner has been the Executive Vice President
of the Manager and the Company and has been employed by the Company since
December 1995, with primary responsibility for the overall operations of the
Company. From March 1995 to December 1995, he was President and Chief Executive
Officer of Showboat Indiana, Inc. with overall responsibility for the
development, licensing, construction and operation of Showboat's riverboat
project in East Chicago, Indiana. From November 1993 to March 1995, he was Vice
President of Project Development for Showboat Development Company and, from
October 1984 to November 1993, he was Vice President and General Counsel to
Atlantic City Showboat, Inc.
Paul W. Sykes, age 44. Mr. Sykes has been Vice President of the Manager and
General Manager of the Company since December 1995 and is employed by the
Company. He has responsibility for management of gaming operations and related
activities of the Company. From February 1995 to December 1995, Mr. Sykes was
Vice President-Operations of Showboat Indiana, Inc. with primary responsibility
for pre-opening activities relating to casino gambling, credit, food and
beverage, property and security operations. From December 1993 to January 1995,
Mr. Sykes was Vice President - Project Development where he was responsible for
identification and evaluation of new markets and related legislative matters.
From November 1991 to November 1993, Mr. Sykes was Vice President of Showboat
Atlantic City, where he was responsible for the direct mail, player development,
special events and complimentary services. Prior to 1991, Mr. Sykes served as
Vice President of Customer Development for Trump's Taj Mahal.
Michael E. Kelly, age 34. Mr. Kelly joined the management team in April
1996 as Vice President and Chief Financial Officer of the Manager, with overall
responsibility for the Company's financial affairs. Mr. Kelly is also employed
by the Company. From June 1994 to April 1996, Mr. Kelly held various positions
with Fitzgeralds Gaming Corporation including Vice President of Finance. Mr.
Kelly also was the Senior Director of Operations and Chief Financial Officer of
Fitzgeralds Tunica where he was responsible for operations, finance, regulatory
affairs, legal and strategic planning and involved in the design and development
of a new dockside gaming facility in Robinsonville, Mississippi. From September
1991 to June 1994, Mr. Kelly was Vice President and Chief Financial Officer of
Empress River Casino Corporation and its affiliates, with responsibility for
finance, regulatory affairs and administration. Mr. Kelly also participated in
the design and development of riverboat casino operations at Joliet, Illinois
and Hammond, Indiana while employed by the Empress River Casino Corporation.
From 1982 to 1991, Mr. Kelly was employed in various senior finance and
administrative functions by Harrah's Hotels & Casino in New Jersey and Nevada,
and the Fitzgeralds Group in Reno and Las Vegas, Nevada.
Thomas P. Burke, age 40. Mr. Burke is Director of Finance in charge of the
Company's daily financial operations. Prior to joining the Company in April
1996, Mr. Burke was Director of Casino Administration at American Gaming &
Entertainment since June 1993, where he coordinated and supervised casino
development efforts in new jurisdictions, evaluated potential gaming sites and
coordinated licensing, permitting and pre-opening activities. During that time,
he headed a group which developed and opened the Crown Casino in Melbourne,
Australia. From April 1990 to June 1993, Mr. Burke was Vice President, Casino
Finance for Trump's Taj Mahal and was responsible for the redesign of the casino
floor and development of internal controls. Prior to 1990, Mr. Burke held
various casino controller and operating finance functions for more than
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<PAGE> 49
10 years at Trump Castle Casino, Tropicana Hotel Casino, Marriott Hotel
Corporation and Resorts International Casino Hotel.
Barry J. Elmore, age 41. Mr. Elmore was appointed Controller of the Company
in March 1996 with responsibilities for the financial, planning, accounting and
budgeting functions. From 1994 to March 1996, Mr. Elmore was an accounting
systems specialist with Remington Hotel Corporation, a 72 hotel chain based in
Dallas, Texas. Prior to 1994, Mr. Elmore's experience included controller and
accounting services at Rank Hotels North America and Registry Hotel Corporation.
James M. Lake, Jr., age 39. Mr. Lake is Director of Property Operations and
Food Service of the Company. From 1988 to December 1995, Mr. Lake was Food and
Beverage Manager of Showboat Atlantic City. Prior to that time, he was employed
by Golden Nugget and Tropicana Hotel and Casino in various restaurant management
functions.
Jose LeBron, age 37. Mr. LeBron has over 18 years of casino operations
experience and is the Company's Director of Gaming. Prior to joining the Company
in December 1995, he had served as Director of Table Games for Showboat Marina
in East Chicago since May 1995, where he was responsible for establishing
training programs for employees and designing the layout of the casino games.
From 1987 to 1995, he was a Casino Shift Manager at Showboat Atlantic City.
EMPLOYMENT AGREEMENTS
Mr. Barden serves as Chairman and President of the Manager and will receive
annual compensation of $275,000 as an employee of the Company, pursuant to a
letter agreement dated as of April 25, 1996.
Mr. Bonner serves as Executive Vice President of Gaming Operations pursuant
to an employment agreement with the Company, effective as of December 4, 1995.
Under the terms of his employment agreement, Mr. Bonner will receive base
compensation of $348,700 per year and housing, car and meal allowances
aggregating $19,300 per year. Mr. Bonner can also earn incentive compensation
based on his performance and the performance of the Company. The employment
agreement is for a term of three years unless earlier terminated because of Mr.
Bonner's death, permanent disability, inability to obtain or maintain the
licenses required for the performance of his duties, or "for cause" (as defined
therein). The employment agreement also includes a non-competition provision
which generally provides that during the term of the employment agreement and
for 18 months thereafter, Mr. Bonner cannot directly or indirectly recruit or
solicit the Company's employees to work for another company or to compete with
the Company in specified portions of Illinois and Indiana (the "Non-Competition
Provision").
Mr. Sykes has entered into an employment agreement with the Company,
effective as of December 4, 1995, pursuant to which he has agreed to serve as
Vice President and General Manager of Operations for a three year term. Mr.
Sykes will receive base compensation of $247,000 per year and can also earn
incentive compensation based upon his performance and the performance of the
Company. Mr. Sykes' employment agreement contains terms substantially similar to
that of Mr. Bonner's, including the Non-Competition Provision.
Mr. Kelly serves as Vice President and Chief Financial Officer pursuant to
a two-year employment agreement with the Company, effective as of April 22,
1996. Mr. Kelly will receive base compensation of $225,000 per year and is
entitled to annual incentive compensation based on his performance and the
performance of the Company. Mr. Kelly's employment agreement contains other
terms substantially similar to that of Mr. Bonner's, including a Non-Competition
Provision with a duration of 12 months.
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CERTAIN TRANSACTIONS
NOTE TO AND ADVANCES FROM PRINCIPAL MEMBER
By December 31, 1995, the Company had been capitalized by its members with
$35.0 million, including interest earned thereon, of capital contributions.
Effective March 31, 1996, $10.8 million of the contributions of BDI was
reclassified as indebtedness payable to BDI, evidenced by the Note to Principal
Member. The Note to Principal Member is a non-transferable and subordinated note
which bears interest at a rate equal to the applicable short-term federal rate,
as set forth in Section 1274(d) of the Internal Revenue Code, adjusted on the
first day of each month that the Note to Principal Member is outstanding.
The net proceeds from the Senior Note Offering to be designated to repay
the Note to Principal Member will be deposited in the Completion Reserve Account
and $5.0 million will be released upon satisfaction of certain conditions. Any
funds remaining in the Completion Reserve Account will be disbursed to repay the
Note to Principal Member upon delivery of the Permanent Vessel to the Company.
See "Use of Proceeds" and "Description of Senior Notes -- Cash Collateral and
Disbursement Agreement."
BDI loaned the Company additional amounts required to fund the ongoing
costs of completing the Majestic Star Casino and the Gaming Complex pursuant to
an additional promissory note. Such note aggregating $18,097,299 in principal
amount, was repaid with interest at 5% per annum at the Closing from the
proceeds of the offering of the Senior Notes on May 22, 1996.
IGC BOND
On April 8, 1996, NBD Bank, N.A. (Indiana) (the "Bank") issued a $12.5
million letter of credit for the Company to benefit the IGC (the "L/C"). The L/C
was furnished as the IGC Bond, required under the Certificate of Suitability
primarily to secure the Company's off-site development obligations under the
Development Agreement. Don H. Barden guaranteed the Company's obligations to the
Bank to support the L/C and pledged approximately $12.9 million of cash
equivalents to secure the guaranty. If Don H. Barden is required to make
payments to the Bank as a result of the guaranty, the Company will be obligated
to reimburse Don H. Barden for any such payments. Mr. Barden is a director of
one of the Bank's affiliates.
On May 20, 1996, the IGC agreed to accept a $12.5 million surety bond (the
"Bond") issued by United States Fidelity and Guaranty Company ("USF&G") in place
of the L/C, which was canceled on May 21, 1996 by the Bank, thereby releasing
Don H. Barden's pledge of $12.9 million of cash equivalents. However, to support
the Company's obligations to USF&G should there be a draft against the Bond, the
Company obtained on May 15, 1996 a $3.5 million letter of credit from the Bank
to benefit USF&G. Don H. Barden guaranteed the Company's obligations to USF&G
under the Bond and to the Bank under the $3.5 million letter of credit. To
secure the guaranty to the Bank, Mr. Barden pledged $3.6 million of cash
equivalents.
The Company is attempting to reduce or eliminate the need for the guaranty
and pledge made by Mr. Barden.
REIMBURSEMENT OF EXPENSES TO MANAGER
Pursuant to the terms of the Operating Agreement, the Manager receives no
compensation for its management of the Company, but is reimbursed for all
reasonable out-of-pocket expenses related therewith.
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PRINCIPAL SECURITY HOLDERS
The following table sets forth the beneficial ownership of the membership
interests in the Company as of May 31, 1996 by (i) each person known by the
Company to beneficially own 5% or more of the outstanding membership interests
of the Company and (ii) each executive officer and director of the Company or
the Manager.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL OWNER % OWNERSHIP
- -------------------------------------------------------------------------------- -----------
<S> <C>
Don H. Barden, 400 Renaissance Center, Suite 2400, Detroit, Michigan 48243...... 100.0%(1)
All other executive officers as a group (3 persons)............................. 0.0%
</TABLE>
- -------------------------
(1) Includes the membership interests in the Company beneficially owned directly
by BDI and indirectly by BDI and BMI through GRG. See ownership structure
set forth below.
Don H. Barden
|
___________________________________
| |
100% 100%
Barden Development, Inc.* Barden Management, Inc.*
Indiana Corp. Indiana Corp.
| | |
| | |
| | |
| 50% Gary Riverboat Gaming, LLC** 50%
| | Indiana LLC
| |
| |
| |
Trump Indiana, Inc. | |
Delaware Corp. | |
| | |
| | 85% | 15%
| 50% | |
Buffington Harbor | |
Riverboats, L.L.C.______The Majestic Star Casino, LLC
Delaware LLC 50% Indiana Corp.
- ---------------
* 90.1% owned by Don H. Barden and 9.9% owned by two Grantor Annuity Trusts.
** A portion of the membership interests in Gary Riverboat Gaming, LLC may be
sold up to ten residents of the City of Gary, Indiana.
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<PAGE> 52
DESCRIPTION OF SENIOR NOTES
GENERAL
The Senior Notes (as defined on page 84 of this Prospectus) are issued
pursuant to the Indenture between the Company and IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee"), dated as of May 22, 1996. The terms of the
Senior Notes include those stated in the Indenture and the Collateral Documents
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), as in effect on the date of the
Indenture. The Senior Notes are subject to all such terms, and Holders of the
Senior Notes are referred to the Indenture, the Collateral Documents and the
Trust Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture and the Collateral Documents does not purport to be
complete and is qualified in its entirety by reference to the Indenture and the
Collateral Documents, including the definitions therein of certain terms used
below. A copy of the form of Indenture and of each of the Collateral Documents
is available from the Company as described under "-- Additional Information."
The definitions of certain terms used in the following summary are set forth
below under "-- Certain Definitions." Capitalized terms that are used but not
otherwise defined in this Prospectus have the meanings assigned them in the
Indenture.
RANKING AND SECURITY
The Senior Notes rank senior in right of payment to all Subordinated
Indebtedness of the Company and rank pari passu in right of payment to all other
Senior Indebtedness.
The Senior Notes are secured by (i) a pledge of the Company's 50%
membership interest in the BHR Joint Venture pursuant to the BHR Pledge
Agreement, (ii) a pledge of BDI's entire membership interest in the Company
pursuant to the BDI Pledge Agreement, (iii) a collateral assignment of the
Company's interest in the Berthing Agreement pursuant to the Security Agreement,
(iv) a pledge of all funds in the Cash Collateral Accounts into which the
proceeds from the Offering will be placed pending their use pursuant to the Cash
Collateral and Disbursement Agreement, (v) a first lien on certain other assets
now owned or hereafter acquired by the Company after the Issuance Date pursuant
to the Security Agreement (other than any assets which if pledged, hypothecated
or given as collateral security would require the Trustee or a holder or
beneficial holder of the Senior Notes to be licensed, qualified or found
suitable and other than certain assets to the extent such assets are permitted
to be financed by Indebtedness permitted to be incurred pursuant to the covenant
entitled "Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Capital Stock" and such Indebtedness is permitted to be secured pursuant to the
covenant entitled "Liens" pursuant to the definition of "Permitted Liens") and
(vi) a collateral assignment of the Company's rights to the service mark
"Majestic Star Casino" pursuant to the Trademark Security Agreement
(collectively, the "Note Collateral").
At such time that the Company elects to construct a new vessel to serve as
the Permanent Vessel, (i) pending construction of such Permanent Vessel, the
Senior Notes will be secured by a collateral assignment of the Company's entire
interest in and to any material construction contracts relating to such
construction and a duly perfected security interest in all property comprising
such Permanent Vessel while under construction and (ii) upon Delivery of such
Permanent Vessel, the Senior Notes will be secured by a duly perfected First
Preferred Ship Mortgage in such Permanent Vessel.
The Trustee may appoint one or more collateral agents, who may be delegated
any one or more of the duties or rights of the Trustee under the Collateral
Documents or which are specified in any Collateral Documents.
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes are senior secured obligations of the Company, limited in
aggregate principal amount to $105.0 million and will mature on May 15, 2003.
Each Senior Note bears interest at the rate of 12 3/4% per annum of the
principal amount then outstanding (the "Fixed Interest") from the Issuance Date
to the date of payment of such principal amount of such Senior Note.
Installments of Fixed Interest become due and payable semi-annually in arrears
on each May 15 and
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<PAGE> 53
November 15 of each year to the Holders of record at the close of business on
the preceding May 1 or November 1. Additionally, installments of accrued and
unpaid Fixed Interest become due and payable with respect to any principal
amount of the Senior Notes that matures (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or otherwise) upon such
maturity of such principal amount of the Senior Notes. Fixed Interest on the
Senior Notes will be computed on the basis of a 360-day year, consisting of
twelve 30-day months. Each installment of Fixed Interest is or will be
calculated to accrue from and including the most recent date to which Fixed
Interest has been paid or provided for (or from and including the Issuance Date
if no installment of Fixed Interest has been paid) to, but not including, the
date of payment.
In addition, the Senior Notes will bear Contingent Interest, calculated as
described below, from the Commencement Date to the date of payment of the Senior
Notes. Installments of accrued or deferred Contingent Interest will become due
and payable semi-annually on each May 15 and November 15 after the Commencement
Date to the Holders of record at the close of business on the preceding May 1 or
November 1; provided that no Contingent Interest is payable with respect to any
period prior to the Commencement Date and that such installment of Contingent
Interest is not permitted to be deferred on such date. Additionally, all
installments of accrued or deferred Contingent Interest will become due and
payable (and may not be further deferred) with respect to any principal amount
of the Senior Notes that matures (whether at stated maturity, upon acceleration,
maturity of repurchase obligation or otherwise) upon such maturity of such
principal amount of the Senior Notes.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the extent
that, (a) the payment of such portion of Contingent Interest will cause the
Company's Adjusted Fixed Charge Coverage Ratio for the four consecutive fiscal
quarters last completed prior to such interest payment date to be less than 2.0
to 1 on a pro forma basis after giving effect to the assumed payment of such
Contingent Interest and (b) the principal amount of the Senior Notes
corresponding to such Contingent Interest has not then matured and become due
and payable (at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise). Contingent Interest that is deferred shall become due
and payable, in whole or in part, on the earlier of (i) the next succeeding
interest payment date on which all or a portion of such Contingent Interest is
not permitted to be deferred, and (ii) upon the maturity of the corresponding
principal amount of the Senior Notes (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or otherwise). No interest
will accrue on any Contingent Interest deferred and which does not become due
and payable. To the extent permitted by law, interest will accrue on overdue
Fixed Interest or Contingent Interest at the same rate as the Fixed Interest
plus one percent (1%) per annum.
Each installment of Contingent Interest is calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to, and including, either (a) the last day of the next
Semiannual Period if the corresponding principal amount of the Senior Notes has
not become due and payable or (b) the date of payment if the corresponding
principal amount of the Senior Notes has become due and payable (whether at
stated maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). With respect to each Accrual Period, interest will accrue daily on
the principal amount of each Senior Note outstanding during such period as
follows: (i) for any portion of an Accrual Period which consists of all or part
of a Semiannual Period that ends during such Accrual Period, 1/180 of the Base
Contingent Interest with respect to such principal amount for such Semiannual
Period until fully accrued and (ii) for any other portion of an Accrual Period,
1/180 of the Base Contingent Interest with respect to such principal amount for
the Semiannual Period that began and last ended after the Commencement Date.
Any reference in this Prospectus to "accrued and unpaid interest" on the
Senior Notes includes the amount of Fixed Interest, unpaid Contingent Interest
and Liquidated Damages, if any, due and payable thereon.
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<PAGE> 54
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person at
any time the Fixed Charge Coverage Ratio of such Person on such date adjusted as
follows: (a) for purposes of the calculation of the Fixed Charge Coverage Ratio,
Fixed Charges shall be adjusted to include (rather than exclude) Contingent
Interest, whether paid or accrued, and (b) the amount of Contingent Interest on
a pro forma basis shall equal the Contingent Interest accrued and reflected in
the financial statements for the last two Semiannual Periods with respect to
which Contingent Interest was accruable or payable or, if two such Semiannual
Periods have not occurred, then the amount accrued and reflected in the
financial statements with respect to the previous Semiannual Period multiplied
by 2.0.
"Base Contingent Interest" means with respect to any principal amount of
Senior Notes as of any date after the Commencement Date, an amount equal to the
product of (i) 5.0% of the Company's Consolidated Cash Flow for the Semiannual
Period last completed times (ii) a fraction, the numerator of which is the
amount of such principal and the denominator of which is $105.0 million;
provided however that additional Contingent Interest will cease accruing on any
outstanding principal amount of the Senior Notes if the aggregate amount of such
Base Contingent Interest in respect of any two consecutive Semiannual Periods
(and excluding any deferred Contingent Interest from prior periods) exceeds the
Maximum Contingent Interest.
"Commencement Date" means the first day that the Majestic Star Casino
becomes Operating.
"Contingent Interest" means Base Contingent Interest on the Senior Notes
then accrued and any Base Contingent Interest previously accrued and the payment
of which has been permitted to be deferred.
"Maximum Contingent Interest" means with respect to any amount of principal
of Senior Notes, an amount equal to the product of (i) 5.0% of $60.0 million and
(ii) a fraction, the numerator of which is the amount of such principal and the
denominator of which is $105.0 million.
"Semiannual Period" means each period that begins on October 1 and ends on
the next succeeding March 31 or each period that begins on April 1 and ends on
the next succeeding September 30.
The Senior Notes are payable as to principal, premium, if any, and interest
(including Contingent Interest and Liquidated Damages, if any) at the office or
agency of the Company maintained for such purpose within the City and State of
New York or, at the option of the Company, payment of interest (including
Contingent Interest and Liquidated Damages, if any) may be made by check mailed
to the Holders of the Senior Notes at their respective addresses set forth in
the register of Holders of Senior Notes. Until otherwise designated by the
Company, its office or agency in New York is the office of the Trustee
maintained for such purpose. The Senior Notes will be issued in registered form,
without coupons, and in denominations of $1,000 and integral multiples thereof.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemptions or sinking fund
payments prior to maturity with respect to the Senior Notes.
OPTIONAL REDEMPTION
Except as described below, the Senior Notes are not redeemable at the
Company's option prior to May 15, 2000. From and after May 15, 2000, the Company
has the option to redeem the Senior Notes, in whole or in part, 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 (including Contingent
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<PAGE> 55
Interest and Liquidated Damages, if any) thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on May 15 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR %
---- -------
<S> <C>
2000....................................................... 106.375
2001....................................................... 104.250
2002....................................................... 102.125
2003....................................................... 100.000
</TABLE>
The Company also has the option on and after May 15, 1997 and prior to May
15, 1998, to redeem up to $12.0 million principal amount of the Senior Notes
solely out of any amounts remaining in the Interest Reserve Account, upon not
less than 30 nor more than 60 days' notice, at the redemption price of 112.75%
of the principal amount thereof plus accrued and unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon to the applicable
redemption date.
Notwithstanding any other provision of the Indenture, if any Gaming
Regulatory Authority requires that a Holder or beneficial owner of the Senior
Notes must be licensed, qualified or found suitable under any applicable gaming
laws in order to maintain any gaming license or franchise of the Company under
any applicable gaming laws, and the Holder or beneficial owner fails to apply
for a license, qualification or finding of suitability within 30 days after
being requested to do so by such Gaming Regulatory Authority or if such Holder
or beneficial owner is not so licensed, qualified or found suitable, the Company
shall have the right, at its option:
(1) to require such Holder or beneficial owner to dispose of such
Holder's or beneficial owner's Senior Notes within 30 days of receipt by
such Holder of such finding of unsuitability by the applicable Gaming
Regulatory Authority (or such earlier date as may be required by the
applicable Gaming Regulatory Authority); or
(2) to call for redemption of the Senior Notes of such Holder or
beneficial owner at a redemption price equal to the lesser of the principal
amount thereof or the price at which such Holder or beneficial owner
acquired the Senior Notes, together with, in either case, accrued and
unpaid interest (including Contingent Interest and Liquidated Damages, if
any), to the earlier of the date of redemption or the date of the finding
of unsuitability by such Gaming Regulatory Authority, which may be less
than 30 days following the notice of redemption if so ordered by such
Gaming Regulatory Authority.
In connection with any such redemption, and except as may be required by a
Gaming Regulatory Authority, the Company shall comply with the procedures
contained in the Indenture for redemption of the Senior Notes. Under the
Indenture, the Company is not required to pay or reimburse any Holder or
beneficial owner of Senior Notes who is required to apply for any such license,
qualification or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability. Such expenses
will, therefore, be the obligation of such Holder or beneficial owner.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will promptly make
an offer to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of the Senior Notes pursuant to the offer described below (the "Change
of Control Offer") at a price in cash (the "Change of Control Payment") equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid interest
(including Contingent Interest and Liquidated Damages, if any), to the date of
purchase. The Company shall not be required to make such an offer to purchase if
the Change of Control event ceases prior to the Change of Control Payment Date
(as defined below). To effect any Change of Control Offer, the Company will mail
a notice to each Holder which states:
(1) a Change of Control Offer is being made pursuant to the covenant
entitled "Offer to Repurchase Upon Change of Control" in the Indenture, the
length of time the offer will remain open and
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<PAGE> 56
that all Senior Notes properly tendered pursuant to such Change of Control
Offer will be accepted for payment unless the Change of Control event
ceases prior to the Change of Control Payment Date;
(2) the purchase price and the purchase date, which will be no earlier
than 30 days nor later than 60 days from the date such notice is mailed,
except as may be otherwise required by applicable law (the "Change of
Control Payment Date");
(3) any Senior Note not properly tendered or accepted for payment will
remain outstanding and continue to accrue interest (including Contingent
Interest, if any);
(4) unless the Company defaults in the payment of the Change of
Control Payment, all Senior Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest after the Change of
Control Payment Date;
(5) Holders electing to have any Senior Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Senior Notes,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Senior Notes completed, to the Company, a depositary, if appointed
by the Company, or a Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the
Change of Control Payment Date;
(6) Holders will be entitled to withdraw their tendered Senior Notes
and their election to require the Company to purchase the Senior Notes,
provided, however, that the Company, the depositary or the Paying Agent
receives, not later than the close of business on the last day of the offer
period, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Senior Notes tendered for
purchase, and a statement that such Holder is withdrawing his tendered
Senior Notes and his election to have such Senior Notes purchased; and
(7) Holders whose Senior Notes are being purchased only in part will
be issued new Senior Notes equal in principal amount to the unpurchased
portion of the Senior Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Senior Notes pursuant to a Repurchase Offer.
On the Change of Control Payment Date, the Company will, to the extent
permitted by law:
(1) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the aggregate Change
of Control Payment in respect of all Senior Notes or portions thereof so
tendered; and
(3) deliver, or cause to be delivered, to the Trustee for cancellation the
Senior Notes so accepted together with an Officers' Certificate stating that
such Senior Notes or portions thereof have been tendered to and purchased by the
Company.
The paying agent will promptly mail to each Holder of Senior Notes the
Change of Control Payment for such Senior Notes, and the Trustee will promptly
authenticate and mail to each Holder a new Senior Note equal in principal amount
to any unpurchased portion of the Senior Notes surrendered, if any, provided,
however, that each such new Senior Note will be in a principal amount of $1,000
or an integral multiple thereof. The Company will publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
The source of funds for any repurchase of Senior Notes upon a Change of
Control will be the Company's cash or cash generated from operations or other
sources, including borrowings, sales of assets or Capital Stock. However, there
can be no assurance that sufficient funds will be available at the time of any
Change of Control to make any required repurchases. Any failure by the Company
to repurchase Senior Notes tendered pursuant
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<PAGE> 57
to a Change of Control Offer will be deemed an Event of Default unless the
Change of Control event ceases prior to the Change of Control Payment Date.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless:
(a) No Default or Event of Default exists or is continuing immediately
prior to or after giving effect to such Asset Sale;
(b) the Company, or its Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined by the Board of Managers and set forth in the Officers'
Certificate delivered to the Trustee) of the assets sold or otherwise disposed
of; and
(c) at least 80% of such consideration is in the form of cash or Cash
Equivalents; provided, however, that the amount of any liabilities (as shown on
the Company's, or such Subsidiary's, as the case may be, most recent balance
sheet or in the notes thereto) of the Company, or any Subsidiary, as the case
may be (other than any liabilities that are by their terms expressly
subordinated to the Senior Notes), that are assumed by the transferee of any
such assets and any notes or other obligations received by the Company, or any
Subsidiary, as the case may be, from such transferee that are converted by the
Company, or such Subsidiary, as the case may be, into cash (to the extent of the
cash received) within 10 Business Days following the closing of such Asset Sale,
shall be deemed to be cash only for purposes of satisfying this clause (c).
Within 180 days after the Company's receipt of the Net Proceeds of any
Asset Sale, the Company may apply the Net Proceeds from such Asset Sale to
either:
(1) an investment in the Principal Business or in tangible long-term assets
used or useful in the Principal Business; or
(2) to permanently reduce Indebtedness that is not Subordinated
Indebtedness.
Pending the final application of any such Net Proceeds, such Net Proceeds shall
be pledged to the Trustee as security for the Senior Notes until applied or
redeemed as set forth below. Any Net Proceeds from the Asset Sale that are not
invested as provided in the first sentence of this paragraph will be deemed to
constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds
exceeds $3.0 million, the Company shall make an offer to all Holders of Senior
Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes,
that is an integral multiple of $1,000, that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 101% of the principal
amount thereof, plus accrued and unpaid interest (including Contingent Interest
and Liquidated Damages, if any), to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the Indenture. The Company
will commence an Asset Sale Offer with respect to Excess Proceeds within 10
Business Days after the date that the aggregate amount of Excess Proceeds
exceeds $3.0 million by mailing the notice required pursuant to the terms of the
Indenture. To the extent that the aggregate amount of Senior Notes properly
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, such
remaining Excess Proceeds shall be released to the Company and the Company may
use any such remaining Excess Proceeds for any lawful purpose permitted under
the Indenture. If the aggregate principal amount of Senior Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Senior Notes to be purchased in the manner described under the caption
"Selection and Notice" below. Upon completion of any such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero. The Net Proceeds of all Asset
Sales of assets constituting Note Collateral (other than Permitted Investments),
as well as Excess Proceeds, shall be promptly and without commingling deposited
with the Trustee subject to a Lien in favor of the Trustee for the benefit of
the Holders unless and until applied as permitted pursuant to this paragraph.
The Indenture will also require the Company to grant to the Trustee, on behalf
of the Holders of the Senior Notes, a first priority lien on any properties or
assets acquired with the Net Proceeds of any such Asset Sale on the terms set
forth in the Indenture and the Collateral Documents.
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<PAGE> 58
EVENT OF LOSS
The Indenture provides that within 360 days after any Event of Loss with
respect to Note Collateral with a fair market value (or replacement cost, if
greater) in excess of $1.0 million, the Company may apply the Net Loss Proceeds
from such Event of Loss to the rebuilding, repair, replacement or construction
of improvements to any property now owned or hereafter acquired by the Company
relating to the Majestic Star Casino, with no concurrent obligation to make any
purchase of any Senior Notes, provided that:
(1) the Company delivers to the Trustee within 60 days of such Event
of Loss a written opinion from a reputable architect that the Majestic Star
Casino with at least the Minimum Facilities can be rebuilt, repaired,
replaced, or constructed and Operating within 360 days of such Event of
Loss;
(2) an Officer's Certificate certifying that the Company has available
from Net Loss Proceeds or cash, sufficient funds on hand to complete such
rebuilding, repair, replacement or construction; and
(3) the Net Loss Proceeds are less than $15.0 million.
Any BHR Loss Proceeds and any Net Loss Proceeds from an Event of Loss that
are not reinvested or are not permitted to be reinvested as provided above will
be deemed "Excess Loss Proceeds." When the aggregate amount of "Excess Loss
Proceeds" exceeds $3.0 million, the Company shall promptly make an offer to all
Holders of Senior Notes (an "Event of Loss Offer") to purchase the maximum
principal amount of Senior Notes that is an integral multiple of $1,000, that
may be purchased out of the Excess Loss Proceeds at an offer price in cash in an
amount equal to 101% of the principal amount thereof, plus accrued and unpaid
interest (including Contingent Interest and Liquidated Damages, if any), to the
date fixed for the closing of such offer, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Senior Notes
tendered pursuant to an Event of Loss Offer is less than the Excess Loss
Proceeds, such remaining Excess Loss Proceeds shall be released to the Company
and the Company may use any such remaining Excess Loss Proceeds so released for
any lawful purpose permitted under the Indenture. If the aggregate principal
amount of Senior Notes surrendered by Holders thereof exceeds the amount of
Excess Loss Proceeds, the Trustee shall select the Senior Notes to be purchased
in the manner described under the caption "Selection and Notice" below. Upon
completion of any such Event of Loss Offer, the amount of Excess Loss Proceeds
shall be reset at zero. Pending any permitted rebuilding, repair or construction
or the completion of any Excess Loss Offer, the Company shall pledge to the
Trustee as additional Note Collateral any Net Loss Proceeds or other cash on
hand required for such permitted rebuilding, repair or construction pursuant to
the terms of the Cash Collateral and Disbursement Agreement. Such pledged funds
will be released to the Company to pay for such permitted rebuilding, repair or
construction or such Event of Loss Offer pursuant to the terms of the Cash
Collateral and Disbursement Agreement. The BHR Loss Proceeds and the Net Loss
Proceeds of all Events of Loss with respect to assets constituting Note
Collateral (other than Permitted Investments), as well as Excess Loss Proceeds,
shall be promptly and without commingling deposited with the Trustee in an Event
of Loss Account pursuant to the terms of the Cash Collateral and Disbursement
Agreement until applied as permitted pursuant to this paragraph. The Indenture
also requires the Company to grant to the Trustee, on behalf of the Holders of
the Senior Notes, a first priority lien on any properties or assets rebuilt,
repaired or constructed with such Net Loss Proceeds on the terms set forth in
the Indenture and the Collateral Documents.
The Indenture also provides that with respect to any Event of Loss pursuant
to clause (iv) of the definition of "Event of Loss" that has a fair market value
(or replacement cost, if greater) in excess of $2.0 million, the Company will be
required to receive consideration at least:
(1) equal to the fair market value (as determined by an Independent
Financial Advisor) of the assets subject to an Event of Loss; and
(2) 90% of which is in the form of cash or Cash Equivalents; provided,
however, that the amount of:
(a) any liabilities (as shown on the Company's most recent balance
sheet or in the notes thereto) of the Company (other than liabilities
that are by their terms expressly subordinated to the Senior Notes),
that are assumed by the transferee of any such assets; and
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<PAGE> 59
(b) any notes or other obligations received by the Company from
such transferee that are converted by the Company into cash (to the
extent of the cash received) within 10 Business Days following the
closing of such sale of the assets subject to such Event of Loss;
shall be deemed to be cash only for purposes of satisfying this item 2 and for
no other purpose.
The Indenture also provides that with respect to any Event of Loss with
respect to Note Collateral with a fair market value (or replacement cost, if
greater) of $1.0 million or less, the Net Loss Proceeds therefrom shall be
released to the Company.
UNCOMPLETED PROJECT OFFER
If the Majestic Star Casino is not Operating by December 31, 1996 (the
"Uncompleted Project"), then the Company will be required (a) within 30 days of
such date to offer to purchase Senior Notes up to an amount equal to funds
remaining in the Cash Collateral Accounts, provided that such funds exceed $5.0
million (the "Initial Uncompleted Project Offer") and (b) within one year after
such date (but no later than 30 days after receipt of the proceeds from the
Project Liquidation), to offer to purchase Senior Notes up to an amount equal to
the net proceeds from the liquidation of the remaining assets of the Uncompleted
Project ("Project Liquidation"), plus any funds remaining in the Cash Collateral
Accounts (a "Final Uncompleted Project Offer"; and, together with the Initial
Uncompleted Project Offer, an "Uncompleted Project Offer"), in each case at a
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the purchase date.
The Company will also be required to proceed promptly after December 31,
1996 with an orderly liquidation of the remaining assets related to the
Uncompleted Project. Failure to complete such liquidation and commence the Final
Uncompleted Project Offer within one year shall be an Event of Default.
Within 30 days after December 31, 1996, the Company will mail to all
Holders of Senior Notes a notice apprising such Holders of the Initial
Uncompleted Project Offer and of the Holders' rights arising as a result
thereof. Within 30 days after the completion of the Project Liquidation, the
Company will mail to all Holders of Senior Notes a notice apprising such Holders
of the Final Uncompleted Project Offer and of the Holders' rights arising as a
result thereof. The procedures governing all Uncompleted Project Offers will be
set forth in full in the Indenture.
There can be no assurance that the balance of funds in the Cash Collateral
Accounts and the proceeds from any Project Liquidation will equal the proceeds
of the Senior Notes originally deposited in the Cash Collateral Accounts for
such Uncompleted Project. If the aggregate principal amount of Senior Notes
surrendered pursuant to any such Uncompleted Project Offer exceeds the amount of
funds available to repurchase such Senior Notes, the Trustee shall select the
Senior Notes to be purchased in the manner described under the caption
"Selection and Notice" below.
It shall constitute an Event of Default under the Senior Notes if the
Majestic Star Casino is not Operating by December 31, 1996 and continues to be
not Operating.
UNCOMPLETED VESSEL OFFER
If Delivery of the Permanent Vessel has not occurred by June 30, 1998, then
the Company will be required within 30 days of such date to offer to purchase
Senior Notes up to an amount equal to funds remaining in the Cash Collateral
Accounts (the "Uncompleted Vessel Offer") at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any.
Within 30 days after June 30, 1998, the Company will mail to all Holders of
Senior Notes a notice apprising such Holders of the Uncompleted Vessel Offer and
of the Holders' rights arising as a result thereof. The procedures governing an
Uncompleted Vessel Offer will be set forth in full in the Indenture.
There can be no assurance that the balance of funds in the Cash Collateral
Accounts will equal the proceeds of the Senior Notes originally deposited in the
Cash Collateral Accounts for such Permanent Vessel. If the aggregate principal
amount of Senior Notes surrendered pursuant to any such Uncompleted Vessel
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<PAGE> 60
Offer exceeds the amount of funds available to repurchase such Senior Notes, the
Trustee shall select the Senior Notes to be purchased in the manner described
under the caption "Selection and Notice" below.
It shall constitute an Event of Default under the Senior Notes if the
Permanent Vessel is not Delivered by June 30, 1998.
SELECTION AND NOTICE
If less than all of the Senior Notes are to be purchased in an Asset Sale
Offer, Event of Loss Offer, Uncompleted Project Offer or Uncompleted Vessel
Offer or redeemed at any time, selection of Senior Notes for purchase or
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Senior Notes
are listed, or, if the Senior Notes are not so listed, on a pro rata basis, by
lot or by such other method as the Trustee considers fair and appropriate (and
in such manner as complies with applicable legal requirements), provided, that
no Senior Notes of $1,000 or less shall be purchased or redeemed in part unless
all of the Notes of a Holder are to be purchased or redeemed, then the entire
outstanding amount of Senior Notes held by such Holder, even if not a multiple
of $1,000, shall be purchased or redeemed.
The Company shall mail, by first class mail, postage prepaid, at least 30
but not more than 60 days before the purchase or redemption date, a notice of
purchase or redemption to each Holder of Senior Notes to be purchased or
redeemed at such Holder's registered address. If any Senior Note is to be
purchased or redeemed in part only, any notice of purchase or redemption that
relates to such Senior Note shall state the portion of the principal amount
thereof that has been or is to be purchased or redeemed.
A new Senior Note in principal amount equal to the unpurchased or
unredeemed portion of any Senior Note purchased or redeemed in part will be
issued in the name of the Holder thereof upon cancellation of the original
Senior Note. On and after the purchase or redemption date, unless the Company
defaults in payment of the purchase or redemption price, interest shall cease to
accrue on Senior Notes or portions thereof purchased or called for redemption.
CERTAIN COVENANTS
USE OF PROCEEDS
The Indenture provides that the Company use the net proceeds from the sale
of the Senior Notes (to the extent provided in the Indenture) only for Permitted
Proceed Uses. The Company deposited the net proceeds from the sale of the Senior
Notes on May 22, 1996 into the Cash Collateral Accounts and such net proceeds
will be disbursed only in accordance with the Cash Collateral and Disbursement
Agreement.
CONSTRUCTION
The Indenture provides that the Company will cause the equipping and
refitting of the Chartered Vessel for gaming, and will use its best efforts to
cause the construction by the BHR Joint Venture of the Gaming Complex, including
the furnishing, fixturing and equipping thereof, to be prosecuted with diligence
and continuity in a good and workmanlike manner substantially in accordance with
the Plans and Specifications and within the Construction Budget. The Indenture
also provides that at such time as the Company elects to construct the Permanent
Vessel, such construction will be prosecuted with diligence and continuity in a
good and workmanlike manner substantially in accordance with the Plans and
Specifications for such construction and within the construction budget therefor
and that the Company shall use its best efforts to cause the Permanent Vessel to
be Delivered no later than June 30, 1998.
GAMING LICENSES
The Indenture provides that the Company will use its best efforts to obtain
and retain in full force and effect at all times all Gaming Licenses necessary
for the operation of the Majestic Star Casino.
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CORPORATE EXISTENCE
The Indenture provides that the Company will, and will cause each of its
Subsidiaries to, preserve and maintain its existence as a limited liability
company, corporation, partnership or other entity, and its rights (charter and
statutory) and authority.
RESTRICTED PAYMENTS
(a) Except as set forth in paragraph (b) below, the Indenture provides that
the Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly: (i) declare or pay any dividend or make any distribution in
either case on account of the Company's or any of its Subsidiaries' Equity
Interests (other than (A) dividends or distributions payable in Equity Interests
(other than Disqualified Capital Stock) or (B) dividends or distributions by a
Subsidiary of the Company, provided that to the extent that a portion of such
dividend or distribution is paid to a holder other than the Company or a
Subsidiary, such portion of such dividend or distribution is not greater than
such holder's pro rata aggregate equity interest in such Subsidiary); (ii)
purchase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any of its Subsidiaries or any other Affiliate of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Subsidiary); (iii) purchase, redeem or otherwise acquire or retire any
Subordinated Indebtedness of the Company or any of its Subsidiaries; or (iv)
make any Restricted Investment (all such dividends, distributions, purchases,
redemptions or Investments being collectively referred to as "Restricted
Payments"); if, at the time of such actions, or after giving effect thereto: (1)
an Event of Default or Default shall have occurred and be continuing or would
occur as a consequence thereof; (2) at the time of such Restricted Payment and
upon giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, the Company could not
incur at least $1.00 of additional Indebtedness under the first paragraph of the
covenant described under the caption entitled "Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Capital Stock"; and (3) the aggregate
amount of Restricted Payments made by the Company and its Subsidiaries,
including Restricted Payments permitted by the following paragraph, will be no
greater than the sum of (x) 50% of cumulative Consolidated Net Income of the
Company for the period (taken as one accounting period) from the first day that
the Majestic Star Casino is Operating to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are available, less
all distributions in respect of any such period under clause (i) of paragraph
(b) below, (or, in the event that such Consolidated Net Income for such period
is a deficit, minus 100% of such deficit), plus (y) 100% of the aggregate net
cash proceeds received by the Company from the issue or sale of Equity Interests
or debt securities of the Company that have been converted into such Equity
Interests of the Company (other than Equity Interests or convertible debt
securities of the Company sold to a Subsidiary of the Company and other than
Disqualified Capital Stock or debt securities that have been converted into
Disqualified Capital Stock) or capital contributions to the Company subsequent
to the issuance of the Senior Notes.
The foregoing provisions do not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Subsidiary in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company) of Equity Interests of the Company (other than any Disqualified
Capital Stock); (iii) the redemption, repurchase, retirement or other
acquisition of any Subordinated Indebtedness of the Company or any Subsidiary in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of Subordinated Indebtedness of the
Company or Equity Interests of the Company (other than Disqualified Capital
Stock), provided, however, that (x) the principal amount of such Subordinated
Indebtedness shall not exceed the principal amount of the Subordinated
Indebtedness so redeemed, repurchased, retired or otherwise acquired (plus the
amount of reasonable expenses incurred and any premium paid in connection
therewith), (y) the Subordinated Indebtedness shall have a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of
the Subordinated Indebtedness being redeemed, repurchased, retired or otherwise
acquired, and (z) such Subordinated Indebtedness is subordinate in right of
payment to the Senior Notes and on terms at least as
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favorable to the holders of the Senior Notes as the terms set forth in the
documentation governing the Subordinated Indebtedness being redeemed,
repurchased, retired or otherwise acquired; and (iv) any redemption or purchase
by the Company or any Subsidiary of Equity Interests of the Company required by
a Gaming Regulatory Authority in order to preserve a material Gaming License,
provided, that so long as such efforts do not jeopardize any material Gaming
License, the Company or such Subsidiary shall have diligently tried to find a
third-party purchaser for such Equity Interests and no third-party purchaser
acceptable to the applicable Gaming Regulatory Authority was willing to purchase
such Equity Interests within a time period acceptable to such Gaming Regulatory
Authority; provided, further, that at the time of, and after giving effect to,
any Restricted Payment permitted under clauses (ii) and (iii), no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof.
(b) Notwithstanding anything in paragraph (a) to the contrary, from and
after the Issue Date (and for so long as no Event of Default described in the
Indenture shall have occurred and be continuing), the Company will be permitted
to (i) make quarterly distributions to the members of the Company in an amount
not to exceed, with respect to any fiscal year, an amount equal to the good
faith estimate of maximum federal and state income tax liability of the Company
in such period if it were a taxable Person at the highest effective federal and
state income tax rate of any member of the Company; provided, that each such
quarterly distribution shall not exceed the estimated federal and state tax
liability calculated on such basis; provided further that the Company may make
one annual tax distribution in respect of any difference between the annual tax
liability so calculated and the estimated quarterly distributions made and that
any distribution of estimated tax payments that exceeds the annual tax liability
so calculated will be applied to reduce the distributions in the following year,
(ii) make capital contributions to the BHR Joint Venture to the extent required
by the BHR Operating Agreement in an aggregate amount not to exceed $56.1
million; (iii) make capital contributions to the BHR Joint Venture to pay for
harbor improvements required by the Harbor Lease and other improvements
ancillary to such harbor improvements; (iv) make capital contributions, loans or
advances to the BHR Joint Venture for additional development or expansion costs
in an aggregate amount not exceeding $5.0 million; (v) from and after the
Commencement Date and so long as clause (a)(2) of this covenant shall be
satisfied, make capital contributions, loans or advances to the BHR Joint
Venture for additional development or expansion costs in an aggregate amount not
exceeding $50.0 million less any capital contributions, loans or advances made
by the Company pursuant to clause (b)(iii) or clause (b)(iv) hereof; (vi) repay
the Note to Principal Member and (vii) make payments to the City of Gary or any
other person in accordance with the Development Agreement.
LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED CAPITAL
STOCK
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries, to directly or indirectly, create, incur, issue, assume,
guaranty, or otherwise become directly or indirectly liable with respect to any
Indebtedness (including Acquired Indebtedness) or any shares of Disqualified
Capital Stock; provided, however, that the Company and its Subsidiaries may
incur Indebtedness or issue shares of Disqualified Capital Stock if (i) the
Majestic Star Casino is Operating, (ii) the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence would have been at least 2.5 to 1 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Capital Stock had
been issued, as the case may be, and application of proceeds had occurred at the
beginning of such four-quarter period and (iii) such Indebtedness or
Disqualified Capital Stock, as the case may be, does not have a Weighted Average
Life to Maturity less than the Weighted Average Life to Maturity of the Senior
Notes.
The foregoing limitations do not apply to:
(a) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in an aggregate principal amount not to exceed at any one time
$6.0 million for working capital purposes;
(b) the incurrence by the Company or any of its Subsidiaries of any
Existing Indebtedness;
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(c) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by the Senior Notes;
(d) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (the "Refinancing Indebtedness") issued in exchange for, or
the proceeds of which are used to extend, refinance, renew, replace, or
refund Indebtedness referred to in the first paragraph of this covenant or
in clauses (a), (b), (c) or this clause (d), provided, however, that (1)
the principal amount of such Refinancing Indebtedness shall not exceed the
principal amount of Indebtedness so extended, refinanced, renewed,
replaced, substituted or refunded (plus the amount of reasonable expenses
incurred and any premium paid in connection therewith), (2) the Refinancing
Indebtedness shall, if applicable, be subordinate in right and priority of
payment to the Senior Notes to the same extent such Indebtedness being
refinanced is, and (3) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life
to Maturity of the Indebtedness being extended, refinanced, renewed,
replaced, substituted or refunded;
(e) intercompany Indebtedness between or among the Company and any
Wholly Owned Subsidiary; provided, however, the obligations to pay
principal, interest or other amounts under such intercompany Indebtedness
is subordinated to the payment in full of the Senior Notes;
(f) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations or purchase money
obligations, in each case incurred for the purpose of financing or
refinancing all or any part of the purchase or lease of personal property
or equipment used in the business of the Company or such Subsidiary, in an
aggregate principal amount pursuant to this clause (f) not to exceed (i)
$8.0 million outstanding at any time prior to Delivery of the Permanent
Vessel and (ii) $12.0 million outstanding at any time in connection with
the equipping of the Permanent Vessel; and
(g) to the extent that such incurrence does not result in the
incurrence by the Company or any Subsidiary of any obligation for the
payment of borrowed money of others, Indebtedness incurred solely in
respect of performance bonds, completion guarantees, standby letters of
credit or bankers' acceptance, provided, that such Indebtedness was
incurred (i) to comply with a requirement of a Gaming Regulatory Authority
or (ii) in the ordinary course of business, in amounts and for purposes
customary for gaming operations similar to the Company's or such
Subsidiary's, and in an aggregate principal amount outstanding under this
clause (g) (ii) at any one time of less than $2.0 million.
LIENS
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or suffer
to exist any Lien, except Permitted Liens, on any asset owned as of the Issuance
Date or thereafter acquired by the Company or such Subsidiary or any income or
profits therefrom, or assign or convey any right to receive income therefrom.
RESTRICTIONS ON BHR JOINT VENTURE
The Indenture provides that the Company will not consent to the issuance of
Indebtedness by the BHR Joint Venture except (a) Indebtedness incurred pursuant
to Section 4.3(c) of the BHR Operating Agreement; (b) Indebtedness incurred for
the purpose of acquiring, constructing or improving property owned by the BHR
Joint Venture in an aggregate principal amount not to exceed $4.0 million; and
(c) the refinancing of any such Indebtedness. The Indenture will provide that
the Company will not consent to the creation, incurrence, assumption or
existence of any Lien by the BHR Joint Venture, except Permitted Liens.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
assets, properties or securities to, or purchase any asset, property or security
from, or enter into or make any contract, agreement, understanding, loan,
advance or
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guarantee with, or for the benefit of, any Affiliate of the Company (each of the
foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Subsidiary with
an unrelated Person; and
(ii) (A) the Company delivers to the Trustee with respect to any
Affiliate Transaction involving aggregate payments in any twelve month
period in excess of $350,000, a resolution adopted by the Board of Managers
of the Company approving such Affiliate Transaction and set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above and (B) the Company delivers to the Trustee with
respect to any Affiliate Transaction involving aggregate payments in any
twelve month period in excess of $4.0 million, an opinion as to the
fairness to the Company or such Subsidiary from a financial point of view
issued by an Independent Financial Advisor.
The foregoing provisions do not apply to the following: (1) Restricted
Payments permitted by the covenant of the Indenture entitled "Restricted
Payments", (2) capital contributions required to be made by the Company pursuant
to the BHR Operating Agreement, (3) the Berthing Agreement, (4) the provision of
certain services to the City of Gary or to any other Person in the State of
Indiana on behalf of the City of Gary by an Affiliate or Affiliates of the
Company to satisfy certain obligations of the Company under the Development
Agreement, (5) the licensing of any service mark of the Company to an Affiliate
or Affiliates of the Company and (6) the extension or renewal of any terms of
any Affiliate Transaction in effect on the Issuance Date so long as such
extension or renewal is accompanied by an Officers' Certificate stating that
such extension or renewal complies with clause (i) above.
Notwithstanding the foregoing, the Company shall not enter into an
employment or consulting agreement with any individual who directly or
indirectly controls the Company, which agreement provides for annual
compensation to such individual in excess of $350,000.
LINE OF BUSINESS
The Indenture provides that for so long as any Senior Notes are
outstanding, the Company (i) shall not, and shall not permit any of its
Subsidiaries to, engage in any business or activity other than the Principal
Business and (ii) shall not permit the BHR Joint Venture to engage in any
business or activity other than businesses or activities that relate to the
Principal Business.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any such Subsidiary to (a)(i) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (A) on its Capital Stock
or (B) with respect to any other interest or participation in, or measured by,
its profits, or (ii) pay any Indebtedness owed to the Company or any of its
Subsidiaries, (b) make loans or advances to the Company or any of its
Subsidiaries or (c) sell, lease, or transfer any of its properties or assets to
the Company or any of its Subsidiaries, except (in each case) for such
encumbrances or restrictions existing under or by reason of (1) contractual
encumbrances or restrictions in effect on the Issuance Date, (2) the Indenture,
the Senior Notes and the Collateral Documents, (3) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any
Subsidiary as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person is not taken into account in determining whether such
acquisition was permitted by the terms of the Indenture, (4) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (5) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature discussed in clause (c) above on the property so
acquired, (6) applicable law or any applicable rule or order of any Gaming
Regulatory Authority, or (7) any encumbrances or restrictions
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imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (6) above,
provided, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are, in the
good faith judgment of the Company's Board of Managers, no more restrictive with
respect to such dividend and other payment restrictions than those contained in
the dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing.
RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY
The Indenture provides that the Company shall not, and shall not permit any
Subsidiary to, lease, sublease, or grant a license, concession or other
agreement to occupy, manage or use any Note Collateral owned or leased by the
Company (each, a "Lease Transaction"), other than the following Lease
Transactions; provided that (1) no Default or Event of Default has occurred or
is continuing immediately after entering into such Lease Transaction (or
immediately after any extension or renewal of such Lease Transaction made at the
option of the Company or any Subsidiary) and (2) no gaming or casino operations
may be conducted on any Note Collateral that is the subject of such Lease
Transaction other than by the Company or any Subsidiary:
(a) the Company may enter into a Lease Transaction with respect to any
space on or within the Majestic Star Casino with any Person, provided that:
(i) such Lease Transaction will not interfere with, impair or
detract from the operations of the Majestic Star Casino and will, in the
opinion of the Company, enhance the value and operations of the Majestic
Star Casino;
(ii) such Lease Transaction is at a fair market rent (in light of
other similar or comparable prevailing commercial transactions) and
contains such other terms such that the Lease Transaction, taken as a
whole, is commercially reasonable and fair to the Company in light of
prevailing or comparable transactions in other casinos, hotels,
attractions or shopping venues; and
(iii) such Lease Transaction complies with all applicable laws,
including obtaining any consent or license of the IGC, if required; and
(b) the Company may enter into a management or operating agreement
with respect to any Note Collateral (other than any Note Collateral or
space used for any casino or gaming operations) with any Person; provided
that;
(i) the manager or operator has experience in managing or operating
similar operations;
(ii) such management or operating agreement is on commercially
reasonable and fair terms to the Company; and
(iii) such management or operating agreement is terminable without
penalty to the Company upon no more than 90 days written notice.
The Trustee shall enter into a leasehold non-disturbance agreement with
respect to any Lease Transaction permitted under clause (a) above, in the event
that the Trustee, on behalf of the Holders of Senior Notes, forecloses or take
possession of any Note Collateral. Such an agreement shall provide, among other
things, that any action taken with respect to any Note Collateral, including any
sale of Note Collateral, will be subject to the terms of the Lease Transaction
and will permit the lessee to cure certain defaults under such Lease
Transaction. No Lease Transaction may provide that the Company may subordinate
its leasehold or fee interest to any lessee or any financing party of any
lessee.
LIMITATIONS ON MERGERS AND CERTAIN OTHER TRANSACTIONS
The Indenture provides that the Company, in a single transaction or through
a series of related transactions, shall not consolidate with or merge with or
into any other Person, or transfer (by lease, assignment, sale or otherwise) all
or substantially all of its properties and assets unless (1) either 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 to which all or
substantially all of the properties and
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assets of the Company are transferred (the Company or such other Person
hereinafter referred to as the "Surviving Person") shall be a corporation or
limited liability company organized and validly existing under the laws of the
United States, any state thereof or the District of Columbia, and shall
expressly assume, by a supplemental indenture, all the obligations of the
Company under the Senior Notes, the Indenture and the Collateral Documents; (2)
immediately after and giving effect to such transaction and the assumption
contemplated by clause (1) above and the incurrence or anticipated incurrence of
any Indebtedness to be incurred in connection therewith, (A) the Surviving
Person shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction, and
(B) the Surviving Person could incur $1.00 of additional Indebtedness under the
Fixed Charge Coverage Ratio; (3) immediately before and immediately after and
giving effect to such transaction and the assumption of the obligations as set
forth in clause (1) above and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith, no Default or Event of
Default shall have occurred and be continuing; and (4) such transactions would
not require any Holder of Senior Notes to obtain a Gaming License or be
qualified under the laws of any gaming jurisdiction, provided that such Holder
would not have been required to obtain a Gaming License or be qualified under
the laws of any applicable gaming jurisdiction in the absence of such
transactions.
MAINTENANCE OF INSURANCE
The Indenture provides that, until the Senior Notes have been paid in full,
the Company shall, and shall cause its Subsidiaries to, maintain insurance with
responsible carriers against such risks and in such amounts as are customarily
carried by similar businesses with such deductibles, retentions, self insured
amounts and coinsurance provisions as are customarily carried by similar
businesses of similar size, including, without limitation, property and
casualty, and shall have provided insurance certificates evidencing such
insurance to the Trustee prior to the Issuance Date and shall hereafter provide
such certificates prior to the anniversary or renewal date of each such policy,
which certificate shall expressly state the expiration date for each policy
listed. The Company shall furnish or cause to be furnished certified copies of
the policies to the Trustee.
Customary insurance coverage shall be deemed to include the following:
(i) workers' compensation insurance to the extent required to comply
with all applicable state, territorial, or United States laws and
regulations, or the laws and regulations of any other applicable
jurisdiction;
(ii) comprehensive general liability insurance with minimum limits of
$1.0 million;
(iii) umbrella or excess liability insurance providing excess
liability coverages over and above the foregoing underlying insurance
policies up to a minimum limit of $25.0 million; and
(iv) property insurance protecting the property against loss or damage
by fire, lightning, windstorm, tornado, water damage, vandalism, riot,
earthquake, civil commotion, malicious mischief, hurricane, and such other
risks and hazards as are from time to time covered by an "all-risk" policy
or a property policy covering "special" causes of loss. Such insurance
shall provide coverage in not less than the lesser of 120% of the
outstanding principal amount of the Senior Notes plus accrued and unpaid
interest and 100% of actual replacement value (as determined at each policy
renewal based on the F.W. Dodge Building Index or some other recognized
means) of any improvements and with a deductible no greater than 2% of the
insured value of the Majestic Star Casino or such greater amount as is
available on commercially reasonable terms (other than earthquake or flood
insurance, for which the deductible may be up to 10% of such replacement
value).
All insurance required under the Indenture (except workers' compensation)
shall name the Company as insured and the Trustee as an additional insured, with
losses in excess of $1.0 million payable jointly to the Company and the Trustee
(unless a Default or Event of Default has occurred and is then continuing, in
which case all losses are payable solely to the Trustee), with no recourse
against the Trustee for the payment of premiums, deductibles, commissions or
club calls, and for at least 30 days notice of cancellation. All such losses in
excess of $1.0 million shall be deposited in the Event of Loss Account to be
established pursuant to
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Section 10.12 of the Indenture and the Cash Collateral and Disbursement
Agreement and shall be pledged to the Trustee until released in accordance with
the terms of the applicable Collateral Document. All such insurance policies
shall be issued by carriers having an A.M. Best & Company, Inc. rating of "A" or
higher and a financial size category of not less than XII, or if such carrier is
not rated by A.M. Best & Company, Inc., having the financial stability and size
deemed appropriate by an opinion from a reputable insurance broker. The Company
shall deliver to the Trustee on the Issuance Date and each anniversary
thereafter a certificate of an insurance agent stating that the insurance
policies obtained by the Company comply with this covenant and the related
applicable provisions of the Collateral Documents.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture prohibits the Company and its Subsidiaries from being
required to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended) or from otherwise becoming subject
to regulation under the Investment Company Act of 1940.
COLLATERAL DOCUMENTS
The Indenture provides that neither the Company nor any of its Subsidiaries
will amend, waive or modify, or take or refrain from taking any action that has
the effect of amending, waiving or modifying, any provision of the Collateral
Documents to the extent that such amendment, waiver, modification or action
could have an adverse effect in any material respect on the rights of the
Trustee or the Holders; provided, that:
(i) the Note Collateral may be released or modified as expressly
provided in the Indenture and in the Collateral Documents;
(ii) the Construction Budget may be amended as expressly provided in
the Cash Collateral and Disbursement Agreement; and
(iii) the Indenture and any of the Collateral Documents may be
otherwise amended, waived or modified as set forth under the caption
"Amendment, Supplement and Waiver" in the Indenture.
FURTHER ASSURANCES
The Indenture provides that the Company will (and will cause each of its
Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination statements, notices
of assignment, transfers, certificates, assurances and other instruments as may
be required from time to time in order (i) to carry out more effectively the
purposes of the Collateral Documents, (ii) to subject to the Liens created by
any of the Collateral Documents any of the properties, rights or interest
required to be encumbered thereby, (iii) to perfect and maintain the
enforceability, validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, (iv) to enter into the
First Preferred Ship Mortgage upon Delivery of the Permanent Vessel, and (v) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm to
the Trustee any of the rights granted or now or hereafter intended by the
parties thereto to be granted to the Trustee, the Holders of the Senior Notes or
under any other instrument executed in connection therewith or granted to the
Company under the Collateral Documents or under any other instrument executed in
connection therewith.
REPORTS
Under the terms of the Indenture, notwithstanding that the Company may not
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company will file with the SEC all information, documents and reports
specified in Section 13 or 15(d) of the Exchange Act.
Under the terms of the Indenture, the Company has agreed to file with the
Trustee and provide Holders of Senior Notes, within 15 days after the Company
files the same with the SEC, copies of its annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rule or regulation prescribe) which the Company
would be required to file with the SEC
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pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the Indenture requires
the Company to continue to file with the SEC (unless the SEC will not accept
such reports) and, at the Company's expense, provide the Trustee, Holders of
Senior Notes, securities analysts and prospective investors (upon request) with
copies of such reports:
(i) within 90 days after the end of each fiscal year, annual reports
on Form 10-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor
or comparable form);
(ii) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form); and
(iii) promptly from time to time after the occurrence of an event
required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in any successor or comparable form);
provided, however, that the Company shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filings.
The Company has also agreed to include in such reports the anticipated
initial completion date of the Majestic Star Casino and the anticipated date of
Delivery of the Permanent Vessel and, in the case of quarterly reports, the
Contingent Interest paid, the Contingent Interest Accrual amount and
Consolidated Cash Flow with respect to the most recently ended fiscal quarter of
the Company, and in the case of annual reports, the audited Contingent Interest
paid, the Contingent Interest Accrual amount and audited Consolidated Cash Flow
for the most recently ended fiscal year and for each of the Semiannual Periods
ending in such fiscal year.
Within 15 days after receiving notice that the IGC has commenced any
proceeding seeking the suspension or revocation of the Company's owner's license
or seeking the imposition of a civil penalty against the Company exceeding
$100,000, the Company has agreed to file with the Trustee and provide to Holders
of Senior Notes copies of any such notice unless such proceeding against the
Company is terminated by the IGC without imposition of any material sanction
within such 15-day period.
Not later than the date of filing any quarterly or annual report, the
Company has agreed to deliver to the Trustee an Officers' Certificate stating
that each Restricted Payment made in the prior fiscal quarter was permitted and
setting forth the basis upon which the calculations required by the covenant in
the Indenture relating to "Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
RATING
The Indenture requires the Company to make presentations to Moody's
Investors Service and Standard & Poor's Ratings Group, within 90 days of the
date of the Indenture, for the purpose of obtaining a rating for the Senior
Notes.
SECURITY
The Senior Notes are secured by (i) a pledge of the Company's 50%
membership interest in the BHR Joint Venture pursuant to the BHR Pledge
Agreement, (ii) a pledge of BDI's entire membership interest in the Company
pursuant to the BDI Pledge Agreement, (iii) a collateral assignment of the
Company's interest in the Berthing Agreement pursuant to the Security Agreement,
(iv) a pledge of all funds in the Cash Collateral Accounts into which the
proceeds from the Offering will be placed pending their use pursuant to the Cash
Collateral and Disbursement Agreement, (v) certain other assets now owned or
hereafter acquired by the Company after the Issuance Date pursuant to the
Security Agreement (other than any assets which if pledged, hypothecated or
given as collateral security would require the Trustee or a holder or beneficial
holder of the Senior Notes to be licensed, qualified or found suitable and other
than certain assets to the extent such
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assets are permitted to be financed by Indebtedness permitted to be incurred
pursuant to the covenant in the Indenture entitled "Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Capital Stock" and such Indebtedness
is permitted to be secured pursuant to the covenant entitled "Liens" pursuant to
the definition of "Permitted Liens") and (vi) a collateral assignment of the
Company's rights to the service mark "Majestic Star Casino" pursuant to the
Trademark Security Agreement.
At such time as the Company elects to construct a new vessel to serve as
the Permanent Vessel, (i) pending construction of such Permanent Vessel, the
Senior Notes will be secured by a collateral assignment of the Company's
interest in any material construction contracts relating to such construction
and a duly perfected security interest in all property comprising such Permanent
Vessel while under construction and (ii) upon Delivery of such Permanent Vessel,
the Senior Notes will be secured by a duly perfected First Preferred Ship
Mortgage in such Permanent Vessel.
So long as no Event of Default shall have occurred and be continuing, and
subject to certain terms and conditions in the Indenture and the Collateral
Documents, the Company is entitled to use the Note Collateral in a manner
consistent with normal business practices. Upon the occurrence and during the
continuance of an Event of Default, the Trustee may sell the Note Collateral or
any part thereof in accordance with the terms of the Collateral Documents. All
funds distributed under the Collateral Documents and received by the Trustee for
the benefit of the Holders of the Senior Notes shall be distributed by the
Trustee in accordance with the provisions of the Indenture.
Under the terms of the Collateral Documents, the Trustee may determine the
circumstances and manner in which the Note Collateral shall be disposed of,
including, but not limited to, the determination of whether to release all or
any portion of the Note Collateral from the Liens created by the Collateral
Documents and whether to foreclose on the Note Collateral following an Event of
Default. Subject to certain additional provisions set forth in the Indenture,
the Note Collateral may be released from the Lien and security interest created
by the Indenture and the Collateral Documents at any time or from time to time
upon the request of the Company pursuant to an Officers' Certificate certifying
that all terms for release and conditions precedent under the Indenture and
under any applicable Collateral Document have been met and specifying
(i) the identity of the Note Collateral to be released and
(ii) the provision of the Indenture or Collateral Document which
authorizes such release.
The Trustee shall release (at the sole cost and expense of the Company):
(i) Note Collateral that is the subject of an Asset Sale or that is
sold, transferred or otherwise disposed of; provided, such transaction is
or will be in accordance with provisions of the Indenture or the applicable
Collateral Document, including, without limitation, the requirement that
the net proceeds from such transaction or Asset Sale are or will be applied
in accordance with the Indenture;
(ii) Note Collateral that is condemned, seized or taken by the power
of eminent domain or otherwise confiscated pursuant to an Event of Loss;
provided that the Net Loss Proceeds, if any, from such Event of Loss are or
will be applied in accordance with the covenant described above under
"Event of Loss";
(iii) Note Collateral which may be released with the consent of
Holders of Senior Notes pursuant to the amendment provisions of the
Indenture;
(iv) all Note Collateral (except as provided in the discharge and
defeasance provisions of the Indenture and, in particular, the funds in the
trust fund described in such provisions) upon discharge or defeasance of
the Indenture in accordance with the discharge and defeasance provisions
thereof; and
(v) all Note Collateral upon the payment in full of all obligations of
the Company with respect to the Senior Notes.
The Indenture provides that the Net Proceeds of all Asset Sales and the Net
Loss Proceeds of all Events of Loss of assets constituting Note Collateral
(other than Permitted Investments), as well as Excess Proceeds, be promptly and
without any commingling deposited with the Trustee in a Collateral Account
subject to a lien
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in favor of the Trustee for the benefit of the Holders of the Senior Notes
unless and until applied as permitted under the covenant described under "Asset
Sales" or "Events of Loss," as the case may be. The Trustee shall release to the
Company any Excess Proceeds or Excess Loss Proceeds, as the case may be, that
remain after making an offer to purchase the Senior Notes in compliance with the
covenant described under "Asset Sales" or "Events of Loss," as the case may be.
Amounts so paid to the Trustee shall be invested or released in accordance with
the provisions of the Indenture and the Cash Collateral and Disbursement
Agreement.
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
Pursuant to the Cash Collateral and Disbursement Agreement, the Company
placed all of the net proceeds from the Offering into the Cash Collateral
Accounts, to be held in escrow and invested in Cash Equivalents by the
Disbursement Agent (at the direction of the Company) until needed from time to
time to fund (i) the equipping of the Chartered Vessel, (ii) the Company's
obligations with respect to the construction of the Gaming Complex, (iii) the
construction of the Permanent Vessel, (iv) the repayment of the Note to
Principal Member, (v) the first two scheduled payments of Fixed Interest with
respect to the Senior Notes, and (vi) certain other disbursements as permitted
by the Cash Collateral and Disbursement Agreement, each pursuant to the terms of
the Cash Collateral and Disbursement Agreement. Subject to certain exceptions
set forth in the Cash Collateral and Disbursement Agreement, the Disbursement
Agent will authorize the disbursement of funds from the Cash Collateral Accounts
only upon the satisfaction of the disbursement conditions set forth in the Cash
Collateral and Disbursement Agreement. Such conditions include, with respect to
the Completion Reserve Account, that $5.0 million of the funds in such account
shall be released to BDI as partial repayment of the Note to Principal Member if
(i) the Majestic Star Casino has been Operating for 90 days, (ii) the Company's
Fixed Charge Coverage Ratio as calculated on the last day of such 90-day period
or on the last day of any fiscal quarter thereafter is greater than 2.5 to 1,
provided that Cash Equivalents (other than any Cash Equivalents then remaining
in the Cash Collateral Accounts) available to the Company on any such date of
calculation exceed $5.0 million, (iii) guaranteed maximum price construction
contracts to construct and deliver the Permanent Vessel to the Company in Gary,
Indiana by September 30, 1997 have been entered into, and (iv) no Event of
Default exists or is continuing under the Indenture at any such date of
calculation. Any funds remaining in the Completion Reserve Account shall be
released upon Delivery of the Permanent Vessel.
All funds in the Cash Collateral Accounts are pledged as security for the
repayment of the Senior Notes and, under certain circumstances, the funds in the
Cash Collateral Accounts will be used to offer to redeem a portion of the Senior
Notes.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default:
(i) the Company defaults in payment when due and payable, upon
maturity, redemption or otherwise, of principal or premium, if any, on the
Senior Notes;
(ii) the Company defaults for 30 days or more in the payment when due
of interest (including Contingent Interest and Liquidated Damages, if any),
on the Senior Notes; provided, that payments of Contingent Interest that
are permitted to be deferred as provided in the Senior Notes shall not
become due for this purpose until such payment is required to be made
pursuant to the terms of the Senior Notes;
(iii) failure by the Company to comply, within the applicable cure
periods, with the covenants and provisions described under the captions
"Restricted Payments," "Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Capital Stock," "Asset Sales," "Events of Loss,"
"Corporate Existence," "Offer to Repurchase Upon Change of Control," "Use
of Proceeds," "Uncompleted Project Offer" or "Uncompleted Vessel Offer";
(iv) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in the Indenture, the Senior
Notes or the Collateral Documents for 30 days after written
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notice to the Company by the Trustee or to the Company and the Trustee from
Holders of at least 25% in principal amount of the Senior Notes then
outstanding;
(v) for any reason, other than due to the act of the Trustee, the
Disbursement Agent or the Holders and other than the satisfaction in full
and discharge of all obligations secured thereby, to the extent permitted
by the Indenture or any Collateral Document, any Collateral Document ceases
to be in full force and effect or any Lien intended to be operated thereby
ceases to be or is not a valid and perfected Lien having the ranking or
priority contemplated thereby, except for Permitted Liens, and such
condition continues for 30 days after the Company receives notice of such
condition;
(vi) prior to the Delivery of the Permanent Vessel, the Charter ceases
to be in full force and effect or the Company defaults in the performance
of any covenant set forth in the Charter or any of the Collateral Documents
(which default is not waived or cured);
(vii) a default occurs under any mortgage, indenture or instrument
under which there is issued or by which there is secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries,
or the payment of which is guaranteed by the Company or any of its
Subsidiaries, whether such Indebtedness or guarantee now exists, or is
created after the Issuance Date, which default:
(a) is caused by a failure to pay when due principal of or premium,
if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness (a "Payment Cross-Default");
or
(b) results in the acceleration of such Indebtedness prior to its
express maturity or would constitute a default in the payment of such
issue of Indebtedness at final maturity of such issue and, in each case,
the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which a Payment
Cross-Default then exists or with respect to which the maturity thereof
has been so accelerated or which has not been paid at maturity,
aggregates $1.0 million or more;
(viii) the entry of final judgments against the Company aggregating in
excess of $1.0 million, which final judgments remain unpaid, undischarged,
unbonded or unstayed for a period of more than 60 days;
(ix) any material breach by the Company of any representation or
warranty set forth in the Charter, the Berthing Agreement or any of the
Collateral Documents, or the repudiation by the Company of its obligations
under, or any judgment or decree by a court or governmental agency of
competent jurisdiction declaring the unenforceability of, the Charter, the
Berthing Agreement or any of the Collateral Documents for any reason that
would materially impair the benefits to the Trustee or the Holders of the
Senior Notes thereunder;
(x) certain events of bankruptcy or insolvency with respect to the
Company;
(xi) revocation, termination, suspension or other cessation of
effectiveness of any Gaming License which results in the cessation or
suspension of gaming operations for a period of more than 90 consecutive
days at the Majestic Star Casino;
(xii) cessation of gaming operations for a period of more than 90
consecutive days at the Majestic Star Casino (other than as a result of a
casualty loss) after the Majestic Star Casino becomes Operating;
(xiii) cessation of gaming operations for a period of more than 180
consecutive days as a result of a casualty loss after the Majestic Star
Casino becomes Operating except if the Company is diligently pursuing
reconstruction and opening of the Majestic Star Casino;
(xiv) the Majestic Star Casino is not Operating by December 31, 1996
and continues to be not Operating; or
(xv) the Permanent Vessel has not been Delivered by June 30, 1998.
If any Event of Default (other than by reason of bankruptcy or insolvency)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Senior Notes may declare
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<PAGE> 72
the principal, premium, if any, interest (including Contingent Interest and
Liquidated Damages, if any) and any other monetary obligations on all the Senior
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, with respect to the Company, all the principal, premium, if any,
interest (including Contingent Interest and Liquidated Damages, if any) and
other monetary obligations on all outstanding Senior Notes will become due and
payable without further action or notice. Holders of the Senior Notes may not
enforce the Indenture or the Senior Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Senior Notes may direct the Trustee in its exercise of any
trust or power, including the exercise of any remedy under the Collateral
Documents. The Trustee may withhold from Holders of Senior Notes 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. In addition, the Trustee shall have no
obligation to accelerate the Senior Notes if in the best judgment of the Trustee
acceleration is not in the best interest of the Holders of the Senior Notes.
In the case of any Event of Default occurring on or after May 15, 2000 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Senior Notes pursuant to the optional redemption provisions of the Indenture,
then, upon acceleration of the Senior Notes, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law. If an
Event of Default occurs prior to May 15, 2000, by reason of any willful action
(or inaction) taken (or not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Senior Notes prior to
such date, then upon acceleration of the Senior Notes, an additional premium
shall also become and be immediately due and payable in an amount, for each of
the years beginning on May 15 of the years set forth below, as set forth below
(expressed as a percentage of the principal amount that would otherwise be due
but for the provisions of this sentence):
<TABLE>
<CAPTION>
YEAR %
---- ---
<S> <C>
1996.......................................................... 112.750
1997.......................................................... 112.750
1998.......................................................... 110.625
1999.......................................................... 108.500
2000.......................................................... 106.375
</TABLE>
The Holders of a majority in aggregate principal amount of the Senior Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Senior 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 interest (including Contingent Interest and Liquidated
Damages, if any) on, premium, if any, or the principal of the Senior Notes.
Specific rights and remedies of the Trustee under the Collateral Documents
include the right of the Trustee or the appropriate Person under federal or
state law to sell the Note Collateral and to apply the net proceeds to the
Indebtedness evidenced by the Senior Notes in accordance with the terms of the
Indenture and the Collateral Documents. The Collateral Documents generally
provide for the application of the internal laws of the State of Indiana, while
the Indenture and the Senior Notes provide, with certain exceptions, for the
application of the internal laws of the State of New York. There is no certainty
regarding whether New York or Indiana law would be applied by any court with
respect to the enforcement of remedies under the Senior Notes, the Indenture or
the Collateral Documents.
The right of the Trustee to realize upon and sell the Note Collateral is
likely to be significantly impaired by applicable bankruptcy and insolvency laws
if a proceeding under such laws were commenced in respect of the Company. Such
laws may impose limitations or prohibitions on the exercise of rights and
remedies under the Collateral Documents for a substantial or indefinite period
of time.
The Indenture provides that, following an Event of Default that permits the
taking of possession of the Majestic Star Casino by the Trustee, the Trustee
shall be authorized to recommend that the Company retain
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one or more experienced operators of casinos to manage the casino located at the
Majestic Star Casino on behalf of the Holders of the Senior Notes; provided,
however, that any such operator shall have all necessary legal qualifications
(including without limitation all material Gaming Licenses and approvals of the
IGC to manage the casino located at the Majestic Star Casino).
Due to restrictions upon gaming activities in Indiana, however, the Trustee
may incur delays or possibly frustration in its effort to operate or to sell all
or a portion of the Note Collateral. Operators of gaming facilities in Indiana
are required to be licensed and are required by applicable Gaming Regulatory
Authorities to file applications, be investigated and be found suitable. Such
requirements for governmental approval may delay or preclude a sale of the Note
Collateral to a potential buyer at a foreclosure sale or sales. This may
effectively limit the number of potential bidders and may delay such sales,
either of which could adversely affect the sale price of the Note Collateral.
Moreover, the gaming industry could become subject to different or additional
regulations during the term of the Senior Notes, which could further adversely
affect the practical rights and remedies that the Trustee would have upon the
occurrence of an Event of Default.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, within
five Business Days, upon becoming aware of any Default or Event of Default or
any default under any document, instrument or agreement representing
Indebtedness of the Company, to deliver to the Trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND MEMBERS
No director, officer or office holder, employee, agent, representative, or
member of the Company, as such, shall have any liability for any obligations of
the Company under the Senior Notes, the Indenture or the Collateral Documents,
as applicable, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Senior Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The obligations of the Company under the Indenture (other than certain
obligations) will terminate and the Note Collateral will be released upon
payment in full of all of the Senior Notes. The Company may, at its option and
at any time, elect to have all of its obligations discharged with respect to the
outstanding Senior Notes ("Legal Defeasance") and cure all then existing Events
of Default except for:
(i) the rights of Holders of outstanding Senior Notes to receive
payments in respect of the principal of, premium, if any, and interest
(including Contingent Interest, if any) on such Senior Notes when such
payments are due;
(ii) the Company's obligations with respect to the Senior Notes
concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an
office or agency for payment and money for security payments held in trust;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith; and
(iv) the Legal and Covenant Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Senior Notes. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership, and
insolvency events) described under "Events of Default" will no longer constitute
an Event of Default with respect to Senior Notes. In addition, the Note
Collateral will be released upon Covenant Defeasance or Legal Defeasance.
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In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Senior Notes, 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 as evidenced by a certificate
delivered to the Trustee, to pay the principal of, premium, if any, and
interest (including the maximum amount payable as Contingent Interest and
Liquidated Damages, if any) due on the outstanding Senior Notes on the
stated maturity date or on the applicable redemption date, as the case may
be, of such principal, premium, if any, or interest (including Contingent
Interest and Liquidated Damages, if any) on the outstanding Senior Notes on
the stated maturity date or on the applicable redemption date, as the case
may be, and the Company must specify whether the Senior Notes are being
defeased to maturity or to a particular redemption date;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions
and exclusions:
(a) the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling; or
(b) since the Issuance Date of the Indenture, there has been a change
in the applicable U.S. federal income tax law, in either case to the effect
that and based thereon such opinion of counsel in the United States shall
confirm that, subject to customary assumptions and exclusions, the Holders
of the outstanding Senior Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such Legal Defeasance and
will be subject to U.S. 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;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the outstanding Senior Notes
will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
U.S. 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;
(iv) no Default or Event of Default shall have occurred and be
continuing with respect to certain Events of Default on the date of such
deposit;
(v) 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 the Indenture) to which the Company is
a party or by which the Company is bound;
(vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that, after the 91st day following the deposit and as
of the date of such opinion and subject to customary assumptions and
exclusions following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally under any applicable
United States law;
(vii) 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 defeating, hindering, delaying or defrauding any creditors of the
Company or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel in the United States (which opinion
of counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the Indenture,
the Senior Notes or the Collateral Documents may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Senior Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Senior Notes), provided that any required
governmental approval is obtained, including that of the IGC and subject to
certain provisions in the Indenture, 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 (including Contingent Interest and Liquidated
Damages, if any) on the Senior Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of the
Indenture or the Senior Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Notes (including
consents obtained in connection with a tender offer or exchange offer for Senior
Notes).
Without the consent of each holder of Senior Notes affected, an amendment
or waiver may not (with respect to any Senior Notes held by a non-consenting
holder of Senior Notes):
(i) reduce the principal amount of Senior Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Senior Note or alter or waive the provisions with respect to the redemption
of the Senior Notes (provided, however, that the term "redemption" as used
in this clause (ii) does not apply to any provision with respect to any
Repurchase Offer);
(iii) reduce the rate of or change the time for payment of interest
(including Contingent Interest) on any Senior Note;
(iv) waive a Default or Event of Default in the payment of principal
of, premium, if any, or interest (including Contingent Interest) on the
Senior Notes (except a rescission of acceleration of the Senior Notes by
the Holders of at least a majority in aggregate principal amount of the
then outstanding Senior Notes and waiver of the payment default that
resulted from such acceleration);
(v) make any Senior Note payable in money other than that stated in
the Senior Notes;
(vi) make any change in the provisions of the Indenture relating to
waivers of the past monetary Defaults or the rights of Holders of Senior
Notes to receive payments of principal of or premium, if any, or interest
(including Contingent Interest) on the Senior Notes:
(vii) release all or substantially all of the Note Collateral from the
Lien of the Indenture or the Collateral Documents; or
(viii) make any change in the provisions with respect to "Waiver of
Past Defaults" or "Rights of Holders of Senior Notes to Receive Payment" or
the foregoing amendment and waiver provisions.
Without the consent of Holders of at least 66- 2/3% of the outstanding
principal amount of the Senior Notes, the Company may not amend, alter or waive
the provisions with respect to "Offer to Repurchase Upon Change of Control."
Notwithstanding the foregoing, without the consent of any Holder of Senior
Notes, and provided that any required governmental approval, including that of
the IGC, is obtained, the Company and the Trustee together may amend or
supplement the Indenture, the Senior Notes or the Collateral Documents to:
(i) cure any ambiguity, defect or inconsistency;
(ii) provide for uncertificated Senior Notes in addition to or in
place of certificated Senior Notes;
(iii) comply with the covenants of the Company in the Indenture;
(iv) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Notes, or that does not adversely
affect the legal rights under the Indenture of any such Holder;
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<PAGE> 76
(v) comply with requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act;
(vi) enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel; or
(vii) secure the Senior Notes with additional collateral.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain leased property received in respect of
any such claim as security or otherwise. 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 SEC for permission to
continue as trustee or resign.
The Holders of a majority in principal amount of the then outstanding
Senior Notes 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
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of his own affairs. Subject to such provisions, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Senior Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
GOVERNING LAW
The Indenture and the Senior Notes are subject to certain exceptions,
governed by and construed in accordance with internal laws of the State of New
York, without regard to the choice of law rules thereof. The Collateral
Documents are governed, subject to certain exceptions, by the laws of the State
of Indiana.
ADDITIONAL INFORMATION
Any holder of the Senior Notes may obtain a copy of the Indenture and the
Collateral Documents without charge by writing to the Company at One Buffington
Harbor, Gary, Indiana, 46406-3000, Attention: Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into such specified Person, including Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
such specified Person and (ii) Indebtedness encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of the definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that for purposes of the covenant entitled "Transactions with Affiliates,"
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.
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"Asset Sale" means the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company
(each referred to in this definition as a "disposition") other than (i) a
disposition of inventory or other goods held for sale or disposition in the
ordinary course of business, (ii) any disposition that is a Restricted Payment
permitted under the covenant entitled "Restricted Payments" or that is a
dividend or distribution permitted under the covenant entitled "Restricted
Payments" or any Investment that is not prohibited thereunder or any disposition
of cash or Cash Equivalents, (iii) any single disposition, or related series of
dispositions, of assets with an aggregate fair market value of less than
$500,000, (iv) any Event of Loss, (v) any lease or sublease permitted as
described under the covenant entitled "Restrictions on Leasing and Dedication of
Property", and (vi) any sale of all or substantially all of the assets of the
Company which constitutes a Change of Control pursuant to clause (iii) of the
definition thereof.
"BDI" means Barden Development, Inc., an Indiana corporation.
"BDI Pledge Agreement" means that certain Pledge Agreement executed by BDI,
providing for a pledge of BDI's entire membership interest in the Company in
favor of the Trustee, for the ratable benefit of the Holders of the Senior
Notes, as the same may be amended in accordance with the terms thereof and the
Indenture.
"Beneficial Owner" for purposes of the definition of Change of Control has
the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
"Berthing Agreement" means the Majestic Berthing Agreement dated as of
April 23, 1996 between the Company and the BHR Joint Venture.
"BHR Joint Venture" means Buffington Harbor Riverboats, L.L.C., a Delaware
limited liability company, in which the Company owns a 50% membership interest.
"BHR Loss Proceeds" means any proceeds distributed to the Company from the
BHR Joint Venture which arise out of an Event of Loss with respect to the BHR
Joint Venture.
"BHR Operating Agreement" means the First Amended and Restated Operating
Agreement of Buffington Harbor Riverboats, L.L.C. made as of October 31, 1995,
as amended, by and between Trump Indiana, Inc., a Delaware corporation, and the
Company.
"BHR Pledge Agreement" means that certain Pledge Agreement executed by the
Company, providing for a pledge of the Company's entire membership interest in
the BHR Joint Venture in favor of the Trustee, for the ratable benefit of the
Holders of the Senior Notes, as the same may be amended in accordance with the
terms thereof and the Indenture.
"Board of Managers" means, with respect to any Person that is a limited
liability company, either the sole manager of such Person or, if there is more
than one manager, the managers of such Person, acting as a group, or any
committee of the managers of such Person authorized, with respect to any
particular matter, to exercise the power of the managers, or, if such Person is
managed by its members, the members of such Person, or any committee of the
members of such Person authorized, with respect to any particular matter, to
exercise the power of the members, or any successor to any such Person.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized and reflected as a liability on the
balance sheet in accordance with GAAP.
"Capital Stock" means (i) with respect to any corporation, any and all
shares of stock issued by that corporation and (ii) with respect to any other
Person, any partnership interest, joint venture interest, limited liability
company member interest or other form of equity sharing or participation
interest, as applicable.
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"Cash Collateral Accounts" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Company, the Trustee, and NBD Bank, a Michigan
banking association, as Disbursement Agent, substantially in the form delivered
to the Trustee on the Issuance Date.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $300 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types describes in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualification specified in clause (iii) above, (v) commercial paper rated P-1 or
the equivalent thereof by Moody's Investors Service or A-1 or the equivalent
thereof by Standard & Poor's Ratings Group and in each case maturing within one
year after the date of acquisition and (vi) investment funds investing solely in
securities of the types described in clauses (ii) - (v) above.
"Change of Control" means the occurrence of any of the following: (i) prior
to the completion of a bona fide underwritten initial public offering by the
Company, the failure at any time of Excluded Persons as a group to own and
control at least 40% of the voting power of the Capital Stock of the Company;
(ii) after the completion of a bona fide underwritten initial public offering by
the Company, the acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by (A) any
person or entity (other than an Excluded Person) or (B) any group of persons or
entities (excluding any group in which Excluded Persons beneficially own in the
aggregate at least 75% of the equity and voting interests beneficially owned by
the group) who constitute a group (within the meaning of Section 13(d)(3) of the
Exchange Act), in either case, of Capital Stock of the Company such that, as a
result of such acquisition, such person, entity or group beneficially owns
(within the meaning Rule 13d-3 under the Exchange Act), directly or indirectly,
30% or more of the voting power of the Capital Stock of the Company entitled to
vote in the election of directors, managers, general partners or other similar
governing bodies of the Company then outstanding; provided, however, that no
Change of Control shall be deemed to have occurred if (A) Excluded Persons
beneficially own, in the aggregate, at such time, a greater percentage of total
voting power of the Capital Stock of the Company entitled to vote in the
election of directors, managers, general partners or other similar governing
bodies of the Company than such other person, entity or group or (B) at the time
of such acquisition, Excluded Persons (or any of them) possess the ability (by
contract or otherwise) to elect, or cause the election, of a majority of the
members of the Company's Board of Managers; (iii) any merger or consolidation of
the Company with or into any person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Company, on a consolidated basis, in one transaction or series of related
transactions, if immediately after giving effect to such transaction or
transactions, any person or group (other than Excluded Persons or groups
including Excluded Persons to the extent contemplated by clause (i) or (ii)
above, whichever is then applicable) is or becomes the Beneficial Owner,
directly or indirectly, of more than the percentage of the Capital Stock of the
Company contemplated by clause (i) or (ii) above, whichever is then applicable;
or (iv) during any period of 12 consecutive months after the Issuance Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Managers of the Company (together with any new managers whose election
by such Board or whose nomination for election by the members of the Company was
approved by a vote of a majority of the managers then still in office who were
either managers at the beginning of such period or whose election or nomination
for election was previously so approved), cease for any reason to constitute a
majority of the managers of the Company then in office.
"Charter" means the Charter Agreement dated August 17, 1995 by and among
New Yorker Acquisition Corporation, the Company and President Casinos, Inc.,
providing for the leasing by the Company of the Chartered Vessel, as amended.
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"Chartered Vessel" means the riverboat casino gaming vessel, U.S.O.C. No.
538911, to be chartered by the Company pursuant to the Charter.
"Collateral Documents" means, collectively, the BDI Pledge Agreement, the
BHR Pledge Agreement, the Cash Collateral and Disbursement Agreement, the
Security Agreement, the Trademark Security Agreement, and any other agreements,
instruments, financing statements or other documents that evidence, set forth or
limit the Lien of the Trustee in the Note Collateral.
"Commencement Date" means the first day that the Majestic Star Casino
becomes Operating.
"Completion Reserve Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (a) an amount
equal to any extraordinary loss plus any net loss realized in connection with
any Asset Sale (to the extent such losses were deducted in computing
Consolidated Net Income), plus (b) Consolidated Interest Expense of such Person
for such period, plus (c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent such depreciation and amortization
were deducted in computing Consolidated Net Income, in each case, on a combined
basis for such Person and its Subsidiaries and determined in accordance with
GAAP.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of consolidated depreciation and
amortization expense and other noncash charges (excluding any noncash item that
represents an accrual, reserve or amortization of a cash expenditure for a
future period) of such Person for such period as defined in accordance with
GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of (a) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount and deferred financing fees, non-cash
interest payments, the interest component of Capital Lease Obligations, and net
payments (if any) pursuant to Hedging Obligations, excluding amortization of
deferred financing fees), (b) consolidated capitalized interest of such Person
and its Subsidiaries for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income, (c) commissions,
discounts and other fees and charges paid or accrued with respect to letters of
credit and bankers' acceptance financing, (d) to the extent not included above,
the maximum amount of interest which would have to be paid by such Person or its
Subsidiaries under a Guarantee of Indebtedness of any other Person if such
Guarantee were called upon and (e) to the extent not included above, Contingent
Interest, whether paid or accrued, to the extent such expense was deducted in
computing Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a combined basis, determined in accordance with GAAP, provided,
however, that (i) the Net Income for such period of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting, shall be
included only to the extent of the amount of dividends or distributions paid in
cash (or to the extent converted into cash) to the referent Person or a Wholly
Owned Subsidiary thereof in respect of such period, (ii) the Net Income of any
Person acquired in a pooling of interests transaction shall not be included for
any period prior to the date of such acquisition, and (iii) the cumulative
effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person at any time, the
sum of the following items, as shown on the consolidated balance sheet of such
Person and its Subsidiaries as of such date (i) the common equity or members
capital of such Person and its Subsidiaries, (ii) (without duplication), (a) the
aggregate liquidation preference of Preferred Stock of such Person and its
Subsidiaries (other than Disqualified Capital Stock), and (b) any increase in
depreciation and amortization resulting from any purchase accounting treatment
from an acquisition or related financing, (iii) less any goodwill incurred
subsequent to the Issuance Date, and (iv) less any write up of assets (in excess
of fair market value) after the Issuance Date, in each case on a consolidated
basis for such Person and its Subsidiaries, determined in
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accordance with GAAP, provided, that in calculating Consolidated Net Worth any
gain or loss from any Asset Sale shall be excluded.
"Construction Budget" means itemized schedules setting forth on a line item
basis all of the costs (including financing costs) estimated to be incurred in
connection with improvements to the Chartered Vessel and the financing, design,
development, construction, equipping and opening of the Gaming Complex and the
Permanent Vessel, as the case may be, by the Company, as such schedules are
delivered to the Disbursement Agent as of the Issuance Date and as amended from
time to time in accordance with the Cash Collateral and Disbursement Agreement.
"Construction Supervisor" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Contingent Interest" means as of any payment date, Contingent Interest on
the Senior Notes accrued through the Accrual Period last ended (including any
Accrual Period that ends on such payment date) and any Contingent Interest
previously accrued and the payment of which has been permitted to be deferred.
"Contingent Interest Accrual" means, at any time, the total amount of
Contingent Interest accrued and unpaid through and as of such time.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Delivery" means, with respect to the Permanent Vessel, the first time that
(i) all Liens (other than Permitted Liens) relating to the construction of the
Permanent Vessel have been paid and released, (ii) the Permanent Vessel is in a
condition (including installation of furnishings, fixtures and equipment) so
that the Permanent Vessel is fit to receive guests in the ordinary course of
business and (iii) the construction supervisor for the Permanent Vessel or an
independent construction expert appointed by the Company and acceptable to the
Trustee shall have delivered a certificate to the Trustee certifying that the
Permanent Vessel is complete in all material respects in accordance with the
Plans and Specifications therefor and in compliance with all applicable laws,
ordinances and regulations (including gaming laws and ordinances) with respect
to the physical structure, health and safety, environmental and hazardous
materials, fire, equipment, security and physical operating (gaming and other)
requirements of the Permanent Vessel.
"Development Agreement" means the Development Agreement dated March 26,
1996 between the Company and the City of Gary.
"Disbursement Agent" means NBD Bank, a Michigan banking association, as the
Disbursement Agent under the Cash Collateral and Disbursement Agreement.
"Disqualified Capital Stock" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to May 15,
2003.
"Dollars" and "$" mean lawful money of the United States of America.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal), any of the following: (i) any loss, destruction
or damage of such property or asset; (ii) any institution of any proceedings for
the condemnation or seizure of such property or asset or for the exercise of any
right of eminent domain; (iii) any actual condemnation, seizure or taking by
exercise of the power of eminent domain or otherwise of such property or asset,
or confiscation of such property or asset or the requisition of the use of such
property or asset; or (iv) any settlement in lieu of clause (ii) or (iii) above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Offer" means the registration by the Company under the Securities
Act of the Senior Notes pursuant to a registration statement pursuant to which
the Company is obligated to offer the holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities held by such holders for Senior Exchange Notes in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such holders.
"Excluded Persons" means (a) the Company or any Subsidiary of the Company,
(b) any employee benefit plan of the Company or any trustee or similar fiduciary
holding Capital Stock of the Company for or pursuant to the terms of any such
plan, (c) BDI, (d) Barden Management, Inc., (e) Don H. Barden or his spouse, (f)
the estate of Don H. Barden, (g) any descendant of Don H. Barden or the spouse
of any such descendant, (h) the estate of any such descendant or the spouse of
any such descendant, (i) any trust or other arrangement for the benefit of the
spouse of Don H. Barden or any such descendant or the spouse of any such
descendant and (j) any charitable organization or trust established by Don H.
Barden.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness (other than Capital Lease Obligations) of the Company or its
Subsidiaries in existence on the Issuance Date, plus interest accruing thereon,
after application of the net proceeds of sale of the Senior Notes as described
in this Offering Memorandum, until such amounts are repaid.
"First Preferred Ship Mortgage" means the first preferred ship mortgage on
the Permanent Vessel, to be dated as of the date of Delivery of the Permanent
Vessel, between the Company and the Trustee.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than working capital financing) or issues Preferred Stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated given pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter period. For purposes of making the
computation referred to above, acquisitions, dispositions and discontinued
operations (as determined in accordance with GAAP) that have been made by the
Company or any of its Subsidiaries, including all mergers, consolidations and
dispositions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be calculated on
a pro forma basis assuming that all such acquisitions, dispositions,
discontinued operations, mergers, consolidations (and the reduction of any
associated fixed charge obligations resulting therefrom) had occurred on the
first day of the four-quarter reference period.
"Fixed Charges" means with respect to any Person for any period, the sum of
(a) the Consolidated Interest Expense (excluding, solely for purposes of this
definition, Contingent Interest paid or accrued) and (b) the product of (i) all
dividend payments on any series of Preferred Stock of such Person, and (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory income tax
rate of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"Fixed Interest" means, interest at the rate of 12 3/4% per annum of the
principal amount of the Senior Notes.
"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting
profession.
"Gaming Complex" means the facilities to be constructed, owned and operated
by the BHR Joint Venture including, without limitation, all related berthing and
parking facilities, as well as any hotel or other ancillary structures and
facilities and all furniture, fixtures and equipment at any time contained
therein.
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"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct gaming activities of the
Company or any of its Subsidiaries, including, without limitation, all such
licenses by the granted under the Indiana Riverboat Gambling Act, and the
regulations promulgated pursuant thereto, and other applicable federal, state,
foreign or local laws.
"Gaming Regulatory Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision, whether now or hereafter existing, or any officer
or official thereof, including, without limitation, the IGC or 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.
"Government Securities" means securities that are (i) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Security
or a specific payment of principal of or interest on any such Government
Security held by such custodian for the account of the holder of such depository
receipt; provided, however, that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Security or the specific payment of principal of or interest on
the Government Security evidenced by such depository receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Harbor Lease" means the Harbor Lease Agreement dated as of June 29, 1995
by and between Trump Indiana, Inc. and Lehigh Portland Cement Company as
assigned by Trump Indiana, Inc. to the BHR Joint Venture pursuant to the
Assignment of Harbor Lease Agreement dated as of October 31, 1995 by and between
Trump Indiana, Inc. and the BHR Joint Venture.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates.
"Holder" means a Person in whose name a Senior Note is registered.
"IGC" means the Indiana Gaming Commission, or any successor Gaming
Regulatory Authority thereto.
"Indebtedness" means, with respect to any Person, (i) any indebtedness of
such Person, whether or not contingent (a) in respect of borrowed money,
including accrued and unpaid Contingent Interest, (b) evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof), (c) representing the balance deferred and unpaid
of the purchase price of any property (including Capital Lease Obligations),
except any such balance that constitutes an accrued expense or trade payable, or
(d) representing any Hedging Obligations, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (ii) to the extent not otherwise included, any obligation
by such Person to be liable for, or to pay, as obligor, guarantor or otherwise,
on the Indebtedness of another Person (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) and (iii) to the
extent not otherwise included, Indebtedness of another Person secured by a Lien
on any asset of the referent Person (whether or not such Indebtedness is assumed
by such referent Person).
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"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Company's Board of Managers, (i) qualified to perform the task
for which it has been engaged and (ii) disinterested and independent with
respect to the Company and each Affiliate of the Company.
"Interest Reserve Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
Guarantees), advances or capital contributions (excluding commissions, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions by such Person of Equity Interests or
other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the closing date for the sale and original issuance
of the Senior Notes.
"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 on the Senior
Notes 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 the interest that was due for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Majestic Star Casino" means, prior to Delivery of the Permanent Vessel,
the Chartered Vessel and the Gaming Complex proposed to be constructed at
Buffington Harbor in Gary, Indiana with respect to which the Company has applied
for a Gaming License, and after Delivery of the Permanent Vessel, the Permanent
Vessel and such Gaming Complex.
"Manager of the Company" means BDI.
"Minimum Facilities" means, with respect to the Majestic Star Casino at
least 800 operating slot machines, 40 operating table games, 2,300 usable
parking spaces, adequate access to the local highway system and all banking,
coin, token, security and other ancillary equipment and facilities necessary to
operate the Majestic Star Casino on a 20 hour per day, seven days a week basis.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities or the extinguishment of any Indebtedness of such
Person or any of its Subsidiaries, and (ii) excluding any extraordinary gain
(but not loss), together with any related provision for taxes on such
extraordinary gain (but not loss).
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company in respect of any Event of Loss, including, without limitation,
insurance proceeds, condemnation awards or damages awarded by any judgment, net
of the direct costs in recovery of such proceeds (including, without limitation,
legal, accounting, appraisal and insurance adjuster fees) and any taxes paid or
payable as a result thereof.
"Net Proceeds" means the aggregate cash proceeds received by the Company in
respect of any Asset Sale, net of the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and
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investment banking or brokerage fees, and sales commissions), and any relocation
expenses incurred as a result thereof, taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions), amounts
required to be applied to the repayment of Indebtedness secured by a Lien (other
than the Senior Notes) on the asset or assets that are the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets.
"Note to Principal Member" means the outstanding Indebtedness of the
Company due and owing to BDI pursuant to the promissory note dated March 31,
1996 in the aggregate principal amount of $10,759,355, plus any interest accrued
thereon.
"Obligations" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the Offering of the Senior Notes by the Company.
"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.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Manager 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 Manager of the Company that meets the
requirements of Section 11.05 of the Indenture.
"Operating" means, with respect to the Majestic Star Casino, the first time
that (i) all material Gaming Licenses have been granted and have not been
revoked or suspended, (ii) all Liens (other than Liens created by the Collateral
Documents or Permitted Liens) related to the construction of the Majestic Star
Casino have been paid or, if payment is not yet due or if such payment is
contested in good faith by the Company, sufficient funds remain in the Cash
Collateral Accounts to discharge such Liens, (iii) the Construction Supervisor
of the Majestic Star Casino shall have delivered a certificate to the Trustee
certifying that the Majestic Star Casino is complete in all material respects in
accordance with the Plans and Specifications therefor and all applicable
building laws, ordinances and regulations, (iv) the Majestic Star Casino is in a
condition (including installation of furnishings, fixtures and equipment) to
receive guests in the ordinary course of business and (v) gaming and other
operations in accordance with applicable law are open to the general public and
are being conducted at the Majestic Star Casino with respect to at least the
Minimum Facilities for such Majestic Star Casino.
"Operating Expenses" means all operating expenses of the Company with
respect to any commercial enterprise, determined in accordance with GAAP
consistently applied. Operating Expenses shall include, without limitations: (i)
all accrued interest expense (whether or not distributed and whether or not
deposited) with respect to the Senior Notes; (ii) depreciation and amortization;
and (iii) any bond premium under the Indenture.
"Payment Default" means any failure to pay when due, any principal, premium
or interest on the Senior Notes, whether at stated maturity, upon acceleration,
upon redemption or in connection with a Repurchase Offer, in each case, without
giving effect to any grace period.
"Permanent Vessel" means the riverboat gaming vessel to be constructed by
the Company subsequent to the Offering and containing at least 36,000 square
feet of gaming space.
"Permitted Investments" means (a) any Investments in Cash Equivalents, (b)
other Investments in any Person that do not exceed in the aggregate $50,000 at
any time outstanding and (c) any Investments in a tax-exempt money market mutual
fund meeting the requirements of 17 C.F.R. sec.270.2a-7.
"Permitted Liens" means: (a) existing Liens; (b) Liens created by the
Senior Notes, the Indenture and the Collateral Documents; (c) Liens incurred in
the ordinary course of business including Liens incurred pursuant to clause (d)
of the covenant entitled "Limitations on Incurrence of Indebtedness and Issuance
of Disqualified Capital Stock"; (d) Liens securing Acquired Indebtedness;
provided that such Liens (i) are not
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incurred in connection with, or in contemplation of the acquisition of the
property or assets acquired and (ii) do not extend to or cover any property or
assets of the Company or any Subsidiary other than the property or assets so
acquired; (e) Liens to secure certain Indebtedness that is otherwise permitted
under the Indenture and that are used to finance the cost of the property
subject thereto; provided that (i) any such Lien is created solely for the
purpose of securing Indebtedness representing, or incurred to finance, refinance
or refund, the cost (including sales and excise taxes, installation and delivery
charges and other direct costs of, and other direct expenses paid or charged in
connection with, such purchase or construction) of the property subject thereto,
(ii) such Lien does not extend to or cover any other property other than such
item of property and any improvements on such item; (f) additional Liens on
assets and properties of the Company securing indebtedness permitted to be
incurred pursuant to the Indenture in an amount not to exceed $6.0 million; (g)
Liens in favor of the Trustee; (h) any replacement, extension or renewal, in
whole or in part, of any Lien described in the foregoing clauses provided that
to the extent any such clause limits the amount secured or the assets subject to
such Liens, no extension or renewal shall increase the amount or the assets
subject to such Liens; (i) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business or in the construction
of the Majestic Star Casino and which obligations are not expressly prohibited
by the Indenture; (j)(1) Liens for taxes, assessments or governmental charges or
claims or (2) statutory Liens of landlords, and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's, crew wages, maritime or
other similar Liens arising in the ordinary course of business or in the
construction of the Majestic Star Casino, in the case of (1) and (2), with
respect to amounts that either (A) are not yet delinquent or (B) are being
contested in good faith by appropriate proceedings as to which appropriate
reserves or other provisions have been made in accordance with GAAP; and (k)
easements, rights of way, navigational servitudes, restrictions, minor defects
or irregularities in title and other similar charges or encumbrances which do
not interfere in any material respect with the ordinary conduct of business of
the Company and its Subsidiaries.
"Permitted Proceed Uses" means (i) to fund improvements to the Majestic
Star Casino in accordance with the Construction Budget, (ii) to fund capital
contributions to the BHR Joint Venture in accordance with the BHR Operating
Agreement, (iii) to fund the construction of the Permanent Vessel, (iv)
repayment of the Note to Principal Member, (v) to fund the Interest Reserve
Account in an amount equal to the first two scheduled Fixed Interest payments
with respect to the Senior Notes, and (vi) to fund certain other disbursements
as permitted by the Cash Collateral and Disbursement Agreement, each to be
disbursed in accordance with the Cash Collateral and Disbursement Agreement.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Plans and Specifications" means all drawings, plans and specifications
prepared by or on behalf of the Company, as the same may be amended or
supplemented from time to time, and, if required, submitted to and approved by
the appropriate Gaming Regulatory Authorities, which describe and show the
Majestic Star Casino and the labor and materials necessary for construction or
purchase thereof.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution or winding up.
"Principal Business" means the casino gaming business and any activity or
business incidental, directly related or similar thereto, or any business or
activity that is a reasonable extension, development or expansion thereof or
ancillary thereto, including any hotel, entertainment, recreation or other
activity or business designed to promote, market, support, develop, construct or
enhance the casino gaming business operated by the Company and any business or
activity that is required to meet the commitments of the Company pursuant to the
Development Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Issuance Date, by and among the Company and the other party or
parties named on the signature pages thereof, substantially in the form
delivered to the Trustee on the Issuance Date.
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"Restricted Investment" means any Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means that certain Security Agreement to encumber
certain assets of the Company in favor of the Trustee, for the ratable benefit
of the Holders of the Senior Notes, as the same may be amended in accordance
with the terms thereof and the Indenture.
"Semiannual Period" means each period that begins on October 1 and ends on
the next succeeding March 31 or each period that begins on April 1 and ends on
the next succeeding September 30.
"Senior Exchange Notes" means Indebtedness of the Company identical in all
material respects to the Senior Notes that are issued by the Company in exchange
for the Senior Notes pursuant to the Exchange Offer.
"Senior Notes" means, prior to the consummation of the Exchange Offer, the
Company's 12 3/4% Senior Secured Notes Due 2003 issued in accordance with the
Indenture, and after the consummation of the Exchange Offer, the Senior Notes
(if any) and the Senior Exchange Notes, in each case as amended or modified from
time to time in accordance with the terms thereof and the Indenture, issued
under the Indenture.
"Subordinated Indebtedness" means any other Indebtedness of the Company
which is expressly by its terms subordinated in right of payment of the Senior
Notes.
"Subsidiary" means (i) any instrumentality or subdivision or subunit of the
Company that has a separate legal existence or status or whose property and
assets would not be bound by the terms of the Indenture or the Collateral
Documents or (ii) with respect to any Person, any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of such Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. sec.sec.
77aaa-77bbbb) as in effect on the date on which the Indenture is qualified under
the TIA.
"Trademark Security Agreement" means that certain Trademark Security
Agreement executed by the Company to encumber the "Majestic Star Casino" service
mark in favor of the Trustee, for the ratable benefit of the Holders of the
Senior Notes, as the same may be amended in accordance with the terms thereof
and the Indenture.
"Transfer Restricted Securities" means securities that bear or are required
to bear the legend set forth in Section 2.06 of the Indenture.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of the Indenture and thereafter
means the successor serving thereunder.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Disqualified Capital Stock, as the case may be, 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 or liquidation preference, as
applicable, of such Indebtedness or Disqualified Capital Stock, as the case may
be.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
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FORM, DENOMINATION AND BOOK-ENTRY PROCEDURES
The Senior Notes issued to "qualified institutional buyers" were initially
represented by a single global note in fully registered form (the "Global Senior
Note"). The Senior Exchange Notes exchanged for Senior Notes represented by the
Global Senior Note will be represented by a single global note in fully
registered form (the "Global Senior Exchange Note"), unless the beneficial
holders thereof request otherwise. The Global Senior Exchange Note will be
deposited upon issuance with DTC and registered in the name of DTC or a nominee
of DTC (the "Global Note Registered Owner"). Except as set forth below, the
Global Senior Exchange Note may be transferred, in whole and not in part, only
to another nominee of DTC or to a successor of DTC or its nominee.
DTC has advised the Company 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 Initial Purchaser), 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 interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established
by it, (i) upon deposit of the Global Senior Exchange Note, DTC will credit the
accounts of Participants designated by the beneficial holders thereof with
portions of the principal amount of the Global Senior Exchange Note and (ii)
ownership of such interests in the Global New Note 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 interests in
the Global Senior Exchange Note). 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 the Global Senior Exchange Note will be
limited to that extent.
Except as described below, owners of interests in the Global Senior
Exchange Note will not have Senior Exchange Notes registered in their names,
will not receive physical delivery of Senior Exchange Notes in definitive 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, and interest
on any Senior Exchange Notes registered in the name of the Global Note
Registered Owner will be payable by the Trustee to the Global Note Registered
Owner in its capacity as the registered holder under the Indenture. Under the
terms of the Indenture, the Company and the Trustee will treat the persons in
whose names the Senior Exchange Notes, including the Global Senior Exchange
Note, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company, the Trustee nor any agent of the Company or the Trustee has or will
have any responsibility or liability for (i) any aspect of DTC's records or any
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Senior Exchange Note, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's records
relating to the beneficial ownership interests in the Global Senior Exchange
Note or (ii) any other matter relating to the actions and practices of DTC or
any of its Participants. DTC has advised the Company that its current practice,
upon receipt of any payment in respect of securities such as the Senior 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 principal amount of beneficial
interests 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
Senior Exchange Notes will be governed by standing
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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 the Company. Neither the Company nor the Trustee will be
liable for any delay by DTC or any of its Participants in identifying the
beneficial owners of the Senior Exchange Notes, and the Company and the Trustee
may conclusively rely on and will be protected in relying on instructions from
the Global Note Registered Owner for all purposes.
The Global Senior Exchange Note is exchangeable for definitive Senior
Exchange Notes (i) if DTC notifies the Company that it is unwilling or unable to
continue as depository of the Global Senior Exchange Note and the Company
thereupon fails to appoint a successor depository, (ii) if the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
the Senior Exchange Notes in definitive registered form, (iii) if there shall
have occurred and be continuing an Event of Default or any event which after
notice or lapse of time or both would be an Event of Default with respect to the
Senior Exchange Notes or (iv) as provided in the following paragraph. Such
definitive Senior Exchange Notes shall be registered in the names of the owners
of the beneficial interests in the Global Senior Exchange Note as provided by
the Participants. Senior Exchange Notes issued in definitive form will be in
fully registered form, without coupons, in integral multiples of $1,000. Upon
issuance of Senior Exchange Notes in definitive form, the Trustee is required to
register the Senior Exchange Notes in the name of, and cause the Senior Exchange
Notes to be delivered to, the person or persons (or the nominee thereof)
identified as the beneficial owners as DTC shall direct.
A Senior Exchange Note in definitive form may be issued upon the request of
any Person having a beneficial interest in the Global Senior Exchange Note, or
upon the resale, pledge or other transfer of any Senior Exchange Note or
interest therein to any person or entity that is not a "qualified institutional
buyer" or that does not participate in DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
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SENIOR NOTES -- REGISTRATION RIGHTS
The Company and the Initial Purchaser entered into a registration rights
agreement on May 22, 1996 (the "Registration Rights Agreement") pursuant to
which the Company agreed, for the benefit of the holders of the Senior Notes,
that the Company would, at its cost, (i) within 45 days after the date of
original issue of the Senior Notes file a registration statement in accordance
with the Securities Act (an "Exchange Offer Registration Statement") with the
Commission with respect to a registered offer to exchange the Senior Notes for
the Senior Exchange Notes, which would have terms substantially identical in all
material respects to the Senior Notes and (ii) use their reasonable best efforts
to cause such Exchange Offer Registration Statement to be declared effective
under the Securities Act at the earliest possible time, but in no event later
than 120 days after filing with the Commission. Upon such Exchange Offer
Registration Statement being declared effective, the Company will offer to
holders of Senior Notes who are able to make certain representations an
opportunity to exchange properly tendered Senior Notes for Senior Exchange
Notes. The Company will keep the Exchange Offer open for not less than 20
business days (or longer if required by applicable law) after the date notice of
such Exchange Offer is mailed to the holders of the Senior Notes. For each
Senior Note surrendered to the Company, pursuant to such Exchange Offer, a
holder of the Senior Note will receive a Senior Exchange Note having a principal
amount at maturity equal to that of the surrendered Senior Note. Under existing
Commission interpretations, the Senior Exchange Notes would generally be freely
transferable after the Exchange Offer without further registration under the
Securities Act; provided, that in the case of broker-dealers, a prospectus
meeting the requirements of the Securities Act must be delivered as required.
The Company has agreed for a period of at least 365 days after consummation of
the Exchange Offer to make available a prospectus meeting the requirements of
the Securities Act to any broker-dealer for use in connection with any resale of
any such Senior Exchange Notes so acquired. A broker-dealer that delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act, and will be
bound by the provisions of the Registration Rights Agreement (including, without
limitation, certain indemnification and contribution rights and obligations).
Each holder of Senior Notes who wishes to exchange such Senior Notes for
Senior Exchange Notes in the Exchange Offer is required to make certain
representations including representations that (i) any Senior Exchange Notes to
be received by it will be acquired in the ordinary course of its business, (ii)
it is not engaged in, and does not intend to engage in and has no arrangement
with any person to participate in the distribution of the Senior Exchange Notes
and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities
Act, of the Company.
In the event that applicable interpretations of the staff of the Commission
do not permit the Company to effect such an Exchange Offer, or if for any other
reason the Exchange Offer is not consummated because the Exchange Offer is not
permitted by applicable law or Commission policy or any holder of Senior Notes
of $500,000 or more notifies the Company within 20 business days following the
consummation of the Exchange Offer that such holder is prohibited by law or
Commission policy from participating in the Exchange Offer or subject to certain
other restrictions, the Company will, at its own expense, use its reasonable
best efforts to (i) as promptly as practicable, file a shelf registration
statement covering resales of the Senior Notes (a "Shelf Registration
Statement"), (ii) cause such Shelf Registration Statement to be declared
effective under the Securities Act and (iii) keep effective such Shelf
Registration Statement until the earlier of three years following the date of
original issue and such time as all of the Senior Notes have been sold
thereunder or otherwise cease to be a Transfer Restricted Security (as defined
in the Registration Rights Agreement). The Company will, in the event a Shelf
Registration Statement is required to be filed by it, provide to each holder of
a Senior Note copies of the prospectus which is a part of such Shelf
Registration Statement, notify each such holder of Senior Notes when such Shelf
Registration Statement for the Senior Notes has become effective and take
certain other actions as are required to permit unrestricted resales of the
Senior Notes. A holder of Senior Notes who sells such Notes pursuant to the
Shelf Registration Statement generally would be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with
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such sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such a holder (including certain
indemnification and contribution rights and obligations).
Although the Company has filed this registration statement to satisfy the
obligations described above, there can be no assurance that such registration
statement will become effective. If (i) the Company fails to file any of the
Registration Statements required by the Registration Rights Agreement on or
before the date specified for such filing in the Registration Rights Agreement,
(ii) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), (iii) the Company fails to consummate the Exchange
Offer within 30 business days after the Effectiveness Target Date with respect
to the Exchange Offer Registration Statement or (iv) the Shelf Registration
Statement or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of Senior
Notes during the periods specified in the Registration Rights Agreement without
being succeeded immediately by a post effective amendment to such Registration
Statement that cures such failure and that is itself declared effective within a
five business day period (each such event referred to in clauses (i) through
(ii) above, a "Registration Default"), the Company will pay Liquidated Damages
to each holder of Senior Notes, with respect to the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to $.05 per week per $1,000 principal amount of Senior Notes held by such
holder. Upon a Registration Default, Liquidated Damages will accrue at the rate
specified above until such Registration Default is cured and the amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Senior Notes with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.35 per $1,000 principal amount of Senior Notes
(regardless of whether one or more than one Registration Default is
outstanding). All accrued Liquidated Damages will be paid by the Company on each
interest payment date to the holders of the Senior Notes by wire transfer of
immediately available funds or by mailing checks to their registered addresses
if no such accounts have been specified.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which will be available upon request to the Company.
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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following summary of the material Federal income tax consequences
expected to result to holders whose Senior Notes are exchanged for Senior
Exchange Notes in the Exchange Offer is based upon the current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
regulations, judicial and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service (the "IRS") will not take a contrary
view, and no ruling from the IRS has been or will be sought. Legislative,
judicial or administrative changes or interpretations may occur that could alter
or modify the statements and conclusions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to the Senior Note holders participating in the Exchange Offer.
This summary is for general information only and does not purport to
address all of the possible Federal income tax consequences or any state, local
or foreign tax consequences of the acquisition, ownership and disposition of the
Senior Notes or the Senior Exchange Notes or the Exchange Offer. It is limited
to investors who will hold the Senior Notes and the Senior Exchange Notes as
capital assets and does not address the federal income tax consequences that may
be relevant to particular investors in light of their unique circumstances or to
certain types of investors (such as dealers in securities; insurance companies;
financial institutions; foreign corporations, partnerships, trusts, nonresident
individuals; and tax-exempt entities) who may be subject to special treatment
under Federal income tax laws.
EXCHANGE OF SENIOR NOTES FOR SENIOR EXCHANGE NOTES
The exchange of Senior Exchange Notes for Senior Notes pursuant to the
Exchange Offer should not be treated as a taxable event for Federal income tax
purposes because the Senior Exchange Notes should not be considered to differ
materially in kind or extent from the Senior Notes. Rather, the Senior Exchange
Notes received by a holder of the Senior Notes should be treated as a
continuation of the Senior Notes in the hands of such holder. As a result, no
Federal income tax consequences should result to holders exchanging Senior Notes
for Senior Exchange Notes.
PURCHASERS OF SENIOR NOTES AT OTHER THAN ORIGINAL ISSUANCE PRICE
The foregoing does not address special rules which may affect the treatment
of purchasers that acquired Senior Notes other than at par, including those
provisions of the Internal Revenue Code relating to the treatment of "market
discount," and "amortizable bond premium." Any such purchaser should consult its
tax advisor as to the consequences to him of the acquisition, ownership, and
disposition of Senior Notes.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER OF THE
SENIOR NOTES AND EACH PROSPECTIVE HOLDER OF THE SENIOR EXCHANGE NOTES SHOULD
CONSULT ITS TAX ADVISOR AS TO HOW ITS OWN PARTICULAR TAX SITUATION MIGHT BE
AFFECTED BY THE EXCHANGE OF THE SENIOR NOTES FOR THE SENIOR EXCHANGE NOTES AND
THE POTENTIAL TAX CONSEQUENCES TO IT OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF THE SENIOR NOTES AND THE SENIOR EXCHANGE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
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PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Company believes that Senior Exchange Notes issued
pursuant to the Exchange Offer in exchange for the Senior Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
holder which is (i) an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act, (ii) a broker-dealer who acquired Notes directly from
the Company or (iii) broker-dealers who acquired Notes as a result of
market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Senior Exchange Notes are acquired in the ordinary course of such
holders' business, and such holders are not engaged in, and do not intend to
engage in, and have no arrangement or understanding with any person to
participate in, a distribution of such Senior Exchange Notes; provided that
broker-dealers ("Participating Broker-Dealers") receiving Senior Exchange Notes
in the Exchange Offer will be subject to a prospectus delivery requirement with
respect to resales of such Senior Exchange Notes. To date, the Staff has taken
the position that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to transactions involving an exchange of
securities such as the exchange pursuant to the Exchange Offer (other than a
resale of an unsold allotment from the sale of the Senior Notes to the Initial
Purchaser) with the Prospectus contained in the Registration Statement. Pursuant
to the Registration Rights Agreement, the Company has agreed to permit
Participating Broker-Dealers and other persons, if any, subject to similar
prospectus delivery requirements to use this Prospectus in connection with the
resale of such Senior Exchange Notes. The Company has agreed that, for a period
of 365 days after the Expiration Date, it will make this Prospectus, and any
amendment or supplement to this Prospectus, available to any broker-dealer that
requests such documents in the Letter of Transmittal.
Each holder of the Senior Notes who wishes to exchange its Senior Notes for
Senior Exchange Notes in the Exchange Offer will be required to make certain
representations to the Company as set forth in "The Exchange Offer -- Terms and
Conditions of the Letter of Transmittal." In addition, each holder who is a
broker-dealer and who receives Senior Exchange Notes for its own account in
exchange for Senior Notes that were acquired by it as a result of market-making
activities or other trading activities, will be required to acknowledge that it
will deliver a prospectus in connection with any resale by it of such Senior
Exchange Notes.
The Company will not receive any proceeds from any sale of Senior Exchange
Notes by broker-dealers. Senior 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 Senior 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 a 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 and/or the purchasers of any such Senior
Exchange Notes. Any broker-dealer that resells Senior 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 Senior Exchange Notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any such resale of Senior Exchange Notes and any commissions
received by any 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.
The Company has agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concession of any brokers or dealers and will
indemnify holders of the Senior Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities act, as set
forth in the Registration Rights Agreement.
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LEGAL MATTERS
Certain legal matters relating to this Exchange Offer will be passed upon
for the Company by Dykema Gossett PLLC, Detroit, Michigan.
EXPERTS
The financial statements of the Company included in this Registration
Statement have been audited by Coopers & Lybrand L.L.P., independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
The audited financial statements of Buffington Harbor Riverboats, L.L.C.
included in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
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THE MAJESTIC STAR CASINO, LLC
(A COMPANY IN THE DEVELOPMENT STAGE)
REPORT ON AUDIT OF FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND FOR THE PERIOD
DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995
F-1
<PAGE> 95
INDEX TO AUDITED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CONTENTS PAGES
Report of Independent Accountants.................................................... F-3
Financial Statements:
Balance Sheet as of December 31, 1995.............................................. F-4
Statement of Operations for the period December 8, 1993 (date of inception) to
December 31, 1995............................................................... F-4
Statement of Changes in Members' Equity for the period December 8, 1993 (date of
inception) to December 31, 1995................................................. F-4
Statement of Cash Flows for the period December 8, 1993 (date of inception) to
December 31, 1995............................................................... F-5
Notes to Financial Statements for the period December 8, 1993 (date of inception)
to December 31, 1995............................................................ F-6
</TABLE>
F-2
<PAGE> 96
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
The Majestic Star Casino, LLC:
We have audited the accompanying balance sheet of The Majestic Star Casino,
LLC (a company in the development stage) as of December 31, 1995 and the related
statements of operations, changes in members' equity, and cash flows for the
period December 8, 1993 (date of inception) to December 31, 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Majestic Star Casino,
LLC as of December 31, 1995, and the results of its operations and its cash
flows for the period December 8, 1993 (date of inception) to December 31, 1995
in conformity with generally accepted accounting principles.
/c/o/Coopers & Lybrand, L.L.P.
Detroit, Michigan
January 31, 1996
F-3
<PAGE> 97
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
BALANCE SHEET AS OF DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents...................................................... $ 8,446,389
Investment in Buffington Harbor Riverboats, L.L.C. ............................ 21,823,018
Property and equipment......................................................... 74,846
Organization costs............................................................. 141,241
Deposits....................................................................... 250,000
Deferred expenses.............................................................. 4,392,729
-----------
Total assets................................................................. $35,128,223
===========
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Accounts payable............................................................... $ 119,573
-----------
Members' equity................................................................ 35,008,650
-----------
Total liabilities and members' equity........................................ $35,128,223
===========
</TABLE>
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995
<TABLE>
<S> <C>
Revenues:
Interest income, net......................................................... $ 249,295
-----------
Net income................................................................ $ 249,295
===========
</TABLE>
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
MEMBERS'
EQUITY
-----------
<S> <C>
Contributions made in 1995..................................................... $32,547,090
Non cash assets contributed.................................................... 2,212,265
Net income..................................................................... 249,295
-----------
Balance, December 31, 1995..................................................... $35,008,650
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 98
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
STATEMENT OF CASH FLOWS
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income.................................................................. $ 249,295
Adjustments to reconcile net income to net cash used in operating
activities:
Changes in assets and liabilities:
Increase in assets:
Deposits............................................................ (250,000)
Organization costs.................................................. (141,241)
Deferred expenses................................................... (2,585,863)
Increase in liabilities:
Accounts payable.................................................... 119,573
------------
Net cash used in operating activities.................................... (2,608,236)
------------
Cash flows from investing activities:
Purchase of property and equipment.......................................... (74,846)
Investment in Buffington Harbor Riverboats, L.L.C........................... (21,417,619)
------------
Net cash used in investing activities.................................... (21,492,465)
------------
Cash flows from financing activities:
Contributions made in 1995.................................................. 32,547,090
------------
Net cash provided by financing activities................................ 32,547,090
------------
Net increase in cash.......................................................... 8,446,389
Cash, beginning of period..................................................... --
------------
Cash, end of period........................................................... $ 8,446,389
============
Supplemental noncash operating and financing activities of the Company include
the following:
Deferred expenses of $918,286 were paid by a former member on behalf of the
Company and $888,580 were contributed to the Company by a current member.
Investment in Buffington Harbor Riverboats, L.L.C. of $87,167 was paid by a
former member on behalf of the Company and $318,232 was contributed to
the Company by a current member.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 99
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995
1. ORGANIZATION:
The Majestic Star Casino, LLC (formerly Barden-Davis Casino, LLC and
formerly Barden PRC-Gary, LLC), (the "Company") was formed on December 8, 1993
as an Indiana limited liability company. The purpose of the Company is to
establish, develop and operate a riverboat/dockside casino gaming operation and
other ancillary activities in the City of Gary, Indiana (the "City"), in
accordance with the terms and conditions of a certificate of suitability (the
"Certificate") obtained from the Indiana Gaming Commission (the "Commission").
The Company is currently in the planning and evaluation phases of building
a riverboat casino.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Cash and Cash Equivalents: The Company considers all highly liquid debt
investments purchased with an original maturity of three months or less to be
cash equivalents.
b. Property and Equipment: Property and equipment are stated at cost.
Depreciation has been deferred until the assets are placed in service.
Depreciation will be computed on the straight-line method and charged to
operations over the estimated useful lives of the related assets.
c. Organization Costs: Organization costs incurred in connection with the
formation of the limited liability company have been deferred until operations
commence and will be amortized over a period of five years.
d. Deferred Expenses: Deferred expenses incurred in connection with the
development and opening of the riverboat casino have been deferred until
operations commence and will be amortized over a period of five years. As of
December 31, 1995, deferred expenses consist primarily of $2,750,000 of economic
development incentive paid to the City and $1,642,729 for preopening and
licensing costs.
e. Federal Income Taxes: The Company has elected status as an LLC under the
Internal Revenue Code. Under this election, income of the Company is taxed
directly to the members and accordingly, there is no provision for federal
income taxes.
3. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<S> <C>
Furniture and equipment............................................. $ 5,459
Computer equipment.................................................. 10,559
Construction in progress............................................ 58,828
------
$74,846
======
</TABLE>
4. CERTIFICATE OF SUITABILITY:
On December 9, 1994, the Commission awarded the Company one of two
Certificates for a riverboat owner's license for a riverboat casino to be docked
in Gary, Indiana. The Certificate was valid for 180 days with renewal options.
The Certificate has been consistently renewed by the Commission and currently
expires on June 28, 1996. In accordance with the terms of the Certificate and as
determined by the Commission, the Company must comply with certain statutory and
regulatory requirements and other conditions. Upon satisfactory fulfillment of
such requirements and conditions outlined by the Commission, the Company will
receive a permanent riverboat owner's license.
The second Certificate was issued to Trump Indiana, Inc. ("Trump"). The
Company and Trump have committed to a joint development and operation of a
docking location for which the entities will conduct separate but coordinated
riverboat gaming operations in the City.
F-6
<PAGE> 100
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995
5. CITY OF GARY INDIANA DEVELOPMENT OBLIGATION:
On September 7, 1995, the Company and the City entered into a Binding
Memorandum of Understanding for the purpose of summarizing procedures regarding
the acquisition and development of a certain parcel of land in accordance with
the Certificate. A similar memorandum was entered into between Trump and the
City. The Company paid the City $250,000 under the terms of this memorandum.
On September 29, 1995, the Company, Trump and the City entered into an
agreement which modified certain terms and conditions of each individual
entity's Memorandum of Understanding with the City. In accordance with this
agreement, the Company paid the City $2,500,000 and agreed to pay an additional
$2,500,000 on or before the ninetieth day following commencement of gaming
operations by the Company.
6. BUFFINGTON HARBOR RIVERBOATS, L.L.C.:
On October 31, 1995, the Company and Trump entered into the First Amended
and Restated Operating Agreement of Buffington Harbor Riverboats, L.L.C. ("BHR")
for the purpose of acquiring and developing certain facilities for the gaming
operations on 88 acres of land in the City ("BHR property"). The BHR is
responsible for the management, development and operation of the BHR property,
the joint docking location for each entity's gaming vessel.
As outlined in the agreement, each member is required to make certain
capital contributions. The Company's total capital contribution to the BHR as of
December 31, 1995 was $21,823,018. The total investment in the BHR is estimated
to be approximately $40 million.
As of December 31, 1995, BHR (a company in the development stage) had total
assets of $47,231,902 which included cash and cash equivalents of $14,056,869,
land and construction in progress of $32,603,593 and deferred preopening costs
of $571,880. BHR had liabilities of $3,512,085 and members' equity totaling
$43,719,817. Members' equity represents contributions of $21,823,018, each from
the Company and Trump plus retained earnings of $73,781.
7. CHARTER AGREEMENT:
On August 17, 1995, the Company entered into a Charter Agreement
("Agreement") with New Yorker Acquisition Corporation ("Owner") and President
Casinos, Inc. for the purpose of leasing the Owner's casino gaming vessel
together with all improvements, furniture, fixtures and equipment. The Agreement
is effective upon the completion of certain renovations to the vessel and
expires on the fifth anniversary from the date of commencement, with early
termination options. Under the terms of the Agreement, the Company will pay the
Owner monthly, $125,000, subject to adjustments after the first 24 months. The
monthly rate for the final three years will be negotiated based on market rates.
The Company will be responsible for certain refurbishing and other expenses to
operate the vessel during the Agreement period as defined in the Agreement.
As defined by the Agreement, the Company has placed a security deposit in
escrow with a financial institution. As of December 31, 1995, the amount in
escrow was $250,000 plus accrued interest. The security deposit is refundable
pursuant to the terms of the Escrow Agreement.
F-7
<PAGE> 101
(This page intentionally left blank)
F-8
<PAGE> 102
THE MAJESTIC STAR CASINO, LLC
(A COMPANY IN THE DEVELOPMENT STAGE)
FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995 AND FOR THE QUARTER ENDED MARCH 31,
1996 AND THE PERIOD
DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995 AND MARCH 31, 1996
F-9
<PAGE> 103
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CONTENTS PAGES
Financial Statements:
Balance Sheets as of March 31, 1996 and December 31, 1995.......................... F-11
Statements of Operations for the quarter ended March 31, 1996 and the period
December 8, 1993 (date of inception) to December 31, 1995 and March 31, 1996.... F-11
Statements of Changes in Members' Equity for the quarter ended March 31, 1996 and
the period December 8, 1993 (date of inception) to December 31, 1995 and March
31, 1996........................................................................ F-12
Statements of Cash Flows for the quarter ended March 31, 1996 and the period
December 8, 1993 (date of inception) to December 31, 1995 and March 31, 1996.... F-13
Notes to Financial Statements for the quarter ended March 31, 1996................. F-14
</TABLE>
F-10
<PAGE> 104
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
BALANCE SHEETS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARCH 31,
1996 DECEMBER 31,
(unaudited) 1995
----------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents.......................................... $ 4,090,611 $ 8,446,389
Investment in Buffington Harbor Riverboats, L.L.C. ................ 22,323,018 21,823,018
Property and equipment............................................. 3,438,005 74,846
Organization costs................................................. 141,241 141,241
Deposits........................................................... 250,000 250,000
Deferred Costs..................................................... 5,161,864 4,392,729
----------- ------------
Total assets................................................ $35,404,739 $ 35,128,223
=========== ============
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Accounts payable.............................................. $ 306,567 $ 119,573
Note to Principal Member...................................... 10,759,355 --
----------- ------------
Total liabilities........................................... 11,065,922 119,573
----------- ------------
Members' equity:
Members' equity............................................... 24,000,000 34,759,355
Retained earnings............................................. 338,817 249,295
----------- ------------
Total members' equity....................................... 24,338,817 35,008,650
----------- ------------
Total liabilities and members' equity....................... $35,404,739 $ 35,128,223
=========== ============
</TABLE>
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996 AND
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995 AND
MARCH 31, 1996
<TABLE>
<CAPTION>
DECEMBER 8, 1993 DECEMBER 8, 1993
MARCH 31, (INCEPTION) TO (INCEPTION) TO
1996 DECEMBER 31, MARCH 31, 1996
(unaudited) 1995 (unaudited)
----------- ----------------- ----------------
<S> <C> <C> <C>
REVENUES:
Interest income, net............................. $89,522 $ 249,295 $338,817
------- --------- --------
Net income.................................. $89,522 $ 249,295 $338,817
======= ========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE> 105
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
FOR THE QUARTER ENDED MARCH 31, 1996 AND
FOR THE PERIOD DECEMBER 8, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1995 AND
MARCH 31, 1996
<TABLE>
<S> <C>
Contributions made in 1995................................................... $ 32,547,090
Non cash assets contributed.................................................. 2,212,265
Net income................................................................... 249,295
------------
Balance, December 31, 1995................................................... 35,008,650
Reclassification of member contribution to Note to Principal Member.......... (10,759,355)
Net income................................................................... 89,522
------------
Balance, March 31, 1996 (unaudited).......................................... $ 24,338,817
============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 8, 1993
(INCEPTION) TO
MARCH 31, 1996
(unaudited)
----------------
<S> <C>
Contributions made in 1995................................................... $ 32,547,090
Non cash assets contributed.................................................. 2,212,265
Reclassification of member contribution to Note to Principal Member.......... (10,759,355)
Net income................................................................... 338,817
------------
Balance, March 31, 1996...................................................... $ 24,338,817
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE> 106
MAJESTIC STAR CASINO, LLC
(a company in the development stage)
STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1996 AND FOR THE PERIOD DECEMBER 8, 1993
(DATE OF INCEPTION) TO DECEMBER 31, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
DECEMBER 8,
DECEMBER 8, 1995
1993 (INCEPTION)
(INCEPTION) TO
MARCH 31, TO MARCH 31,
1996 DECEMBER 31, 1996
(unaudited) 1995 (unaudited)
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income....................................... $ 89,522 $ 249,295 $ 338,817
Adjustments to reconcile net income to net cash
used in operating activities:
Change in assets and liabilities:
Increase in assets:
Deposits................................. (250,000) (250,000)
Organization costs....................... (141,241) (141,241)
Deferred expenses........................ (769,135) (2,585,863) (3,354,998)
Increase in liabilities:
Accounts payable......................... 186,994 119,573 306,567
------------ ------------ ------------
Net cash used in operating activities.............. (492,619) (2,608,236) (3,100,855)
Cash flows from investing activities:
Purchase of property and equipment............... (3,363,159) (74,846) (3,438,005)
Investment in Buffington Harbor Riverboats,
L.L.C. ....................................... (500,000) (21,417,619) (21,917,619)
------------ ------------ ------------
Net cash used in investing activities.............. (3,863,159) (21,492,465) (25,355,624)
------------ ------------ ------------
Cash flows from financing activities --
Contributions.................................... 32,547,090 32,547,090 32,547,090
Net increase (decrease) in cash.................... (4,355,778) 8,446,389 4,090,611
Cash, beginning of period.......................... 8,446,389 0 0
------------ ------------ ------------
Cash, end of period................................ $ 4,090,611 $ 8,446,389 $ 4,090,611
============ ============ ============
</TABLE>
Supplemental noncash operating and financing activities of the Company
include the following:
In 1995, deferred expenses of $918,286 were paid by a former member on
behalf of the Company and $888,580 were contributed to the Company by a
current member.
In 1995, investment in Buffington Harbor Riverboats, L.L.C. of $87,167 was
paid by a former member on behalf of the Company and $318,232 was
contributed to the Company by a current member.
On March 31, 1996, contributions totaling $10,759,355 were reclassified
from Members' Equity to Note to Principal Member.
The accompanying notes are an integral part of the financial statements.
F-13
<PAGE> 107
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1996
1. ORGANIZATION:
The Majestic Star Casino, LLC (formerly Barden-Davis Casino, LLC and
formerly Barden PRC-Gary, LLC), (the "Company") was formed on December 8, 1993
as an Indiana limited liability company. The purpose of the Company is to
establish, develop and operate a riverboat/dockside casino gaming operation and
other ancillary activities in the City of Gary, Indiana (the "City"), in
accordance with the terms and conditions of a certificate of suitability (the
"Certificate") obtained from the Indiana Gaming Commission (the "Commission).
The Company is currently in the planning and evaluation phases of building
a riverboat casino.
2. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES:
a. Cash and Cash Equivalents: The Company considers all highly liquid debt
investments purchased with an original maturity of three months or less to be
cash equivalents.
b. Property and Equipment: Property and equipment are stated at cost.
Depreciation has been deferred until the assets are placed in service.
Depreciation will be computed on the straight-line method and charged to
operations over the estimated useful lives of the related assets.
c. Organization Costs: Organization costs incurred in connection with the
formation of the limited liability company have been deferred until operations
commence and will be amortized over a period of five years.
d. Deferred Expenses: Deferred expenses incurred in connection with the
development and opening of the riverboat casino have been deferred until
operations commence and will be amortized over a period of five years. As of
March 31, 1996, deferred expenses consist primarily of $2,750,000 of economic
development incentive paid to the City and $2,411,864 for preopening and
licensing costs.
e. Federal Income Taxes: The Company has elected status as an LLC under the
Internal Revenue Code. Under this election, income of the Company is taxed
directly to the members and accordingly, there is no provision for federal
income taxes.
3. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<S> <C>
Furniture and equipment......................................... $ 22,543
Computer equipment.............................................. 76,717
Slot machines................................................... 328,778
Table games..................................................... 253,756
Management information systems.................................. 88,708
Cage and count rooms............................................ 478,118
Surveillance and security....................................... 330,392
Other equipment................................................. 29,197
Construction in progress........................................ 1,829,796
----------
$3,438,005
=========
</TABLE>
F-14
<PAGE> 108
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE QUARTER ENDED MARCH 31, 1996
4. MEMBERS' EQUITY:
On March 31, 1996, capital contributions totaling $10,759,355 were
reclassified from Members' Equity to Note to Principal Member. The note is
payable to a member of the Company.
5. CERTIFICATE OF SUITABILITY:
On December 9, 1994, the Commission awarded the Company one of two
Certificates for a riverboat owner's license for a riverboat casino to be docked
in Gary, Indiana. The Certificate was valid for 180 days with renewal options.
The Certificate has been consistently renewed by the Commission and currently
expires on June 28, 1996. In accordance with the terms of the Certificate and as
determined by the Commission, the Company must comply with certain statutory and
regulatory requirements and other conditions. Upon satisfactory fulfillment of
such requirements and conditions outlined by the Commission, the Company will
receive a permanent riverboat owner's license.
The second Certificate was issued to Trump Indiana, Inc. ("Trump"). The
Company and Trump have committed to a joint development and operation of a
docking location for which the entities will conduct separate but coordinated
riverboat gaming operations in the City.
6. CITY OF GARY INDIANA DEVELOPMENT OBLIGATION:
On September 7, 1995, the Company and the City entered into a Binding
Memorandum of Understanding for the purpose of summarizing procedures regarding
the acquisition and development of a certain parcel of land in accordance with
the Certificate. A similar memorandum was entered into between Trump and the
City. The Company paid the City $250,000 under the terms of this memorandum.
On September 29, 1995, the Company, Trump and the City entered into an
agreement which modified certain terms and conditions of each individual
entity's Memorandum of Understanding with the City. In accordance with this
agreement, the Company paid the City $2,500,000 and agreed to pay an additional
$2,500,000 on or before the ninetieth day following commencement of gaming
operations by the Company.
As of March 26, 1996, the City and the Company entered into a development
agreement. The development agreement supersedes the September 7, 1995 Memorandum
of Understanding between the City and the Company. The development agreement
requires the Company, among other things, (1) to invest $116 million in various
on-site and off-site improvements, (2) pay the City an amount equal to 3% of the
Company's adjusted gross receipts, as defined by the Riverboat Gambling Act and
(3) pay a default payment in the amount of damages for failure to complete
certain on-site developments, which amount is capped at $12 million.
7. BUFFINGTON HARBOR RIVERBOATS, L.L.C.:
On October 31, 1995, the Company and Trump entered into the First Amended
and Restated Operating Agreement of Buffington Harbor Riverboats, L.L.C. ("BHR")
for the purpose of acquiring and developing certain facilities for the gaming
operations of 88 acres of land in the City ("BHR property"). The BHR is
responsible for the management, development and operation of the BHR property,
the joint docking location for each entity's gaming vessel.
As outlined in the agreement, each member is required to make certain
capital contributions, which are estimated to be approximately $40 million.
F-15
<PAGE> 109
THE MAJESTIC STAR CASINO, LLC
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE QUARTER ENDED MARCH 31, 1996
As of December 31, 1995 and March 31, 1996, respectively, BHR (a company in
the development stage) had total assets of $47,231,902 and $49,955,792 which
included cash and cash equivalents of $14,056,869 and $961,149, land and
construction in progress of $32,603,593 and $48,137,483 and deferred preopening
costs of $571,440 and $857,160. BHR had liabilities of $3,512,085 and $5,147,551
and members' equity totaling $43,719,817 and $44,808,241. Members' equity
represents contributions of $21,823,018 and $22,323,018 each from the Company
and Trump plus retained earnings of $73,781 and $162,205.
8. CHARTER AGREEMENT:
On August 17, 1995, the Company entered into a Charter Agreement
("Agreement") with New Yorker Acquisition Corporation ("Owner") and President
Casinos, Inc. for the purpose of leasing the Owner's casino gaming vessel
together with all improvements, furniture, fixtures and equipment. The Agreement
is effective upon the completion of certain renovations to the vessel and
expires on the fifth anniversary from the date of commencement, with early
termination options. Under the terms of the Agreement, the Company will pay the
Owner monthly, $125,000, subject to adjustments after the first 24 months. The
monthly rate for the final three years will be negotiated based on market rates.
The Company will be responsible for certain refurbishing and other expenses to
operate the vessel during the Agreement period as defined in this Agreement.
As defined by the Agreement, the Company has placed a security deposit in
escrow with a financial institution. As of March 31, 1996, the amount in escrow
was $250,000 plus accrued interest. The security deposit is refundable pursuant
to the terms of the Escrow Agreement.
9. PRIVATE PLACEMENT OFFERING:
The Company is currently considering issuing $105 million in senior secured
notes in a private placement offering.
F-16
<PAGE> 110
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM SEPTEMBER 27, 1995
THROUGH DECEMBER 31, 1995
F-17
<PAGE> 111
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Members of
Buffington Harbor Riverboats, L.L.C.:
We have audited the accompanying balance sheet of Buffington Harbor
Riverboats, L.L.C. (a Delaware limited liability company) as of December 31,
1995, and the related statements of operations, members' capital and cash flows
for the period from September 27, 1995 through December 31, 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Buffington Harbor
Riverboats, L.L.C. as of December 31, 1995, and the results of its operations
and its cash flows for the period from September 27, 1995 through December 31,
1995 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Roseland, New Jersey
March 29, 1996
F-18
<PAGE> 112
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 2)........................................... $14,056,869
Property, Plant and Equipment (Notes 2 and 3).................................. 32,603,593
Deferred Preopening Costs (Note 4)............................................. 571,440
-----------
Total assets.............................................................. $47,231,902
===========
LIABILITIES AND MEMBERS' CAPITAL
Current Liabilities:
Accounts payable............................................................. $ 2,940,645
Deferred Rent Expense (Note 4)................................................. 571,440
Commitments and Contingencies (Note 4)
Members' Capital............................................................... 43,719,817
-----------
Total liabilities and members' capital.................................... $47,231,902
===========
</TABLE>
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 27, 1995 THROUGH DECEMBER 31, 1995
<TABLE>
<S> <C>
Income:
Interest income.............................................................. $ 73,781
-----------
Net income................................................................ $ 73,781
===========
</TABLE>
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
STATEMENT OF MEMBERS' CAPITAL
FOR THE PERIOD FROM SEPTEMBER 27, 1995 THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
MEMBER NET
CONTRIBUTIONS INCOME TOTAL
------------- ------- -----------
<S> <C> <C> <C>
Balance, September 27, 1995............................... $ 0 $ 0 $ 0
Capital contribution made by Trump Indiana, Inc......... 21,823,018 0 21,823,018
Capital contribution made by The Majestic Star Casino,
LLC.................................................. 21,823,018 0 21,823,018
Net income.............................................. 0 73,781 73,781
----------- ------- -----------
Balance, December 31, 1995................................ $ 43,646,036 $73,781 $43,719,817
=========== ======= ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
financial statement.
F-19
<PAGE> 113
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM SEPTEMBER 27, 1995 THROUGH DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income.................................................................. $ 73,781
Cash flows from investing activities:
Purchases of property, plant and equipment.................................. (29,662,948)
------------
Cash flows from financing activities:
Contributed capital --
Trump Indiana, Inc. ..................................................... 21,823,018
The Majestic Star Casino, LLC............................................ 21,823,018
------------
Net cash flow provided by financing activities......................... 43,646,036
------------
Net increase in cash and cash equivalents.............................. 14,056,869
Cash and cash equivalents at September 27, 1995............................... 0
------------
Cash and cash equivalents at December 31, 1995................................ $ 14,056,869
============
Supplemental disclosure of noncash investing activities:
Purchase of property, plant and equipment................................... $ 2,940,645
============
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
F-20
<PAGE> 114
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION AND OPERATIONS:
Trump Indiana, Inc. ("Trump Indiana") and The Majestic Star Casino, LLC
("Barden"), the two holders of certificates of suitability for the Gary, Indiana
riverboat casinos formed Buffington Harbor Riverboats, L.L.C. ("BHR") on
September 27, 1995 and have entered into an agreement (the "BHR Agreement")
relative to the joint ownership, development and operation of all common land
based and waterside operations in support of the Trump Indiana and Barden
riverboat casinos. Under the BHR Agreement, BHR acquired property and is
constructing common roadways, utilities and other infrastructure improvements on
BHR's property. Trump and Barden shall contribute one-half of the costs required
pursuant to the BHR Agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Property, Plant and Equipment -- Property, plant and equipment is carried
at cost. Substantially all of the property and equipment represent construction
in progress; accordingly no depreciation has been recorded for the period from
September 27, 1995 through December 31, 1995.
Income Taxes -- BHR makes no provision for income taxes since taxable
income is allocated to the members for inclusion in their respective income tax
returns.
Long-Lived Assets -- During 1995, BHR adopted the provisions of Statement
of Financial Accounting Standard No. 121, "Accounting for the Impairment of
Long-Lived Assets" ("SFAS No. 121"). SFAS No. 121 requires, among other things,
that an entity review its long-lived and certain related intangibles for
impairment whenever changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable. Impairment of long-lived assets
exists, if, at a minimum the future expected cash flows (undiscounted and
without interest charges) from an entity's operations are less than the carrying
value of these assets. As a result of its review, BHR does not believe that any
impairment exists in the recoverability of its long-lived assets.
Statement of Cash Flows -- For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less at the time of acquisition to be cash equivalents.
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is comprised of the following as of December
31, 1995 --
<TABLE>
<S> <C>
Land and land improvements....................................... $22,988,872
Building......................................................... 1,435,684
Harbor improvements.............................................. 8,179,037
-----------
Total property, plant and equipment......................... $32,603,593
===========
</TABLE>
F-21
<PAGE> 115
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1995
4. COMMITMENTS AND CONTINGENCIES
Indiana Gaming Regulations -- The ownership and operation of riverboat
gaming operations in Indiana are subject to strict state regulation under the
Riverboat Gambling Act ("Act") and the administrative rules promulgated
thereunder. The Indiana Gaming Commission ("IGC") is empowered to administer,
regulate and enforce the system of riverboat gaming established under the Act
and has jurisdiction and supervision over all riverboat gaming operations in
Indiana, as well as all persons on riverboats where gaming operations are
conducted. The IGC is empowered to regulate a wide variety of gaming and
nongaming related activities, including the licensing of suppliers to, and
employees at, riverboat gaming operations and to approve the form of ownership
and financial structure of not only riverboat owner and supplier licensees, but
also their entity qualifiers and intermediary and holding companies. Indiana is
a new jurisdiction and the emerging regulatory framework is not yet complete.
The IGC has adopted certain final rules and has published others in proposed or
draft form which are proceeding through the review and final adoption process.
The IGC also has indicated its intent to publish additional proposed rules in
the future. The IGC has broad rulemaking power, and it is impossible to predict
what effect, if any, the amendment of existing rules or the finalization of
currently new rules might have on the operations of BHR, Trump Indiana and
Barden.
Leases -- BHR has entered into, or has been assigned, a number of
agreements with Lehigh Portland Cement Co. ("Lehigh Cement"), whereby BHR, among
other things, has leased certain property which is integral to the gaming
operations of Trump Indiana and Barden. The lease places certain restrictions on
the use of the harbor by the riverboats of Barden and Trump Indiana and requires
the reimbursement of certain costs which may be incurred by Lehigh Cement. The
lease is rent free through December 29, 1997 and subject to obtaining the
necessary regulatory permits, the lease will be extended beyond December 29,
1997 until December 31, 2005. BHR will be required to pay $125,000 per month
beginning in January, 1998. Minimum rental commitments under noncancelable
operating leases are as follows --
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 --
- ---------------------------
<S> <C>
1996........................................................ $ 0
1997........................................................ 0
1998........................................................ 1,500,000
1999........................................................ 1,500,000
2000........................................................ 1,500,000
Thereafter.................................................. 7,500,000
-----------
$12,000,000
===========
</TABLE>
BHR has entered into a number of contracts for improvements to be made to
its property at Buffington Harbor.
F-22
<PAGE> 116
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES OTHER THAN THE SECURITIES
TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary........................ 4
Risk Factors.............................. 11
The Exchange Offer........................ 19
Use of Proceeds........................... 27
Capitalization............................ 28
Selected Financial Data................... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 30
Business.................................. 32
Material Agreements....................... 39
Regulation................................ 43
Management................................ 45
Certain Transactions...................... 47
Principal Security Holders................ 48
Description of Senior Notes............... 49
Senior Notes -- Registration Rights....... 86
Material Federal Income Tax
Considerations.......................... 88
Plan of Distribution...................... 89
Legal Matters............................. 90
Experts................................... 90
Index to Audited Financial Statements..... F-2
Index to Financial Statements............. F-10
Financial Statements of Buffington Harbor
Riverboats, L.L.C. ..................... F-17
</TABLE>
THE MAJESTIC STAR
CASINO, LLC
$105,000,000
12 3/4% SENIOR EXCHANGE SECURED NOTES
DUE 2003
WITH CONTINGENT INTEREST
PROSPECTUS
June , 1996
<PAGE> 117
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Majestic Star Casino, LLC (the "Company") is an Indiana limited
liability company and is managed by Barden Development, Inc. (the "Manager").
Section 5 of the Company's Third Amended and Restated Operating Agreement (the
"Operating Agreement") provides that the Manager will not be liable to the
Company or to any member for any loss or damage arising out of the management of
the Company, or any other activities in its capacity as a Manager, unless caused
by the Manager's (a) receipt of a financial benefit to which it is not entitled,
(b) assenting to a distribution in violation of the Operating Agreement or the
Indiana Limited Liability Company Act, (c) commission of a crime, or (d)
material violations of the Operating Agreement that are both knowing and
willful. Further, the Operating Agreement generally provides that the Company
will indemnify the Manager (and its agents and employees) from all loss or
damage incurred by them in connection with the Company, unless such loss or
damage is caused by such person's gross negligence or bad faith. (To the extent
that such indemnification provisions purport to include indemnification for
liabilities arising under the securities laws, in the opinion of the Securities
and Exchange Commission, such indemnification is contrary to public policy and
is therefore unenforceable.)
The Manager of the Company is an Indiana corporation. Chapter 37 of the
Indiana Business Corporation Law (the "IBCL") sets forth the conditions and
limitations governing the indemnification of officers, directors and other
persons.
The IBCL provides for indemnification of directors and officers acting in
good faith and in a manner they reasonably believe to be in or not opposed to
the best interest of the Company (and, with respect to a criminal proceeding, if
they have reasonable cause to believe their conduct to be lawful or they have no
reasonable cause to believe their conduct to be unlawful) against liability
incurred in a proceeding in which they are a party. The IBCL requires
indemnification for reasonable expenses to the extent that a director or officer
is successful, on the merits or otherwise, in defending against any such
proceeding and otherwise requires in general that the indemnification provided
for above to be made on a determination (a) by a majority vote of a quorum of
the board of directors who were not parties to such proceeding, (b) if such
quorum cannot be obtained, by the majority vote of a committee duly designated
by the board of directors (in which designation directors who are parties may
participate), consisting solely of 2 or more directors not at the time parties
to the proceeding, (c) by legal counsel selected by the board of directors or
such committee, (d) by the full board, if a quorum cannot be obtained or a
committee cannot be designated or (e) by the shareholders, but shares owned by
or voted under the control of directors who are at the time parties to the
proceeding may not be voted on such determination. In certain circumstances, the
IBCL further permits advances to cover such expenses before a final
determination that indemnification is permissible, upon receipt of a written
affirmation by the directors or officers of their good faith belief that they
have met the applicable standard of conduct set forth in the IBCL, receipt of a
written undertaking by or on behalf of the directors or officers to repay such
amounts unless it shall ultimately be determined that they are entitled to
indemnification and a determination that the facts then known to those making
the advance would not preclude indemnification.
Indemnification under the IBCL is not exclusive of other rights to
indemnification to which a person may be entitled under a company's articles of
incorporation, bylaws, or a contractual agreement. Reference is made to Article
IX of the Company's Amended Bylaws which provide for indemnification of
directors and officers of the Company and authorizes the board of directors to
extend such indemnity to others to the full extent permitted by the aforesaid
sections of the IBCL.
The IBCL permits the Company to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions with
the Company whether or not such liabilities would be within the indemnification
provisions of the IBCL. The Company carries no such insurance.
II-1
<PAGE> 118
ITEM 21. EXHIBITS
A list of exhibits included as part of this Registration Statement is set
forth in the Exhibit Index which immediately precedes such exhibits and is
incorporated herein by reference.
ITEM 22. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes as follows:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(b) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment 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.
(c) To remove from registration by means of a post-effective amendment any of
the foregoing securities being registered which remain unsold at the termination
of the offering.
2. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
a Registrant of expenses incurred or paid by a director, officer or
controlling person of such Registrant 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
Registrant against which such claim is asserted will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
3. The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility under subsection (a) of section 310 of
the Trust Indenture Act ("Act") in accordance with the rules and regulations
prescribed by the Commission under section 305(b)(2) of the Act.
4. 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 this Registration Statement when it became effective.
II-2
<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit, State of Michigan on the 20th day of June,
1996.
THE MAJESTIC STAR CASINO, LLC
BY: BARDEN DEVELOPMENT, INC.,
THE MANAGER
By: /s/ DON H. BARDEN
------------------------------------
Don H. Barden, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
SIGNATURE DATE
- --------------------------------------------- --------------
/s/ DON H. BARDEN June 20, 1996
- ---------------------------------------------
Don H. Barden
President and Chief Executive Officer
(Principal Executive Officer)
/s/ MICHAEL E. KELLY June 20, 1996
- ---------------------------------------------
Michael E. Kelly
Chief Financial Officer
(Principal Financial and Accounting
Officer)
II-3
<PAGE> 120
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS PAGE NO.
- ----------- ------------------------------------------------------------------------ --------
<S> <C> <C>
3.1* Amended and Restated Articles of Organization of The Majestic Star
Casino, LLC.
3.2* Third Amended and Restated Operating Agreement of The Majestic Star
Casino, LLC dated as of March 29, 1996.
4.1* Purchase Agreement, dated as of May 22, 1996, by and between The
Majestic Star Casino, LLC and Wasserstein Perella Securities, Inc.
4.2* Indenture, dated as of May 22, 1996, by and between The Majestic Star
Casino, LLC, IBJ Schroder Bank & Trust Company, as Trustee, with respect
to the Senior Secured Notes due 2003 with Contingent Interest (the
"Senior Notes") and the holder of Senior Exchange Secured Notes due May
15, 2003 with Contingent Interest (the "Senior Exchange Notes").
4.3* Form of Senior Note and Senior Exchange Note (included in Exhibit 4.2).
4.4* Security Agreement, dated as of May 22, 1996, from The Majestic Star
Casino, LLC, in favor of the holders of Senior Notes and the Senior
Exchange Notes.
4.5* Pledge Agreement, dated as of May 22, 1996, from Barden Development,
Inc. in favor of the holders of Senior Notes and the Senior Exchange
Notes.
4.6* Pledge Agreement, dated as of May 22, 1996, from the Company in favor of
the holders of Senior Notes and the Senior Exchange Notes.
4.7* Trademark Security Agreement, dated as of May 22, 1996, from the Company
in favor of the holders of the Senior Notes and the Senior Exchange
Notes.
4.8* Cash Collateral Agreement, dated as of May 22, 1996, by and among the
Company, the Trustee and NBD Bank.
4.9* Registration Rights Agreement, dated as of May 22, 1996, by and between
The Majestic Star Casino, LLC, and Wasserstein Perella Securities, Inc.
5.1* Opinion of Dykema Gossett PLLC regarding legality.
10.1* Letter Agreement dated as of April 25, 1996 by and between the Company
and Don H. Barden.
10.2* Employment Agreement effective as of December 4, 1995 by and between the
Company, and Thomas C. Bonner.
10.3* Employment Agreement effective as of December 4, 1995 by and between the
Company, and Paul W. Sykes.
10.4* Employment Agreement effective as of April 22, 1996, by and between the
Company and Michael E. Kelly.
10.5* Berthing Agreement, dated as of April 23, 1996, between the Company and
Buffington Harbor Riverboats, L.L.C.
10.6* First Amended and Restated Operating Agreement of Buffington Harbor
Riverboats, L.L.C., made as of October 31, 1995, by and between Trump
Indiana, Inc. and the Company, as amended to date.
10.7* Charter Agreement, dated August 17, 1995, by and among New Yorker
Acquisition Corporation, the Company and President Casinos, Inc, as
amended to date.
10.8* Development Agreement, dated March 26, 1996, by and between the Company
and the City of Gary, Indiana.
</TABLE>
II-4
<PAGE> 121
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS PAGE NO.
- ----------- ------------------------------------------------------------------------ --------
<S> <C> <C>
10.9** Harbor Lease Agreement, dated June 29, 1995, by and between Trump
Indiana, Inc. and Lehigh Portland Cement Company, as assigned by Trump
Indiana, Inc. to Buffington Harbor Riverboats, L.L.C pursuant to the
Assignment Agreement dated as of October 31, 1995, by and between Trump
Indiana, Inc. and Buffington Harbor Riverboats, L.L.C.
10.10* Equipment Financing Agreement dated April 5, 1996 by and between the
Company and International Game Technology.
10.11* Master Surety Agreement by and between Company and United States
Fidelity and Guaranty Company.
10.12* Standby Letter of Credit Application and Reimbursement and Security
Agreement.
23.1* Consent of Dykema Gossett PLLC (included in Exhibit 5.1).
23.2* Consent of Coopers & Lybrand, LLP.
23.3* Consent of Arthur Andersen, LLP.
25.1* Form T-1 Statement of Eligibility and Qualifications under the Trust
Indenture Act of 1939 of IBJ Schroder Bank & Trust Company.
99.1* Form of Letter of Transmittal with respect to the Exchange Offer.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Instruction to Registered Holder and/or Book Entry Transfer Participant
from Beneficial Owner.
99.4** Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
99.5** Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees.
99.6* Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
</TABLE>
- -------------------------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules
All Schedules are omitted as the required information is inapplicable or
not present in amounts sufficient to require submission of the schedule, or
because the information is presented in the consolidated financial statements or
related notes.
II-5
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF ORGANIZATION
THE UNDERSIGNED, acting pursuant to the Indiana Business Flexibility Act (the
"Act"), and with specific reference to Section 23-18-2-6 of the Act, hereby:
(a) executes this certificate to amend and restate the articles of
organization of the Indiana limited liability company currently known as The
Majestic Star Casino, LLC, and formerly known as Barden-Davis Casino, LLC and,
before that, known as Barden PRC-Gary, LLC (the "Company"),
(b) submits these amended and restated articles of organization for filing
with the Indiana Secretary of State (the "Secretary"),
(c) advises the Secretary that the original articles of organization of
the Company were filed on December 8, 1993, that the Secretary designated such
filing as 1993120420, that the original articles of organization were since
restated pursuant to a filing with the Secretary on August 8, 1995, and that
the first restated articles of organization were again restated pursuant to a
filing with the Secretary on January 30, 1996, and
(d) states that, upon their filing with the Secretary, the articles of
organization of the Company shall thereafter read in their entirety as follows:
1. Name. The Company's name shall be The Majestic Star Casino, LLC.
2. Office/Agent. Until changed in accordance with the Act, (a) the
Company's registered office shall be One North Capitol Avenue,
Indianapolis, Indiana 46204, and (b) the Company's registered agent at such
office shall be CT Corporation System.
3. Duration. The Company shall continue in existence until December 31,
2043, unless earlier dissolved pursuant to the Act or the terms of that
certain Amended and Restated Operating Agreement, executed by the members
of the Company (the "Members"), dated July 31, 1995, and thereafter amended
and restated October 1, 1995, and thereafter again amended and restated as
of the date of the filing of this instrument with the Secretary, as such
agreement may hereafter be further amended from time to time (the
"Operating Agreement").
<PAGE> 2
4. Purpose. The purpose of the Company shall be to establish, develop and
operate a riverboat/dockside casino gaming operation in Gary, Indiana, and
all businesses and other activities related or ancillary thereto, in
accordance with the terms and conditions of the gaming license to be
obtained from the Indiana Gaming Commission (the "Commission") for that
purpose.
<PAGE> 3
5. Transfer. Members may sell, assign, pledge or otherwise transfer or
encumber all or any part of their respective interests in the Company only in
accordance with, and only subject to the restrictions recited in, (a) the
Riverboat Gambling Act (the "Statute"), (b) the rules of the Commission (the
"Rules"), and (c) the Operating Agreement. Accordingly, without limiting the
broad scope of the foregoing restriction:
The Company shall not issue 5% or greater of any voting securities or
other voting interests to a person except in accordance with the Statute
and the Rules.
The issuance of any voting securities or other voting interests in
violation of the Statute or Rules shall be void and such voting
securities or other voting interests shall be deemed not to be issued and
outstanding, until (a) the Company shall cease to be subject to the
jurisdiction of the Commission, or (b) the Commission shall, by
affirmative action, validate said issuance or waive any defect in
issuance.
No voting securities or other voting interests issued by the Company, and
no interest, claim or charge of 5% or greater therein or thereto shall be
transferred in any manner whatsoever except in accordance with the
Statute and the Rules. Any transfer in violation thereof shall be void
until (a) the Company shall cease to be subject to the jurisdiction of
the Commission, or (b) the Commission shall, by affirmative action,
validate said transfer or waive any defect in said transfer.
If the Commission at any time determines that a holder of voting
securities or other voting interests of the Company shall be denied the
application for transfer, then the issuer of such voting securities or
other voting interests may, within 30 days after the denial, purchase
such voting securities or other voting interests of such denied applicant
at the lesser of (a) the market price of the ownership interest, or (b)
the price at which the applicant purchased the ownership interest; unless
such voting securities or other voting interests are transferred to a
suitable person (as determined by the Commission) within 30 days after
the denial of the application for transfer of ownership.
Until any such voting securities or other voting interests are owned by
persons found by the Commission to be suitable to own them, the following
restrictions shall apply:
<PAGE> 4
(a) The Company shall not be required or permitted to pay any
dividend or interest with regard to the voting securities or other
voting interests.
(b) The holder of such voting securities or other voting interests
shall not be entitled to vote on any matter as
<PAGE> 5
the holder of the voting securities or other voting interests, and
such voting securities or other voting interests shall not for any
purposes be included in the voting securities or other voting
interests of the Company entitled to vote.
(c) The Company shall not pay any remuneration in any form to the
holder of the voting securities or other voting interests as provided
in the foregoing recitation.
6. Management. The Company shall be managed by one or persons serving as
managers pursuant to Subsection (b) of Section 23-18-4-1 of the Act,
consistent with the various delegations of authority conferred, and the
various restrictions on the exercise of authority imposed, by the Act, by the
Rules and by the Operating Agreement, and the Company shall be subject to
Subsection (b) of Section 23-18-4-1 of the Act.
THESE AMENDED AND RESTATED ARTICLES OF ORGANIZATION are executed on this 25th
day of March, 1996, by one of the Members, Barden Development, Inc., an Indiana
corporation whose address is 504 Broadway, Suite 1025, Gary, Indiana 46402,
pursuant to authority conferred upon such signatory by all of the Members.
BARDEN DEVELOPMENT, INC.
By: Don H. Barden
------------------------
Don H. Barden, President
<PAGE> 1
EXHIBIT 3.2
THE MAJESTIC STAR CASINO, LLC
Third Amended And Restated Operating Agreement
THIS AMENDED AND RESTATED OPERATING AGREEMENT (this "Agreement") is executed as
of the 29th day of March, 1996, by BARDEN DEVELOPMENT, INC., an Indiana
corporation having an address at One Buffington Harbor Drive, Gary, Indiana
46406 ("Barden"), GARY RIVERBOAT GAMING, LLC, an Indiana limited liability
company having an address at One Buffington Harbor Drive, Gary, Indiana 46406
(the "Investor LLC"), and ANY PERSONS HEREAFTER EXECUTING THIS AGREEMENT
PURSUANT TO SECTION 11.2 OR 12.1 HEREOF and having the names and addresses
recited in Exhibit A hereto.
WHEREAS, pursuant to the filing on December 8, 1993 of Articles of Organization
with the Indiana Secretary of State (the "Secretary"), President Riverboat
Casino-Gary, Inc., a Delaware corporation ("PRC"), Barden (under its former
name "Barden Enterprises, Inc."), and the Investor LLC formed a limited
liability company, pursuant to the Indiana Business Flexibility Act of 1993
(the "Act").
WHEREAS, the limited liability company so formed (the "Company") was at such
time (a) known as Barden PRC-Gary, LLC, (b) constituted as a manager-managed
limited liability company for purposes of Section 23-18-4-1(b) of the Act, and
(c) governed by an Operating Agreement dated December 8, 1993.
WHEREAS, on June 30, 1995, the Investor LLC, Barden and the Company were
petitioned by PRC to permit the withdrawal of PRC from the Company, both as a
member and as manager, upon specified terms.
WHEREAS, such consent was granted, and, in contemplation of PRC's withdrawal
from the Company, Barden and the Investor LLC, constituting the sole members of
the Company, executed, for filing with the Secretary, an amended and restated
version of the Company's articles of organization, to, inter alia, (a) change
the name of the Company to Barden-Davis Casino, LLC, (b) remove any references
to PRC, and (c) convert the Company to a member-managed limited liability
company for purposes of Section 23-18-4-1(b) of the Act.
WHEREAS, Davis Gaming Company, a Delaware corporation ("Davis"), requested the
opportunity to invest in the Company, as a member and as a creditor, on those
terms negotiated by Davis, Barden, the Investor LLC and the Company.
WHEREAS, pursuant to the granting of Davis' request, and in contemplation of
the continuing and anticipated operations of the Company, Barden, Davis and the
Investor LLC amended and restated the operating agreement of the Company as of
July 31, 1995.
WHEREAS, the Company has retired all of Davis' interest in the Company (whether
as member or creditor), pursuant to an amendment, dated September 30, 1995, to
the aforementioned restated operating agreement of July 31, 1995.
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WHEREAS, by execution of a restated operating agreement on October 1, 1995,
Barden and the Investor LLC further amended the operating agreement of July 31,
1995.
WHEREAS, on January 31, 1996, Barden and the Investor LLC filed an amendment
and restatement of the Company's articles of organization to, inter alia,
change the name of the Company to "The Majestic Star Casino, LLC".
WHEREAS, on March 29, 1996, Barden and the Investor LLC filed a further
amendment and restatement of the Company's articles of organization to, inter
alia, thereafter constitute the Company as a manager-managed limited liability
company.
WHEREAS, by execution of this Third Amended and Restated Operating Agreement,
Barden, the Investor LLC and any Participants wish to amend and restate the
restated operating agreement of October 1, 1995, such that from and after the
date hereof, and unless and until further amended, this Agreement, alone and in
its entirety, shall serve as the operating agreement of the Company for
purposes of Section 23-18-1-16 of the Act.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
Definitions
1.1 Specific Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Act" has the meaning ascribed to it in the recitals hereto.
"Agreement" means this Third Amended And Restated Operating Agreement and
any amendments adopted in accordance with this Agreement and the Act.
"Articles" means the Articles of Organization of the Company filed with
the Secretary, as amended and in effect from time to time.
"Authorizations" means the License and any other licenses, permits,
approvals and consents necessary or required for the Company to operate the
Gary Facility.
"Affiliate" means any person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control
with, a Member.
"Barden" means Barden Development, Inc., and/or, upon any action taken
pursuant to Section 11.2, any successor-in-interest to it.
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"BMI" means Barden Management Inc., an Indiana corporation, and/or, upon
any action taken pursuant to Section 11.2, any successor-in-interest to it.
"Book Value" means, with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except (a) the initial Book Value of any asset
contributed to the Company shall be its gross fair market value at the time of
contribution, (b) if the Company so elects, the Book Value of all Company
assets shall be adjusted to equal their gross fair market values at the times
required by Code Section 704(b), and (c) if the Book Value of an asset has been
determined pursuant to clause (a) or (b), such Book Value shall thereafter be
adjusted in the same manner as would the asset's adjusted basis for tax
purposes except that depreciation deductions shall be computed as specifically
provided.
"Certificate of Suitability" means the Certificate of Suitability issued
to the Company on December 27, 1994 by the Commission, as may be extended from
time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of future laws.
"Commission" means the Indiana Gaming Commission, organized pursuant to
the Indiana Riverboat Gambling Act, as constituted from time to time or any
successor thereto.
"Company" has the meaning ascribed to it in the recitals hereto.
"Consensus" means each and every incumbent Member, acting in accordance
with Article VI.
"Contributions" means the amount of cash or the fair market value of other
property contributed to the Company or required to be contributed to the
Company.
"Debt Memorandum" means the Offering Memorandum, dated on or about May of
1996, relating to the Debt Offering, and including any supplement thereto as
may be approved by the Manager.
"Debt Offering" means the issuance by the Company of Initial Notes having
a stated principal amount of $105,000,000, more or less, pursuant to which the
subscribing eligible offeree (or offerees) shall lend funds to the Company.
"Depreciation" means for each Fiscal Year of the Company or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable under the Code with respect to an asset for such year or
other period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount that bears the same ratio to such
beginning Book Value as the federal income tax depreciation,
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amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Book Value using any reasonable method selected by the Manager.
"Development Entity" means Buffington Harbor Riverboats, LLC, a Delaware
limited liability company that owns certain real estate and related assets in
the vicinity of the Gary Facility.
"Distribution" means the amount of cash, and the fair market value of
property, distributed to a Member by the Company, to the extent such
distribution is not (a) compensation for services, (b) payment for purchased or
leased property, or (c) repayment of (or interest on) sums expressly designated
as loans.
"Equity Memorandum" means a Subscription Agreement and Offering
Memorandum, each pertaining to the Equity Offering, as may hereafter be
structured in accordance with Section 12.1, including supplements thereto, all
as may be approved by the Manager.
"Equity Offering" means any future issuance, by the Company, of equity
interest in the Company, pursuant to which subscribing eligible offerees shall
become Members.
"Exchange" means the transaction in which the Company shall (a) permit the
holder or holders of the Initial Notes to exchange, on a dollar-for-dollar
basis, outstanding Initial Notes for Registered Notes, and (b) retire the
Initial Notes returned to the Company upon such exchange.
"Fiscal Year" means the calendar year.
"Gary Facility" means the riverboat and/or dockside gaming facility in
Gary, Indiana for which the Company has received a Certificate of Suitability
from the Commission and all businesses and other activities reasonably related
or ancillary thereto owned or operated by the Company.
"Initial Notes" means the secured promissory notes to be issued by the
Company pursuant to a private placement consistent with the Debt Memorandum,
bearing set and contingent interest, and having such other attributes as are
consistent with Section 4.4.
"Interim Funds" means those sums, if any, paid over to the Company by
Barden that, pursuant Section 4.3, qualify, and are designated by Barden, as
loans.
"Investor LLC" means Gary Riverboat Gaming, LLC, and/or, upon any action
taken pursuant to Section 11.2, any successor-in-interest to it.
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"License" means a license granted by the Commission to operate a riverboat
or any other casino gaming facility within the State of Indiana.
"Majority Interest" means any group of Members that includes all, but not
fewer than all, of the following subsets:
(a) those Members holding Percentages aggregating over 50%, and
(b) those Members holding over 50% of all Company capital (as determined by
reference to the Members' respective then-current capital accounts).
"Manager" means Barden (or any successor to it pursuant to Section 5.1)
serving as manager of the Company in accordance with Section 23-18-4-1(b) of
the Act.
"Members" means Barden, the Investor LLC and any Participants, if any,
and, in the event of appropriate action taken to grant a person membership in
the Company pursuant to Section 11.2 or Section 12.1, any successor-in-interest
to any or all of them.
"Notes" means the Initial Notes and/or Registered Notes.
"Participants" means any persons hereafter admitted to the Company as
members thereof, pursuant to their making of a Contribution in accordance with
Subsection 4.1(b) or Section 12.1, and, upon any action taken to grant a person
membership in the Company pursuant to Section 11.2, any successor-in-interest
to any or all of them.
Percentage" means the percentage, as reflected on Schedule A hereto, in
which a Member shares Profits, Losses and Distributions, as determined from
time to time consistent with Section 4.6, Section 11.2 and/or Article XII.
"Profits and Losses" means taxable profits or losses of the Company for
each Fiscal Year (or other period) determined in accordance with Code Section
703 (provided that (a) any tax-exempt income shall be added to such taxable
income or loss, (b) any Code Section 705(a)(2)(B) expenditures shall be
subtracted from such taxable income or loss, (c) if the Book Value of any asset
is adjusted consistent with Code Section 704(b), such adjustment shall
constitute gain or loss from the disposition of such asset, (d) any gain or
loss from any disposition of Company property shall be computed by reference to
the Book Value of such property rather than its adjusted tax basis, (e) in lieu
of depreciation or amortization, Depreciation shall be taken into account, and
(f) any items that are specially allocated pursuant to Section 7.12 shall not
be taken into account in computing Profits or Losses).
"Property" means the real and personal property, whether or not tangible,
owned from time to time by the Company.
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"Registered Notes" means promissory notes that are to be (a) issued by the
Company after issuance of the Initial Notes, (b) substantially identical to the
then-outstanding Initial Notes in terms and amount, and (c) distributed in an
offering registered under (i) the Securities Act of 1933, and (ii) the
securities laws of selected political subdivisions of the United States.
"Regulation" means the treasury regulations promulgated under the Code.
"Regulatory Authority" means the Commission and any other government,
quasi-governmental or other regulatory authority with jurisdiction, control or
authority over the granting and policing of any one or more of the
Authorizations.
"Reserves" means the amount, if any, set aside from time to time in the
discretion of the Manager to provide for the Company's actual or potential
business and capital needs.
"Residual Proceeds" means the net proceeds resulting from (a) the sale,
exchange or other event resulting in the voluntary or involuntary disposition
of all or substantially all of the Property, (b) the refinancing of any
mortgage loan, and/or (c) the release of cash (pursuant to the discretionary
decision of the Manager) from any previously established contingency allowance
that was originally funded with Residual Proceeds.
"Revenues" means annual net revenues (as opposed to net income) of the
Company, as determined in accordance with generally accepted accounting
principles and consistent with the Company's accounting methods as selected by
the Company's outside accountants.
"Secretary" has the meaning ascribed to it in the recitals hereto.
"Trustee" means the then-incumbent trustee acting as the designated
fiduciary for the holders of the Notes.
1.2 General Provisions.
(a) Certain technical terms used in Section 7.12 shall have the respective
meanings ascribed to them in Section 7.13.
(b) Accounting terms not defined in this Agreement, and accounting terms
partly defined to the extent not fully defined, shall have the respective
meanings given to them under generally accepted accounting principles.
(c) Words of the masculine gender shall be deemed to include the feminine
or neuter genders, and vice versa, where applicable. Words of the singular
number shall be deemed to include the plural number, and vice versa, where
applicable.
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ARTICLE II
Organization of Company
2.1 Continuation. The parties hereto hereby agree and acknowledge that, from
and after March 29, 1996, the Company shall be constituted as a manager-managed
limited liability company in accordance with the Act and shall be governed by
this Agreement.
2.2 Name/Office. The name of the Company shall hereafter be The Majestic Star
Casino, LLC, and Barden is authorized to file an amendment to the Articles to
reflect the same. The Company's principal offices shall be located at One
Buffington Harbor Drive, Gary, Indiana 46406, or such other place in Indiana as
the Members may determine from time to time.
2.3 Registered Office/Agent. The Company's registered office shall be located
at One North Capitol Avenue, Indianapolis, Indiana 46204, and the registered
agent for the Company at such office shall be CT Corporation System. The
registered office and registered agent may be changed from time to time in
accordance with the Act. If the registered agent shall ever resign, the
Manager shall promptly appoint a successor.
2.4 Personnel. Consistent with Article V, the direction and supervision of,
and all executive-level decisions made in respect of, the Company shall be
reserved to the Manager, as determined and announced by the Manager's chairman,
president and/or ranking vice president, acting on behalf of the Manager.
Managerial personnel selected by the Manager may, along with other Company
employees, be employed directly by the Company, provided that no such personnel
shall have independent authority (beyond such operating authority, consistent
with such employee's role, as is appropriate to implement the directives of the
Manager). Subject to the foregoing limitation, the Manager may designate one
or more persons as officers of the Company, and may assign specific titles to
such persons, with each person holding such title at the pleasure of the
Manager.
ARTICLE III
Purpose
3.1 Scope of Authority. The Company is organized to establish, develop and
operate the Gary Facility in accordance with the terms of the Certificate of
Suitability obtained, and the License to be obtained, for that purpose (and all
applicable Authorizations), and including participation as a member of the
Development Entity, in respect of the land, developments and operations
contiguous to the Gary Facility, and such other businesses and activities as
may be determined by the Majority Interest.
3.2 Scope of Enterprise. The Company shall engage in only the activities
contemplated by Section 3.1, and no Member need afford the Company or any
Member the opportunity to acquire or invest in any investment or asset that
such Member may learn of or may wish to
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acquire in his own name, whether or not such transaction or prospect would
otherwise be an opportunity of or (subject to Section 3.3) competitive with the
Company.
3.3 Restricted Activities. Any of the Members may engage in other business
ventures of every nature and description, independently or with others, and the
engagement in such activities shall not be deemed to be wrongful or improper as
long as such activities are in compliance with Indiana gaming laws and would
not adversely affect the Company's ability to be issued or to hold a License;
provided, however, that, until such time as the Company is formally and finally
denied a License to operate the Gary Facility,
(a) no Member nor any Affiliate of a Member shall, directly or indirectly,
apply for or take any action in connection with the preparation of an
application for a License to operate in Gary, other than the Company's
application for the Gary Facility, nor shall any of them acquire or hold any
ownership interest in any applicant for a License to operate in Gary,
(b) no Member nor any of its Affiliates shall, directly or indirectly,
apply for or take any action in connection with the preparation of an
application for a License to operate at any location within any Indiana county
that borders on Lake Michigan, nor shall any of them acquire or hold any
ownership interest in any applicant for a License to operate at any such
location, and
(c) no Member nor any of its Affiliates shall, directly or indirectly,
manage, or hold any material interest in, any casino or other gaming operation
operating at any location within any Indiana county that borders on Lake
Michigan, nor shall any of them acquire or hold any ownership interest in any
applicant for a License to operate at any such location.
ARTICLE IV
Capital and Debt
4.1 General.
(a) As more specifically recited below, (i) by March 31, 1996, Barden
shall have made a net Contribution of $19,545,365 (including sums paid by
Barden for the account of the Company), (ii) by March 31, 1996, the Investor
LLC shall have made a net Contribution of $3,449,182, (iii) Barden may lend
such Interim Funds as are permitted by Section 4.3, (iv) third parties may lend
any such sums as may be raised pursuant to the Debt Offering, (v) third parties
and/or Members may make such further Contributions as may be raised pursuant to
any Equity Offering or other permitted means, and (vi) third parties and/or
Members may make further loans pursuant to Section 4.5. Accordingly,
(1) the Manager shall solicit any Interim Funds as Barden may agree to
make,
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(2) the Manager shall solicit the Contributions to be made by the
Participants in the event the Manager elects to conduct an Equity Offering,
and, in connection therewith, the Manager shall distribute an Equity
Memorandum to each prospective Participant, and, in such event, shall
conduct the Equity Offering on such terms, consistent with Section 12.1, as
the Manager may approve,
(3) the Manager shall conduct the Debt Offering on behalf of the Company,
and, in connection therewith, the Manager and its agents shall distribute
the Debt Memorandum to each prospective lender, and shall conduct the Debt
Offering on such terms, consistent with Section 4.4, as the Manager may
approve, and
(4) the Manager shall borrow such further sums as may be needed consistent
with Section 4.5.
(b) Unless approved by the Manager and Consensus from time to time, no
Member shall have any obligation to make additional Contributions, provided
that (i) any Member admitted to the Company pursuant to Section 12.1 shall make
the Contribution specified pursuant to Subsection 12.1(b), and (ii) Members
shall repay any excess amounts received by them pursuant to Subsection 7.3(c).
(c) No Member shall be required to restore any deficit in his capital
account, and, until termination of the Company, no Member shall withdraw any of
his capital account.
4.2 Contributions.
(a) Barden and the Investor LLC have made the Contributions respectively
referenced in Paragraphs 4.1(a)(i) and 4.1(a)(ii).
(b) In the event the Manager at any time elects to conduct an Equity
Offering, the Company shall, with the consent of the Majority Interest, issue
such number of interest in the Company to, and raise such Contributions from,
the Participants as shall be determined consistent with Sections 12.1 and 5.3.
4.3 Interim Funding. Barden shall be entitled, but shall not be obligated, to
lend up to $30,000,000 to the Company on any such terms as Barden shall accept.
Neither the terms of any Interim Funding, nor the lending itself of any
Interim Funds, shall be subject to approval or challenge by the Company or any
of the Members, unless any such Interim Funding shall (a) call for the accrual
of interest at a rate exceeding 12% per annum, (b) call for the accrual of
interest pending any default at a rate exceeding 15% per annum, (c) specify a
term of less than 30 days, or (d) run afoul of any unwaived provision of the
Notes.
4.4 Notes. The Manager is authorized to conduct, on behalf of the Company, (i)
the issuance of the Initial Notes, (ii) the issuance of the Registered Notes
(after the issuance of the Initial Notes), and (iii) the Exchange (after, or
upon, the issuance of the Registered
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Notes). Subject to any other specific restrictions recited in this Agreement
and applicable to the Notes, the Manager shall have discretion to structure
and/or approve (A) the Notes themselves, (B) the Debt Offering, (C) the
pledging of Company assets and credit, (D) the subordinating of Distributions,
(E) the third-party indentures and other obligations ancillary to the issuance
of the Notes, (F) the Exchange, and (G) all other matters attendant to the
Notes and/or Exchange. Notwithstanding, the foregoing, however, the principal
amount of the Notes shall not exceed $110,000,000.
4.5 Other Loans.
(a) Subject to all applicable restrictions imposed by the Notes, and
subject to the right of Barden to be repaid any outstanding Interim Funds, the
Company may borrow such sums, from such sources and on such terms, as the
Manager may deem appropriate for the Company's operations, for the meeting of
its obligations and/or the preservation of its assets.
(b) Any further funds required by the Company and requested by the Manager
may, if the Manager in its discretion decides not to pursue third-party
financing or make an Interim Funding, be lent by the Manager and/or any one or
more Members on such terms as may be established by the Manager from time to
time, which in any event shall be subject to all applicable restrictions
imposed by the Notes, and subject to the right of Barden to be repaid any
outstanding Interim Funds. In the case of any loan to the Company from the
Manager or its Affiliate (other than a loan of Interim Funds), the Manager
shall give not less than ten days notice to each Member setting forth the terms
on which the Company is prepared to borrow from one or more particular Members
or Affiliates, and each other Member electing to lend to the Company on the
same terms shall be permitted to do so. Each Electing Member (or his
designated Affiliate) shall be entitled to lend no more than (i) the total
amount to be lent by all Members, times (ii) the electing Member's Percentage.
Neither the Manager nor any Member shall be obligated to lend to the Company.
4.6 New Members.
(a) Upon the conclusion of any Equity Offering, and assuming the receipt
of funds and acceptable subscriptions from one or more Participants, the
Manager shall admit the Participants to the Company as Members in accordance
with Section 4.2(b).
(b) In the event the Manager from time to time (and in its discretion)
determines that additional funding is required by the Company, and that all or
any portion of that funding is not to be solicited as a loan, additional
Contributions may be solicited subject to, and consistent with, Section 12.1.
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ARTICLE V
Manager Rights and Obligations
5.1 Manager Management.
(a) The Company shall be managed by the will of the Manager, and, except
as may be specifically provided for in this Agreement, shall not be governed by
its Members. In addition, the Manager shall have apparent authority to the
extent recited in Subsection 5.2(f). The Company shall at no time have more
than one Manager.
(b) The Manager shall be Barden, until Barden's (i) voluntary resignation
as Manager, (ii) dissolution or bankruptcy, or (iii) removal pursuant to
Subsection 5.1(c). If Barden's tenure expires pursuant to the foregoing
sentence, the new Manager shall be BMI, until BMI's (A) voluntary resignation
as Manager, (B) dissolution or bankruptcy, or (C) removal pursuant to
Subsection 5.1(c). If BMI refuses to so serve or if BMI's tenure expires
pursuant to the foregoing sentence, a new Manager shall be appointed by those
Members holding a majority in interest of Percentages and majority in interest
of Company capital, pursuant to Section 5.3.
(c) Those Members holding three-fourths of those Percentages that are not
held by Affiliates of the Manager may remove a Manager if, and only if, such
Manager (i) shall have embezzled money or other assets from the Company, or
(ii) after written warning, materially breached this Agreement and failed to
cure such breach within 60 days thereafter.
5.2 Manager Powers.
(a) The Manager shall manage, and, subject to Section 5.3, shall have
complete control over the conduct of, the affairs of the Company. Subject to
the other provisions of this Article V, the Manager shall have the authority,
on behalf of the Company, to do all things appropriate to the accomplishment of
the purposes of the Company, including (but not limited to):
(i) developing, operating, expanding, enhancing, retracting, leasing,
holding, selling and/or promoting all or any portion of the Gary
Facilities,
(ii) those actions generally described in Article IV,
(iii) employing contractors, subcontractors, attorneys, accountants or
other agents, including Affiliates, and defining their duties and
establishing their compensation,
(iv) investing and reinvesting Company funds,
(v) negotiating and executing the operating agreement of the Development
Entity and any amendments thereto, voting the Company's interest as a
member of the Development Entity,
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committing Company funds, credit and resources to the Development Entity
(and/or the projects of the development entity), delineating the Company's
rights to the Development Entity's land and facilities, and negotiating and
contracting with the Development Entity,
(vi) otherwise entering into -- and committing Company funds, credit and
resources to -- ventures with one or more neighboring enterprises in
respect of the development, purchase, operation and/or allocation of common
areas and facilities,
(vii) causing the Company to make all payments, and to provide all
consideration, consistent with this Article V,
(viii) executing contracts, notes and other writings, including those with
respect to which an Affiliate is a counterparty, and
(ix) appointing any person as agent for service of process on the Company.
(b) In furtherance and not in limitation of the foregoing, the Manager is
authorized to execute, on behalf of the Company, all documents required in
connection with (i) the further or full acquisition of the Gary Facility, and
(ii) the interest, rights and liabilities of the Company in respect of the
common areas appurtenant to the Gary Facilities and/or to be shared with (or
with the patrons of) any and all neighboring facilities.
(c) Each Member irrevocably appoints the Manager and each officer of the
Manager as his attorney-in-fact on his behalf and in his stead to execute,
swear to and file any amendment or revocation of the Articles and to execute,
sign any Member's name to, swear to and file any writing, and to give any
notice that may be required by any rule or law that may be appropriate to the
effecting of any action by or on behalf of the Company or the Members that has
been taken as provided in this Agreement, that may be necessary or appropriate
to enable the Company to transact business in any other state, or that may be
necessary or appropriate to correct any errors or omissions. This power of
attorney (i) is coupled with an interest and shall not be revoked by the act,
death or incapacity of any Member, and (ii) shall survive an assignment by any
Member of his interest (provided that where a Member's entire interest is
assigned to a person becoming a substitute Member, this power shall survive
solely to permit the Manager to effect the substitution).
(d) Any amendments to the Articles shall be filed by the Manager with the
Secretary. The Manager need not deliver a copy of any such document to each
Member, but shall provide copies to a Member upon request.
(e) Subject to the other provisions of this Article V, the Manager shall
have the power to act for and to bind the Company to the full extent provided
by Indiana law.
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(f) No third party shall be required to independently confirm that any
Manager's action on behalf of the Company is authorized, and such third party
shall be entitled to assume the authority of any incumbent Manager purporting
to act on behalf of the Company, and every contract, note, mortgage, lease,
deed or other instrument executed by a Manager shall be conclusive evidence
that, at the time of execution, the Company was then in existence, this
Agreement had not theretofore been terminated or amended in any manner not
disclosed in the Articles, and the execution and delivery of such instrument
was duly authorized by the Company.
(g) The Manager shall act as "tax matters partner" of the Company, as
defined in Code Section 6231(a)(7).
5.3 Limitation on Power. Notwithstanding the foregoing and any other provision
contained in this Agreement to the contrary, the Manager's unilateral authority
shall be circumscribed in the case of those matters listed in this Section 5.3.
Accordingly, the discretionary consent of the Majority Interest shall be
required before the Manager may approve or implement:
(a) any merger of the Company,
(b) dissolution of the Company pursuant to Subsection 9.2(c),
(c) any act that would contravene the Articles, this Agreement or the Act,
(d) the admission to the Company, pursuant to Section 12.1, of a person
who is not the assignee or successor of a then-existing Member,
(e) the admission to the Company, pursuant to Section 11.2, of a person
who is the assignee or successor of a then-existing Member (with the two
relevant determinations of Majority Interest (i.e., Percentages and Capital) to
be made by considering only the respective interests held by those Members who
have not made the assignment to the candidate), provided that (i) the consent
of the Majority Interest shall not be required, and such substitution shall be
made at the request of the Trustee, if Subsection 11.2(b) is invoked, and (ii)
the consent of the Majority Interest shall be determined by considering the
respective interests held by all Members, including those who have made the
assignment to the candidate, if Subsection 11.2(c) is invoked,
(f) the issuance of additional equity interests in, to raise further
capital for, the Company,
(g) the continuation of the Company pursuant to Paragraph 9.2(d)(ii) (with
the two relevant determinations of Majority Interest (i.e., Percentages and
Capital) to be made by considering only the
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respective interests held by those Members who are not themselves the subject
of the withdrawal event),
(h) the appointment of a substitute Manager, in the event neither Barden
nor BMI is able or willing to so serve,
(i) any payment by the Company to any Manager or any Affiliate of a
Manager, unless:
(i) such payment is pursuant to a loan to the Company meeting the
requirements of Section 4.3, 4.4 or 4.5 (in which case authorization by the
Majority Interest or any other person shall not be required),
(ii) such payment is otherwise specifically noted in the Debt Memorandum
(in which case authorization by the Majority Interest or any other person
shall not be required),
(iii) such payment is a reimbursement described in Section 5.5 (in which
case authorization by the Majority Interest or any other person shall not
be required), or
(iv) such payment (A) is disclosed to the Members, (B) is fair to the
Company, (C) reflects terms substantially similar to those that would have
been reached in an arms'-length arrangement, and (D) is terminable upon 60
days notice by the Company (in which case authorization by the Majority
Interest or any other person shall not be required),
(j) any other consideration by the Company to any Manager or any Affiliate
of a Manager, unless:
(i) such consideration is the right of Barden to from time to time appoint
itself and/or any one or more of its Affiliates as a perpetual royalty-free
licensee of the phrase, and the trademarks associated with, "The Majestic
Star Casino" (or any portion of such phrase or trademark) in connection
with the designation or promotion of (I) gaming operators, (II) other
entities, and/or (III) their respective facilities (in which case
authorization by the Majority Interest or any other person shall not be
required), or
(ii) such consideration is otherwise specifically noted in the Debt
Memorandum (in which case authorization by the Majority Interest or any
other person shall not be required), or
(k) the assignment of an interest in the Company, pursuant to Section
11.1.
5.4 Standard of Care. The Manager shall discharge its management duties in
good faith. Nonetheless, no Manager shall be liable for monetary damages to
the Company for any breach of any such management duties, except for (a)
receipt of a financial benefit to which it is
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not entitled, (b) assenting to a distribution in violation of this Agreement or
the Act, (c) the commission of a crime, or (d) material violations of this
Agreement that are both knowing and willful.
5.5 Compensation. No Member or Affiliate shall receive any compensation for
managing the affairs of the Company, although the Manager and its Affiliates
shall be reimbursed for any reasonable out-of-pocket expenses incurred by it on
behalf of the Company.
ARTICLE VI
Meetings of Members
6.1 Voting. Members shall be entitled to vote on any matter to the extent, and
in the manner, provided for in Section 5.3 or Subsection 5.1(c).
6.2 Meetings. Meetings of Members for the dissemination of information, or for
the transaction of any proposal subsumed by Section 5.3 or Subsection 5.1(c),
shall be held at such place, on such date and at such time as the Manager shall
determine. Such meetings may be called by the Manager, and shall be called by
the Manager upon the written request of those Members holding one-fourth of all
Percentages held by all Members other than the Manager's Affiliates. The
Company shall deliver or mail written notice stating the date, time, place and
purposes of any meeting to each Member. Such notice shall be given not fewer
than ten nor more than 60 days before the meeting, and shall permit
participation at the meeting via teleconference hook-up.
6.3 Consent.
(a) In the event a Member is not an individual, any consent granted on
behalf of a Member shall be taken, if at all, (i) by all trustees, if the
Member is a trust, (ii) by all partners, if the Member is a co-partnership,
(iii) by all general partners, if the Member is a limited partnership, (iv) by
the president, if the Member is a corporation, (v) by all managers, if the
Member is a manager-managed limited liability company, or (vi) by a majority in
interest of the members, if the Member is a member-managed limited liability
company.
(b) Any action required or permitted to be taken at an annual or special
meeting of the Members may be taken without a meeting, without prior notice,
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the Members having not fewer than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all Members entitled to vote on the action were present and voted. Each
consent shall bear the date and signature of each Member signing the consent.
Prompt notice of the taking of action without a meeting by less than unanimous
written consent shall be given to all Members who have not consented in writing
to such action.
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ARTICLE VII
Capital, Profits, Losses and Distributions
7.1 Capital Accounts. A capital account shall be maintained for each Member,
to which contributions, Profits and any items of income and gain under this
Article VII shall be credited and against which distributions and Losses and
any items of deduction and loss under this Article VII shall be charged.
Capital accounts shall be maintained in accordance with the accounting
principles of Code Section 704 and the Regulations thereunder.
7.2 Profits and Losses. Subject to Sections 7.4 through 7.14, Profits and
Losses shall be determined as of the end of each Fiscal Year.
(a) Profits shall be allocated:
(i) first, to those Members having a negative balance in their respective
capital accounts, in proportion to, and to extent of, such deficits,
(ii) next, to the Members in proportion to, and to the extent of, any
Losses that were (A) previously allocated to them and (B) not addressed by
any later allocation of Profits pursuant to this Paragraph 7.2(a)(ii), and
(iii) last, to the Members, in proportion to their respective Percentages.
(b) Losses shall be allocated to the Members in proportion to their
respective Percentages.
7.3 Distributions. At such times as the Manager may discretionarily determine,
but subject to the rights of creditors (including creditors pursuant to
Sections 4.3, 4.4 and/or 4.5), cash and/or property of the Company (net of
Reserves) shall be distributed as recited in this Section 7.3.
(a) Such cash and/or property, other than distributions constituting
Residual Proceeds, shall be distributed:
(i) first, in accordance with Subsection 7.3(c), and
(ii) last, in proportion to their respective Percentages.
(b) Distributions constituting Residual Proceeds shall be distributed in
accordance with Subsection 10.2
(c) As referenced in Subsection 7.3(a), in the case of distributions that
do not constitute Residual Proceeds, such cash and/or property shall be
distributed to the Members, in accordance with their respective Percentages, in
an amount equal to 40% of the excess, if any, of (i) Profits for the
immediately preceding calendar
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quarter over (ii) any then-existing net cumulative Losses through the
immediately preceding quarter. A tentative distribution under Paragraph
7.3(a)(i) shall be paid within 15 days after each fiscal quarter in an amount
equal to the figure described in the foregoing sentence, as estimated in
writing by the Company's accountants. A reconciliation of such tentative
distribution shall be made within 45 days after the relevant fiscal quarter, by
which time the definitive amount figure shall have been determined by the
Company's accountants and by which time (A) each Member shall forthwith repay
to the Company the amount, if any, by which such Member's preliminary
distribution was excessive, or (B) the Company shall forthwith pay each Member
the amount, if any, by which such Member's preliminary distribution was
inadequate.
7.4 Changes in Interest. If an addition, withdrawal or substitution of, or any
other change in the interest of, any Member occurs during the period covered by
an allocation, then, subject to any agreement between the persons affected,
Profits and Losses for the period shall be allocated among those interests
consistent with Code Section 706(d). If Code Section 706(d) allows alternative
methods of allocation, the Manager shall determine, in its sole discretion,
which alternative method to use in allocating Profits and Losses.
7.5 Depreciation Recapture. In characterizing Profits for purposes of
allocation, that portion, if any, constituting depreciation recapture shall be
the first Profits so allocated and shall be allocated in the proportions that
the depreciation giving rise to such recapture was allocated.
7.6 Section 754. If an election under Code Section 754 is in effect with
respect to the interest of any Member, the allocation of items of income,
deduction, gain or loss shall be governed by the regulations thereunder, but
such allocation shall not be reflected on the Company books.
7.7 Imputed Interest. If any Member makes a loan to the Company, or the
Company makes a loan to any Member, and interest in excess of the amount
actually payable is imputed under Code Sections 7872, 483, or 1271 through
1288, then any item of income or expense attributable to any such imputed
interest shall be allocated solely to the Member who made or received the loan
and shall be credited or charged, as appropriate, to his capital account.
7.8 Contributed Assets. Income, gain, loss or deduction with respect to any
property contributed by a Member shall, solely for tax purposes, be allocated
among the Members, to the extent required by Code Section 704(c), to take
account of the variation between the basis of the assets to the Company and its
fair market value when contributed.
7.9 Partial-Year Allocation. In allocating Profits and Losses, the Members
shall assume that one-twelfth of the Profit or Loss for a year was realized in
each month thereof.
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7.10 Installment Receipts. Any interest received on an installment obligation
received by the Company upon the sale of the Property shall be treated as
Residual Proceeds and shall be distributed among the Members in the same
proportions as the total Residual Proceeds are distributed.
7.11 Involuntary Conversion. Notwithstanding any contrary provision of this
Agreement, upon the compulsory or involuntary conversion of all or any part of
the Property consistent with Code Section 1033(a), if and to the extent
determined by the Manager in its sole discretion, the Company shall not
distribute the net proceeds thereof to the Members, but instead shall reinvest
the net proceeds in such a manner as to avoid recognition (for federal income
tax purposes) of part or all of the gain on such conversion.
7.12 Other Allocations. Notwithstanding the foregoing provisions of this
Article VII or any other provision of this Agreement, the following provisions
shall apply:
(a) The Members intend that the Company be treated as a partnership for
federal income tax purposes and, accordingly, the partnership tax provisions of
the Code shall apply to the Company and its Members. The Members further
intend that each Member's distributive share of income, gain, loss, deduction
or credit (or item thereof) be determined and allocated in accordance with this
Article VII to the fullest extent permitted by Code Section 704(b). To
preserve the determinations and allocations provided for in this Article VII,
the Manager is authorized and directed to allocate income, gain, loss,
deduction, or credit (or item thereof) arising in any year differently than
otherwise provided for in this Article VII to the extent that such an
allocation in the manner otherwise provided for in this Article VII would cause
the determinations and allocations of each Member's distributive share of
income, gain, loss, deduction or credit (or item thereof) to contravene Code
Section 704(b). Any allocation made pursuant to this Section 7.12 shall be a
complete substitute for any allocation otherwise provided for in this Article
VII, and no amendment of this Agreement or approval of any Member shall be
required.
(b) In making any allocation (the "new allocation") under this Section
7.12, the Manager may act only after having been advised by the Company's
accountants that, under Code Section 704(b), (i) the new allocation is
necessary, and (ii) the new allocation is the minimum modification of the
allocations otherwise provided for in this Article VII needed to assure that,
either in the then-current year or in any preceding year, each Member's
distributive share of income, gain, loss, deduction, or credit (or item
thereof) is determined and allocated in accordance with this Article VII to the
fullest extent permitted by Code Section 704(b).
(c) If a net decrease in Company Minimum Gain occurs during a Fiscal Year
so that an allocation is required by Regulation 1.704-2(f), each Member shall
be specially allocated items of income
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and gain for such year (and, if necessary, subsequent years) equal to his share
of the net decrease in Company Minimum Gain as determined by Regulation
1.704-2(g)(2). Such allocations shall be made in a manner and at a time that
will satisfy Regulation 1.704-2(f), or the corresponding provisions of
subsequently adopted Regulations, in order that the allocations provided for in
this Article VII will be recognized for federal income tax purposes.
(d) If a net decrease in the Member Nonrecourse Debt Minimum Gain occurs
during any Fiscal Year, any Member who has a share of such Member Nonrecourse
Debt Minimum Gain (as determined in the same manner as partner nonrecourse debt
minimum gain under Regulation 1.704-2(i)(5)) shall be specially allocated items
of income or gain for such year (and, if necessary, subsequent Fiscal Years)
equal to his share of the net decrease in the Member Nonrecourse Debt Minimum
Gain in the manner and to the extent required by Regulation 1.704-2(i)(4).
(e) If a Member unexpectedly receives an adjustment, allocation, or
distribution described in Regulation 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any
of which causes or increases an Adjusted Deficit Capital Account Balance in
such Member's capital account, he will be specially allocated items of income
and gain in an amount and manner sufficient to eliminate such deficit balance
created or increased by such adjustment, allocation, or distribution as quickly
as possible.
(f) If a Member has an Adjusted Deficit Capital Account Balance at the end
of a Fiscal Year, such Member shall be allocated items of income and gain in
the amount of such Adjusted Deficit Capital Account Balance as quickly as
possible to eliminate it.
(g) Nonrecourse Deductions shall be allocated among the Members in
proportion to their respective Percentages, and any Member Nonrecourse
Deductions shall be allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Regulation 1.704-2(i)(1).
(h) If the Manager is required by Subsection 7.12(a), 7.12(c), 7.12(d),
7.12(e), 7.12(f), 7.12(g) or 7.12(h) to make any new allocation in a manner
other than as provided for in this Article VII without regard thereto, then the
Manager shall, insofar as it is permitted to do so by Code Section 704(b),
allocate income, gain, loss, deduction or credit (or item thereof) arising in
the current Fiscal Year (or subsequent Fiscal Years, if necessary) in order to
bring the proportions of income, gain, loss, deduction or credit (or item
thereof) allocated to the Members as nearly as possible to the proportion
otherwise contemplated by this Article VII without regard thereto; provided
that Nonrecourse Deductions shall not be taken into account except to the
extent Company Minimum Gain is reduced, and Member Nonrecourse Deductions shall
not be taken into account except to the extent Member Minimum Gain has been
reduced and provided
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further that such Nonrecourse Deductions and Member Nonrecourse Deduction shall
in no event be taken into account to the extent the Manager reasonably
determines that such allocations will likely be offset by future allocations
under Subsection 7.12(c) or 7.12(d).
(i) Allocations made by the Manager under this Section 7.12 in reliance on
the advice of the Company's accountants are deemed made pursuant to the
Manager's fiduciary obligation to the Company and the Members.
(j) To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Code Section 734(b) or Code Section 743(b) is required,
pursuant to Regulation 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis), and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Regulations.
7.13 Special Definitions. As used in Section 7.12, the following terms, where
capitalized, shall have the meanings ascribed to them below in this Section
7.13.
"Adjusted Deficit Capital Account Balance" means, with respect to any
Member, any deficit balance in such Member's capital account as of the end of
the relevant Fiscal Year, (1) increased by any amounts such Member is obligated
to restore under Regulation 1.704-1(b)(2)(ii)(c), plus such Member's share of
Company Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum
Gain, and (2) decreased by the items described in Regulation
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Nonrecourse Deductions" has the meaning set forth in Regulation
1.704-2(c).
"Member Nonrecourse Debt Minimum Gain" means the amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse liability
of the Company, determined in accordance with Regulation 1.704-2(i)(3).
"Member Nonrecourse Debt" has the meaning set forth in Regulation
1.704-2(b)(4).
"Member Nonrecourse Deductions" has the meaning set forth in Regulation
1.704-2(i)(2).
"Company Minimum Gain" means an amount determined in accordance with
Regulation 1.704-2(d) by computing, with respect to each Company nonrecourse
liability (as defined in Regulation 1.752-1(a)(2)), the amount of gain (of
whatever character) realized by the Company if (in a taxable transaction) it
disposed of property subject to such
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liability in full satisfaction thereof, and by then aggregating the amounts so
computed.
7.14 Excess Liabilities. For purposes of calculating the Members' shares of
excess nonrecourse liabilities (within the meaning of Regulation
1.752-3(a)(3)), the Members shall be deemed to share Profits in proportion to
their respective Percentages.
ARTICLE VIII
Exculpation and Indemnification
8.1 Exculpation. No Manager or Member, and no officer, director, employee or
agent of the Company or of a Manager or Member, shall be liable for the acts or
obligations of the Company, unless he shall have expressly assumed such
liability.
8.2 Indemnification. Except as otherwise provided in this Article VIII, the
Company shall indemnify any Manager, any Member, any employee, officer,
manager, director or agent of a Manager or Member, and any employee, officer or
agent of the Company, who was or is a party or is threatened to be made a party
to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, and whether formal or
informal (other than an action by or in the right of the Company) by reason
that such person is or was a manager, member, employee, director or agent of
the Company or of a Manager or Member, against expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with the action, suit or
proceeding, but only if the person acted in good faith and in a manner that
such person believed to be in the best interests of the Company, and, with
respect to a criminal action or proceeding, if such person believed his conduct
was not unlawful. Any indemnification permitted under this Section 8.2 shall
(unless ordered by a court) be made by the Company only as authorized in the
specific case, in the absence of a judicial determination that the
indemnification is improper under the circumstances because the person to
indemnify has met the applicable standard of conduct and upon an evaluation of
the reasonableness of expenses and amount paid in settlement. Notwithstanding
the foregoing, no indemnification shall be provided to any person for or in
connection with (i) the receipt of a financial benefit to which such person is
not entitled, (ii) voting for or assenting to a distribution to Members in
violation of this Agreement or the Act, or (iii) a knowing violation of law.
ARTICLE IX
Term of Company
9.1 Commencement. The term of the Company commenced upon the filing of the
Articles with the Secretary.
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9.2 Dissolution. The Company shall be dissolved upon the occurrence of any of
the following events:
(a) December 31, 2043.
(b) The sale, redemption or other disposition of all or substantially all
of the Property.
(c) The written consent of the Manager and all Members.
(d) The death, retirement, resignation, withdrawal, expulsion, bankruptcy,
mental incapacity or dissolution of any Member; provided, however, that the
Company existence shall not terminate if:
(i) the Company has two or more remaining Members, and
(ii) within 60 days after such event, the Manager, the Majority Interest,
and those Members holding in the aggregate over half of the Capital (all as
determined without regard to the interest or holdings of the withdrawing
Member) elect in writing to continue the Company,
(e) The death, retirement, resignation, withdrawal, expulsion, bankruptcy,
mental incapacity or dissolution of the Manager; provided, however, that the
Company existence shall not terminate if within 30 days after such event a new
person assumes the role of Manager in accordance with Subsection 5.1(b).
(f) Upon entry of a decree of judicial dissolution pursuant to the Act.
ARTICLE X
Winding-Up
10.1 Procedure. Upon termination of the Company, the Manager shall conclude
the affairs of the Company. The assets of the Company may be liquidated or
distributed in kind, as determined by the Manager. To the extent Company
assets cannot either be sold without undue loss or readily divided for
distribution in kind to the Members, the Company may, as determined by the
Manager, convey those assets to a trust or other suitable holding entity
established for the benefit of the Members in order to permit the assets to be
sold without undue loss and the proceeds thereof distributed to the Members at
a future date. The legal form of the holding entity, the identity of the
trustee or other fiduciary, and the terms of its governing instrument shall be
determined by the Manager.
10.2 Application of Assets. Upon the winding-up of the Company, the assets of
the Company shall first be applied to the payment of, or to a reserve for the
payment of, Company liabilities (including such provision for contingent or
unforeseen liabilities as the Manager deems appropriate), and then shall be
distributed to the Members in accordance with their respective capital accounts
(after all such accounts shall have been adjusted for all allocations pursuant
to
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Section 7.2 and for all distributions pursuant to Subsection 7.3(a)). If
Company assets are distributed in kind, the assets so distributed shall be
valued at their then-current fair-market values and the unrealized appreciation
or depreciation in value of such assets shall be allocated to the Members'
respective capital accounts in the manner described in Article VII as if such
assets had been sold, and such assets shall then be distributed to the Members
in accordance with their respective positive capital accounts as so adjusted.
ARTICLE XI
Assignability of Interests
11.1 Permitted Assignments.
(a) Subject to all further applicable restrictions recited in Section
11.3, a Member may assign (and/or pledge) his interest in the Company, in whole
or in part with, and only with, the discretionary consent of the Manager and
Majority Interest.
(b) No assignment (and no execution of any pledge) under this Section 11.1
shall of itself substitute the assignee (or pledgee) as a Member, and such
assignment (and such execution of any pledge made) shall entitle the assignee
(or pledgee) to none of the rights of a Member, whether under this Agreement or
under the Act, other than the right to receive (to the extent assigned) the
Distributions to which the assigning (or pledging) Member would otherwise be
entitled.
11.2 Admission of Assignees.
(a) Subject only to Subsections 11.2(b) and 11.2(c), an assignee shall not
be admitted as a Member, unless the assignee shall have received the
discretionary consent of the Manager and Majority Interest, with both the
determination of Majority Interest to be made without regard to the interest or
holdings of the assigning Member. As a condition of its consent, the Manager
may require a substitute Member to pay the legal and other costs incurred by
the Company in effecting his admission. If admitted, the substitute Member
shall have, to the extent assigned, all of the rights and powers, and shall be
subject to all the restrictions and liabilities, of a Member. In addition, the
assignee shall provide the Company with the information and agreements that the
Manager deems necessary in connection with the assignment, including written
acknowledgement binding the assignee to this Agreement as a Member thereof.
(b) No Manager or Member shall be called upon to approve the admission of
the Trustee as a Member, and such admission shall be implemented without
further action, if the Trustee (i) has executed (and delivered to the Manager)
a memorandum binding itself to this Agreement as a Member thereof, and (ii) has
provided the Manager with written confirmation that (A) the Trustee has been
pledged Barden's equity interest in the Company, (B) the Trustee has duly
succeeded to such interest pursuant to the terms governing such pledge, (C) any
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cure period afforded Barden has expired, and (D) the Trustee wishes to become a
Member in the stead of Barden.
(c) In the case of the proposed admission of any assignee of Barden as a
Member, the procedures described in Subsection 11.2(a) shall, with the
following exception, be implemented. All Members shall be entitled to vote on
the proposed admission, and, consequently, the consent of the Majority Interest
shall be determined with regard to the interests and holdings of all Members,
including those of the assigning Member.
11.3 General Restrictions. In addition to the foregoing transfer restrictions,
no Member shall sell, assign, transfer, exchange, mortgage, pledge, grant,
hypothecate or otherwise dispose of any interest in the Company (a) without the
prior discretionary consent of all the Members, if the assignment would
terminate the Company within the meaning of Code Section 708(b), and (b)
without an opinion of counsel in form and substance satisfactory to the Company
that registration is not required under the Securities Act of 1933 and
applicable state law (unless this requirement (b) is waived by the Manager).
In no event shall any Member assign his interest in the Company if such
assignment would (i) violate any applicable state or federal securities law,
(ii) result in any direct or indirect interest in the Company being held, on or
before December 31, 1996, by a person that is not a resident of Indiana for
purposes of SEC Rule 147, (iii) violate the Articles, or (iv) run afoul of any
requirement (or fail to meet with any necessary approval) of the Indiana Gaming
Commission or of any statute granting the Commission its jurisdiction. The
Members acknowledge that their interests in the Company have not been
registered under the securities laws of any jurisdiction and agree that such
interests will not be transferred without appropriate registration or an
exemption therefrom.
11.4 Regulatory Restrictions. In addition to the foregoing transfer
restrictions, and notwithstanding any provision of this Agreement to the
contrary, no interest in the Company shall be sold, assigned, donated or
otherwise transferred (whether or not such conveyance results in a substitution
or admission of a Member), unless such transfer is in compliance with the rules
of the Commission, including any successor proposed or final rules.
ARTICLE XII
Admission and Withdrawal
12.1 Admissions. Other than as provided in Section 11.2 with respect to the
successors and assigns of then-existing Members, additional Members may be
admitted to the Company with the discretionary approval of the Manager and
Majority Interest. Such approval shall be solicited pursuant to a written
proposal that:
(a) shall have been agreed to by (i) the Manager and (ii) the candidate
(unless the proposal calls for the issuance of additional equity interests
pursuant to an Equity Offering made to undesignated offerees),
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(b) shall specify the terms of the proposed admission, including (i) the
candidate's identity, date of admission, Percentage and commitment to make
Contributions, or (ii) the terms of the Equity Offering,
(c) shall specify that all then-existing Percentages shall be diluted
ratably to the aggregate extent of the candidate's (or offerees') Percentage
(provided that a particular Member's Percentage may be disproportionately
diluted, but only if, and only to the extent, such Member specifically agrees
to such disproportionate dilution), and
(d) shall comport with Section 11.4.
12.2 Withdrawals.
(a) No Member may voluntarily resign from the Company without the
discretionary consent of the Manager, which, if given, shall specify the terms
of such withdrawal.
(b) A Member voluntarily resigning from the Company without the
discretionary consent of the Manager shall be liable to the Company for any
damages attendant thereto in accordance with Section 23-18-6-6 of the Act.
(c) A Member resigning or otherwise withdrawing from the Company shall, in
the discretion of the Manager and subject to any applicable restrictions on
distribution recited in the Act, receive, net of any damages pursuant to
Subsection 12.2(b), either (i) the ongoing Distributions to which he would
otherwise be entitled were he still a Member, or (ii) within 12 months after
withdrawal, the fair value of his interest in the Company as of the date of
withdrawal.
(d) At the written election of the Manager,
(i) the Company shall redeem the interest in the Company held by any other
Member whose affiliation with the Company shall, to a material degree,
delay, jeopardize the issuance of, result in added restrictions on, or
impair the good standing of any License or other necessary authorization
issued (or to be issued) to the Company, so long as (A) the redemption
price is equal to the affected Investor's capital account, (B) such payment
is made in cash within 12 months thereafter, and (C) written advice has
been received from the relevant Regulatory Authority referencing the
affected Member and the jeopardy generated by his affiliation, and
(ii) the Company shall, in lieu of any action for damages, redeem the
interest in the Company held by any other Member who shall have breached
any covenant set forth in Section 14.1, or with respect to whom any
representation set forth in Section 14.2 is or has become materially false,
so long as (A) such breach or misrepresentation remains uncured for 30 days
after the date of the election, (B) the redemption price is equal to
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the affected Investor's capital account, minus the amount of damages
suffered by the Company as a result of such breach or misrepresentation,
and (C) such payment is made in one-half in cash within 12 months
thereafter, with the balance payable without interest in five equal annual
installments coming due on the anniversary of the first payment.
(e) Upon the withdrawal of a Member (and the retirement of such Member's
interest in the Company) pursuant to this Section 12.2 or pursuant to any other
action in which no person (other than the Company itself) succeeds to the
withdrawing Member's interest, the Percentages of the remaining Members shall
increase ratably to the aggregate extent of the withdrawn Member's Percentage.
(f) A Manager may voluntarily resign as Manager upon 60 days notice to the
Members.
ARTICLE XIII
Amendment
13.1 Generally. Subject to Section 13.2, this Agreement may be amended only
with the discretionary written consent of (a) the Manager, (b) a three-fourths
interest of the Members, as determined with respect to Percentages, and (c) a
three-fourths interest of the Members, as determined with respect to
capital-account balances.
13.2 Exception. Notwithstanding Section 13.1,
(a) this Agreement may be amended to the extent, if any, contemplated by
Section 7.12, according to the terms and conditions recited in Section 7.12,
and
(b) Schedule A may be amended by the Manager alone to reflect any action
taken from time to time in accordance with Article XII, Section 4.1 or Section
11.2.
ARTICLE XIV
Covenants and Representations
14.1 Covenants. Each Member, on behalf of itself and each of its permitted
successors and assigns, covenants and agrees as follows:
(a) It will provide (and, if applicable, cause its Affiliates to provide)
to the Company, and if required, timely file or cause its Affiliates to file
with the Commission or any other Regulatory Authority any and all documents and
all information required in connection with all necessary Authorizations and in
connection with any proceeding or investigation with respect to the Member's
(or any of its Affiliates') character, reputation, experience, or financial
integrity.
(b) Upon reasonable request, it will, promptly and timely, cooperate, and
cause all of its Affiliates to cooperate, with the other Members, the
Commission or such other Regulatory Authority in
26
<PAGE> 27
the procurement of all necessary Authorizations and in any determination of the
character, reputation, experience or financial integrity of the Member or any
Affiliate of the Member.
(c) It will proceed, in good faith and with due diligence, and will use
its best efforts to demonstrate to the Commission or other Regulatory Authority
its and, if applicable, its Affiliates', good character, reputation, experience
and financial integrity.
(d) It will proceed in good faith to further the goals of development and
operation of the Gary Facility and to perform its obligations in connection
therewith.
14.2 Representations. Each Member represents and warrants to the Company and
to each other Member that:
(a) Neither it nor, to the best of its knowledge, any of its Affiliates
has ever:
(i) been convicted of a felony under Indiana law, the laws of any other
state, or the laws of the United States,
(ii) knowingly or intentionally submitted an application for a gaming
license that contained false information, or
(iii) had a license to own, manage or operate gambling facilities in
another jurisdiction revoked, denied or suspended.
(b) It has no reason to believe that it or any of its Affiliates would not
be found, by the Commission or other Regulatory Authority, to be of good
character, reputation, experience and financial integrity.
(c) It is acquiring its interest in the Company for its own account as an
investment and without an intent to distribute such interest, and it
acknowledges that the interests in the Company have not been registered or
qualified under the Securities Act of 1933 or any state securities law, and may
not be resold or transferred by the Member without appropriate registration and
qualification or an exemption therefrom.
14.3 Survival. The covenants contained and the representations made in this
Article XIV shall survive the execution of this Agreement indefinitely.
ARTICLE XV
Miscellaneous Provisions
15.1 Records. The Manager shall keep true and complete books of account and
records of all Company transactions. The books of account and records shall be
kept at the principal office of the Company. The Company shall maintain at
such office (i) a list of names and addresses of all Members, (ii) a copy of
the Articles together with executed copies of all powers of attorney pursuant
to
27
<PAGE> 28
which the Articles have been executed, (iii) copies of the Company's federal,
state and local income tax returns and reports for the three most recent years,
(iv) copies of the Company's current Agreement, and (v) copies of the financial
statements of the Company for the three most recent years. Such Company
records shall be available to any Member or his designated representative
during ordinary business hours, at his reasonable request and expense.
15.2 Reports. The Manager shall use its best efforts to furnish, or cause to
be furnished, to Members (a) annually, an income statement for the prior year
and a balance sheet as of the year ended, and (b) by March 15 of each year,
Schedule K-1.
15.3 Accounts and Investment. All funds of the Company shall be deposited in
its name in such checking accounts, savings accounts, time deposits or
certificates of deposit shall be invested in such other manner as shall be
designated by the Manager from time to time. Withdrawals shall be made upon
such signature or signatures as the Manager may designate.
15.4 Accounting Decisions. All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the Manager in
accordance with generally accepted accounting principles consistently applied.
Such decisions shall be acceptable to the accountants retained by the Company,
and the Manager may rely upon the advice of the accountants as to whether such
decisions are in accordance with generally accepted accounting principles.
15.5 Tax Elections. The Company shall, to the extent permitted by applicable
law and upon obtaining any necessary approval of the Commissioner of Internal
Revenue, make all tax elections in such manner as the Manager determines to be
most favorable to the Members. The Manager may rely upon accountants hired by
the Company as to the availability and effect of all such elections.
15.6 Investment Representation. The Members represent to each other and to the
Company that they are acquiring their respective interests in the Company for
their own accounts, and without a view to selling or pledging them.
15.7 Composition. This Agreement constitutes the entire Agreement among the
parties and may be modified only as provided herein, but is in addition to the
subscription agreement and any other contract between a party and the Company.
No representation or agreement has been made by (or on behalf of) any party
hereto, and no party relies upon any statement or covenant not recited herein.
This Agreement supersedes any and all other agreements, whether oral or
written, by and among the Members.
15.8 Notice. Any notice, writing or other matter, and any Distribution, to be
delivered hereunder shall be conveyed to the party at the address reflected in
this Agreement and shall be deemed given when deposited in the United States
mail with postage prepaid
28
<PAGE> 29
or when delivered in person or by courier; provided that a person may change
his address by written notice to the Company.
15.9 Member Consent. Various provisions of this Agreement require or permit
the approval or disapproval, written or otherwise, of the Members or some
specified proportion thereof. In any such case, the Manager may give all
Members written notice of the proposed action or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 15 days after
mailing of the notice) shall be deemed to have given his consent to the action,
or to have made the agreement, referred to in the notice.
15.10 Further Execution. Upon request of the Manager from time to time, the
Members shall execute and swear to or acknowledge any amended Articles and
other writing that may be required by any law or that may be appropriate to
effecting any action by or on behalf of the Company or the Members taken in
accordance with this Agreement.
15.11 Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties, their successors and permitted assigns. No
provision of this Agreement (other than Subsection 11.2(b), in favor of the
Trustee, during the term of the Notes) shall be construed as for the benefit of
or as enforceable by any creditor of the Company or of the Members, or any
other person not a party to this Agreement.
15.12 Application. The invalidity or unenforceability of any provision of this
Agreement in a particular respect shall not affect the validity and
enforceability of any other provision of this Agreement or of the same
provision in any other respect. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The headings to the various provisions of this
Agreement are for reference purposes only, and shall not bear on the
interpretation of this Agreement. The validity and interpretation of, and the
sufficiency of performance under, this Agreement shall be governed by Indiana
law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
GARY RIVERBOAT GAMING, LLC BARDEN DEVELOPMENT, INC.
By: BARDEN MANAGEMENT, INC.
By: Don H. Barden
-------------------------
Don H. Barden, President
By: Don H. Barden
--------------------------
Don H. Barden, President
<PAGE> 30
SCHEDULE A
Identities And Interests Of The Members
<TABLE>
<CAPTION>
Name and Address Admission Date Contribution Percentage
<S> <C> <C> <C>
Barden Development, Inc. 12/08/93 $19,545,365 85.000%
One Buffington Harbor Drive
Gary, Indiana 46406
Gary Riverboat Gaming, LLC 12/13/93 $3,449,182 15.000%
One Buffington Harbor Drive
Gary, Indiana 46406
</TABLE>
<PAGE> 1
EXHIBIT 4.1
$105,000,000 OF SENIOR SECURED NOTES DUE 2003
THE MAJESTIC STAR CASINO, LLC
PURCHASE AGREEMENT
May 16, 1996
WASSERSTEIN PERELLA SECURITIES, INC.
31 West 52nd Street
New York, New York 10019
Ladies and Gentlemen:
The Majestic Star Casino, LLC, a limited liability company organized and
existing under the laws of Indiana (the "Company"), proposes, subject to the
terms and conditions stated herein, to issue and sell to Wasserstein Perella
Securities, Inc. (the "Initial Purchaser") an aggregate of $105,000,000 of its
Senior Secured Notes due 2003 (the "Senior Notes").
The Senior Notes will be issued pursuant to an Indenture dated as of May
22, 1996 (the "Indenture") between the Company and IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee"). The Senior Notes will bear interest at
12-3/4% per annum plus contingent interest as described in the Indenture. The
holders of the Senior Notes will be entitled to certain registration rights
provided under a Registration Rights Agreement to be dated as of May 22, 1996
(the "Registration Rights Agreement") between the Company and the Initial
Purchaser.
The Company has prepared a preliminary offering memorandum dated April 30,
1996 (the "Preliminary Offering Memorandum") and a final offering memorandum
(the "Offering Memorandum") dated the date hereof relating to and summarizing
the terms of the Senior Notes. It is also contemplated that the Senior Notes
will be secured by or have the benefit of the provisions of the BDI Pledge
Agreement, the BHR Pledge Agreement, the Cash Collateral and Disbursement
Agreement, the Security Agreement and the Trademark Security Agreement (each as
defined
<PAGE> 2
in the Offering Memorandum and collectively referred to herein as the
"Collateral Documents").
None of the Senior Notes have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and such securities are being sold in
reliance on exemptions from or in transactions not subject to the registration
requirements of the Securities Act, including sales (i) to institutional
"accredited investors" (as defined in Rule 501 (a)(1), (2), (3) or (7) under
the Securities Act); (ii) to "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act or (iii) to non-U.S. persons outside the
United States in reliance upon Regulation S under the Securities Act.
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, the Initial
Purchaser that:
(a) The Offering Memorandum, as of the date hereof, and as of the Closing
Date (as defined herein) is and will be accurate in all material respects and
does not and will not contain an untrue statement of a material fact and does
not or will not omit to state any material fact required to be stated therein
or necessary in the order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No representation
and warranty is made in this subsection (a) with respect to any information
contained in or omitted from the Offering Memorandum or any amendment thereof
or supplement thereto furnished in writing to the Company by the Initial
Purchaser expressly for use in the Offering Memorandum.
(b) Coopers & Lybrand L.L.P. who has expressed their opinion with respect
to the financial statements for the period ended December 31, 1995 included in
the Offering Memorandum are independent accountants as required by the
Securities Act and the rules and regulations thereunder (the "Rules and
Regulations").
(c) The annual audited financial statements of the Company included in
the Offering Memorandum present fairly the financial position of the Company,
as of the respective dates of such financial statements, and the results of
operations and changes in financial position of the Company for the respective
2
<PAGE> 3
periods covered thereby. Such statements and related notes have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis, as certified by the independent accountants named in
subsection 1(b). The selected financial data set forth in the Offering
Memorandum under the captions "Capitalization" and "Selected Financial Data"
fairly present the information set forth therein on the basis stated in the
Offering Memorandum. The unaudited interim financial statements of the Company
included in the Offering Memorandum present fairly the financial position of
the Company, as of the date of such financial statements, and the results of
operations and changes in financial position of the Company for the period
covered thereby. Such statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis subject to the limitations expressed in footnote 1 thereto.
(d) The forecasts and projections contained in the Offering Memorandum
are based upon good faith estimates and assumptions believed by the Company to
be reasonable at the time made.
(e) Subsequent to the dates as of which information is given in the
Offering Memorandum, except as set forth therein, there has been no material
adverse change or any development which might reasonably be expected to result
in any material adverse change in the business, properties, operations,
condition (financial or other) or results of operations of the Company, whether
or not arising from transactions in the ordinary course of business, and since
the date of the latest balance sheet presented in the Offering Memorandum, the
Company has not incurred or undertaken any liabilities or obligations, direct
or contingent, which are material to the Company, except for liabilities or
obligations undertaken in the ordinary course of business or which are
reflected in the Offering Memorandum.
(f) The Company has the full legal right, power and authority to enter
into this Agreement and the other agreements, documents and instruments to be
executed by the Company in furtherance of the transactions contemplated hereby,
including without limitation, the Indenture, the Senior Notes, the Registration
Rights Agreement and the Collateral Documents to be executed by the Company
(collectively, the "Transaction
3
<PAGE> 4
Documents"), and to consummate the transactions contemplated hereby and
thereby.
(g) The execution, delivery, and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby do not and
will not, (i) except as disclosed in the Offering Memorandum, (ii) except for
the consent of the Indiana Gaming Commission ("IGC") which consent has been
obtained (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company pursuant to any agreement, instrument, franchise, license or permit
to which the Company is a party or by which its properties or assets may be
bound or (B) violate or conflict with any judgment, decree, order, statute,
rule or regulation of any court or any public, governmental or regulatory
agency or body applicable to the Company or any of its properties or assets.
The execution, delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated hereby and by the Offering
Memorandum do not and will not violate or conflict with any provision of the
articles of organization or operating agreement of the Company as currently in
effect. No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body applicable to the Company or any of
its properties or assets is required for the execution, delivery and
performance of this agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Senior
Notes to be issued, sold and delivered by the Company hereunder except such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Senior
Notes by the Initial Purchaser.
(h) The Company had, as of March 31, 1996, an authorized and outstanding
capitalization as set forth in the Offering Memorandum and the capital of the
Company conforms in all material respects to the description thereof contained
in the Offering Memorandum.
4
<PAGE> 5
(i) The Company does not own or control, directly or indirectly, any
corporation, association or other entity except that the Company does have a
50% ownership interest in Buffington Harbor Riverboats, L.L.C., a Delaware
limited liability company ("Buffington Harbor, L.L.C."). The Company has been
duly formed and is validly existing as a limited liability company in good
standing under the laws of Indiana. The Company is duly qualified to do
business and in good standing as a foreign limited liability company in each
jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in
good standing which will not in the aggregate have a material adverse effect on
the Company or result in any material adverse change or any development
involving a material adverse change in the business, properties, operations,
condition (financial or other) or results of operations of the Company. The
Company has all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses and
permits of and from all public, regulatory or governmental agencies and bodies,
to own, lease and operate its properties and conduct its business as now being
conducted as described in the Offering Memorandum except where the failure to
possess such requisite power and authority, or the necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses and
permits, would not have a material adverse effect on the business, properties,
operations, condition (financial or other) or results of operations of the
Company, and no such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome restriction
not adequately disclosed in the Offering Memorandum.
(j) Except as described in the Offering Memorandum, there is no
litigation or governmental proceeding to which the Company or Buffington
Harbor, L.L.C. is a party or to which any property of the Company or Buffington
Harbor, L.L.C. is subject or which is pending or, to the knowledge of the
Company, contemplated against the Company or Buffington Harbor, L.L.C. which
might reasonably be expected to result in any material adverse change in the
business, properties, operations, condition (financial or other) or, results of
operations of the Company.
5
<PAGE> 6
(k) The Company has not taken and will not take, directly or indirectly,
any action designed to cause or result in, or which constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Senior Notes to facilitate the sale or resale of the Senior Notes.
(l) The Company is not (i) an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (iii) subject to
regulation under the Federal Power Act or any federal or state statute or
regulation limiting its ability to incur indebtedness for borrowed money.
(m) None of the Company, any of its affiliates or any person acting on
its behalf (excluding the Initial Purchaser, as to which no representation is
made) has engaged in any "directed selling efforts" (as such term is defined in
Regulation S of the Securities Act) in the United States with respect to the
Notes and (ii) each of the Company and any of its affiliates and any person
acting on behalf of any of them (other than the Initial Purchaser and its
affiliates, as to whom the Company makes no representation) has complied with
the offering restrictions requirement of Regulation S.
(n) None of the Company, any of its affiliates or any person authorized
to act on its behalf (excluding the Initial Purchaser, as to which no
representation is made) has engaged in any form of general solicitation or
general advertising (as such terms are defined in Rule 502(c) under the
Securities Act).
(o) None of the Company, any of its affiliates (as defined in Rule 501(b)
under the Securities Act) or any person authorized to act on its behalf
(excluding the Initial Purchaser, as to which no representation is made) has
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of any security (as such term is defined in the Securities Act) of the
Company in a manner which would require registration under the Securities Act.
6
<PAGE> 7
(p) The Senior Notes are eligible for resale pursuant to Rule 144A and,
when issued, will not be of the same class as securities listed on a national
securities exchange registered under Section 6 of the Exchange Act or quoted in
a U.S. automated inter-dealer quotation system.
(q) The Company is in compliance in all material respects with the
Certificate of Suitability issued by the IGC and all applicable rules,
regulations and orders of the IGC. The Company is taking all requisite steps
to procure a gaming license from the IGC.
(r) Subject to compliance by the Initial Purchaser with the
representations and warranties set forth in Section 2 and the procedures set
forth in Section 3 hereof, it is not necessary in connection with the offer,
sale and delivery of the Senior Notes to the Initial Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Senior Notes under the Securities Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended.
(s) The Company does not have any material liabilities or obligations
("Liabilities"), except (i) as reflected or reserved against in the balance
sheets of the Company included in financial statements for the periods ended
December 31, 1995 and March 31, 1996, and not heretofore discharged, (ii) as
specifically disclosed or specifically contemplated in the Offering Memorandum
or (iii) liabilities incurred in the ordinary course of business since December
31, 1995.
(t) Except as disclosed in the Offering Memorandum, and except as to
defaults which individually or in the aggregate would not be material to the
Company, the Company is not in violation or default of any provision of its
articles of organization, operating agreement, or other organizational
documents, or is in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties are bound; and there does not exist any state
of facts which constitutes an event of default on the part of the Company as
defined in such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
7
<PAGE> 8
(u) The Company is in compliance, and has complied in all material
respects, at all times during its existence, and all transactions involving the
issuance, offer, placement and sale, pursuant to the terms of the Transaction
Documents, of the Notes comply, in all material respects, with all applicable
federal, state and local statutes, codes, ordinances, rules and regulations of
the United States and all other countries and subdivisions thereof (the "Laws")
to the extent applicable other than violations which would not have a material
adverse effect on the Company. The Company has not received notice within the
past three (3) years of any violations of any Laws, which violations would be
material to the Company. Except as disclosed in the Offering Memorandum, the
Company and Buffington Harbor L.L.C. have all material licenses, franchises,
permits, certificates and other approvals or authorizations from all regulatory
officials and bodies that are necessary to the conduct of their respective
businesses and to the ownership or lease of their respective properties as
described or contemplated in the Offering Memorandum.
(v) The Company and Buffington Harbor, L.L.C. are each in compliance with
any and all Laws relating to the environment or health and safety except where
a failure is not reasonably likely to be material and adverse to the validity
or enforceability of any of the Transaction Documents or the businesses,
assets, financial condition or results of operations of the Company or
Buffington Harbor, L.L.C. Except as disclosed in the Offering Memorandum,
there exists no fact, and no event has occurred, which has or is reasonably
likely to result in material liability (including, without limitation, alleged
or potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damages, personal injuries
or penalties) of the Company or Buffington Harbor, L.L.C. arising out of, based
on or resulting from the presence or release into the environment of any
hazardous material (including, without limitation, any pollutant or contaminant
or hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any Law) or any violation of any Law
relating to the environment.
(w) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is a valid
8
<PAGE> 9
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(x) The Senior Notes have been duly and validly authorized by the
Company, and the Senior Notes, when authenticated by the Trustee and issued,
sold and delivered in accordance with this Agreement and the Indenture, will
have been duly and validly executed, authenticated, issued and delivered and
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to the benefits
provided by the Indenture except as such enforcement may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and (ii) general principles of equity (regardless of whether
such enforcement may be sought in a proceeding in equity or at law). The
Senior Notes, when executed, authenticated, issued and delivered as provided in
the Indenture, will conform in all material respects to the description thereof
contained in the Offering Memorandum.
(y) The notes to be issued under the Indenture in exchange for the Senior
Notes (the "Senior Exchange Notes") have been duly and validly authorized for
issuance by the Company, and when authenticated by the Trustee and issued and
delivered in accordance with the exchange offer and the Indenture, will have
been duly and validly executed, authenticated, issued and delivered and will
constitute valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to the benefits
provided by the Indenture except as such enforcement may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and (ii) general principles of equity (regardless of whether
such enforcement may be sought in a proceeding in equity or at law). The
Senior Exchange Notes, when executed, authenticated, issued and delivered as
provided in the Indenture and exchange offer will conform in all material
respects to the description thereof contained in the Offering Memorandum.
(z) The Indenture has been duly and validly authorized by the Company,
and the Indenture, when executed and delivered by
9
<PAGE> 10
the Company and the Trustee, will constitute a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as such enforcement may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights and remedies generally and (ii) general
principles of equity (regardless of whether such enforcement may be sought in a
proceeding in equity or at law). The Indenture, when executed and delivered by
the Company and the Trustee, will conform in all material respects to the
description thereof contained in the Offering Memorandum.
(aa) The Registration Rights Agreement has been duly and validly
authorized by the Company, and the Registration Rights Agreement, when executed
and delivered by the Company and the Initial Purchaser, will constitute a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and (ii) general principles of equity (regardless of whether
such enforcement may be sought in a proceeding in equity or at law). The
Registration Rights Agreement, when executed and delivered by the Company and
the Initial Purchaser, will conform in all material respects to the description
thereof contained in the Offering Memorandum.
(bb) The Collateral Documents to be executed by the Company or Barden
Development, Inc., an Indiana corporation and manager of the Company ("Barden
Development"), when executed and delivered by the Company, Barden Development
and the other parties thereto, will constitute valid and binding obligations of
the Company or Barden Development, as the case may be, enforceable against the
Company or Barden Development, as the case may be, except as such enforcement
may be subject to or limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and (ii) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding in equity
or at law). The Collateral Documents, when executed and delivered by the
parties thereto, will conform in
10
<PAGE> 11
all material respects to the descriptions thereof contained in the Offering
Memorandum.
(cc) All of the outstanding membership interests in the Company are duly
and validly authorized and issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued and are not now in violation of or subject to any preemptive rights.
Except as disclosed in or contemplated by the Offering Memorandum, the
financial statements of the Company, and the related notes thereto, included in
the Offering Memorandum, the Company does not have outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, membership interests or any such options, rights,
convertible securities or obligations.
(dd) No preemptive rights or other rights to subscribe for or purchase
securities exist with respect to the issuance and sale of the Senior Notes by
the Company pursuant to this Agreement. No security holder of the Company has
any right which has not been satisfied or waived to require the Company to
register the sale of any securities owned by such security holder under the
Act, except as contemplated by the Registration Rights Agreement.
(ee) When issued, the Senior Notes will rank pari passu in right of
payment with all of the Company's other unsubordinated indebtedness for
borrowed money.
(ff) The Company has legal and valid title to all the properties and
assets reflected as owned in the financial statements hereinabove described (or
elsewhere in the Offering Memorandum), subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except (i) those, if any, reflected in such
financial statements (or elsewhere in the Offering Memorandum), (ii) those
which are not material in amount or do not adversely affect the use made and
proposed to be made of such property by the Company or (iii) Permitted Liens
(as defined in the Indenture). The Company holds its leased properties under
valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the
11
<PAGE> 12
Company. Except as disclosed in the Offering Memorandum, the Company owns or
leases all such properties as are necessary to its operations as now conducted.
(gg) Except as disclosed in or specifically contemplated by the Offering
Memorandum, the Company has sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct its
business as now conducted; the expiration of any trademarks, trade names,
patent rights, copyrights, licenses, approvals or governmental authorizations
would not have a material adverse effect on the condition (financial or
otherwise), business or results of operations of the Company; and the Company
has no knowledge of any material infringement by it of trademark, trade name,
patent, copyright, licenses, trade secret or other similar rights of others,
and there is no claim being made against the Company regarding trademark, trade
name, patent, copyright, license, trade secret or other infringement which
would have a material adverse effect on the condition (financial or otherwise),
business or results of operations of the Company.
(hh) The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid all taxes shown as due thereon;
and the Company has no knowledge of any tax deficiency which has been asserted
or threatened against the Company which could materially and adversely affect
the business, operations or properties of the Company.
(ii) The Company and Buffington Harbor, L.L.C. each maintains insurance
of the types and in the amounts generally deemed adequate for its business
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
(jj) To the knowledge of the Company, the Company has not at any time (i)
made any unlawful contribution to any candidate for office, or failed to
disclose fully any contribution in violation of law or (ii) made any payment to
any federal, state or local governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
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<PAGE> 13
(kk) Except as disclosed or specifically contemplated by the Offering
Memorandum, Buffington Harbor, L.L.C. has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies to own, lease and operate its properties and
conduct its business as now being conducted or proposed to be conducted as
described in the Offering Memorandum except where the failure to possess such
requisite power and authority would not have a material adverse effect on the
business, properties, operation, creditor (financial or other) or results of
operations of Buffington Harbor, L.L.C., and no such consent, approval,
authorization, order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in the Offering
Memorandum. The consummation of the transactions contemplated by the Offering
Memorandum would not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with notice
or lapse of time, or both would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of Buffington Harbor, L.L.C. pursuant to any agreement, instrument,
franchise, license or permit to which Buffington Harbor, L.L.C. is a party or
by which its properties or assets may be bound or (B) violate or conflict with
any judgment, decree, order, statute, rule or regulation or any court of any
public, governmental or regulatory agency or body applicable to Buffington
Harbor, L.L.C. or any of its properties or assets.
(ll) Buffington Harbor, L.L.C. has legal and valid title to all real
properties and has legal and valid title to all personal properties purported
to the owned by Buffington Harbor, L.L.C. in each case free and clear of any
security interest, lien, charge, or encumbrance except those which are incurred
in the ordinary course of business which do not individually or in the
aggregate materially interfere with the use made or proposed to be made of such
properties.
(mm) The First Amended and Restated Operating Agreement of Buffington
Harbor, L.L.C. between the Company and Trump Indiana, Inc. dated as of October
31, 1995, as amended, the Berthing Agreement dated April 23, 1996 between the
Company and Buffington Harbor, L.L.C., and the Development Agreement dated as
13
<PAGE> 14
of March 26, 1996 between the Company and the City of Gary, Indiana
(collectively, the "Project Documents") have been duly authorized, executed and
delivered by the Company and constitute legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms, except as such enforcement may be subject to or limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of when such enforcement may be sought in a
proceeding in equity or at law). The Project Documents are in full force and
effect and conform in all material respects to the descriptions thereof
contained in the Offering Memorandum.
(nn) The Company does not intend to, not does it believe that it will,
incur debts beyond its ability to pay such debts as they mature. The assets of
the Company do not constitute unreasonably small capital to carry out the
business of the Company, as conducted or as proposed to be conducted. Upon the
issuance of the Senior Notes, the assets of the Company will not constitute
unreasonably small capital to carry out its business as now conducted,
including the capital needs of the Company, taking into account the projected
capital requirements and capital availability.
(oo) No action has been taken and no law, statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Senior Notes, prevents or suspends the use
of any Preliminary Offering Memorandum or the Offering Memorandum, or suspends
the sale of the Senior Notes in any jurisdiction referred to in Section 4(c)
hereof; no injunction, restraining order or other order or relief of any nature
by a federal or state court or other tribunal of competent jurisdiction has
been issued with respect to the Company that would prevent or suspend the
issuance or sale of the Senior Notes or the use of any Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction referred to in
Section 4(c) hereof; no action, suit or proceeding is pending or threatened
against or affecting the Company before any court or arbitrator or any
governmental body, agency or official, domestic or foreign, which, if adversely
determined, would materially interfere with or adversely affect the issuance of
the Senior Notes or in any manner draw into
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<PAGE> 15
question the validity of the Transaction Documents, the Project Documents or
the Senior Notes; and every request of any securities authority or agency of
any jurisdiction for additional information (to be included in the Offering
Memorandum or otherwise) has been complied with.
(pp) All roads, easements and rights of way necessary for the full
utilization of and access to the vessel to be operated by the Company and the
conduct of its business have been completed or the necessary steps have been
taken by the Company to assure the complete construction and installation
hereof as contemplated in the Offering Memorandum. All utility services
necessary for the operation of the business of the Company will be available at
the scheduled time for commencent of operation of the vessel to be operated by
the Company.
(qq) The Initial Purchaser has been furnished with a copy of the material
plans and specifications for the construction of the improvements at Buffington
Harbor, the equipment of the chartered vessel and other necessary capital
expenditures, except those associated with the Permanent Vessel. Such plans
and specifications are satisfactory to the Company. The anticipated cost of
such improvements (including interest, legal, architectural, engineering,
planning, zoning and other similar costs) does not exceed the amount set forth
under the caption "Use of Proceeds" in the Offering Memorandum. The Company is
not aware of any material defects in such improvements.
2. Purchase, Sale and Delivery of the Senior Notes. (a) On the basis
of the representations, warranties, covenants and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
sell to the Initial Purchaser and the Initial Purchaser agrees to purchase from
the Company $105,000,000 principal amount of Senior Notes in the amount set
forth on Schedule 1 hereto at a purchase price equal to 96.9301% of their
principal amount plus accrued interest, if any.
(b) Payment of the purchase price for, and delivery of, the Senior Notes
shall be made at the offices of Sidley & Austin, 875 Third Avenue, New York,
New York 10022 at 9:30 a.m. (New York City time) unless postponed in
accordance with Section 9 hereof on May 22, 1996 or such other time and date as
15
<PAGE> 16
shall be mutually agreed between the Company and the Initial Purchaser (such
time and date of such payment and delivery being herein called the "Closing
Date"). At or prior to the Closing Date, the Company shall execute and deliver
for authentication one or more certificates in global or definitive form for
the Senior Notes in such denominations and registered in such names as the
Initial Purchaser requests upon notice to the Company at least two business
days prior to the Closing Date. Against such delivery of the Senior Notes, the
Initial Purchaser shall pay or cause to be paid to the Company the purchase
price for the Senior Notes. Payment shall be made to the Company by certified
or official bank check or checks drawn in New York Clearing House funds or
similar next day funds payable to the order of the Company. The Initial
Purchaser shall have the right to deduct from the purchase price payable to the
Company hereunder the selling concession and any expenses payable pursuant to
the Letter Agreement dated February 27, 1996 among the Company, Barden
Development and the Initial Purchaser.
(c) The Initial Purchaser hereby represents and warrants to, and agrees
with, the Company that it (i) is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act or an "accredited investor" as
defined in Rule 501(a)(1), (2), (3), or (7) under the Securities Act; (ii) has
not and will not solicit offers for, or offer or sell, Notes by means of any
general solicitation or general advertising within the meaning of Rule 502(c)
under Regulation D under the Securities Act; and (iii) will otherwise act in
accordance with the terms and conditions set forth in this Agreement and in the
Offering Memorandum in connection with the placement of the Senior Notes
contemplated hereby.
3. Subsequent Offers and Resales of the Senior Notes.
The Initial Purchaser and the Company hereby establish and agree to
observe the following procedures in connection with the offer and resale by the
Initial Purchaser of the Senior Notes:
(a) Offers and sales of the Senior Notes will be made by the Initial
Purchaser only (i) to institutional investors that are reasonably believed to
qualify as accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities
16
<PAGE> 17
Act) (each such institutional investor being hereinafter referred to as an
"institutional accredited investor") or, (ii) in the case of Senior Notes
resold or otherwise transferred pursuant to Rule 144A under the Securities Act,
to institutional investors that are reasonably believed to qualify as
"qualified institutional buyers" (as therein defined) (each such institutional
investor being hereinafter referred to as a "qualified institutional buyer") or
(iii) to non-U.S. persons outside the United States in reliance upon Regulation
S under the Securities Act, in transactions meeting the requirements of
Regulation S.
(b) The Senior Notes will be offered by the Initial Purchaser only by
approaching prospective purchasers on an individual basis. No general
solicitation or general advertising (as such terms are used in Regulation D
under the Securities Act) will be used in connection with the offering of the
Senior Notes.
(c) In the case of a non-bank purchaser of a Senior Note acting as a
fiduciary for one or more third parties, in connection with an offer and sale
to such purchaser pursuant to clause (a) above, each third party shall, in the
judgment of the Initial Purchaser, be an institutional accredited investor or a
non-U.S. person outside the United States.
(d) In connection with sales outside the United States, the Initial
Purchaser agrees that it will not offer, sell or deliver Senior Notes (i) as
part of its distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering or last closing date with respect to
the Senior Notes, to, or for the account or benefit of, U.S. persons.
Accordingly, the Initial Purchaser represents and agrees that neither it, its
affiliates nor any person acting on its behalf has engaged or will engage in
any directed selling efforts with respect to the Senior Notes, and further that
each such person has complied and will comply with the offering restrictions
requirement of Regulation S under the Securities Act. The Initial Purchaser
also agrees that, at or prior to confirmation of sale of the Senior Notes, it
will send to each dealer to which it sells Senior Notes during the restricted
period a confirmation or other notice setting forth the restrictions on offers,
sales and deliveries of the Senior Notes
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<PAGE> 18
within the United States or to, or for the account or benefit of U.S. persons.
(e) The Initial Purchaser agrees that (i) it has not offered or sold (and
will not, for so long as Part III of the Companies Act 1985 remains in force in
relation to Notes which are not listed on the London Stock Exchange, offer or
sell) any Senior Notes, other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act 1985; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect of
anything done by it in relation to the Senior Notes in, from or otherwise
involving the United Kingdom; and (iii) it has 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 Senior Notes to a person who is of a kind
described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 (as amended).
(f) The Initial Purchaser agrees that it has not, directly or indirectly,
offered or sold and will not, directly or indirectly, offer or sell any Senior
Notes in Japan, except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Securities and Exchange
Law and in compliance with other applicable requirements of Japanese Law.
(g) The Initial Purchaser agrees that it will not offer or sell any
Senior Notes directly or indirectly in any province of Canada except in
compliance with all requirements of applicable securities laws.
(h) No sale of the Senior Notes to any one purchaser will be for less
than $250,000 principal amount, and no Senior Note will be issued in a smaller
principal amount. If the purchaser is a non-bank fiduciary acting on behalf of
others, each person for whom it is acting must purchase at least $250,000
principal amount of the Senior Notes.
(i) The transfer restrictions and the other provisions set forth in the
Indenture, including the legend required
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<PAGE> 19
thereby, shall apply to the Senior Notes except as otherwise agreed by the
Company and the Initial Purchaser. Following the sale of the Senior Notes by
the Initial Purchaser to subsequent purchasers (the "Subsequent Purchasers")
pursuant to the terms hereof, the Initial Purchaser shall not be liable or
responsible to the Company for any losses, damages or liabilities suffered or
incurred by the Company, including any losses, damages or liabilities under the
Securities Act, arising from or relating to any resale or transfer of any
Senior Notes.
(j) The Initial Purchaser will deliver to each purchaser of the Senior
Notes from the Initial Purchaser, in connection with its original distribution
of the Senior Notes, a copy of the Offering Memorandum, as amended and
supplemented at the date of such delivery.
(k) In connection with its original distribution of the Senior Notes, the
Company agrees that, prior to any offer or resale of the Senior Notes by the
Initial Purchaser, the Initial Purchaser and Counsel for the Initial Purchaser
shall have the right to make reasonable due diligence inquiries into the
business of the Company. The Company also agrees to provide answers to
questions from each prospective Subsequent Purchaser concerning the Company (to
the extent that such information is available to prospective Subsequent
Purchasers without unreasonable effort or expense and to the extent the
provision thereof is not prohibited by applicable law) and the terms and
conditions of the offering of the Senior Notes, as provided in the Offering
Memorandum.
4. Convenants of the Company. The Company covenants and agrees with the
Initial Purchaser that:
(a) If at any time prior to the Closing Date any event shall have
occurred as a result of which the Offering Memorandum as then amended or
supplemented would in the judgment of the Initial Purchaser or the Company
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
the Company will notify the Initial Purchaser promptly and prepare and deliver
to the Initial Purchaser an
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<PAGE> 20
amendment or supplement (in form and substance satisfactory to you) which will
correct such statement or omission.
(b) The Company will promptly deliver to the Initial Purchaser such
number of copies of the Offering Memorandum and all amendments of and
supplements thereto as the Initial Purchaser may reasonably request.
(c) The Company will endeavor in good faith, in cooperation with the
Initial Purchaser, to qualify the Senior Notes for offering and sale under the
securities laws relating to the offering or sale of the Senior Notes in such
jurisdictions as the Initial Purchaser may designate and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(d) The Company will apply the proceeds from the sale of the Senior Notes
as set forth under "Use of Proceeds" in the Offering Memorandum. The Company
will comply with the provisions of the Collateral Documents concerning
disbursement of funds.
(e) The Company will use its best efforts to cause the Senior Notes to be
designated Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc., relating to
trading in the PORTAL market.
(f) During the period of 90 days from the date hereof, the Company will
not, without prior written consent of the Initial Purchaser or as permitted in
the Indenture, issue, sell, offer or contract to sell, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, any debt securities
in any such case for cash, other than the Company's sale of Senior Notes
hereunder.
(g) None of the Company, its affiliates (as defined in Rule 501(b) of the
Securities Act) or any person acting on their behalf (other than the Initial
Purchaser and its affiliates) will solicit any offer to buy or offer or sell
the Senior Notes by means of any form of general solicitation or general
advertising
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(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.
(h) None of the Company, its affiliates (as defined in Rule 501(b) of the
Securities Act) or any person acting on their behalf will offer, sell or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) of the Company in a manner that would require
the registration of the Senior Notes under the Securities Act.
(i) During the period from the Closing Date to three years after the
Closing Date, the Company and its Subsidiaries will not, and will not permit
any of their "affiliates" (as defined in Rule 144 under the Securities Act) to,
resell any of the Senior Notes that have been reacquired by them, except for
Senior Notes purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act.
(j) None of the Company, its affiliates and any person acting on their
behalf (other than the Initial Purchaser) will engage in any directed selling
efforts (as that term is defined in Regulation S) with respect to the Senior
Notes sold pursuant to Regulation S, and the Company and its affiliates and
each person acting on their behalf (other than the Initial Purchaser) will
comply with the offering restrictions of Regulation S with respect to those
Senior Notes sold pursuant thereto.
(k) The Company will, so long as the Senior Notes are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, either (i) file reports and other information with the
Commission under Section 13 or 15(d) of the Exchange Act, or (ii) in the event
it is not subject to Section 13 or 15(d) of the Exchange Act, make available to
holders of the Senior Notes and prospective purchasers of the Senior Notes
designated by such holders, upon request of such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resales
of the Senior Notes.
(l) The Company will, if requested by the Initial Purchaser, use its best
efforts on cooperation with the Initial
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<PAGE> 22
Purchaser to permit the Senior Notes to be eligible for clearance and
settlement through The Depository Trust Company ("DTC").
(m) Each of the Senior Notes will bear the legend contained in "Notice to
Investors" in the Offering Memorandum for the time period and upon the other
terms stated therein, except after such Senior Note is resold pursuant to a
registration statement effective under the Securities Act.
5. Payment of Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Offering
Memorandum and any amendments or supplements thereto (including, without
limitation, fees and expenses of the Initial Purchaser's counsel and the
Company's accountants and counsel), the Transaction Documents (including this
Agreement) and all other documents related to the offering of the Senior Notes
(including those supplied to the Initial Purchaser in quantities as hereinabove
stated), (ii) the issuance, transfer and delivery of the Senior Notes to the
Initial Purchaser, including any transfer or other taxes payable thereon, (iii)
the qualification of the Senior Notes under state or foreign securities or Blue
Sky laws, including the costs of printing and mailing a preliminary and final
"Blue Sky Survey" and the fees of counsel for the Initial Purchaser and such
counsel's disbursements and expenses in relation thereto, (iv) the cost of
printing the Senior Notes, (v) the cost and charges of any transfer agent,
registrar, trustee or fiscal paying agent and (vi) the cost and charges of DTC,
Euroclear and CEDEL.
6. Conditions of Initial Purchaser's Obligations. The obligations of the
Initial Purchaser to purchase and pay for the Senior Notes as provided herein,
shall be subject to the accuracy of the representations and warranties of the
Company herein contained, as of the date hereof and as of the Closing Date, to
the absence from any certificates, opinions, written statements or letters
furnished to you or to Sidley & Austin ("Initial Purchaser's Counsel") pursuant
to this Section 6 of any misstatement or omission, to the performance by the
Company of
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<PAGE> 23
its obligations hereunder, and to the following additional conditions:
(a) At the Closing Date you shall have received
the opinion of Dykema Gossett PLLC, counsel for the Company, addressed to the
Initial Purchaser and dated the Closing Date, to the effect that:
(1) The Company has been duly formed and is existing as a limited
liability company in good standing under the laws of its jurisdiction of
formation and is duly qualified to do business as a foreign limited
liability company and is in good standing in all other jurisdictions
where the ownership or leasing of properties or the conduct of its
business requires such qualification, except for jurisdictions in which
the failure to so qualify would not have a material adverse effect on the
Company taken as a whole. The Company has all requisite power and
authority to own, lease and license its respective properties and conduct
its business as described in the Offering Memorandum;
(2) The Company has the requisite power and authority to enter into
this Agreement and to sell and deliver the Senior Notes to the Initial
Purchaser; this Agreement has been duly authorized, executed and
delivered by or on behalf of the Company; and no approval, authorization,
order or consent of any court or governmental authority or agency is
required under the laws of State of Indiana or the United States of
America in connection with the transactions contemplated by this
Agreement, except such as have been obtained or made or as may be
required under applicable Blue Sky laws in connection with the purchase
and distribution of the Senior Notes by the Initial Purchaser;
(3) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby by the Company
do not and will not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, any agreement,
instrument,
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<PAGE> 24
franchise, license or permit known to such counsel to which the Company
is a party or by which the Company or its properties or assets may be
bound or (B) violate or conflict with any provision of the articles of
organization or operating agreement of the Company, or, to the best
knowledge of such counsel, any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency
or body in the United States or any other country having jurisdiction
over the Company or any of its properties or assets;
(4) The Senior Notes have been duly authorized by requisite action
on the part of the Company, and the Senior Notes, when executed, paid for
by (assuming they have been duly authenticated in accordance with the
terms of the indenture) and delivered to the Initial Purchaser in
accordance with the terms of this Agreement, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and will be entitled to the benefits provided
for by the Indenture, except that enforcement may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights and remedies generally and (ii) general principles of equity
(regardless of whether such enforcement may be sought in a proceeding in
equity or at law);
(5) The Senior Exchange Notes have been duly and validly authorized
for issuance by the Company, and when authenticated by the Trustee and
issued and delivered in accordance with the exchange offer and the
Indenture, will have been duly and validly executed, authenticated,
issued and delivered and will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms and entitled to the benefits provided by the Indenture except as
such enforcement may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies generally
and (ii) general principles of equity (regardless of whether such
enforcement may be sought in a proceeding in equity or at law);
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(6) The Indenture has been duly authorized, executed and delivered
by the Company and (assuming the due authorization, execution and
delivery thereof by the Trustee) constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except that enforcement may be subject to or limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and
remedies generally and (ii) general principles of equity (regardless of
whether such enforcement may be sought in a proceeding in equity or at
law);
(7) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the Initial Purchaser)
constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that (a)
enforcement may be subject to or limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and (ii)
general principles of equity (regardless of whether such enforcement may
be sought in a proceeding in equity or at law) and (b) the
indemnification and contribution provisions contained in the Registration
Rights Agreement may be limited by federal or state securities laws or
the public policy underlying such laws;
(8) The Collateral Documents and the Project Documents have been
duly authorized, executed and delivered by the Company or Barden
Development and (assuming the due authorization, execution and delivery
by the other parties thereto) constitute valid and binding obligations of
the Company or Barden Development, as the case may be, enforceable
against the Company or Barden Development, as the case may be, except
that enforcement may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies generally
and (ii) general principles of equity (regardless of whether such
enforcement may be sought in a proceeding in equity or at law).
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(9) The Collateral Agreements are effective to create valid
security interests in favor of the Trustee or the Collateral Agent in the
collateral defined in such agreements to secure the Senior Notes and the
other obligations set forth therein.
(10) Based upon such counsel's understanding that the UCC Financing
Statements will be filed in the offices indicated thereon, upon such
filings there will be created under the Security Agreement and the
Trademark Security Agreement, and the Company will have granted to the
Trustee for the benefit of the Holders, an enforceable and perfected
security interest in all of the Company's chattel paper and general
intangibles and other property (with the exception of those items
explicitly excluded from the Collateral under the Security Agreement) and
all of the Borrower's inventory and equipment located or deemed located
in the State of Indiana, in each case to the extent a security interest
therein may be perfected by filing.
(11) Based upon such counsel's understanding that (a) the UCC
Financing Statements will be filed in the offices indicated thereon and
(b) the pledges of limited liability company interests will be registered
to the Trustee in the records of the Company and the BHR Joint Venture,
upon such filings and registrations there will be created under the BHR
Pledge Agreement and the BDI Pledge Agreement, and each of the Company
and Barden Development, respectively, will have granted to the Trustee,
for the benefit of the Holders, an enforceable and perfected security
interest in all of the Company's and Barden Development's right, title
and interest in and to all of the pledged collateral under the BHR Pledge
Agreement and the BDI Pledge Agreement.
(12) The summary of the provisions of the contracts and agreements
summarized in the Offering Memorandum under the captions "Description of
Senior Notes" and "Material Agreements", fairly and accurately summarize
such matters in all material respects;
(13) The information in the Offering Memorandum under each of the
headings "Regulation" and "Material
26
<PAGE> 27
Federal Income Tax Considerations," insofar as it purports to constitute
a summary of matters of law referred to therein, fairly and accurately
summarizes such matters in all material respects;
(14) It is not necessary in connection with (a) the offer, sale and
delivery of the Senior Notes to the Initial Purchaser in the manner
contemplated by the Purchase Agreement and the Offering Memorandum or (b)
the initial resale of the Senior Notes by the Initial Purchaser in the
manner contemplated in the Purchase Agreement and the Offering Memorandum
to (i) register the Senior Notes under the Securities Act, it being
understood that no opinion need be expressed as to any subsequent resale
of any Senior Note, or (ii) qualify the Indenture under the Trust
Indenture Act of 1939, as amended. In rendering the opinion set forth in
this paragraph, such counsel may assume without independent investigation
(1) the accuracy of the representations and warranties of the Company set
forth in Section 1 of the Purchase Agreement and of the Initial Purchaser
in Section 2 of the Purchase Agreement, (2) the compliance of the Initial
Purchaser with the offering and transfer procedures and restrictions
described in the Offering Memorandum, (3) the due performance by the
Company of the covenants and agreements set forth in Sections 4(h) and
4(j) of the Purchase Agreement, (4) the accuracy of the representations
and warranties made in accordance with the Purchase Agreement and the
Offering Memorandum by purchasers to whom the Initial Purchaser initially
resells Senior Notes and (5) that purchasers to whom the Initial
Purchaser initially resells Senior Notes receive a copy of the Offering
Memorandum prior to such sale;
(15) To counsel's knowledge there is no litigation or governmental
or other action, suit, proceeding or investigation before any court or
before or by any public, regulatory or governmental agency or body
pending or threatened against, or involving the properties or business
of, the Company, which is material to the Company which has not been
properly disclosed in the Offering Memorandum;
(16) Such counsel has participated in conferences with officers and
other representatives of the Company,
27
<PAGE> 28
representatives of the independent accountants of the Company,
representatives of the Initial Purchaser and representatives of the
Initial Purchaser's Counsel at which the contents of the Offering
Memorandum and related matters were discussed and, although such counsel
is not passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Offering Memorandum and has made no independent check or verification
thereof (other than to the extent specified in paragraphs 7 and 8 above),
on the basis of the foregoing, no facts have come to the attention of
such counsel which would lead such counsel to believe that the Offering
Memorandum, as of its date and as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no belief or opinion with respect to the financial
statements and schedules and other financial data included therein or
excluded therefrom); and
(17) Counsel shall also render an opinion as to such other matters
as the Initial Purchaser or its legal counsel may reasonably request.
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Initial
Purchaser's counsel) of other counsel reasonably acceptable to Initial
Purchaser's Counsel, familiar with the applicable laws; (ii) as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company or Barden Development and certificates or other written
statements of officers of departments of various jurisdictions having custody
of documents respecting the existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to
Initial Purchaser's counsel. The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is
28
<PAGE> 29
in form satisfactory to such counsel and, in his opinion, you and the Initial
Purchaser's Counsel are justified in relying thereon.
(b) All proceedings taken in connection with the sale of the Senior Notes
as herein contemplated shall be satisfactory in form and substance to you and
to Initial Purchaser's Counsel, and the Initial Purchaser shall have received
from said Initial Purchaser's Counsel a favorable opinion, dated the Closing
Date with respect to the issuance and sale of the Senior Notes, the Offering
Memorandum and such other related matters as you may reasonably require, and
the Company shall have furnished to Initial Purchaser's Counsel such documents
as they request for the purpose of enabling them to pass upon such matters.
(c) At the Closing Date you shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated the Closing Date, to the effect that (i) as of the date hereof
and as of the Closing Date, the representations and warranties of the Company
set forth in Section 1 hereof are accurate, (ii) as of the Closing Date, the
obligations of the Company to be performed hereunder on or prior thereto have
been duly performed and (iii) subsequent to the respective dates as of which
information is given in the Offering Memorandum, the Company has not sustained
any material loss or interference with its business or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding,
and there has not been any material adverse change, or any development
involving a material adverse change, in the business, properties, operations,
condition (financial or otherwise), or results of operations of the Company,
except in each case as described in or contemplated by the Offering Memorandum.
(d) At the time this Agreement is executed and at the Closing Date, you
shall have received a letter from Coopers & Lybrand, L.L.P., independent
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date, addressed to the Initial Purchaser in
form and substance satisfactory to the Initial Purchaser.
(e) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchaser or the Initial Purchaser's
29
<PAGE> 30
counsel such further information, certificates and documents as the Initial
Purchaser or the Initial Purchaser's counsel may reasonably request.
(f) At the Closing Date, the Senior Notes shall have been approved for
quotation in the PORTAL market.
(g) The Company, Barden Development and Buffington Harbor, L.L.C. shall
have executed and delivered the Transaction Documents and Project Documents and
the Initial Purchaser shall have received counterparts, conformed as executed,
thereof. The Transaction Documents and the Project Documents shall be in full
force and effect. The Company shall have received the requisite governmental
and regulatory approval in connection with each of the Transaction Documents
and Project Documents and the transactions contemplated by the Offering
Memorandum to be completed on or before the Closing Date.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
the Initial Purchaser's Counsel pursuant to this Section 6 shall not be in all
material respects reasonably satisfactory in form and substance to the Initial
Purchaser and to the Initial Purchaser's Counsel, all obligations of the
Initial Purchaser hereunder may be canceled by you at, or at any time prior to,
the Closing Date. Notice or such cancellation shall be given to the Company in
writing, or by telephone, telex or telegraph, confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser and each person, if any, who controls the Initial Purchaser within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several,
to which they or any of
30
<PAGE> 31
them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Offering
Memorandum or the Preliminary Offering Memorandum or arise out of or are based
upon the 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 arise out of or are based upon any inaccuracy in the representations and
warranties of the Company contained herein or any failure of the Company to
perform its obligations hereunder or under applicable law; and will reimburse
the Initial Purchaser and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by the Initial Purchaser or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such case
to the extent but only to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Initial Purchaser expressly for use therein; and
provided, further, that this indemnity agreement with respect to the
Preliminary Offering Memorandum shall not inure to the benefit of the Initial
Purchaser from whom the person asserting any such losses, liabilities, claims,
damages or expenses purchased Notes, or any person controlling the Initial
Purchaser, if a copy of the Offering Memorandum (as then amended or
supplemented if the Company shall have furnished any such amendments or
supplements thereto) was not sent or given by or on behalf of the Initial
Purchaser to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Senior Notes to such person and if the
Offering Memorandum (as so amended or supplemented) would have corrected the
defect giving rise to such loss, liability, claim, damage or expense. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including under this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company, the Company's Manager, each of the officers
31
<PAGE> 32
of the Company and each other person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), jointly or
severally, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Offering Memorandum or the Preliminary Offering Memorandum,
or in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchaser
expressly for use therein and will reimburse the Company, or any such director,
officer, or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
in no case shall the Initial Purchaser be liable or responsible for any amount
in excess of the selling concession applicable to the Senior Notes purchased by
the Initial Purchaser hereunder. This indemnity will be in addition to any
liability which the Initial Purchaser may otherwise have, including under this
Agreement. The Company acknowledges that the statements set forth in the first
paragraph under the caption "Plan of Distribution" in the Offering Memorandum
constitutes the only information furnished in writing by or on behalf of the
Initial Purchaser expressly for use in the Offering Memorandum or amendment
thereof or supplement thereto, as the case may be.
32
<PAGE> 33
(c) Promptly after receipt by an indemnified party, under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party, under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure). In case any such
action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party, promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
take charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties) in any of which events such fees and expenses shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above shall only be liable for the legal expenses of one
counsel (and any local counsel) for all indemnified parties and that all such
fees and expenses of counsel shall be reimbursed as they are incurred.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld.
33
<PAGE> 34
8. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held by a court to be unavailable to any indemnifying party, the Company and
the Initial Purchaser shall contribute to the aggregate losses, claims,
damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, labilities and expenses suffered by the
Company any contribution received by the Company from persons other than the
Initial Purchaser, who may also be liable for contribution, including persons
who control the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, officers and managers of the Company) as incurred to
which the Company and one or more of the Initial Purchaser may be subject, in
such proportions as is appropriate to reflect the relative benefits received by
the Company and the Initial Purchaser from the offering of the Senior Notes or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Initial Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Initial Purchaser shall be deemed to be in the same
proportion as (x) the total proceeds from the offering (net of selling
concessions but before deducting expenses) received by the Company and (y) the
selling concessions received by the Initial Purchaser respectively. The
relative fault of the Company and of the Initial Purchaser 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 or the inaccurate or the alleged inaccurate representation or
warranty relates to information supplied by the Company or the Initial
Purchaser and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
34
<PAGE> 35
The Company and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall the Initial Purchaser be
liable or responsible for any amount in excess of the selling concession
applicable to the Notes purchased by the Initial Purchaser hereunder and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 8, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total price at which the Notes sold
hereunder and distributed to the public were offered to the public exceeds the
amount of any damages that such Initial Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. For purposes of this Section 8, each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
the Initial Purchaser, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer and each manager of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties, notify each party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
withheld.
9. Default by the Initial Purchaser. If the Initial Purchaser shall fail
at Closing Date to purchase the Senior Notes it is obligated to purchase under
this Agreement, then this
35
<PAGE> 36
Agreement shall terminate subject to the provisions of Section 10 hereof.
Nothing in this Section shall relieve the Initial Purchaser from its liability
to reimburse the Company for its costs, expenses and damages resulting from
Initial Purchaser's default.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Initial Purchaser and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Initial
Purchaser or any controlling person thereof or on behalf of the Company, any of
its officers and managers or any controlling person thereof, and shall survive
delivery of and payment for the Senior Notes to and by the Initial Purchaser.
The representations contained in Sections 1 and 2(c) and the agreements
contained in Sections 5, 7, 8 and 11(c) hereof shall survive the termination of
this Agreement, including termination pursuant to Section 9 or 11 hereof.
11. Termination.
(a) The Initial Purchaser shall have the right to terminate this Agreement
at any time prior to the Closing Date if (A) any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt the United States or international
securities markets; or (B) if trading on the New York Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited; or (C)
if a banking moratorium has been declared by any United States federal or New
York State authority or if any new restriction materially adversely affecting
the sale of the Senior Notes shall have become effective; or (D) (i) if the
United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been such
change in political, financial or economic conditions if the effect of any such
event in (i) or (ii) in your judgment makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Notes on the terms
contemplated by the Offering Memorandum.
36
<PAGE> 37
(b) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to section 9 (b) or 11 (a) hereof),
or if the sale of the Senior Notes provided for herein is not consummated
because any condition to the obligations of the Initial Purchaser set forth
herein is not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will, subject to demand by you, reimburse the
Initial Purchaser for all out-of-pocket expenses (including the fees and
expenses of its counsel), incurred by the Initial Purchaser in connection
herewith.
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchaser, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to Wasserstein, Perella Securities, Inc. 31 West 52nd Street, New
York, New York 10019-6163, Attention: Andrew Schupak; if sent to the Company,
shall be mailed, delivered, or telegraphed and confirmed in writing to the
Company, 400 Renaissance Center, Suite 2400, Detroit, Michigan 48243,
Attention: Vice President and Chief Financial Officer.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchaser and the Company and the
controlling persons, directors, managers, officers, employees and agents
referred to in Section 7 and 8, and their respective successors and assigns,
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provision herein contained. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Notes from any of the Initial
Purchaser.
37
<PAGE> 38
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
[SIGNATURES ON FOLLOWING PAGE]
38
<PAGE> 39
If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By: Don H. Barden
--------------------------
Name: Don H. Barden
Title: President
Accepted as of the date first above written
WASSERSTEIN PERELLA SECURITIES, INC.
By: James C. Kingsley
39
<PAGE> 40
SCHEDULE 1
Initial Purchaser Principal Amount
- ----------------- ----------------
Wesserstein Perella Securities, Inc. $105,000,000
40
<PAGE> 1
EXHIBIT 4.2
===============================================================================
THE MAJESTIC STAR CASINO, LLC
ISSUER
$105,000,000
12-3/4% Senior Secured Notes due 2003
with Contingent Interest
and
$105,000,000
12-3/4% Senior Exchange Secured Notes due 2003
with Contingent Interest
---------------------------
INDENTURE
---------------------------
Dated as of May 22, 1996
---------------------------
IBJ Schroder Bank & Trust Company
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) 7.06
7.07
(c) 7.06
11.02
(d) 7.06
314 (a) 4.03
4.04
11.02
(b) 10.02
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(d) 10.02
10.03
10.05
(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
</TABLE>
<PAGE> 3
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
(a)(2) N.A.
(b) 6.07
(c) 2.13
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> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATIONBY REFERENCE (1)
SECTION 1.01. DEFINITIONS (1)
SECTION 1.02. OTHER DEFINITIONS (17)
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT (18)
SECTION 1.04. RULES OF CONSTRUCTION (19)
ARTICLE 2
THE NOTES (19)
SECTION 2.01. FORM AND DATING (19)
SECTION 2.02. EXECUTION AND AUTHENTICATION (20)
SECTION 2.03. REGISTRAR AND PAYING AGENT (21)
SECTION 2.04. DEPOSITORY (21)
SECTION 2.05. HOLDER LISTS (21)
SECTION 2.06. TRANSFER AND EXCHANGE (21)
SECTION 2.07. REPLACEMENT NOTES (28)
SECTION 2.08. OUTSTANDING NOTES (29)
SECTION 2.09. TREASURY NOTES (29)
SECTION 2.10. TEMPORARY NOTES (29)
SECTION 2.11. CANCELLATION (30)
SECTION 2.12. DEFAULTED INTEREST (30)
SECTION 2.13. RECORD DAT . (30)
ARTICLE 3
OFFERS TO PURCHASE OR REDEMPTION (30)
SECTION 3.01. NOTICES TO TRUSTEE (30)
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED (31)
SECTION 3.03. NOTICE OF REDEMPTION (32)
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION (32)
SECTION 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE (33)
SECTION 3.06. NOTES PURCHASED OR REDEEMED IN PART (33)
SECTION 3.07. OPTIONAL REDEMPTION (33)
SECTION 3.08. REDEMPTION PURSUANT TO GAMING LAW (34)
SECTION 3.09. MANDATORY REDEMPTION (34)
SECTION 3.10. REPURCHASE OFFERS (34)
ARTICLE 4
COVENANTS (36)
SECTION 4.01. PAYMENT OF NOTES (36)
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY (37)
SECTION 4.03. REPORTS (37)
</TABLE>
(i)
<PAGE> 5
<TABLE>
<S> <C>
SECTION 4.04. COMPLIANCE CERTIFICATE (38)
SECTION 4.05. TAXES (39)
SECTION 4.06. STAY, EXTENSION AND USURY LAWS (39)
SECTION 4.07. RESTRICTED PAYMENTS (39)
SECTION 4.08. RESTRICTIONS ON JOINT VENTURE (41)
SECTION 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND
ISSUANCE OF DISQUALIFIED CAPITAL STOCK (42)
SECTION 4.10. ASSET SALES (43)
SECTION 4.11. EVENT OF LOSS (44)
SECTION 4.12. TRANSACTIONS WITH AFFILIATES (46)
SECTION 4.13. LIENS (46)
SECTION 4.14. LINE OF BUSINESS (46)
SECTION 4.15. CORPORATE EXISTENCE (47)
SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL (47)
SECTION 4.17. REGISTRATION RIGHTS (47)
SECTION 4.18. USE OF PROCEEDS (48)
SECTION 4.19. CASH COLLATERAL AND DISBURSEMENT AGREEMENT (48)
SECTION 4.20. GAMING LICENSES (48)
SECTION 4.21. CONSTRUCTION (49)
SECTION 4.22. MAINTENANCE OF INSURANCE (49)
SECTION 4.23. LIMITATION ON STATUS AS INVESTMENT COMPANY (50)
SECTION 4.24. COLLATERAL DOCUMENTS (50)
SECTION 4.25. FURTHER ASSURANCES (50)
SECTION 4.26. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES (51)
SECTION 4.27. RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY (51)
SECTION 4.28. UNCOMPLETED PROJECT OFFER (52)
SECTION 4.29. UNCOMPLETED VESSEL OFFER (53)
SECTION 4.30. ADDITIONAL SUBSIDIARIES (54)
SECTION 4.31. RATING (54)
ARTICLE 5
SUCCESSORS (54)
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS (54)
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED (55)
ARTICLE 6
DEFAULTS AND REMEDIES (55)
SECTION 6.01. EVENTS OF DEFAULT (55)
SECTION 6.02. ACCELERATION (58)
SECTION 6.03. OTHER REMEDIES (59)
SECTION 6.04. WAIVER OF PAST DEFAULTS (60)
SECTION 6.05. CONTROL BY MAJORITY (60)
SECTION 6.06. LIMITATION ON SUITS (60)
</TABLE>
(ii)
<PAGE> 6
<TABLE>
<S> <C>
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO
RECEIVE PAYMENT (61)
SECTION 6.08. COLLECTION SUIT BY TRUSTEE (61)
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM (61)
SECTION 6.10. PRIORITIES (62)
SECTION 6.11. UNDERTAKING FOR COSTS (62)
SECTION 6.12. MANAGEMENT OF CASINOS (62)
ARTICLE 7
TRUSTEE (63)
SECTION 7.01. DUTIES OF TRUSTEE (63)
SECTION 7.02. RIGHTS OF TRUSTEE (64)
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE (65)
SECTION 7.04. TRUSTEE'S DISCLAIMER (65)
SECTION 7.05. NOTICES OF DEFAULTS (65)
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES (65)
SECTION 7.07. COMPENSATION AND INDEMNITY (66)
SECTION 7.08. REPLACEMENT OF TRUSTEE (67)
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC (68)
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION (69)
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY (69)
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE (69)
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE (69)
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE (69)
SECTION 8.03. COVENANT DEFEASANCE (70)
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE (71)
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS (72)
SECTION 8.06. REPAYMENT TO COMPANY (72)
SECTION 8.07. REINSTATEMENT (73)
SECTION 8.08. NOTE COLLATERAL (73)
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER (73)
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES (73)
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES (74)
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT (76)
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS (76)
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES (76)
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. (76)
</TABLE>
(iii)
<PAGE> 7
<TABLE>
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ARTICLE 10
COLLATERAL AND SECURITY (77)
SECTION 10.01. SECURITY (77)
SECTION 10.02. RECORDING AND OPINIONS (77)
SECTION 10.03. RELEASE OF NOTE COLLATERAL (79)
SECTION 10.04. PROTECTION OF THE TRUST ESTATE (80)
SECTION 10.05. CERTIFICATES OF THE COMPANY (80)
SECTION 10.06. CERTIFICATES OF THE TRUSTEE (80)
SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE COLLATERAL DOCUMENTS (81)
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE
UNDER THE COLLATERAL DOCUMENTS (81)
SECTION 10.09. TERMINATION OF SECURITY INTEREST (82)
SECTION 10.10. COOPERATION OF TRUSTEE (82)
SECTION 10.11. COLLATERAL AGENT (82)
SECTION 10.12. CASH COLLATERAL ACCOUNTS (82)
SECTION 10.13. ADDITIONAL COLLATERAL (83)
SECTION 10.14. GAMING LAWS (84)
ARTICLE 11
MISCELLANEOUS (85)
SECTION 11.01. TRUST INDENTURE ACT CONTROLS (85)
SECTION 11.02. NOTICES (85)
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES (87)
SECTION 11.04. CERTIFICATE AND OPTIONS AS TO CONDITIONS PRECEDENT (87)
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION (87)
SECTION 11.06. RULES BY TRUSTEE AND AGENTS (87)
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND MEMBERS (88)
SECTION 11.08. GOVERNING LAW (88)
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS (88)
SECTION 11.10. SUCCESSORS (88)
SECTION 11.11. SEVERABILITY (88)
SECTION 11.12. COUNTERPART ORIGINALS (88)
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC (88)
</TABLE>
(iv)
<PAGE> 8
<TABLE>
<S> <C>
EXHIBIT B B-1
</TABLE>
ANNEX A-1
Form of Construction Contract Assignment
ANNEX A-2
Form of Construction Security Agreement
ANNEX A-3
Form of First Preferred Ship Mortgage
(v)
<PAGE> 9
INDENTURE dated as of May 22, 1996 by and between The Majestic Star
Casino, LLC, an Indiana limited liability company (the "Company") and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the Senior Secured
Notes due 2003 and the Exchange Senior Secured Notes due 2003 (collectively,
the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Accrual Period" shall have the meaning specified in paragraph 1 of the
Notes.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into such specified Person, including Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
such specified Person and (ii) Indebtedness encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided, however,
that for purposes of Section 4.12 only, 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.
"Asset Sale" means the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company
(each referred to in this definition as a "disposition") other than (a) a
disposition of inventory or other goods held for sale or disposition in the
ordinary course of business, (b) any disposition that is a Restricted Payment
permitted under Section 4.07 hereof or that is a dividend or distribution
permitted under Section 4.07 hereof or any Investment that is not prohibited
thereunder or any disposition of cash or Cash Equivalents, (c) any single
disposition, or related series of dispositions, of assets with an aggregate
fair market value of less than $500,000, (d) any Event of Loss, (e) any lease
or sublease permitted as described under Section 4.27 hereof and (f) any sale
of all or
<PAGE> 10
substantially all of the assets of the Company which constitutes a Change of
Control pursuant to clause (iii) of the definition thereof.
"Asset Sale Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state
or tribal law or ordinance for the relief of debtors.
"BDI" means Barden Development, Inc., an Indiana corporation.
"BDI Pledge Agreement" means that certain Pledge Agreement executed by
BDI, providing for a pledge of BDI's entire membership interest in the Company
in favor of the Trustee, for the ratable benefit of the Holders of the Senior
Notes, as the same may be amended in accordance with the terms thereof and this
Indenture.
"Beneficial Owner" for purposes of the definition of Change of Control has
the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time.
"Berthing Agreement" means the Majestic Berthing Agreement dated as of
April 23, 1996 between the Company and the BHR Joint Venture.
"BHR Joint Venture" means Buffington Harbor Riverboats, L.L.C., a Delaware
limited liability company, in which the Company owns a 50% membership interest.
"BHR Loss Proceeds" means any proceeds distributed to the Company from the
BHR Joint Venture which arise out of an Event of Loss with respect to the BHR
Joint Venture.
"BHR Operating Agreement" means the First Amended and Restated Operating
Agreement of Buffington Harbor Riverboats, L.L.C. made as of October 31, 1995,
as amended, by and between Trump Indiana, Inc., a Delaware corporation and the
Company.
"BHR Pledge Agreement" means that certain Pledge Agreement executed by the
Company, providing for a pledge of the Company's entire membership interest in
the BHR Joint Venture in favor of the Trustee, for the ratable benefit of the
Holders of the Senior Notes, as the same may be amended in accordance with the
terms thereof and this Indenture.
"Board of Managers" means, with respect to any person that is a limited
liability company, either the sole manager of such person or, if there is more
than one manager, the managers of such person, acting as a group, or any
committee of the managers of such Person authorized, with respect to any
particular matter, to exercise the power of the managers or, if such Person is
managed by its members, the members of such Person, or
(2)
<PAGE> 11
any committee of the members of such Person authorized, with respect to any
particular matter, to exercise the power of the members, or any successor to
any such Person.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability
on the balance sheet in accordance with GAAP.
"Capital Stock" means (i) with respect to any corporation, any and all
shares of stock issued by that corporation and (ii) with respect to any other
Person, any partnership interest, joint venture interest, limited liability
company member interest or other form of equity sharing or participation
interest, as applicable.
"Cash Collateral" shall have the meaning set forth in the Cash Collateral
and Disbursement Agreement.
"Cash Collateral Accounts" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Company, the Trustee, and NBD Bank, a Michigan
banking association, as Disbursement Agent, substantially in the form delivered
to the Trustee on the Issuance Date.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $300 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated P-1
or the equivalent thereof by Moody's Investors Services, Inc. or A-1 or the
equivalent thereof by Standard & Poor's Rating Group and in each case maturing
within one year after the date of acquisition and (vi) investment funds
investing solely in securities of the types described in clauses (ii) - (v)
above.
"Change of Control" means the occurrence of any of the following: (i)
prior to the completion of a bona fide underwritten initial public offering by
the Company, the failure at any time of Excluded Persons as a group to own and
control at least 40% of the voting power of the Capital Stock of the Company;
(ii) after the completion of a bona fide underwritten initial public offering
by the Company, the acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by (A) any
person or entity (other than an Excluded Person) or (B) any group of persons or
entities (excluding any group in which Excluded Persons beneficially own in the
aggregate at least 75% of the equity
(3)
<PAGE> 12
and voting interests beneficially owned by the group) who constitute a group
(within the meaning of Section 13(d)(3) of the Exchange Act), in either case,
of Capital Stock of the Company such that, as a result of such acquisition,
such person, entity or group beneficially owns (within the meaning Rule 13d-3
under the Exchange Act), directly or indirectly, 30% or more of the voting
power of the Capital Stock of the Company entitled to vote in the election of
directors, managers, general partners or other similar governing bodies of the
Company then outstanding; provided, however, that no Change of Control shall be
deemed to have occurred if (A) Excluded Persons beneficially own, in the
aggregate, at such time, a greater percentage of total voting power of the
Capital Stock of the Company entitled to vote in the election of directors,
managers, general partners or other similar governing bodies of the Company
than such other person, entity or group or (B) at the time of such acquisition,
Excluded Persons (or any of them) possess the ability (by contract or
otherwise) to elect, or cause the election, of a majority of the members of the
Company's Board of Managers; (iii) any merger or consolidation of the Company
with or into any person or any sale, transfer or other conveyance, whether
direct or indirect, of all or substantially all of the assets of the Company,
on a consolidated basis, in one transaction or series of related transactions,
if immediately after giving effect to such transaction or transactions, any
person or group (other than Excluded Persons or groups including Excluded
Persons to the extent contemplated by clause (i) or (ii) above, whichever is
then applicable) is or becomes the Beneficial Owner, directly or indirectly, of
more than the percentage of the Capital Stock of the Company contemplated by
clause (i) or (ii) above, whichever is then applicable; or (iv) during any
period of 12 consecutive months after the Issuance Date, individuals who at the
beginning of any such 12-month period constituted the Board of Managers of the
Company (together with any new managers whose election by such Board or whose
nomination for election by the members of the Company was approved by a vote of
a majority of the managers then still in office who were either managers at the
beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of the
managers of the Company then in office.
"Charter" means the Charter Agreement dated as of August 17, 1995 by and
among New Yorker Acquisition Corporation, the Company and President Casinos,
Inc. providing for the leasing by the Company of the Chartered Vessel, as
amended.
"Chartered Vessel" means the riverboat casino gaming vessel, U.S.O.C. No.
538911, to be chartered by the Company pursuant to the Charter.
"Collateral Agent" means any person appointed by the Trustee as a
collateral agent hereunder.
"Collateral Documents" means, collectively, the BDI Pledge Agreement, the
BHR Pledge Agreement, the Cash Collateral and Disbursement Agreement, the
Security Agreement, the Trademark Security Agreement, the First Preferred Ship
Mortgage, the Construction Security Agreement, the Construction Contract
Assignment and any other agreements, instruments, financing statements or other
documents that evidence, set forth or limit the Lien of the Trustee in the Note
Collateral.
"Commencement Date" shall have the meaning specified in paragraph 1 of the
Notes.
(4)
<PAGE> 13
"Completion Reserve Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (a) an amount
equal to any extraordinary loss plus any net loss realized in connection with
any Asset Sale (to the extent such losses were deducted in computing
Consolidated Net Income), plus (b) Consolidated Interest Expense of such Person
for such period, plus (c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent such depreciation and amortization
were deducted in computing Consolidated Net Income, in each case, on a combined
basis for such Person and its Subsidiaries and determined in accordance with
GAAP.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of consolidated depreciation and
amortization expense and other noncash charges (excluding any noncash item that
represents an accrual, reserve or amortization of a cash expenditure for a
future period) of such Person for such period as defined in accordance with
GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of (a) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount and deferred financing fees, non-cash
interest payments, the interest component of Capital Lease Obligations, and net
payments (if any) pursuant to Hedging Obligations, excluding amortization of
deferred financing fees), (b) consolidated capitalized interest of such Person
and its Subsidiaries for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income, (c)
commissions, discounts and other fees and charges paid or accrued with respect
to letters of credit and bankers' acceptance financing, (d) to the extent not
included above, the maximum amount of interest which would have to be paid by
such Person or its Subsidiaries under a Guarantee of Indebtedness of any other
Person if such Guarantee were called upon and (e) to the extent not included
above, Contingent Interest, whether paid or accrued, to the extent such expense
was deducted in computing Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a combined basis, determined in accordance with GAAP, provided,
however, that (i) the Net Income for such period of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting, shall
be included only to the extent of the amount of dividends or distributions paid
in cash (or to the extent converted into cash) to the referent Person or a
Wholly Owned Subsidiary thereof in respect of such period, (ii) the Net Income
of any Person acquired in a pooling of interests transaction shall not be
included for any period prior to the date of such acquisition, and (iii) the
cumulative effect of a change in accounting principles shall be excluded.
(5)
<PAGE> 14
"Consolidated Net Worth" means, with respect to any Person at any time,
the sum of the following items, as shown on the consolidated balance sheet of
such Person and its Subsidiaries as of such date (i) the common equity or
members capital of such Person and its Subsidiaries (ii) (without duplication),
(a) the aggregate liquidation preference of Preferred Stock of such Person and
its Subsidiaries (other than Disqualified Capital Stock), and (b) any increase
in depreciation and amortization resulting from any purchase accounting
treatment from an acquisition or related financing; (iii) less any goodwill
incurred subsequent to the Issuance Date; and (iv) less any write up of assets
(in excess of fair market value) after the Issuance Date, in each case on a
consolidated basis for such Person and its Subsidiaries, determined in
accordance with GAAP, provided, that in calculating Consolidated Net Worth any
gain or loss from any Asset Sale shall be excluded.
"Construction Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Construction Budget" means itemized schedules setting forth on a line
item basis all of the costs (including financing costs) estimated to be
incurred in connection with improvements to the Chartered Vessel and the
financing, design, development, construction, equipping and opening of the
Gaming Complex and the Permanent Vessel, as the case may be, by the Company, as
such schedules are delivered to the Disbursement Agent as of the Issuance Date
and as amended from time to time in accordance with the Cash Collateral and
Disbursement Agreement.
"Construction Contract Assignment" means each Assignment of Construction
Contract to be executed by the Company, to provide for the collateral
assignment of the Company's entire interest in and to each material
construction contract relating to the construction of the Permanent Vessel, in
favor of the Trustee for the ratable benefit of the Holders of the Notes,
substantially in the form attached hereto as Annex A-1.
"Construction Security Agreement" means that certain Security Agreement to
be executed by the Company, to encumber the property comprising the Permanent
Vessel while under construction, in favor of the Trustee for the ratable
benefit of the Holders of the Notes, substantially in the form attached hereto
as Annex A-2.
"Construction Supervisor" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Contingent Interest" shall have the meaning set forth in paragraph 1 of
the Notes.
"Contingent Interest Accrual" means, at any time, the total amount of
Contingent Interest accrued and unpaid through and as of such time.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
(6)
<PAGE> 15
"Default" means any event that is or with passage of time or the giving of
notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of the Notes attached
hereto as Exhibit A-1, that do not include the information called for in
footnote 1 thereof.
"Delivery" means, with respect to the Permanent Vessel, the first time
that (i) all Liens (other than Permitted Liens) relating to the construction of
the Permanent Vessel have been paid and released, (ii) the Permanent Vessel is
in a condition (including installation of furnishing, fixtures and equipment)
so that the Permanent Vessel is fit to receive guests in the ordinary course of
business and (iii) the construction supervisor for the Permanent Vessel or an
independent construction expert appointed by the Company and acceptable to the
Trustee shall have delivered a certificate to the Trustee certifying that the
Permanent Vessel is complete in all material respects in accordance with the
Plans and Specifications therefor and in compliance with all applicable laws,
ordinances and regulations (including gaming laws and ordinances) with respect
to the physical structure, health and safety, environmental and hazardous
materials, fire, equipment, security and physical operating (gaming and other)
requirements of the Permanent Vessel.
"Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.04 hereof as the
Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Development Agreement" means the Development Agreement dated March 26,
1996 between the Company and the City of Gary.
"Disbursement Agent" means NBD Bank, a Michigan banking association, as
the Disbursement Agent under the Cash Collateral and Disbursement Agreement.
"Disqualified Capital Stock" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to May
15, 2003.
"Dollars" and "$" mean lawful money of the United States of America.
"Eligible Institution" means (a) the Trustee, (b) an affiliate of the
Trustee or (c) a commercial banking institution that is federally chartered or
organized under the laws of any state, is not affiliated with the Company, has
combined capital and surplus in excess of $500 million, and whose debt is rated
"A" (or higher) according to Standard & Poor's Rating Group or Moody's
Investors Service.
(7)
<PAGE> 16
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal), any of the following: (A) any loss, destruction
or damage of such property or asset; (B) any institution of any proceedings for
the condemnation or seizure of such property or asset or for the exercise of
any right of eminent domain; (C) any actual condemnation, seizure or taking by
exercise of the power of eminent domain or otherwise of such property or asset,
or confiscation of such property or asset or the requisition of the use of such
property or asset; or (D) any settlement in lieu of clause (B) or (C) above.
"Event of Loss Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the registration by the Company under the
Securities Act of the Senior Exchange Notes pursuant to a registration
statement pursuant to which the Company is obligated to offer the Holders of
all outstanding Transfer Restricted Securities the opportunity to exchange all
such outstanding Transfer Restricted Securities held by such Holders for Senior
Exchange Notes in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such
exchange offer by such Holders.
"Excluded Persons" means (a) the Company or any Subsidiary of the Company,
(b) any employee benefit plan of the Company or any trustee or similar
fiduciary holding Capital Stock of the Company for or pursuant to the terms of
any such plan, (c) BDI, (d) Barden Management, Inc., (e) Don H. Barden or his
spouse, (f) the estate of Don H. Barden, (g) any descendant of Don H. Barden or
the spouse of any such descendant, (h) the estate of any such descendant or the
spouse of any such descendant, (i) any trust or other arrangement for the
benefit of the spouse of Don H. Barden or any such descendant or the spouse of
any such descendant and (j) any charitable organization or trust established by
Don H. Barden.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness (other than Capital Lease Obligations) of the Company or its
Subsidiaries in existence on the Issuance Date, plus interest accruing thereon,
after application of the net proceeds of sale of the Senior Notes as described
in the Company's Offering Memorandum dated May 16, 1996, until such amounts are
repaid.
"First Preferred Ship Mortgage" means the first preferred ship mortgage on
the Permanent Vessel to be dated as of the date of Delivery of the Permanent
Vessel between the Company and the Trustee substantially in the form attached
hereto as Annex A-3.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs,
(8)
<PAGE> 17
assumes, guarantees or redeems any Indebtedness (other than working capital
financing) or issues Preferred Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated given pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable four-quarter
period. For purposes of making the computation referred to above,
acquisitions, dispositions and discontinued operations (as determined in
accordance with GAAP) that have been made by the Company or any of its
Subsidiaries, including all mergers, consolidations and dispositions, during
the four-quarter reference period or subsequent to such reference period and on
or prior to the Calculation Date shall be calculated on a pro forma basis
assuming that all such acquisitions, dispositions, discontinued operations,
mergers, consolidations (and the reduction of any associated fixed charge
obligations resulting therefrom) had occurred on the first day of the
four-quarter reference period.
"Fixed Charges" means with respect to any Person for any period, the sum
of (a) the Consolidated Interest Expense (excluding, solely for purposes of
this definition, Contingent Interest paid or accrued) and (b) the product of
(i) all dividend payments on any series of Preferred Stock of such Person, and
(ii) a fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory income
tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Interest" shall have the meaning specified in paragraph 1 of the
Notes.
"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting
profession.
"Gaming Complex" means the facilities to be constructed, owned and
operated by the BHR Joint Venture including, without limitation, all related
berthing and parking facilities, as well as any hotel or other ancillary
structures and facilities and all furniture, fixtures and equipment at any time
contained therein.
"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct gaming activities of the
Company, or any of its Subsidiaries, including without limitation, all such
licenses granted under the Indiana Riverboat Gambling Act, and the regulations
promulgated pursuant thereto, and other applicable federal, state, foreign or
local laws.
"Gaming Regulatory Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision, whether now or hereafter existing, or any officer
or official thereof, including, without limitation,
(9)
<PAGE> 18
the IGC or 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.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 to the form of the Note attached hereto as Exhibit A-1.
"Government Securities" means securities that are (a) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Security
or a specific payment of principal of or interest on any such Government
Security held by such custodian for the account of the holder of such
depository receipt; provided, however, that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian
in respect of the Government Security or the specific payment of principal of
or interest on the Government Security evidenced by such depository receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Harbor Lease" means the Harbor Lease Agreement dated as of June 29, 1995
by and between Trump Indiana, Inc. and Lehigh Portland Cement Company, as
assigned by Trump Indiana, Inc. to the BHR Joint Venture pursuant to the
Assignment of Harbor Lease Agreement dated as of October 31, 1995 by and
between Trump Indiana, Inc. and the BHR Joint Venture.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates.
"Holder" or "Noteholder" means a Person in whose name a Note is
registered.
"IGC" means the Indiana Gaming Commission, or any successor Gaming
Regulatory Authority thereto.
"Indebtedness" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money,
including accrued and unpaid Contingent Interest, (ii) evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof), (iii) representing the
(10)
<PAGE> 19
balance deferred and unpaid of the purchase price of any property (including
Capital Lease Obligations), except any such balance that constitutes an accrued
expense or trade payable, or (iv) representing any Hedging Obligations, if and
to the extent any of the foregoing indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, (b) to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as
obligor, guarantor or otherwise, on the Indebtedness of another Person (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business) and (c) to the extent not otherwise included, Indebtedness
of another Person secured by a Lien on any asset of the referent Person
(whether or not such Indebtedness is assumed by such referent Person).
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Company's Board of Managers, (i) qualified to perform the task
for which it has been engaged and (ii) disinterested and independent with
respect to the Company and each Affiliate of the Company.
"Interest Reserve Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
Guarantees), advances or capital contributions (excluding commissions, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions by such Person of Equity Interests
or other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the closing date for the sale and original issuance
of the Notes.
"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 on the Notes 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 the interest that was due for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
(11)
<PAGE> 20
"Majestic Star Casino" means, prior to Delivery of the Permanent Vessel,
the Chartered Vessel and the Gaming Complex proposed to be constructed at
Buffington Harbor in Gary, Indiana with respect to which the Company has
applied for a Gaming License, and after Delivery of the Permanent Vessel, the
Permanent Vessel and such Gaming Complex.
"Manager of the Company" means BDI.
"Maximum Contingent Interest" shall have the meaning specified in
paragraph 1 of the Notes.
"Minimum Facilities" means, with respect to the Majestic Star Casino
Project, at least 800 operating slot machines, 40 operating table games, 2,300
usable parking spaces, adequate access to the local highway system and all
banking, coin, token, security and other ancillary equipment and facilities
necessary to operate the Majestic Star Casino on a 20 hour per day, seven days
a week basis.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Subsidiaries, and (ii) excluding any extraordinary
gain (but not loss), together with any related provision for taxes on such
extraordinary gain (but not loss).
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company in respect of any Event of Loss, including, without limitation,
insurance proceeds, condemnation awards or damages awarded by any judgment, net
of the direct costs in recovery of such proceeds (including, without
limitation, legal, accounting, appraisal and insurance adjuster fees) and any
taxes paid or payable as a result thereof.
"Net Proceeds" means the aggregate cash proceeds received by the Company
in respect of any Asset Sale, net of the direct costs relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
or brokerage fees, and sales commissions), and any relocation expenses incurred
as a result thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions), amounts required to be
applied to the repayment of Indebtedness secured by a Lien (other than the
Notes) on the asset or assets that are the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets.
"Note Collateral" means (i) a pledge of the Company's 50% membership
interest in the BHR Joint Venture pursuant to the BHR Pledge Agreement, (ii) a
pledge of BDI's entire membership interest in the Company pursuant to the BDI
Pledge Agreement, (iii) a collateral assignment of the Company's interest in
the Berthing Agreement pursuant to the Security Agreement, (iv) a pledge of all
funds in the Cash Collateral Accounts into which the proceeds from the Offering
will be placed pending their use pursuant to the Cash Collateral and
(12)
<PAGE> 21
Disbursement Agreement, (v) a first lien on certain other assets now owned or
hereafter acquired by the Company after the Issuance Date pursuant to the
Security Agreement (other than any assets which if pledged, hypothecated or
given as collateral security would require the Trustee or a holder or
beneficial holder of the Senior Notes to be licensed, qualified or found
suitable and other than certain assets to the extent such assets are permitted
to be financed by Indebtedness permitted to be incurred pursuant to Section
4.09 and such Indebtedness is permitted to be secured pursuant to Section
4.13), (vi) a collateral assignment of the Company's rights to the service mark
"Majestic Star Casino" pursuant to the Trademark Security Agreement and (vii)
any security interest to be granted to the Trustee in accordance with Section
10.13 hereof.
"Note Custodian" means IBJ Schroder Bank & Trust Company, as custodian for
the Depository with respect to the Notes in global form, or any successor
entity thereto.
"Note to Principal Manager" means the outstanding Indebtedness of the
Company due and owing to BDI pursuant to the promissory note dated March 31,
1996 in the aggregate principal amount of $10,759,355, plus any interest
accrued thereon.
"Notes" means, collectively, the Senior Notes and, when issued under the
Exchange Offer, the Senior Exchange Notes.
"Obligations" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the Offering of the Notes by the Company.
"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.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Manager 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 Manager of the Company that meets the
requirements of Section 11.05 hereof.
"Operating" means, with respect to the Majestic Star Casino, the first
time that (i) all material Gaming Licenses have been granted and have not been
revoked or suspended, (ii) all Liens (other than Liens created by the
Collateral Documents or Permitted Liens) related to the construction of the
Majestic Star Casino have been paid or, if payment is not yet due or if such
payment is contested in good faith by the Company, sufficient funds remain in
the Collateral Account to discharge such Liens, (iii) the Construction
Supervisor of the Majestic Star Casino shall have delivered a certificate to
the Trustee certifying that the Majestic Star Casino is complete in all
material respects in accordance with the Plans and Specifications therefor and
all applicable building laws, ordinances and regulations, (iv) the Majestic
Star Casino is in a condition (including installation of furnishings, fixtures
and equipment) to
(13)
<PAGE> 22
receive guests in the ordinary course of business, and (v) gaming and other
operations in accordance with applicable law are open to the general public and
are being conducted at the Majestic Star Casino with respect to at least the
Minimum Facilities for such Majestic Star Casino.
"Operating Expenses" means all operating expenses of the Company with
respect to any commercial enterprise, determined in accordance with GAAP
consistently applied. Operating Expenses shall include, without limitation:
(i) all accrued interest expense (whether or not distributed and whether or not
deposited) with respect to the Notes; (ii) depreciation and amortization and
(iii) any bond premium under this Indenture.
"Opinion of Counsel" means an opinion from legal counsel, that meets the
requirements of Section 11.05 hereof. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment Default" means any failure to pay when due, any principal,
premium or interest on the Notes, whether at stated maturity, upon
acceleration, upon redemption or in connection with a Repurchase Offer, in each
case, without giving effect to any grace period.
"Permanent Vessel" means the riverboat gaming vessel to be constructed by
the Company subsequent to the Offering and containing at least 36,000 square
feet of gaming space.
"Permitted Investments" means (a) any Investments in Cash Equivalents, (b)
other Investments in any Person that do not exceed in the aggregate $50,000 at
any time outstanding and (c) any Investments in a tax-exempt money market
mutual fund meeting the requirements of 17 C.F.R. Section 270.2a-7.
"Permitted Liens" means (a) existing Liens; (b) Liens created by the
Notes, the Indenture and the Collateral Documents; (c) Liens incurred in the
ordinary course of business including Liens incurred pursuant to Section 4.09
hereof; (d) Liens securing Acquired Indebtedness; provided that such Liens (i)
are not incurred in connection with, or in contemplation of the acquisition of
the property or assets acquired and (ii) do not extend to or cover any property
or assets of the Company or any Subsidiary other than the property or assets so
acquired; (e) Liens to secure certain Indebtedness that is otherwise permitted
under the Indenture and that are used to finance the cost of the property
subject thereto; provided that (i) any such Lien is created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes, installation
and delivery charges and other direct costs of, and other direct expenses paid
or charged in connection with, such purchase or construction) of the property
subject thereto, (ii) such Lien does not extend to or cover any other property
other than such item of property and any improvements on such item; (f)
additional Liens on assets and properties of the Company securing indebtedness
permitted to be incurred pursuant to the Indenture in an amount not to exceed
$6.0 million; (g) Liens in favor of the Trustee; (h) any replacement, extension
or renewal, in whole or in part, of any Lien described in the foregoing clauses
provided that to the extent any such clause limits the amount secured or the
assets subject to such Liens, no extension or renewal shall increase the amount
or the assets subject to such Liens; (i) Liens
(14)
<PAGE> 23
to secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the
ordinary course of business or in the construction of the Majestic Star Casino
and which obligations are not expressly prohibited by the Indenture; (j)(1)
Liens for taxes, assessments or governmental charges or claims or (2) statutory
Liens of landlords, and carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's, crew wages, maritime or other similar Liens arising
in the ordinary course of business or in the construction of the Majestic Star
Casino, in the case of (1) and (2), with respect to amounts that either (A) are
not yet delinquent or (B) are being contested in good faith by appropriate
proceedings as to which appropriate reserves or other provisions have been made
in accordance with GAAP; and (k) easements, rights of way, navigational
servitudes, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances which do not interfere in any material respect
with the ordinary conduct of business of the Company and its Subsidiaries.
"Permitted Proceed Uses" means (i) to fund improvements to the Majestic
Star Casino in accordance with the Construction Budget, (ii) to fund capital
contributions to the BHR Joint Venture in accordance with the BHR Operating
Agreement, (iii) to fund the construction of the Permanent Vessel, (iv)
repayment of the Note to Principal Member, (v) to fund the Interest Reserve
Account in an amount equal to the first two scheduled fixed interest payments
with respect to the Notes and (vi) to fund certain other disbursements as
permitted by the Cash Collateral and Disbursement Agreement, each to be
disbursed in accordance with the Cash Collateral and Disbursement Agreement.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Plans and Specifications" means all drawings, plans and specifications
prepared by or on behalf of the Company, as the same may be amended or
supplemented from time to time, and, if required, submitted to and approved by
the appropriate Gaming Regulatory Authorities, which describe and show the
Majestic Star Casino and the labor and materials necessary for construction or
purchase thereof.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution or winding up.
"Principal Business" means the casino gaming business and any activity or
business incidental, directly related or similar thereto, or any business or
activity that is a reasonable extension, development or expansion thereof or
ancillary thereto, including any hotel, entertainment, recreation or other
activity or business designed to promote, market, support, develop, construct
or enhance the casino gaming business operated by the Company and any business
or activity that is required to meet the commitments of the Company pursuant to
the Development Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Issuance Date, by and among the Company and the other party or
parties named on
(15)
<PAGE> 24
the signature pages thereof, substantially in the form delivered to the Trustee
on the Issuance Date.
"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 Investment" means any Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means that certain Security Agreement to encumber
certain assets of the Company in favor of the Trustee, for the ratable benefit
of the Holders of the Notes, as the same may be amended in accordance with the
terms thereof and the Indenture.
"Semiannual Period" shall have the meaning specified in paragraph 1 of the
Notes.
"Senior Exchange Notes" means Indebtedness of the Company identical in all
material respects to the Senior Notes that are issued by the Company in
exchange for the Senior Notes pursuant to the Exchange Offer in the form
attached hereto as Exhibit A-2, as amended or modified from time to time in
accordance with the terms thereof and this Indenture.
"Senior Notes" means the Company's Senior Secured Notes due May 15, 2003
to be issued pursuant to this Indenture in the form attached hereto as Exhibit
A-1, as amended or modified from time to time in accordance with the terms
thereof and this Indenture.
"Subordinated Indebtedness" means any other Indebtedness of the Company
which is expressly by its terms subordinated in right of payment to the Notes.
"Subsidiary" means (i) any instrumentality or subdivision or subunit of
the Company that has a separate legal existence or status or whose property and
assets would not be bound by the terms of this Indenture or the Collateral
Documents or (ii) with respect to any Person, any corporation, association or
other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
(16)
<PAGE> 25
"Trademark Security Agreement" means that certain Trademark Security
Agreement executed by the Company to encumber the "Majestic Star Casino"
service mark in favor of the Trustee, for the ratable benefit of the Holders of
the Notes, as the same may be amended in accordance with the terms thereof and
this Indenture.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"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.
"Uncompleted Project Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Capital Stock, as the case may be, 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, as the case may be.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
"Working Capital Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
SECTION 1.02 OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined
Term in Section
- ------------------------------------------ ----------
<S> <C>
"Affiliate Transaction" 4.12
"Asset Sale Offer" 4.10
"Cash Collateral Account" 10.12
"Change of Control Offer" 4.16
"Change of Control Payment" 4.16
"Collateral Investments" 10.12
"Covenant Defeasance" 8.03
"Event of Default" 6.01
</TABLE>
(17)
<PAGE> 26
<TABLE>
<S> <C>
"Event of Loss Offer" 4.11
"Excess Loss Proceeds" 4.11
"Excess Proceeds" 4.10
"Exchange Offer Registration 4.17
"Lease Transaction" 4.27
"Legal Defeasance" 8.02
"Liquidated Damages" 4.17
"New Notes" 4.17
"Offer Amount" 3.10
"Offer Period" 3.10
"Paying Agent" 2.03
"Payment Cross Default" 6.01
"Project Liquidation" 4.28
"Purchase Date" 3.10
"Refinancing Indebtedness" 4.09
"Registrar" 2.03
"Registration Default" 4.17
"Repurchase Offer" 3.10
"Restricted Payments" 4.07
"Shelf Registration Statement" 4.17
"Surviving Person" 5.01
"Uncompleted Project Offer" 4.28
"Uncompleted Vessel Offer" 4.29
"Willful Default" 6.02
</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;
"obligor" on the Notes means the Company, and any successor obligor upon
the Notes as the case may be.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
(18)
<PAGE> 27
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP and any accounting term with respect to any Person
shall be determined on a consolidated or combined basis of such Person and all
of its Subsidiaries, in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act or the
Exchange Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time;
(7) the term "redeem" and the correlative terms "redemption" and
"redeemed" shall not include any Repurchase Offer; and
(8) unless otherwise expressly provided, the term "interest" shall
include all Fixed Interest, Contingent Interest and Liquidated Damages, if any.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Senior Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-1 hereto which is incorporated in and
made a part of this Indenture. Subject to 2.07 hereof, the Senior Notes shall
be in an aggregate principal amount of $105,000,000; provided, that in the
event Senior Exchange Notes are issued hereunder pursuant to the Exchange
Offer, the principal amount of Senior Notes shall be reduced by the principal
amount of Senior Exchange Notes so issued. The Senior Exchange Notes, when and
if issued, and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-2 hereto which is incorporated in and
made a part of this Indenture. Subject to Section 2.07 hereof, the Senior
Exchange Notes shall be in a principal amount of $105,000,000 less the
principal amount of Senior Notes that are not exchanged for Senior Exchange
Notes in the Exchange Offer. The Notes may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject 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.
(19)
<PAGE> 28
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture, and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
The Senior Notes will initially be issued in global form, substantially in
the form of Exhibit A-1 hereto, except for those Senior Notes that will be
issued in definitive form in the name of various institutional accredited
investors. The Senior Exchange Notes also will initially be issued in global
form, substantially in the form of Exhibit A-2, except for those Senior
Exchange Notes that will be issued in definitive form in the name of various
institutional accredited investors. Such Global Notes shall be registered in
the name of the Depository for such Global Notes or the nominee of such
Depository and shall be delivered by the Trustee to such Depository or pursuant
to such Depository's instructions. So long as the Depository or its nominee is
the registered owner of such Global Notes it will be deemed the sole owner and
holder of such Global Notes for all purposes hereunder and under such Global
Notes. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made by the
Depository on account of beneficial interests in such Global Notes. Such
Global Notes shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
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 and repurchases. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
Subject to the terms and conditions of this Indenture, payment of the
principal of and any interest on any Note, as the case may be, in global or
definitive form shall be made to the Holder thereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION
Two Officers of the Manager of the Company shall sign the Notes for the
Company by manual or facsimile signature.
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 the Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Manager of the Company, authenticate Notes for original issue
up to the aggregate principal amount stated in Section 2.01 of the Indenture.
The aggregate principal amount of Notes
(20)
<PAGE> 29
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. Unless limited by the terms of such appointment, 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 the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The office or agency where Notes may be presented for registration of
transfer or for exchange ("Registrar") and the office or agency where Notes may
be presented for payment ("Paying Agent") shall be the Corporate Trust Office
of the Trustee. The Registrar shall keep a register of the Notes and of their
transfer and exchange.
SECTION 2.04. DEPOSITORY.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global 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).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes;
or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in
writing; and
(21)
<PAGE> 30
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification to that
effect from such Holder (in substantially the form of Exhibit
B hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from such Holder (in substantially the form of Exhibit
B hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an Opinion of
Counsel from such Holder or the transferee reasonably
acceptable to the Company and to the Registrar to the effect
that such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a
Definitive Note, duly endorsed or accompanied by appropriate
instruments of transfer in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer
Restricted Security, a certification from the Holder
thereof (in substantially the form delivered to the
Trustee on the Issuance Date) to the effect that such
Definitive Note is being transferred by such Holder to a
"qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A
under the Securities Act; and
(ii) whether or not such Definitive Note
is a Transfer Restricted Security, written instructions
from the Holder thereof directing the Trustee to make,
or to direct the Note Custodian to make, an endorsement
on the Global Note to reflect an increase in the
aggregate principal amount of the Notes represented by
the Global Note,
(22)
<PAGE> 31
in which case the Trustee shall cancel such Definitive Note in
accordance with Section 2.11 hereof and cause, or direct the Note
Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Note
Custodian, the aggregate principal amount of Notes represented by
the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture
and the procedures of the Depository therefor, which shall include
restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a
Global Note may upon request exchange such beneficial interest
for a Definitive Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is
customary for the Depository, from the Depository or its
nominee on behalf of any Person having a beneficial interest
in a Global Note, together with, in the case of a Transfer
Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred
to the Person designated by the Depository as
being the beneficial owner, a certification to
that effect from such Person (in substantially the
form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred
to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit B hereto);
or
(C) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company
and to
(23)
<PAGE> 32
the Registrar to the effect that such
transfer is in compliance with the Securities
Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depository and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and
the Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this Section
2.06(d) shall be registered in such names and in such
authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes to the Persons in whose names
such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.06), a
Global Note may not be transferred as a whole except by the
Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or
by the Depository or any such nominee to a successor Depository or a
nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository. If at
any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as
Depository for the Global Notes and a successor Depository for
the Global Notes is not appointed by the Company within 90
days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of
Definitive Notes under this Indenture,
then the Company shall execute, and the Trustee shall authenticate
and deliver, Definitive Notes in an aggregate principal amount
equal to the principal amount of the Global Notes in exchange for
such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs
(ii) and (iii), each Note certificate evidencing Global Notes
and Definitive Notes (and all Notes issued in exchange
therefor or substitution thereof) shall bear legends in
substantially the following form:
(24)
<PAGE> 33
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION
5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE
144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1)
ABOVE."
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted
Security represented by a Global Note) pursuant to Rule 144
under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is
a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted
Security; and
(25)
<PAGE> 34
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear the
legend set forth in (i) above, but shall continue to be
subject to the provisions of Section 2.06(c) hereof;
provided, however that with respect to any request for
an exchange of a Transfer Restricted Security that is
represented by a Global Note for a Definitive Note that
does not bear the legend set forth in (i) above, which
request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit
B hereto).
(iii) Notwithstanding the foregoing, upon consummation
of the Exchange Offer, the Company shall issue and, upon
receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate Senior Exchange
Notes in exchange for Senior Notes accepted for exchange in
the Exchange Offer, which Senior Exchange Notes shall not bear
the legend set forth in (i) above, and the Registrar shall
rescind any restriction on the transfer of such Notes, in each
case unless the Holder of such Senior Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution
of the Senior Notes or (C) a Person who is an affiliate (as
defined in rule 144) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or canceled, all Global
Notes 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 Definitive Notes, redeemed, repurchased or canceled,
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 the Notes Custodian, at the direction
of the Trustee, to reflect such reduction.
(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 Definitive Notes and Global Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder 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
3.07, 4.10, 4.16 and 9.05 hereto).
(26)
<PAGE> 35
(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 Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes
or Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global 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 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; or
(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.
(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 neither the Trustee, any Agent nor the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes in accordance with the provisions of Section
2.02 hereof.
(j) Exchange of Senior Notes for Senior Exchange Notes. The
Senior Notes may be exchanged for Senior Exchange Notes pursuant to
the terms of the Exchange Offer. The Trustee and Registrar shall
make the exchange as follows:
(i) the Company shall present the Trustee with an
Opinion of Counsel (which may rely on an Officer's Certificate
with respect to matters of fact) to the effect that upon
issuance of the Senior Exchange Notes, the transactions
contemplated by the Exchange Offer have been consummated; and
(27)
<PAGE> 36
(ii) the Company shall present the Trustee with an
Officers' Certificate certifying that the principal amount of
Senior Notes properly tendered in the Exchange Offer which are
represented by a Global Note and the principal amount of
Senior Notes properly tendered in the Exchange Offer which are
represented by Definitive Notes (together with such Definitive
Notes), the name of each Holder of such Definitive Notes, the
principal amount properly tendered in the Exchange Offer by
each such Holder and the name and address to which Definitive
Notes for Senior Exchange Notes shall be registered and sent
for each such Holder.
(iii) The Trustee, upon receipt of such Opinion of
Counsel and Officers' Certificate and a written order signed
by two Officers of the Manager of the Company shall
authenticate (A) a Global Note for Senior Exchange Notes in
principal amount equal to the principal amount of Senior Notes
represented by a Global Note indicated in such Officers'
Certificate as having been properly tendered and (B)
Definitive Notes representing Senior Exchange Notes registered
in the names of, and in the principal amounts indicated in
such Officers' Certificate.
(iv) The Trustee shall deliver such Global Note for
Senior Exchange Notes to the Note Custodian who shall deliver
to the Trustee the Global Note for the Senior Notes for
cancellation pursuant to Section 2.11, or if the principal
amount of the Global Note for the Senior Exchange Notes is
less than the principal amount of the Global Note for Senior
Notes, the Trustee shall direct the Note Custodian to make an
endorsement on such Global Note for Senior Notes indicating a
reduction in the principal amount represented thereby.
(v) The Trustee shall deliver such Definitive Notes
for Senior Exchange Notes to the Holders thereof as indicated
in such Officers' Certificate.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Manager of the Company,
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.
(28)
<PAGE> 37
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 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 (including Contingent
Interest, if any) on it ceases to accrue.
If the Paying Agent (other than the Company or an Affiliate 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 (including
Contingent Interest, if any).
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 a Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes that are to be acquired by the Company or
an Affiliate of the Company pursuant to an exchange offer, tender offer or
other agreement shall not be deemed to be owned by the Company or an Affiliate
of the Company until legal title to such Notes passes to the Company or
Affiliate of the Company, as the case may be.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two officers of the Manager of the Company. Temporary Notes
shall be substantially in the form of definitive 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.
Until such exchange, Holders of temporary Notes shall be entitled to all
of the benefits of this Indenture.
(29)
<PAGE> 38
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
cancelled Notes (subject to the record retention requirement of the Exchange
Act), unless the Company directs cancelled Notes to be returned to it. The
Company may not issue new Notes to replace Notes that is has redeemed or paid
or that have been delivered to the Trustee for cancellation. All cancelled
Notes held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company at its request, unless by a written order,
signed by two Officers of the Manager of the Company, the Company shall direct
that cancelled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest (including Contingent
Interest, if any) on the Notes, the Company shall pay to the Trustee for
distribution to the Holders, the defaulted interest (including Contingent
Interest, if any), 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 such
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 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 (including Contingent Interest, if any) to be
paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders
entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided in TIA Section
316(c).
ARTICLE 3
OFFERS TO PURCHASE OR REDEMPTION
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 45
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the Section 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.
(30)
<PAGE> 39
If the Company is required to make an offer to purchase Notes pursuant to
the provisions of Section 4.10, 4.11, 4.16, 4.28 or 4.29, it shall furnish to
the Trustee, at least 45 days before the scheduled purchase date, an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the offer to purchase shall occur, (ii) the offer's terms, (iii) the purchase
price, (iv) the principal amount of the Notes to be purchased, and (v) further
setting forth a statement to the effect that (a) the Company has made an Asset
Sale and there are Excess Proceeds aggregating more than $3.0 million and the
amount of such Excess Proceeds, (b) the Company has suffered an Event of Loss
and there are Excess Loss Proceeds aggregating more than $3.0 million and the
amount of such Excess Loss Proceeds, (c) a Change of Control has occurred, (d)
that the Majestic Star Casino was not Operating by December 31, 1996 and
whether the offer to purchase is (x) an Initial Uncompleted Project Offer or
(y) a Final Uncompleted Project Offer and, in the case of clause (x), there are
funds in the Cash Collateral Accounts aggregating more than $5.0 million or (e)
that the Permanent Vessel was not Delivered by June 30, 1998.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed among the Holders of the Notes by lot or
in accordance with any other method the Trustee considers fair and appropriate
(and in such manner as complies with applicable legal requirements). In the
event of partial redemption in the manner provided above, 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 purchased or called for redemption.
In the event that less than all of the Notes properly tendered in an Asset
Sale Offer, Event of Loss Offer, Uncompleted Project Offer or Uncompleted
Vessel Offer are to be purchased, the particular Notes to be purchased shall be
determined pro rata among Holders tendering their Notes in any such Asset Sale
Offer, Event of Loss Offer, Uncompleted Project Offer or Uncompleted Vessel
Offer promptly upon the expiration of such Asset Sale Offer, Event of Loss
Offer, Uncompleted Project Offer or Uncompleted Vessel Offer.
The Trustee shall promptly notify the Company in writing of the Notes to
be purchased or redeemed and, in the case of any Note to be partially purchased
or redeemed, the principal amount thereof to be purchased or 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 purchased or
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000 shall be purchased or redeemed. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Notes
purchased or called for redemption also apply to portions of Notes purchased or
called for redemption.
In the event the Company is required to make an Asset Sale Offer, an Event
of Loss Offer, a Change of Control Offer, an Uncompleted Project Offer or an
Uncompleted Vessel Offer pursuant to Section 4.10, 4.11, 4.16, 4.28 or 4.29
hereof, respectively, and the amount of money in the Cash Collateral Accounts
or the amount of Excess Proceeds or Excess Loss Proceeds, as the case may be,
to be applied to such purchase would result in the purchase of a principal
amount of Notes which is not evenly divisible by $1,000, the Trustee shall
promptly
(31)
<PAGE> 40
refund to the Company the portion of such money in the Cash Collateral Accounts
or the amount of Excess Proceeds or Excess Loss Proceeds, as the case may be,
that is not necessary to purchase the immediately lesser principal amount of
Notes that is so divisible.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Trustee shall mail or cause to be mailed, by first class mail, at the expense
of the Company, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address; 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
following paragraph.
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.
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.
(32)
<PAGE> 41
SECTION 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE.
Not later than 12:00 noon on any purchase date with respect to an offer to
purchase the Notes required hereunder or redemption date, the Company shall
deposit with the Trustee money sufficient to pay the purchase or redemption
price of, and accrued and unpaid interest, if any, on all Notes to be purchased
or redeemed on that date. The Trustee shall promptly return to the Company any
money deposited with the Trustee by the Company in excess of the amounts
necessary to pay the purchase or redemption price of, and accrued and unpaid
interest, if any, on, all Notes to be purchased or redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the purchase or redemption date, interest shall cease to accrue on
the Notes or the portions of Notes purchased or called for redemption. If a
Note is purchased or 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 Notes tendered for purchase
or called for redemption shall not be so paid upon surrender for such tender or
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the purchase or
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 PURCHASED OR REDEEMED IN PART.
Upon surrender of a Note that is purchased or 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 unpurchased or unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
Except as set forth herein and in Section 3.08 hereof, the Company shall
not have the option to redeem the Notes pursuant to this Section 3.07 prior to
May 15, 2000. From and after May 15, 2000, 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 in the chart immediately below
the first paragraph of paragraph 5 of the Notes, plus accrued and unpaid
interest (including Contingent Interest and Liquidated Damages, if any),
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 15 of the years indicated in such chart.
The Company shall also have the option to redeem up to $12.0 million
principal amount of the Notes on and after May 15, 1997 and prior to May 15,
1998 solely out of any amounts remaining in the Interest Reserve Account at the
redemption price (expressed at a percentage of principal amount) set forth in
the second paragraph of paragraph 5 of the Notes, plus accrued and unpaid
interest (including Contingent Interest and Liquidated Damages, if any), to the
applicable redemption date.
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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. REDEMPTION PURSUANT TO GAMING LAW.
(a) Notwithstanding any other provisions of this Article 3, if any Gaming
Regulatory Authority requires that a Holder or beneficial owner of the Notes
must be licensed, qualified or found suitable under any applicable gaming laws
in order to maintain any gaming license or franchise of the Company under any
applicable gaming laws, and the Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Regulatory Authority (or such lesser period
that may be required by such Gaming Regulatory Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Company
has the right, at its option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
by such Holder of such finding by the applicable Gaming Regulatory Authority
(or such earlier date as may be required by the applicable Gaming Regulatory
Authority) or (ii) to call for redemption of the Notes of such Holder or
beneficial owner at a redemption price equal to the lesser of the principal
amount thereof or the price at which such Holder or beneficial owner acquired
the Notes, together with, in either case, accrued and unpaid interest
(including Contingent Interest and Liquidated Damages, if any), to the earlier
of the date of redemption or the date of the finding of unsuitability by such
Gaming Regulatory Authority, which may be less than 30 days following the
notice of redemption if so ordered by such Gaming Regulatory Authority.
(b) In connection with any redemption pursuant to this Section 3.08, and
except as may be required by a Gaming Regulatory Authority, the Company shall
by required to comply with Sections 3.01 through 3.06 hereof, except that such
redemption shall be made only as to such Holder.
(c) The Company shall not be required to pay or reimburse any Holder or
beneficial owner of Notes who is required to apply for any such license,
qualification or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability. Such expenses
shall be the obligation of such Holder or beneficial owner.
SECTION 3.09. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption or sinking
fund payments prior to maturity with respect to the Notes.
SECTION 3.10. REPURCHASE OFFERS.
In the event that, pursuant to Section 4.10, 4.11, 4.16, 4.28 or 4.29
hereof, the Company shall be required to commence an offer to all Holders to
purchase Notes (a "Repurchase Offer"), it shall follow the procedures specified
below.
The Repurchase Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by
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applicable law (the "Offer Period"). No later than five Business Days after
the termination of the Offer Period (the "Purchase Date"), the Company shall
purchase at the Purchase Price (as determined in accordance with Section 4.10,
4.11, 4.16, 4.28 or 4.29 hereof, as the case may be) the principal amount of
Notes required to be purchased pursuant to Section 4.10, 4.11, 4.16, 4.28 or
4.29 hereof, as the case may be (the "Offer Amount"), or, if less than the
Offer Amount has been properly tendered, all Notes properly tendered in
response to the Repurchase Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest, if
any, shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to the Holders who tender Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall state:
(a) that the Repurchase Offer is being made pursuant to this Section 3.10
and Section 4.10, 4.11, 4.16, 4.28 or 4.29 hereof, as the case may be, and the
length of time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not properly tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Repurchase Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a depositary, if appointed by the Company, or Paying
Agent at the address specified in the notice at least three days before the
Purchase Date;
(f) that Holders shall be entitled to withdraw their tendered Notes and
their election if the Company, the depositary or the Paying Agent, as the case
may be, receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase and
a statement that such Holder is withdrawing his tendered Notes and his election
to have such Note purchased; and
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(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Notes shall be selected for purchase
pursuant to the terms of Section 3.02 hereof, and that Holders whose Notes were
purchased only in part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, pursuant to the terms of Section 3.02 hereof, the Offer
Amount of Notes or portions thereof properly tendered pursuant to the
Repurchase Offer, or if less than the Offer Amount has been properly tendered,
all Notes properly tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.10. The
Company, the Depository or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Purchase Date) mail or
deliver to each tendering Holder an amount equal to the purchase price of the
Notes properly tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Notes surrendered. Any Notes not accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Repurchase Offer on the Purchase Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Section 3.01 through 3.06 hereof to the extent applicable.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid to the Trustee for the benefit
of the Holders of the Notes the principal of, premium, if any, and interest on
the Notes on the dates and in the manner provided in the Notes and this
Indenture. Principal, premium, if any, and interest shall be considered paid
on the date due if the Trustee 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. If interest payable on the Notes includes Contingent
Interest, the Company shall provide a calculation of such Contingent Interest
in reasonable detail to the Trustee in the form of an Officer's Certificate at
the time of depositing the amount of such Contingent Interest with the Trustee.
If interest payable on the Notes does not include Contingent Interest, the
Company shall provide notice to the Trustee to that effect.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest
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(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of 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 Trustee shall maintain the Corporate Trust Office of the Trustee in
the Borough of Manhattan, the City of New York, as the office or agency 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.
SECTION 4.03. REPORTS.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the SEC all information, documents and reports specified in Section 13 or
15(d) of the Exchange Act.
The Company shall file with the Trustee and provide Holders of Notes,
within 15 days after it files them with the SEC (or, if the SEC does not permit
such filings, within 15 days after it would have been required to make such
filings had the Company been subject to such filing requirements), copies of
its annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rule or
regulation prescribe) which the Company is required to file (or would have been
required to file if the Company was subject to such requirements) with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the Company shall be
required to continue to file with the SEC (unless the SEC will not accept such
reports) and, at the Company's expense, provide the Trustee, the Holders,
securities analysts and prospective investors (upon request) with copies of the
following: (a) within 90 days after the end of each fiscal year, annual
reports on Form 10-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor or
comparable form); (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form); and (c) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in any successor or comparable form); provided,
however, that the Company shall not be so obligated to file such reports with
the SEC if the SEC does not permit such filings. The Company shall also
include in such reports the anticipated initial completion date of the Majestic
Star Casino and the anticipated date of Delivery of the Permanent Vessel and,
in the case of quarterly reports, the Contingent Interest paid, the Contingent
Interest Accrual amount and Consolidated Cash Flow with respect to the most
recently ended fiscal quarter of the Company, and in the case of annual
reports, the audited Contingent Interest paid, the Contingent Interest Accrual
amount and audited Consolidated Cash Flow for the most recently ended fiscal
year and for each of the Semiannual Periods ending in such fiscal year.
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Within 15 days after receiving notice that the IGC has commenced any
proceeding seeking the suspension or revocation of the Company's owner license
or seeking the imposition of a civil penalty against the Company exceeding
$100,000, the Company shall file with the Trustee and provide to Holders of
Notes, copies of any such notice unless such proceeding against the Company is
terminated by the IGC without imposition of any material sanction within such
15-day period.
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 during the preceding fiscal year has been made under
the supervision of the signing Officers of the Company with a view to
determining whether the Company and each obligor on the Notes under this
Indenture is in compliance with this Indenture and each Collateral Document and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company and each such obligor is in compliance
with each and every covenant contained in this Indenture and each Collateral
Document and is not in default in the performance or observance of any other
terms, provisions and conditions of this Indenture or any Collateral Document
(or, if a Default or Event of Default shall exist, describing all such Defaults
or Events of Default of which he or she may have knowledge and what action the
Company or such obligor, as the case may be, is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred that remains in existence by reason of which payments on account of
the principal of or interest (including Contingent Interest, if any) on the
Notes is prohibited or if such event exists, a description of the event and
what action the Company or such obligor, as the case may be, 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 is in
violation of any provisions of Article Four or Article Five hereof or, if any
such violation exists, 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, within five Business Days upon any Officer becoming
aware of any Default or Event of Default or any event of default under any
document, instrument or agreement representing Indebtedness of the Company, an
Officers' Certificate specifying such Default or Event of Default and what
actions the Company is taking or proposes to take with respect thereto.
(d) Immediately upon the Majestic Star Casino becoming Operating, the
Company shall deliver promptly to the Trustee an Officers' Certificate which
shall state that (i) the
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Majestic Star Casino is Operating and (ii) the date on which the Majestic Star
Casino became Operating.
(e) Immediately upon Delivery of the Permanent Vessel, the Company shall
deliver promptly to the Trustee an Officers' Certificate which shall state that
(i) the Permanent Vessel is Delivered and (ii) the date on which the Permanent
Vessel was Delivered.
SECTION 4.05. TAXES.
The Company shall 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 payments is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company 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 where
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (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. RESTRICTED PAYMENTS.
(a) Except as set forth in paragraph (b) below, the Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly: (i) declare
or pay any dividend or make any distribution in either case on account of the
Company's or any of its Subsidiaries' Equity Interests (other than (A)
dividends or distributions payable in Equity Interests (other than Disqualified
Capital Stock) or (B) dividends or distributions by a Subsidiary of the
Company, provided that to the extent that a portion of such dividend or
distribution is paid to a holder other than the Company or a Subsidiary, such
portion of such dividend or distribution is not greater than such holder's pro
rata aggregate equity interest in such Subsidiary); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or
any of its Subsidiaries or any other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Wholly Owned Subsidiary);
(iii) purchase, redeem or otherwise acquire or retire any Subordinated
Indebtedness of the Company or any of its Subsidiaries; or (iv) make any
Restricted Investment (all such dividends, distributions, purchases,
redemptions or Investments being collectively referred to as "Restricted
Payments"); if, at the time of such actions, or after giving effect thereto:
(1) an Event of Default or Default shall have occurred and be continuing
or would occur as a consequence thereof;
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(2) at the time of such Restricted Payment and upon giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning of
the applicable four-quarter period, the Company could not incur at least $1.00
of additional Indebtedness under the first paragraph of Section 4.09; and
(3) the aggregate amount of Restricted Payments made by the Company and
its Subsidiaries, including Restricted Payments permitted by the following
paragraph, shall be no greater than the sum of (x) 50% of cumulative
Consolidated Net Income of the Company for the period (taken as one accounting
period) from the first day that the Majestic Star Casino is Operating to the
end of the Company's most recently ended fiscal quarter for which internal
financial statements are available, less all distributions in respect of any
such period under clause (i) of paragraph (b) of this Section 4.07 (or, in the
event that such Consolidated Net Income for such period is a deficit, minus
100% of such deficit), plus (y) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale of Equity Interests or debt
securities of the Company that have been converted into such Equity Interests
of the Company (other than Equity Interests or convertible debt securities of
the Company sold to a Subsidiary of the Company and other than Disqualified
Capital Stock or debt securities that have been converted into Disqualified
Capital Stock) or capital contributions to the Company subsequent to the
issuance of the Senior Notes.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Subsidiary in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than any
Disqualified Capital Stock); (iii) the redemption, repurchase, retirement or
other acquisition of any Subordinated Indebtedness of the Company or any
Subsidiary in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company) of Subordinated
Indebtedness of the Company or Equity Interests of the Company (other than
Disqualified Capital Stock), provided, however, that (x) the principal amount
of such Subordinated Indebtedness shall not exceed the principal amount of the
Subordinated Indebtedness so redeemed, repurchased, retired or otherwise
acquired (plus the amount of reasonable expenses incurred and any premium paid
in connection therewith), (y) the Subordinated Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of the Subordinated Indebtedness being redeemed, repurchased,
retired or otherwise acquired, and (z) such Subordinated Indebtedness is
subordinate in right of payment to the Senior Notes and on terms at least as
favorable to the holders of the Senior Notes as the terms set forth in the
documentation governing the Subordinated Indebtedness being redeemed,
repurchased, retired or otherwise acquired; and (iv) any redemption or purchase
by the Company or any Subsidiary of Equity Interests of the Company required by
a Gaming Regulatory Authority in order to preserve a material Gaming License,
provided, that so long as such efforts do not jeopardize any material Gaming
Regulatory License, the Company or such Subsidiary shall have diligently tried
to find a third-party purchaser for such Equity Interests and no third-party
purchaser acceptable to the applicable Gaming Regulatory Authority was willing
to purchase such Equity Interests within a time period acceptable to such
Gaming Regulatory Authority; provided, further, that at the time of, and after
giving effect to, any
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Restricted Payment permitted under clauses (ii) and (iii), no Default or Event
of Default shall have occurred and be continuing or would occur as a
consequence thereof.
(b) Notwithstanding anything in paragraph (a) to the contrary, from and
after the Issuance Date (and for so long as no Event of Default shall have
occurred and shall be continuing), the Company will be permitted to (i) make
quarterly distributions to the members of the Company in an amount not to
exceed, with respect to any fiscal year, an amount equal to the good faith
estimate of maximum federal and state income tax liability of the Company in
such period if it were a taxable Person at the highest effective federal and
state income tax rate of any member of the Company; provided, that each such
quarterly distribution shall not exceed the estimated federal and state tax
liability calculated on such basis; provided further that the Company may make
one annual tax distribution in respect of any difference between the annual tax
liability so calculated and the estimated quarterly distributions made and that
any distribution of estimated tax payments that exceeds the annual tax
liability so calculated will be applied to reduce the distributions in the
following year, (ii) make capital contributions to the BHR Joint Venture to the
extent required by the BHR Operating Agreement in an aggregate amount not to
exceed $56.1 million; (iii) make capital contributions to the BHR Joint Venture
to pay for harbor improvements required by the Harbor Lease and other
improvements ancillary to such harbor improvements; (iv) make capital
contributions, loans or advances to the BHR Joint Venture for additional
development or expansion costs in an aggregate amount not exceeding $5.0
million; (v) from and after the Commencement Date and so long as clause (a)(2)
of this Section 4.07 shall be satisfied, make capital contributions, loans or
advances to the BHR Joint Venture for additional development or expansion costs
in an aggregate amount not exceeding $50.0 million less any capital
contributions, loans or advances made by the Company pursuant to clause
(b)(iii) or clause (b)(iv) hereof; (vi) repay the Note to Principal Member and
(vii) make payments to the City of Gary or any other person in accordance with
the Development Agreement.
For purposes of determining the amount of Restricted Investments
outstanding at any time, all Restricted Investments shall be valued at their
fair market value at the time made (in each case as determined in good faith by
the Company's Board of Managers), and no adjustments shall be made for
subsequent changes in fair market value.
Not later than the date of filing of quarterly or annual report, the
Company shall deliver to the Trustee an Officers' Certificate stating that each
Restricted Payment made in the prior fiscal quarter was permitted and setting
forth the basis upon which the calculations required by this Section 4.07 were
computed, which calculations may be based upon the Company's latest available
financial statements.
SECTION 4.08. RESTRICTIONS ON JOINT VENTURE.
The Company will not consent to the issuance of Indebtedness by the BHR
Joint Venture except: (a) Indebtedness incurred pursuant to Section 4.3(c) of
the BHR Operating Agreement; (b) Indebtedness incurred for the purpose of
acquiring, constructing or improving property owned by the BHR Joint Venture in
an aggregate principal amount not to exceed $4.0 million; and (c) the
refinancing of any such Indebtedness. The Company will not consent
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to the creation, incurrence, assumption or existence of any Lien by the BHR
Joint Venture, except Permitted Liens.
SECTION 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED CAPITAL STOCK.
The Company will not, and will not permit any of its Subsidiaries, to
directly or indirectly, create, incur, issue, assume, guaranty, or otherwise
become directly or indirectly liable with respect to any Indebtedness
(including Acquired Indebtedness) or issue any shares of Disqualified Capital
Stock; provided, however, that the Company and its Subsidiaries may incur
Indebtedness or issue shares of Disqualified Capital Stock if (i) the Majestic
Star Casino is Operating, (ii) the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence would have been at least 2.5 to 1 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Capital Stock had
been issued, as the case may be, and application of proceeds had occurred at
the beginning of such four-quarter period and (iii) such Indebtedness or
Disqualified Capital Stock, as the case may be, does not have a Weighted
Average Life to Maturity less than the Weighted Average Life to Maturity of the
Notes.
The foregoing limitations will not apply to:
(a) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in an aggregate principal amount not to exceed at any one time
$6.0 million for working capital purposes;
(b) the incurrence by the Company or any of its Subsidiaries of any
Existing Indebtedness;
(c) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by the Senior Notes;
(d) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (the "Refinancing Indebtedness") issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace, or refund
Indebtedness referred to in the first paragraph of this covenant or in clauses
(a), (b), (c) or this clause (d), provided, however, that (1) the principal
amount of such Refinancing Indebtedness shall not exceed the principal amount
of Indebtedness so extended, refinanced, renewed, replaced, substituted or
refunded (plus the amount of reasonable expenses incurred and any premium paid
in connection therewith), (2) the Refinancing Indebtedness shall, if
applicable, be subordinate in right and priority of payment to the Notes to the
same extent such Indebtedness being refinanced is, and (3) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, substituted or refunded;
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(e) intercompany Indebtedness between or among the Company and any Wholly
Owned Subsidiary; provided, however, the obligations to pay principal, interest
or other amounts under such intercompany Indebtedness is subordinated to the
payment in full of the Notes;
(f) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations or purchase money
obligations, in each case incurred for the purpose of financing or refinancing
all or any part of the purchase or lease of personal property or equipment used
in the business of the Company or such Subsidiary, in an aggregate principal
amount pursuant to this clause (f) not to exceed $8.0 million outstanding at
any time prior to Delivery of the Permanent Vessel and (ii) $12.0 million
outstanding at any time in connection with the equipping of the Permanent
Vessel; and
(g) to the extent that such incurrence does not result in the incurrence
by the Company or any Subsidiary of any obligation for the payment of borrowed
money of others, Indebtedness incurred solely in respect of performance bonds,
completion guarantees, standby letters of credit or bankers' acceptance,
provided, that such Indebtedness was incurred (i) to comply with a requirement
of a Gaming Regulatory Authority or (ii) in the ordinary course of business, in
amounts and for purposes customary for gaming operations similar to the
Company's or such Subsidiary's, and in an aggregate principal amount
outstanding under this clause (g)(ii) at any one time of less than $2.0
million.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries to,
cause, make or suffer to exist an Asset Sale, unless
(a) no Default or Event of Default exists or is continuing immediately
prior to or after giving effect to such sale;
(b) the Company or its Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined by the Board of Managers and set forth in the Officers'
Certificate delivered to the Trustee) of the assets sold or otherwise disposed
of; and
(c) at least 80% of such consideration is in the form of cash or Cash
Equivalents; provided, however, that the amount of any liabilities (as shown on
the Company's or such Subsidiary's, as the case may be, most recent balance
sheet or in the notes thereto) of the Company or any Subsidiary, as the case
may be (other than any liabilities that are by their terms expressly
subordinated to the Notes), that are assumed by the transferee of any such
assets and any notes or other obligations received by the Company or any
Subsidiary, as the case may be, from such transferee that are converted by the
Company or such Subsidiary, as the case may be, into cash (to the extent of the
cash received) within 10 Business Days following the closing of such Asset
Sale, shall be deemed to be cash only for purposes of satisfying this clause
(c).
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Within 180 days after the Company's receipt of the Net Proceeds of any
Asset Sale, the Company may apply the Net Proceeds from such Asset Sale to (1)
an investment in the Principal Business or in tangible long-term assets used or
useful in the Principal Business or (2) permanently reduce Indebtedness that is
not Subordinated Indebtedness. Any Net Proceeds from the Asset Sale will be
promptly and without commingling deposited in the Asset Sale Account and
pledged to the Holders of the Notes as collateral on the Notes until applied or
released as herein provided. When the aggregate amount of Net Proceeds from
the Asset Sale that are not invested as provided in the first sentence to this
paragraph ("Excess Proceeds") exceeds $3.0 million, the Company shall make an
offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes, that is an integral multiple of $1,000, that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in Section 3.10. The Company shall
commence an Asset Sale Offer with respect to Excess Proceeds within 10 Business
Days after the date that the aggregate amount of Excess Proceeds exceeds $3.0
million by mailing the notice required in Section 3.10 hereof to the Holders.
To the extent that the aggregate amount of Notes properly tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, such remaining Excess
Proceeds shall be released to the Company and the Company may use any such
remaining Excess Proceeds so released for any lawful purpose permitted under
this Indenture. If the aggregate principal amount of Notes properly tendered
pursuant to an Asset Sale Offer by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased in the manner
described in Section 3.02 hereof. Upon completion of any such Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero. The Net Proceeds
of all Asset Sales of assets constituting Note Collateral (other than Permitted
Investments), as well as Excess Proceeds, shall be promptly and without
commingling deposited with the Trustee in an Asset Sale Account pursuant to the
terms of the Cash Collateral and Disbursement Agreement until applied as
permitted pursuant to this paragraph. The Company shall grant to the Trustee,
on behalf of the Holders, a first priority Lien on any properties or assets
acquired with the Net Proceeds of any such Asset Sale on the terms set forth in
this Indenture and the Collateral Documents.
SECTION 4.11. EVENT OF LOSS.
(a) Within 360 days after any Event of Loss with respect to Note
Collateral with a fair market value (or replacement cost, if greater) in excess
of $1.0 million, the Company may apply the Net Loss Proceeds from such Event of
Loss to the rebuilding, repair, replacement or construction of improvements to
the Majestic Star Casino, with no concurrent obligation to make any purchase of
any Notes, provided that (i) the Company delivers to the Trustee within 60 days
of such Event of Loss a written opinion from a reputable architect that the
Majestic Star Casino with at least the Minimum Facilities can be rebuilt,
repaired, replaced or constructed and Operating within 360 days of such Event
of Loss, (ii) an Officers' Certificate certifying that the Company has
available from Net Loss Proceeds or cash on hand sufficient funds to complete
such rebuilding, repair, replacement or construction, and (iii) the Net Loss
Proceeds are less than $15.0 million. Any BHR Loss Proceeds and any Net Loss
Proceeds from an Event of Loss that are not reinvested or are not permitted to
be reinvested as provided in the first sentence of this paragraph will be
deemed "Excess Loss Proceeds."
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When the aggregate amount of "Excess Loss Proceeds" exceeds $3.0 million, the
Company shall promptly make an offer to all Holders of Notes (an "Event of Loss
Offer") to purchase the maximum principal amount of Notes, that is an integral
multiple of $1,000, that may be purchased out of the Excess Loss Proceeds at an
offer price in cash in an amount equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date fixed for the closing of
such offer, in accordance with the procedures set forth in Section 3.10. To
the extent that the aggregate amount of Notes properly tendered pursuant to an
Event of Loss Offer is less than the Excess Loss Proceeds, such remaining
Excess Loss Proceeds shall be released to the Company and the Company may use
any such remaining Excess Loss Proceeds so released for any lawful purpose
permitted under this Indenture. If the aggregate principal amount of Notes
properly tendered pursuant to an Event of Loss Offer exceeds the amount of
Excess Loss Proceeds, the Trustee shall select the Notes to be purchased in the
manner described in Section 3.02 hereof. Upon completion of any such Event of
Loss Offer, the amount of Excess Loss Proceeds shall be reset at zero. Pending
any permitted rebuilding, repair or construction or the completion of any
Excess Loss Offer, the Company shall promptly and without commingling deposit
in the Event of Loss Account and pledge to the Trustee as additional Note
Collateral any Net Loss Proceeds or other cash on hand required for such
permitted rebuilding, repair or construction pursuant to the Cash Collateral
and Disbursement Agreement. Such pledged funds will be released to the Company
to pay for such permitted rebuilding repair or construction or such Event of
Loss Offer pursuant to the Cash Collateral and Disbursement Agreement. The BHR
Loss Proceeds and the Net Loss Proceeds of all Events of Loss with respect to
assets constituting Note Collateral (other than Permitted Investments), as well
as Excess Loss Proceeds, shall be promptly and without commingling deposited
with the Trustee in an Event of Loss Account pursuant to the terms of the Cash
Collateral and Disbursement Agreement until applied as permitted pursuant to
this paragraph. The Company shall grant to the Trustee, on behalf of the
Holders of the Notes, a first priority lien on any properties or assets
rebuilt, repaired or constructed with such Net Loss Proceeds on the terms set
forth in this Indenture and the Collateral Documents.
(b) With respect to any Event of Loss pursuant to clause (D) of the
definition of "Event of Loss" that has a fair market value (or replacement
cost, if greater) in excess of $2.0 million, the Company will be required to
receive consideration at least (i) equal to the fair market value (as
determined by an Independent Financial Advisor) of the assets subject to an
Event of Loss and (ii) 90% of which is in the form of cash or Cash Equivalents;
provided, however, that the amount of (A) any liabilities (as shown on the
Company's most recent balance sheet or in the Notes thereto) of the Company
(other than liabilities that are by their terms expressly subordinated to the
Notes), that are assumed by the transferee of any such assets and (B) any notes
or other obligations received by the Company from such transferee that are
converted by the Company into cash (to the extent of the cash received) within
10 Business Days following the closing of such sale of the assets subject to
such Event of Loss, shall be deemed to be cash only for purposes of satisfying
clause (ii) of this Section 4.11(b) and for no other purpose.
(c) With respect to any Event of Loss with respect to Note Collateral with
a fair market value (or replacement cost, if greater) of $1.0 million or less,
the Net Loss Proceeds therefrom shall be released to the Company.
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SECTION 4.12. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its assets, properties or
securities to, or purchase any assets, properties or securities from, or enter
into or make any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Company in which the Company
or any Subsidiary owns, directly or indirectly, an equity interest (each of the
foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction
is on terms that are no less favorable to the Company or the relevant
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Subsidiary with an unrelated Person and (b) the Company
delivers to the Trustee (i) with respect to any Affiliate Transaction involving
aggregate payments in excess of $350,000, a resolution adopted by the Board of
Managers of the Company approving such Affiliate Transaction and set forth in
an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (a) above and (ii) with respect to any Affiliate Transaction
involving aggregate payments in excess of $4.0 million, a written opinion as to
the fairness to the Company from a financial point of view issued by an
Independent Financial Advisor with assets in excess of $1.0 billion. The
foregoing provisions shall not apply to the following: (1) Restricted Payments
permitted by Section 4.07 hereof; (2) capital contributions required to be made
by the Company pursuant by the BHR Operating Agreement; (3) the Berthing
Agreement; (4) the provision of certain services to the City of Gary or to any
other Person in the State of Indiana on behalf of the City of Gary by an
Affiliate or Affiliates of the Company to satisfy certain obligations of the
Company under the Development Agreement; (5) the licensing of any service mark
of the Company to an Affiliate or Affiliates of the Company; or (6) the
extension or renewal of any terms of any Affiliate Transaction in effect on the
Issuance Date so long as such extension or renewal is accompanied by an
Officer's Certificate stating that such extension or renewal complies with
clause (i) above.
Notwithstanding the foregoing, the Company shall not enter into an
employment or consulting agreement with any individual who directly or
indirectly controls the Company, which agreement provides for annual
compensation to such individual in excess of $350,000.
SECTION 4.13. LIENS.
The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly create, incur, assume or suffer to exist any Lien, except Permitted
Liens, on any asset owned as of the Issuance Date or thereafter acquired by the
Company or any such Subsidiary, or any income or profits therefrom, or assign
or convey any right to receive income therefrom.
SECTION 4.14. LINE OF BUSINESS.
For so long as any Notes are outstanding, the Company (i) shall not, and
shall not permit any Subsidiary to, engage in any business or activity other
than the Principal Business and (ii) shall not permit the BHR Joint Venture to
engage in any business or activity other than businesses or activities that
relate to the Principal Business.
(46)
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SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 hereof, as the case may be, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its existence as a limited liability company and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time
to time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its 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 Subsidiaries, if the Board of Managers of the Company 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 of the
Notes.
SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, the Company shall promptly
make an offer to each Holder to purchase all or any part (equal to $1,000 or an
integral multiple thereof) of the Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a price in cash (the "Change
of Control Payment") equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase, provided,
that the Company shall not be required to make such an offer to purchase if
such event deemed to be a Change of Control ceases to exist prior to the
Purchase Date. Such Change of Control Offer shall be made in accordance with
the procedures set forth in Article 3 hereof. The Company shall commence such
Change of Control Offer by mailing the notice set forth in Section 3.10 hereof
to Holders. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act, and any other securities laws and regulations thereunder to
the extent such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to any Repurchase Offer.
SECTION 4.17. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement, the Company will file a
registration statement (the "Exchange Offer Registration Statement") with
respect to an offer to exchange the Senior Notes for a new issue of Senior
Exchange Notes of the Company (the "New Notes") registered under the Securities
Act, with terms identical to those of the Senior Notes. If (i) the Exchange
Offer is not permitted by applicable law or (ii) any holder of Senior Notes
notifies the Company that (A) it is prohibited by law or SEC policy from
participating in the Exchange Offer, (B) that it may not resell the New Notes
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 or (C) that it is a
broker-dealer and holds Notes acquired directly from the Company or an
affiliate of the Company, the Company will be required to provide a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
the Notes by the holders thereof.
(47)
<PAGE> 56
If (i) the Company fails to file within 30 days, or fails to cause to
become effective within 120 days after filing, the Exchange Offer Registration
Statement, or (ii) the Company is obligated to provide a Shelf Registration
Statement and such Shelf Registration Statement is not filed within 30 days, or
declared effective within 120 days after filing, or (iii) the Company fails to
consummate the Exchange Offer within 30 days of the date on which the Exchange
Offer Registration Statement was required to be declared effective by the
Commission or (iv) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but shall thereafter cease to be
effective or usable in connection with resales of the Notes for the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (i) through (iv) above a "Registration Default"), then the Company
shall pay to each holder of Notes, with respect to the first 90-day period
following such Registration Default, liquidated damages ("Liquidated Damages")
in an amount equal to $.05 per week per $1,000 in principal amount of Notes
held by such holder. The amount of such Liquidated Damages will increase by an
additional $.05 per week per $1,000 in principal amount of Notes held by such
holders for each subsequent 90-day period until such Registration Default has
been cured, up to a maximum of $.35 per week.
SECTION 4.18. USE OF PROCEEDS.
The Company shall use the net proceeds from the sale of the Notes only for
Permitted Proceed Uses. The Company shall cause the net proceeds from the sale
of the Notes to be deposited into the Cash Collateral Accounts and disbursed
only in accordance with the Cash Collateral and Disbursement Agreement.
SECTION 4.19. CASH COLLATERAL AND DISBURSEMENT AGREEMENT.
The Company shall place all of the net proceeds of the Offering (to the
extent provided below) into the Cash Collateral Accounts to be held in escrow
and invested in cash or Cash Equivalents by the Disbursement Agent until needed
from time to time to fund (i) the equipping of the Chartered Vessel, (ii) the
Company's obligations with respect to the construction of the Gaming Complex,
(iii) the construction of the Permanent Vessel, (iv) the repayment of the Note
to Principal Member, (v) the first two scheduled fixed interest payments with
respect to the Senior Notes and (vi) certain other disbursements as permitted
by the Cash Collateral and Disbursement Agreement, each pursuant to the terms
of the Cash Collateral and Disbursement Agreement. On or prior to the Issuance
Date, the Company shall have entered into the Cash Collateral and Disbursement
Agreement. The Trustee, for the ratable benefit of the Holders, shall have an
exclusive, and perfected security interest in the Cash Collateral Accounts.
The Disbursement Agent will make disbursements out of the Cash Collateral
Accounts in accordance with the disbursement conditions set forth in the Cash
Collateral and Disbursement Agreement.
SECTION 4.20. GAMING LICENSES.
The Company covenants to use its best efforts to obtain and retain in full
force and effect at all times all Gaming Licenses necessary for the operation
of the Majestic Star Casino, provided, that, if the Company is required by any
Gaming Regulatory Authority to suspend or revoke any consent, permit or license
or close or suspend any operation of any
(48)
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part of the Majestic Star Casino as a result of any noncompliance with law, the
Company will use its best efforts to promptly and diligently correct such
noncompliance or replace any personnel causing such noncompliance so that the
Majestic Star Casino will be opened and fully Operating.
SECTION 4.21. CONSTRUCTION.
The Company shall cause the Chartered Vessel to be equipped and refitted
for gaming and shall use its best efforts to cause the construction by the BHR
Joint Venture of the Gaming Complex, including the furnishing, fixturing and
equipping thereof, to be prosecuted with diligence and continuity in a good and
workmanlike manner substantially in accordance with the Plans and
Specifications and within the Construction Budget. At such time that the
Company commences construction of the Permanent Vessel, the Company shall cause
such construction to be prosecuted with diligence and continuity in a good and
workmanlike manner substantially in accordance with the Plans and
Specifications for such construction and within the construction budget
therefor and shall use its best efforts to cause the Permanent Vessel to be
Delivered no later than June 30, 1998.
SECTION 4.22. MAINTENANCE OF INSURANCE.
Until the Notes have been paid in full, the Company and its Subsidiaries
shall maintain insurance with responsible carriers against such risks and in
such amounts as is customarily carried by similar businesses with such
deductibles, retentions, self insured amounts and coinsurance provisions as are
customarily carried by similar businesses of similar size, including, without
limitation, property and casualty, and shall have provided insurance
certificates evidencing such insurance to the Trustee prior to the Issuance
Date and shall hereafter provide such certificates prior to the anniversary or
renewal date of each such policy, which certificate shall expressly state the
expiration date for each policy listed. The Company shall furnish or cause to
be furnished certified copies of the policies to the Trustee.
Customary insurance coverage shall be deemed to include the following: (i)
workers' compensation insurance to the extent required to comply with all
applicable state, territorial, or United States laws and regulations, or the
laws and regulations of any other applicable jurisdiction, (ii) comprehensive
general liability insurance with minimum limits of $1.0 million, (iii) umbrella
or excess liability insurance providing excess liability coverages over and
above the foregoing underlying insurances up to a minimum limit of $25.0
million, and (iv) property insurance protecting the property against loss or
damage by fire, lightning, windstorm, tornado, water damage, vandalism, riot,
earthquake, civil commotion, malicious mischief, hurricane, and such other
risks and hazards as are from time to time covered by an "all-risk" policy or a
property policy covering "special" causes of loss (such insurance shall provide
coverage in not less than the lesser of 120% of the outstanding principal
amount of the Notes plus accrued and unpaid interest and 100% of actual
replacement value (as determined at each policy renewal based on the F.W. Dodge
Building Index or some other recognized means) of any improvements and with a
deductible no greater than 2% of the insured value of the Majestic Star Casino
Project and the Permanent Vessel or such greater amount as is available on
commercially reasonable terms (other than earthquake insurance, for which the
deductible may be up to 10% of such replacement value)). All insurance
required under this
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Indenture (except worker's compensation) shall name the Company as insured and
the Trustee as an additional insured, with loss proceeds in excess of $1.0
million payable jointly to the Company and the Trustee (unless a Default or
Event of Default has occurred and is then continuing, in which case all loss
proceeds are payable solely to the Trustee), with no recourse against the
Trustee for the payment of premiums, deductibles, commissions or club calls,
and for at least 30 days notice of cancellation. All such loss proceeds in
excess of $1.0 million shall be deposited in the Event of Loss Account to be
established pursuant to Section 10.12 hereof and the Cash Collateral and
Disbursement Agreement and shall be pledged to the Trustee until released in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
All such insurance policies shall be issued by carriers having an A.M. Best &
Company, Inc. rating of "A" or higher and a financial size category of not less
than XII, or if such carrier is not rated by A.M. Best & Company, Inc., having
the financial stability and size deemed appropriate by an opinion from a
reputable insurance broker. The Company shall deliver to the Trustee on the
Issuance Date and each anniversary hereafter a certificate of an insurance
agent stating that the insurance policies obtained by the Company comply with
this Section 4.22 and the related applicable provisions of the Collateral
Documents.
SECTION 4.23. LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Company shall not become an Investment Company subject to registration
as an "investment company" (as that term is defined in the Investment Company
Act of 1940, as amended), or from otherwise becoming subject to regulation
under the Investment Company Act of 1940.
SECTION 4.24. COLLATERAL DOCUMENTS.
The Company will not, and will not permit any of its Subsidiaries to,
amend, waive or modify, or take or refrain from taking any action that has the
effect of amending, waiving or modifying, any provision of the Collateral
Documents to the extent that such amendment, waiver, modification or action
could have an adverse effect in any material respect on the rights of the
Trustee or the Holders, provided, that: (i) the Note Collateral may be released
or modified as expressly provided in this Indenture and in the Collateral
Documents; (ii) the Construction Budget may be amended as expressly provided in
the Cash Collateral and Disbursement Agreement; and (iii) this Indenture and
any of the Collateral Documents may be otherwise amended, waived or modified as
set forth under Article 9 hereof.
SECTION 4.25. FURTHER ASSURANCES.
The Company shall (and shall cause each of its Subsidiaries to) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of assignments,
transfers, certificates, assurances and other instruments as may be required
from time to time in order (i) to carry out more effectively the purposes of
the Collateral Documents, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests required to be
encumbered thereby, (iii) to perfect and maintain
(50)
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the enforceability, validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, (iv) to
enter into the First Preferred Ship Mortgage upon Delivery of the Permanent
Vessel, and (v) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Trustee any of the rights granted or now or
hereafter intended by the parties thereto to be granted to the Trustee, the
Holders of the Notes or under any other instrument executed in connection
therewith or granted to the Company under the Collateral Documents or under any
other instrument executed in connection therewith.
SECTION 4.26. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Subsidiary
to (a)(i) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
Indebtedness owed to the Company or any of its Subsidiaries, (b) make loans or
advances to the Company or any of its Subsidiaries or (c) sell, lease, or
transfer any of its properties or assets to the Company or any of its
Subsidiaries, except (in each case) for such encumbrances or restrictions
existing under or by reason of (1) contractual encumbrances or restrictions in
effect on the Issuance Date, (2) the Indenture, the Senior Notes and the
Collateral Documents, (3) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any Subsidiary as in effect at the
time of such acquisition (except to the extent such Indebtedness was incurred
in connection with or in contemplation of such acquisition), which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated Cash Flow of such Person is not taken
into account in determining whether such acquisition was permitted by the terms
of the Indenture, (4) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent with past
practices, (5) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in clause
(c) above on the property so acquired, (6) applicable law or any applicable
rule or order of any Gaming Regulatory Authority, or (7) any encumbrances or
restrictions imposed by any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in clauses (1) through (6)
above, provided, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are, in the
good faith judgment of the Company's Board of Managers, no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
SECTION 4.27. RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY.
The Company shall not, and shall not permit any Subsidiary to, lease,
sublease, or grant a license, concession or other agreement to occupy, manage
or use any Note Collateral
(51)
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owned or leased by the Company (each, a "Lease Transaction"), other than the
following Lease Transactions, provided that (1) no Default or Event of Default
has occurred or is continuing immediately after entering into such Lease
Transaction (or immediately after any extension or renewal of such Lease
Transaction made at the option of the Company or any Subsidiary) and (2) no
gaming or casino operations may be conducted on any Note Collateral that is
the subject of such Lease Transaction other than by the Company or any
Subsidiary:
(a) the Company may enter into a Lease Transaction with respect to any
space on or within the Majestic Star Casino with any Person, provided that (i)
such Lease Transaction will not interfere with, impair or detract from the
operations of the Majestic Star Casino and will, in the opinion of the Company,
enhance the value and operations of the Majestic Star Casino, (ii) such Lease
Transaction is at a fair market rent (in light of other similar or comparable
prevailing commercial transactions) and contains such other terms such that the
Lease Transaction, taken as a whole, is commercially reasonable and fair to the
Company in light of prevailing or comparable transactions in other casinos,
hotels, attractions or shopping venues and (iii) such Lease Transaction
complies with all applicable laws, including obtaining any consent or license
of the IGC if required; and
(b) the Company may enter into a management or operating agreement with
respect to any Note Collateral (other than any Note Collateral or space used
for any casino or gaming operations) with any Person, provided that (i) the
manager or operator has experience in managing or operating similar operations,
(ii) such management or operating agreement is on commercially reasonable and
fair terms to the Company and (iii) such management or operating agreement is
terminable without penalty to the Company upon no more than 90 days written
notice.
The Company will notify the Trustee of any Lease Transaction and request
that the Trustee enter into a leasehold non-disturbance agreement (acceptable
to the Trustee) with respect to any Lease Transaction permitted under clause
(a) above, in the event that the Trustee, on behalf of the Holders of Notes,
forecloses or takes possession of any Note Collateral. Such an agreement shall
provide, among other things, that any action taken with respect to any Note
Collateral, including any sale of Note Collateral, will be subject to the terms
of the Lease Transaction and will permit the lessee to cure certain defaults
under such Lease Transaction. No Lease Transaction may provide that the
Company may subordinate its leasehold or fee interest to any lessee or any
financing party of any lessee.
SECTION 4.28. UNCOMPLETED PROJECT OFFER
If the Majestic Star Casino is not Operating by December 31, 1996 (the
"Uncompleted Project"), then the Company shall be required (a) within 30 days
of such date to offer to purchase Notes up to an amount equal to funds
remaining in the Cash Collateral Accounts, provided that such funds exceed $5.0
million (the "Initial Uncompleted Project Offer") and (b) within one year after
such date (but no later than 30 days after receipt of the proceeds from the
Project Liquidation), to offer to purchase Notes up to an amount equal to the
net proceeds from the liquidation of the remaining assets of the Uncompleted
Project ("Project Liquidation"), plus any funds remaining in the Cash
Collateral Accounts (a "Final Uncompleted Project
(52)
<PAGE> 61
Offer"; and, together with the Initial Uncompleted Project Offer, an
"Uncompleted Project Offer"), in each case at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
purchase date.
The Company shall also be required to proceed promptly after December 31,
1996 with an orderly liquidation of the remaining assets related to the
Uncompleted Project and without commingling to deposit the proceeds thereof
with the Disbursement Agent in the Uncompleted Project Account pursuant to the
Cash Collateral and Disbursement Agreement subject to a lien in favor of the
Trustee for the benefit of the Holders. Failure to complete such liquidation
and commence the Final Uncompleted Project Offer within one year shall be an
Event of Default.
Within 30 days after December 31, 1996, if applicable, the Company will
mail to all Holders of Notes a notice apprising such Holders of the Initial
Uncompleted Project Offer and of the Holders' rights arising as a result
thereof. Within 30 days after the completion of the Project Liquidation, the
Company will mail to all Holders of Notes a notice apprising such Holders of
the Final Uncompleted Project Offer and of the Holders' rights arising as a
result thereof.
If the aggregate principal amount of Notes surrendered pursuant to any
such Uncompleted Project Offer exceeds the amount of funds available to
repurchase such Notes, the Trustee shall select the Notes to be purchased in
the manner described in Section 3.02 hereof.
Any offer to purchase Notes pursuant to this Section 4.28 shall be made in
accordance with the procedures set forth in Section 3.10 hereof.
SECTION 4.29. UNCOMPLETED VESSEL OFFER
If the Delivery of the Permanent Vessel has not occurred by June 30, 1998,
then the Company will be required within 30 days of such date to offer to
purchase Notes up to an amount equal to funds remaining in the Cash Collateral
Accounts (the "Uncompleted Vessel Offer") at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any.
Within 30 days after June 30, 1998, the Company will mail to all Holders
of Notes a notice apprising such Holders of the Uncompleted Vessel Offer and of
the Holders' rights arising as a result thereof.
If the aggregate principal amount of Notes surrendered pursuant to any
such Uncompleted Vessel Offer exceeds the amount of funds available to
repurchase such Notes, the Trustee shall select the Notes to be purchased in
the manner described in Section 3.02 hereof.
Any offer to purchase Notes pursuant to this Section 4.29 shall be made in
accordance with the procedures set forth in Section 3.10 hereof.
(53)
<PAGE> 62
SECTION 4.30. ADDITIONAL SUBSIDIARIES.
Upon the formation of any Subsidiary of the Company, the Company shall
pledge to the Trustee the stock or other evidences of ownership of such
Subsidiary and, in any event, any intercompany notes held by the Company, as
Note Collateral pursuant to the Pledge Agreement substantially in the form of
the existing Pledge Agreement, subject to such amendments or modifications as
may be appropriate to reflect the nature of the Subsidiary and the jurisdiction
in which such Subsidiary is formed or operates; provided, however that (i)
Capital Stock of a Subsidiary hereafter owned by the Company need not be
pledged if any such pledge would in any way jeopardize the obtaining or
maintenance of a Gaming License or would require the Trustee or a Holder or
beneficial holder of Notes to be licensed, qualified or found suitable by an
applicable Gaming Regulatory Authority and (ii) if such Subsidiary is a
partnership, such pledge of Capital Stock need only be pledged to the extent of
distributions received from such partnership.
SECTION 4.31. RATING.
The Company shall be required, within 90 days of the date of this
Indenture, to make presentations to Moody's Investors Service and Standard &
Poor's Ratings Group, for the purpose of obtaining a rating for the Notes.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company, in a single transaction or through a series of related
transactions, shall not consolidate with or merge with or into any other
Person, or transfer (by lease, assignment, sale or otherwise) all or
substantially all of its properties and assets unless (1) either the Company is
the continuing Person, or the Person (if other than the Company) formed by or
surviving such consolidation or into which the Company is merged or to which
all or substantially all of the properties and assets of the Company are
transferred (the Company or such other Person hereinafter referred to as the
"Surviving Person") is a corporation or limited liability company organized and
validly existing under the laws of the United States, any state thereof or the
District of Columbia, and shall expressly assume, by a supplemental indenture,
all the obligations of the Company under the Notes, the Indenture and the
Collateral Documents; (2) immediately after and giving effect to such
transaction and the assumption contemplated by clause (1) above and the
incurrence or anticipated incurrence of any Indebtedness to be incurred in
connection therewith, (A) the Surviving Person shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction, and (B) the Surviving Person could incur
$1.00 of additional Indebtedness under the Fixed Charge Coverage Ratio; (3)
immediately before and immediately after and giving effect to such transaction
and the assumption of the obligations as set forth in clause (1) above and the
incurrence or anticipated incurrence of any Indebtedness to be incurred in
connection therewith, no Default or Event of Default shall have
(54)
<PAGE> 63
occurred and be continuing and (4) such transactions would not require any
Holder of Notes to obtain a gaming license or be qualified under the laws of
any applicable gaming jurisdiction, provided that such Holder would not have
been required to obtain a Gaming License or be qualified under the laws of any
applicable gaming jurisdiction in the absence of such transactions.
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 Surviving
Person 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 Surviving Person and not to the Company), and may exercise
every right and power of the Company under this Indenture with the same effect
as if such Surviving Person had been named as the Company herein; provided,
however, that (A) the Surviving Person shall (i) assume all of the obligations
of the acquired Person under this Indenture, the Notes, and if applicable, the
Collateral Documents, (ii) acquire and own and operate, directly or through
Wholly Owned Subsidiaries, all or substantially all of the properties and
assets then constituting the assets of the Company or any of its Subsidiaries,
as the case may be, (iii) have been issued, or have a consolidated Subsidiary
which has been issued, Gaming Licenses to operate the acquired casino
operations and entities substantially in the manner and scope operated prior to
such transaction, which Gaming Licenses are in full force and effect, and (iv)
comply fully with Section 5.01 hereof and (B) the predecessor Company shall
have delivered to the Trustee an Officers' Certificate and Opinion of Counsel,
subject to customary assumptions and exclusions, stating that the proposed
transaction complies with this Indenture; provided further, however, that the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest (including Contingent Interest, if any) 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.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the
Notes and such default continues for a period of 30 days; provided that
payments of Contingent Interest that are permitted to be deferred as
provided in the Notes shall not become due for this purpose until such
payment is required to be made pursuant to the terms of the Notes;
(55)
<PAGE> 64
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same become due and payable at
maturity, upon redemption (or in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply, within any applicable cure periods,
with any of the provisions of Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16,
4.18, 4.28, 4.29, 4.31 or 5.01 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes
or the Collateral Documents for 30 days after written notice to the
Company by the Trustee or to the Company and the Trustee from Holders of
at least 25% in principal amount of the Notes then outstanding;
(e) for any reason, other than due to the act of the Trustee, the
Disbursement Agent or the Holders and other than the satisfaction in full
and discharge of all obligations secured thereby, to the extent permitted
by this Indenture or any Collateral Document, any Collateral Document
ceases to be in full force and effect or any Lien intended to be
perfected thereby ceases to be or is not a valid and perfected Lien
having the ranking or priority contemplated thereby, except for Permitted
Liens, and such condition continues for a period of 30 days after the
Company receives notice of such condition;
(f) prior to Delivery of the Permanent Vessel, the Charter ceases to
be in full force and effect or the Company defaults in the performance of
any covenant set forth in the Charter or any of the Collateral Documents
(which default is not waived or cured);
(g) a default occurs under any mortgage, indenture or instrument
under which there is issued or by which there is secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
or the payment of which is guaranteed by the Company or any of its
Subsidiaries, whether such Indebtedness or guarantee now exists, or is
created after the Issuance Date, which default (a) is caused by a failure
to pay when due principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
indebtedness (a "Payment Cross-Default") or (b) results in the
acceleration of such Indebtedness prior to its express maturity or would
constitute a default in the payment of such issue of Indebtedness at
final maturity of such issue and, in each case, the principal amount of
such Indebtedness, together with the principal amount of any other such
Indebtedness under which a Payment Cross-Default then exists or with
respect to which the maturity thereof has been so accelerated or which
has not been paid at maturity, aggregates $1.0 million or more;
(h) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries or any of their assets and such
judgment or judgments remain unpaid,
(56)
<PAGE> 65
undischarged, unbonded or unstayed for a period of 60 days, provided
that the aggregate of all such undischarged judgments exceeds $1.0
million;
(i) the Company or any of its Subsidiaries breaches in a material
respect any representation or warranty set forth in the Charter, the
Berthing Agreement or any of the Collateral Documents, or the Company or
any of its Subsidiaries repudiates any of its obligations under, or any
judgment or decree by a court or government agency of competent
jurisdiction declaring the unenforceability of the Charter, the Berthing
Agreement or any of the Collateral Documents and such repudiation
materially impairs the benefits to the Trustee or the Holders of the
Notes thereunder;
(j) the Company 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) makes a general assignment for the benefit of its
creditors, or
(iv) generally is not paying its debts as they become due; or
(k) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case; or
(ii) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 30 consecutive
days;
(l) there is any revocation, termination, suspension or other
cessation of effectiveness of any Gaming License which results in the
cessation or suspension of gaming operations for a period of more than 90
consecutive days at the Majestic Star Casino;
(m) there is a cessation of gaming operations for a period of more
than 90 consecutive days at the Majestic Star Casino (other than as a
result of casualty loss) after the Majestic Star Casino becomes
Operating;
(n) there is a cessation of gaming operations for a period of more
than 180 consecutive days as a result of a casualty loss after the
Majestic Star Casino becomes Operating, except if the Company is
diligently pursuing reconstruction and opening of the Majestic Star
Casino and such reconstruction and opening can be accomplished with the
funds available to the Company;
(57)
<PAGE> 66
(o) the Majestic Star Casino Project is not Operating by December
31, 1996 and continues to be not Operating; or
(p) the Permanent Vessel has not been Delivered by June 30, 1998.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (j) or (k) of Section 6.01 hereof with respect to the Company), occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes may declare the principal, premium, if
any, interest (including Contingent Interest and Liquidated Damages, if any)
and any other monetary obligations on all of the Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified
in clause (j) or (k) of Section 6.01 hereof occurs with respect to the Company,
the principal, premium, if any, interest (including all Contingent Interest and
Liquidated Damages, if any) and any other monetary obligations on all of the
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.
Notwithstanding the foregoing, the Trustee shall have no obligation to
accelerate the Notes if in the best judgment of the Trustee acceleration is not
in the best interest of the Holders of the Notes.
If an Event of Default occurs on or after May 15, 2000 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof (a "Willful Default"), then, upon acceleration
of the Notes, an equivalent premium shall also become and be immediately due
and payable, to the extent permitted by law, anything in this Indenture or in
the Notes to the contrary notwithstanding. If an Event of Default occurs prior
to May 15, 2000 by reason of any Willful Default then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on May 15 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount that would otherwise be due but for the provisions of this sentence):
<TABLE>
<CAPTION>
Year %
---- -------
<S> <C>
1996 112.750
1997 112.750
1998 110.625
1999 108.500
2000 106.375
</TABLE>
(58)
<PAGE> 67
The Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may notify the Company in writing, no later than 60 days
following the acceleration of the Notes, that the Trustee or such Holders
believe in good faith that a Willful Default has occurred. If the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
fail to notify the Company of a Willful Default within such 60-day period, the
Company shall not be required to pay such Willful Default premium.
If the Company objects to a written notice by the Trustee or such Holders
that a Willful Default has occurred, the Company may so notify the Trustee in
writing within 15 days of its receipt of such notice. Upon receipt of the
Company's notice of objection, the Trustee shall promptly submit the issue of
whether a Willful Default has occurred to binding arbitration under the
Commercial Rules of the American Arbitration Association. The arbitration
shall be a non-administered arbitration in that all administrative functions
will be performed by the parties and the arbitrators rather than the American
Arbitration Association and no fees will be paid to the American Arbitration
Association for such arbitration. To the extent that there are any conflicts
between the Commercial Rules of the American Arbitration Association and this
Section 6.02, this Section 6.02 shall govern.
The arbitration proceeding contemplated in the preceding paragraph shall
be conducted by three arbitrators, with one selected by the Company, one
selected by the Trustee and one selected by the mutual agreement of the Company
and the Trustee. If the Trustee and the Company are unable to agree to the
selection of a third arbitrator within seven (7) days of the selection of the
other two arbitrators, the arbitrators selected by the Trustee and the Company
shall select the third arbitrator. The arbitration shall take place in
Detroit, Michigan, and judgment upon any award rendered by the arbitrators may
be entered by any court having jurisdiction thereon. The arbitration shall be
governed by the laws of the State of New York. The arbitrators shall not be
empowered to award damages, but shall only be empowered to determine whether a
Willful Default has occurred. No interest on any premium determined to be
payable by the Company to the Holders shall accrue prior to the decision of the
arbitrators. The procedures set forth in this paragraph and the preceding
paragraph shall be the sole and exclusive method of determining whether a
Willful Default has occurred hereunder.
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, this Indenture or the Collateral Documents, including, without
limitation, any remedy available pursuant to the Cash Collateral and
Disbursement Agreement.
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 constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
(59)
<PAGE> 68
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than 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, 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.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it, including the exercise of any remedy under the Collateral
Documents. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from the
Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
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 principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request; provided, however, that such provision does not
affect the right of a Holder to sue for enforcement of any overdue payment
thereon.
(60)
<PAGE> 69
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, if any, and interest
on the Notes, on or after the respective due dates expressed in the Notes
(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, 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, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
(61)
<PAGE> 70
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
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, 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, if any, and interest, respectively; and
Third: (i) with respect to any other money, 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.
SECTION 6.12. MANAGEMENT OF CASINOS.
Notwithstanding any provision of this Article 6 to the contrary, following
an Event of Default that permits the taking of possession of the Majestic Star
Casino by the Trustee, the Trustee shall be authorized, to recommend that the
Company retain one or more experienced operators of casinos to manage the
casino located at the Majestic Star Casino on behalf of the Holders of Notes;
provided, however, that any such operator shall have all necessary legal
qualifications, including all material Gaming Licenses and/or approvals of the
IGC to manage the casino located at the Majestic Star Casino.
(62)
<PAGE> 71
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
the Collateral Documents, 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 his own affairs.
(b) Except during the continuance of an Event of Default, the duties of
the Trustee shall be determined solely by the express provisions of this
Indenture and the Collateral Documents and the Trustee need perform only those
duties that are specifically set forth in this Indenture and the Collateral
Documents and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee.
(c) 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 in all material respects to the requirements of this Indenture and
the Collateral Documents. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform in all material respects
to the requirements of this Indenture and the Collateral Documents. The
permissive right of the Trustee to take actions enumerated in this Indenture
shall never be construed as a duty.
(d) The Trustee may not be relieved from liabilities for its own gross
negligent action, its own gross negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph (d) does not limit the effect of paragraphs (b)
and (c) of this Section;
(ii) the Trustee shall not be liable to the Company, any holder of
the Notes or any other Person for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was
grossly negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable to the Company, any holder of
the Notes or any other Person 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.
(e) 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), (c) and (d) of this Section.
(f) All moneys received by the Trustee shall, until used or applied or
invested as herein provided, be held in trust for the purposes of which they
were received but need not be
(63)
<PAGE> 72
segregated from other funds except to the extent required by law or as provided
in this Indenture. 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 or
as provided in this Indenture.
(g) 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
before or following the occurrence of any Event of Default 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.
(h) The Trustee shall not be individually liable for any debt contracted
or for damages to persons or to personal property injured or damaged, or for
salaries or non-fulfillment of contracts during any period in which it may be
in the possession of or managing any real and tangible personal property as
anywhere in the Indenture provided.
(i) At any and all reasonable times the Trustee and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives shall
have the right fully to inspect any and all of the books, papers and records of
the Company pertaining to the Notes, and to make such copies from and in regard
thereto as may be desired.
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
reasonable 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.
(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
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Holders shall have requested such action in accordance with this Indenture and
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.
(g) Except with respect to Section 4.01 hereof, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article
Four hereof. In addition, the Trustee shall not be deemed to have knowledge of
any Default or Event of Default except (i) any Event of Default occurring
pursuant to Section 6.01(a) or 6.01(b) or (ii) any Default or Event of Default
of which the Trustee shall have received written notification or obtained
actual knowledge.
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 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 SEC 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, the Collateral Documents or the
Notes or as to the adequacy of the security for 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 or the Collateral Documents; it shall not be responsible for the
use or application of any money received by the Disbursement Agent, 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. NOTICES 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 the Holders of Notes and the
Disbursement Agent notices 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 (including Contingent
Interest, if any) on any Note, the Trustee may withhold the notices if and so
long as the Trustee in good faith determines that withholding the notices is in
the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
On 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
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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 SEC 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.
At the expense of the Company, the Trustee or, if the Trustee is not the
Registrar, the Registrar, shall report the names of record holders of the Notes
to any Gaming Regulatory Authority when requested to do so by the Company.
At the express direction of the Company and at the Company's expense, the
Trustee will provide any Gaming Regulatory Authority with:
(i) copies of all notices, reports and other written communications
which the Trustee gives to Holders;
(ii) a list of all of the Holders promptly after the original
issuance of the Notes and periodically thereafter if the Company so
directs;
(iii) Notice of any Default or Event of Default under this
Indenture, any acceleration of the indebtedness evidenced hereby, the
institution of any legal actions or proceedings before any court or
governmental authority in respect of a Default or Event of Default
hereunder;
(iv) notice of the removal or resignation of the Trustee within five
Business Days of the effectiveness thereof;
(v) notice of any transfer or assignment of rights under this
Indenture known to the Trustee within five Business Days thereof; and
(vi) a copy of any amendment to the Notes or this Indenture within
five Business Days of the effectiveness thereof.
To the extent requested by the Company and at the Company's expense, the
Trustee shall cooperate with any Gaming Regulatory Authority in order to
provide such Gaming Regulatory Authority with the information and documentation
requested and as otherwise required by applicable law.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder in
accordance with a written schedule provided by the Trustee to the Company. 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
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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 hereby indemnifies the Trustee and its officers, directors,
agents and employees 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 or the Collateral Documents,
including the costs and expenses of enforcing this Indenture or the Collateral
Documents 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 gross negligence or willful
misconduct. 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
(including Contingent Interest, if any) 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(j) or (k) 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 provision 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 and taking of office 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 Notes 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:
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(a) the Trustee fails to comply with Section 7.10 hereof;
(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. For up to one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may by
written action appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If any Gaming Regulatory Authority requires a Trustee to be approved,
licensed or qualified and the Trustee fails or declines to do so, such
approval, license or qualification shall be obtained upon the request of, and
at the expense of, the Company unless the Trustee declines to do so, or, if the
Trustee's relationship with the Company may, in the Company's discretion,
jeopardize any material gaming license or franchise or right or approval
granted thereto, the Trustee shall resign, and, in addition, the Trustee may at
its option resign if the Trustee in its sole discretion determines not to be so
approved, licensed or qualified.
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 the Notes 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 at any time fails to comply with Section 7.10, any Holder
of a Note for at least six months 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 of the Notes. 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
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further act shall be the successor Trustee; provided such corporation shall be
otherwise eligible and qualified under this Article.
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 $50
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).
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. The Trustee hereby waives any right to set off any claim that it may
have against the Company in any capacity (other than as Trustee, Paying Agent
or Collateral Agent hereunder or under the Collateral Documents) against any of
the assets of the Company held by the Trustee, including in any of the Cash
Collateral Accounts; provided, however, that if the Trustee is or becomes a
lender of any other indebtedness permitted hereunder to be pari passu with the
Notes, then such waiver shall not apply to the extent of such Indebtedness.
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 Managers evidenced by a
resolution set forth in an Officers' Certificate delivered to the Trustee, 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 Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
(a) When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation or (ii)
all outstanding Notes have become due and payable and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity all outstanding
Notes, including interest thereon (other than Notes replaced pursuant to
Section 2.07), and if in either case the Company pays all other sums payable
hereunder by it, then this Indenture shall, subject to Sections 8.02(b) and
8.07 cease
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to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on the Company's demand accompanied by an Officers'
Certificate and an Opinion of Counsel and at the Company's cost and expense.
(b) 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 and cured all existing Events of Default, 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 (i) and (ii)
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: (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
(including Contingent Interest, if any) on such Notes when such payments are
due, (ii) the Company's obligations with respect to such Notes under Article 2
and Section 4.02 hereof, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (iv) this Article Eight. Subject to compliance with this Article
Eight, 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, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.24,
4.25, 4.26, 4.27, 4.28, 4.29, 4.30, and 5.01, and the Events of Default
specified under Sections 6.01(c), 6.01(d), 6.01(e), 6.01(h), 6.01(k), 6.01(l),
6.01(m), 6.01(n), 6.01(o) or 6.01(p) hereof with respect to the outstanding
Notes on and after the date the conditions set forth below 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, 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 listed in this Section
8.03, 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.
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(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 as evidenced by a certificate delivered to the Trustee, to
pay the principal of, premium, if any, and interest (including the maximum
amount payable as Contingent Interest and Liquidated Damages, if any) due on
the outstanding Notes on the stated maturity date 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, subject to customary
assumptions and exclusions, (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the
Issuance Date, 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, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Legal Defeasance and
will be subject to U.S. 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, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Covenant Defeasance and will be subject to U.S. 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
pursuant to Section 6.01(a), 6.01(b), 6.01(j), or 6.01(k) hereof on the date of
such deposit;
(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 is a party or by
which the Company is bound;
(f) the Company shall have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit and as of the date
of such opinion and subject to customary assumptions and exclusions following
the deposit, the trust funds will not
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be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally under any
applicable United States law;
(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 defeating, hindering, delaying or defrauding any creditors of the
Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which Opinion of Counsel may be subject
to customary assumptions and exclusions, 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
(including the maximum amount of Contingent Interest payable), 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.
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, 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,
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as an unsecured creditor, 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
(including Contingent Interest, if any) 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. NOTE COLLATERAL.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to either Section 8.02 or 8.03, the Note Collateral, except the
funds in the trust fund described in Section 8.04 hereof, shall be released
pursuant to Section 10.03 hereof.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Notes or the Collateral
Documents without the consent of any Holder of a Note, and provided that any
required governmental approval, including that of the IGC, is obtained:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to comply with Article 5 hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of a Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
(f) to enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel pursuant to Article 10 hereof; or
(g) to secure the Notes with additional collateral.
Upon the request of the Company accompanied by a resolution of the Board
of Managers of the Company authorizing the execution of any such amended or
supplemental Indenture, Notes or Collateral Documents, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of any amended or supplemental
Indenture, Notes or Collateral Documents 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 any such amended or supplemental Indenture, Notes or
Collateral Documents that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02 or elsewhere in this
Indenture, the Company and the Trustee may amend or supplement this Indenture,
the Notes or the Collateral Documents with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), provided that any required governmental approval is obtained, including
that of the IGC, 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 (including Contingent
Interest and Liquidated Damages, if any) on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for the Notes). Without the consent of at least 66-2/3% in principal
amount of the Notes then outstanding (including consents obtained in a tender
offer or exchange offer for such Notes), no waiver or amendment to this
Indenture may make any change to Section 4.16 hereof.
Upon the request of the Company accompanied by a resolution of the Board
of Managers of the Company authorizing the execution of any such amended or
supplemental Indenture, Notes or Collateral Documents, 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 in
the execution of such amended or supplemental Indenture, Notes or
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Collateral Documents, unless any such amended or supplemental Indenture, Notes
or Collateral Documents affects the Trustee's own rights, duties or immunities
under this Indenture, the Notes, the Collateral Documents or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture, Notes or Collateral
Documents.
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 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 affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture, Notes or Collateral Documents or waiver. Subject to Sections 6.04
and 6.07 hereof, the Holders of a majority in aggregate principal amount of the
Notes then outstanding may waive compliance in a particular instance with any
provision of this Indenture, the Notes or the Collateral Documents. However,
without the consent of each Holder affected, an amendment or waiver 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
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 optional or mandatory
redemption provisions of the Notes (provided, however, that this clause (b)
does not apply to any provision with respect to any Repurchase Offer);
(c) reduce the rate of or change the time for payment of interest
including Contingent Interest, if any, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal
amount of then outstanding Notes and a waiver of the payment default that
resulted from such acceleration);
(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 monetary Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest (including Contingent
Interest and Liquidated Damages, if any) on the Notes;
(g) release all or substantially all of the Note Collateral from the Lien
of this Indenture or the Collateral Documents; or
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(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, the Notes and the
Collateral Documents shall be set forth in an amended or supplemental Indenture
or Collateral Document that complies with the TIA as then in effect, if
applicable.
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 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, Note or
Collateral Document, if necessary, 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, Note or Collateral Document until the
Board of Managers approves it. In executing any amended or supplemental
indenture, Note or Collateral Document, if necessary, the Trustee shall be
entitled to receive and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel, which Opinion
of Counsel may be subject to customary assumptions and exclusions, stating that
the execution of such amended or supplemental indenture, Note or Collateral
Document is authorized or permitted by this Indenture.
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ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY.
The due and punctual payment of the principal of, premium, if any, and
interest on the Notes when and as the same shall be due and payable, whether on
an interest payment date, at maturity, by acceleration, repurchase, redemption
or otherwise, and interest on the overdue principal of, premium, if any, and
interest on the Notes and performance of all other obligations of the Company
to the Holders of Notes or the Trustee under this Indenture and the Notes,
according to the terms hereunder or thereunder, shall be secured by a first
lien on the Note Collateral as provided herein and in the Collateral Documents
which the Company has entered into simultaneously with the execution of this
Indenture for the benefit of the Holders of Notes. Each Holder of Notes, by
its acceptance thereof, consents and agrees to the terms of the Collateral
Documents (including, without limitation, the provisions providing for
foreclosure and release of Note Collateral and to the remedies available
therefor) as the same may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Trustee to enter into
the Collateral Documents and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company shall deliver to the Trustee
copies of all documents executed pursuant to this Indenture and the Collateral
Documents and shall do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the Collateral
Documents to assure and confirm to the Trustee the security interest in the
Note Collateral contemplated hereby, by the Collateral Documents or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Notes secured hereby,
according to the intent and purposes herein expressed. The Company shall take
any and all actions reasonably required to cause the Collateral Documents to
create and maintain, as security for the obligations of the Company hereunder,
a valid and enforceable perfected first priority Lien in and on all the Note
Collateral, in favor of the Trustee for the ratable benefit of the Holders,
superior to and prior to the rights of all third Persons and subject to no
other Liens than Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS.
The Company will cause the applicable Collateral Documents and any
financing statements, all amendments or supplements to each of the foregoing
and any other similar security documents as necessary, to be registered,
recorded and filed and/or re-recorded, re-filed and renewed in such manner and
in such place or places, if any, as may be required by law or reasonably
requested by the Trustee in order fully to preserve and protect the Lien
securing the obligations under the Notes pursuant to the Collateral Documents.
The Company will use its best efforts to obtain any required approval of the
IGC of any of the Collateral Documents, this Indenture or any Note.
The Company and any other obligor shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture, and
promptly after the execution and delivery of any other instrument of further
assurance or amendment, an
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Opinion of Counsel in the United States either (i) stating that, subject to
customary assumptions and exclusions, in the opinion of such counsel, this
Indenture and other applicable Collateral Documents and all other instruments
of further assurance or amendment have been properly recorded, registered and
filed to the extent necessary to make effective the Lien intended to be created
by such Collateral Documents and reciting the details of such action or
referring to prior Opinions of Counsel in which such details are given, and
stating that, subject to customary assumptions and exclusions, as to such
Collateral Documents and such other instruments such recording, registering and
filing are the only recordings, registerings and filings necessary to give
notice thereof and that no re-recordings, re-registerings or re-filings are
necessary to maintain such notice, and further stating that all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the rights of the Holders of Notes and
the Trustee hereunder and under the Collateral Documents or (ii) stating that,
subject to customary assumptions and exclusions, in the opinion of such
counsel, no such action is necessary to make any other Lien created under any
of the Collateral Documents effective as intended by such Collateral Documents;
(b) within 30 days after January 1, in each year beginning with the year
1997, an Opinion of Counsel, dated as of such date, either (i) stating that,
subject to customary assumptions and exclusions, in the opinion of such
counsel, such action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and re-filing of this Indenture and all
supplemental indentures, financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Lien of this
Indenture and the Collateral Documents until the next Opinion of Counsel is
required to be rendered pursuant to this paragraph and reciting the details of
such action or referring to prior Opinions of Counsel in which such details are
given, and stating that all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the rights of the Holders and the Trustee hereunder and under the Collateral
Documents or (ii) stating that, subject to customary assumptions and
exclusions, in the opinion of such counsel, no such action is necessary to
maintain such Lien, until the next Opinion of Counsel is required to be
rendered pursuant to this paragraph;
(c) upon Delivery of the Permanent Vessel, an Opinion of Counsel, dated as
of such date, stating that, subject to customary assumptions and exclusions, in
the opinion of such counsel, the Permanent Vessel has been duly documented in
the name of the Company under the laws of the United States and the First
Preferred Ship Mortgage has been duly recorded in the Office of Officer in
Charge, Marine Inspection, U.S. Coast Guard, at the home port of the Permanent
Vessel (the only office in which such recording is necessary), has been duly
endorsed on the Vessel's documents and constitutes a first "preferred mortgage"
under the Ship Mortgage Act of 1920, as amended, having the effect and with the
priority provided in said Act and that no periodic re-recording or periodic
refiling of the First Preferred Ship Mortgage is necessary under existing law
to continue the lien on the First Preferred Ship Mortgage.
(d) the Company shall furnish to the Trustee the certificates or opinions,
as the case may be, required by TIA Section 314(d). Such certificates or
opinions will be subject to the terms of TIA Section 314(e).
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SECTION 10.03. RELEASE OF NOTE COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03, Note
Collateral may be released from the Lien and security interest created by this
Indenture and the Collateral Documents at any time or from time to time upon
the request of the Company pursuant to an Officers' Certificate certifying that
all terms for release and conditions precedent hereunder and under any
applicable Collateral Document have been met and specifying (i) the identity of
the Note Collateral to be released and (ii) the provision of this Indenture
which authorizes such release.
The Trustee shall release (at the sole cost and expense of the Company)
(a) Note Collateral that is the subject of an Asset Sale or which is sold,
transferred or disposed of; provided, such transaction is or will be in
accordance with the provisions of this Indenture or the applicable Collateral
Document, including, without limitation, the requirement that the Net Proceeds
from such Asset Sale are or will be applied in accordance with Section 4.10
hereof; (b) Note Collateral that is condemned, seized or taken by the power of
eminent domain or otherwise confiscated pursuant to an Event of Loss; provided
that the Net Loss Proceeds from such Event of Loss are or will be applied in
accordance with Section 4.11 hereof; (c) Note Collateral which may be released
with the consent of Holders pursuant to Article 9 hereof; (d) all Note
Collateral (except as provided in Article 8 hereof and, in particular, the
funds in the trust fund described in Section 8.04 and any funds in any accounts
established under Section 10.12 hereof) upon discharge or defeasance of this
Indenture in accordance with Article 8 hereof; (e) all Note Collateral upon the
payment in full of all obligations of the Company with respect to the Notes;
(f) any cash or Cash Equivalents held as security for the Notes may be released
pursuant to the terms of this Indenture, the Cash Collateral and Disbursement
Agreement or any other relevant Collateral Document; and (g) collateral under
the Security Agreement may be released in accordance with the terms of the
Security Agreement. Upon receipt of such Officers' Certificate the Trustee
shall execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any Note
Collateral permitted to be released pursuant to this Indenture or the
Collateral Documents.
(b) No Note Collateral shall be released from the Lien and security
interest created by the Collateral Documents pursuant to the provisions of the
Collateral Documents unless there shall have been delivered to the Trustee the
certificate required by this Section 10.03 (or the applicable certificate
called for by the Cash Collateral and Disbursement Agreement).
(c) The Trustee may release Note Collateral from the Lien and security
interest created by this Indenture and the Collateral Documents upon the sale
or disposition of Note Collateral pursuant to the Trustee's powers, rights and
duties with respect to remedies provided under any of the Collateral Documents.
(d) The release of any Note Collateral from the terms of this Indenture
and the Collateral Documents shall not be deemed to impair the security under
this Indenture in contravention of the provisions hereof if and to the extent
the Note Collateral is released pursuant to the terms hereof. To the extent
applicable, the Company shall cause TIA Section
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313(b), relating to reports, and TIA Section 314(d), relating to the release
of property or securities from the Lien and security interest of the Collateral
Documents and relating to the substitution therefor of any property or
securities to be subjected to the Lien and securities interest of the
Collateral Documents to be complied with. Any certificate or opinion required
by TIA Section 314(d) may be made by an Officer of the Company except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by
an independent Person, which Person shall be an independent engineer, appraiser
or other expert selected or approved by the Trustee in the exercise of
reasonable care.
SECTION 10.04. PROTECTION OF THE TRUST ESTATE.
Upon prior written notice to the Company, the Trustee shall have the power
(i) to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Note Collateral under any of the
Collateral Documents; and (ii) to enforce the obligations of the Company, under
this Indenture or the Collateral Documents, to institute and maintain such
suits and proceedings as may be expedient to prevent any impairment of the Note
Collateral under the Collateral Documents and in the profits, rents, revenues
and other income arising therefrom; including the power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair any Note Collateral or be
prejudicial to the interests of the Holders of Notes or the Trustee, to the
extent permitted thereunder.
SECTION 10.05. CERTIFICATES OF THE COMPANY.
The Company shall furnish to the Trustee, prior to each proposed release
of Note Collateral pursuant to the Collateral Documents (i) all documents
required by TIA Section 314(d) and (ii) and Opinion of Counsel in the United
States, which may be rendered by internal counsel to the Company, to the effect
that, subject to customary assumptions and exclusions, such accompanying
documents constitute all documents required by TIA Section 314(d). The Trustee
may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such documents and such Opinion of Counsel.
SECTION 10.06. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Note Collateral in
accordance with the Collateral Documents and has delivered the certificates and
documents required by the Collateral Documents and Sections 10.03 and 10.05
hereof, the Trustee shall determine whether it has received all documentation
required by TIA Section 314(d) in connection with such release and, based on
such determination and the Opinion of Counsel delivered pursuant to Section
10.05, shall deliver a certificate to the Trustee setting forth such
determination.
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SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of Notes on
behalf of the Holders of Notes take all actions it deems necessary or
appropriate in order to (a) enforce any of the terms of the Collateral
Documents and (b) collect and receive any and all amounts payable in respect of
the Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Note Collateral by any acts that may be unlawful
or in violation of the Collateral Documents or this Indenture, and such suits
and proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of Notes in the Note Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest hereunder or be prejudicial to the interest of the
Holders of Notes or of the Trustee).
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Upon an Event of Default and so long as such Event of Default continues,
the Trustee may exercise in respect of the Note Collateral, in addition to the
other rights and remedies provided for herein, in the Collateral Documents or
otherwise available to it, all of the rights and remedies of a secured party
under the Uniform Commercial Code or other applicable law, and the Trustee may
also upon obtaining possession of the Note Collateral as set forth herein,
without notice to the Company, except as specified below, sell the Note
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Trustee's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Trustee may deem commercially reasonable. The Company
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such a sale were a public
sale. The Company agrees that, to the extent notice of sale shall be required
by law, at least 10 days' notice to the Company of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale regardless of notice of sale having been given. The Trustee may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
Any cash that is Note Collateral held by the Trustee and all cash proceeds
received by the Trustee in respect of any sale of, collection from, or other
realization upon all or any part of the Note Collateral shall be applied
(unless otherwise provided for in the Collateral Documents and after payment of
any and all amounts payable to the Trustee pursuant to the Indenture), as the
Trustee shall determine or as the Holders of the Notes shall direct pursuant to
Section 6.05 hereof, (i) against the Obligations for the ratable benefit of the
Holders of the Notes, (ii) to maintain, repair or otherwise protect the Note
Collateral or (iii) to take such other action to protect the other rights of
the Holders of the Notes. Any surplus of such cash or
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cash proceeds held by the Trustee and remaining after payment in full of all
the Obligations of the Company under this Indenture, the Notes or the
Collateral Documents shall be paid over to the Company or to whomsoever may be
lawfully entitled to receive such surplus or as a court of competent
jurisdiction may direct.
SECTION 10.09. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under this
Indenture, the Notes and the Collateral Documents, or upon Legal Defeasance,
the Trustee shall, at the request of the Company, deliver a certificate to the
Collateral Agent stating that such Obligations have been paid in full, and
instruct the Collateral Agent to release the Liens pursuant to this Indenture
and the Collateral Documents.
SECTION 10.10. COOPERATION OF TRUSTEE.
In the event the Company pledges or grants a security interest in
additional Note Collateral, the Trustee shall cooperate with the Company in
reasonably and promptly agreeing to the form of, and executing as required, any
instruments or documents necessary to make effective the security interest in
the Note Collateral to be so substituted or pledged. To the extent
practicable, the terms of any security agreement or other instrument or
document necessitated by any such substitution or pledge shall be comparable to
the provisions of the existing Collateral Documents. Subject to, and in
accordance with the requirements of this Article 10 and the terms of the
Collateral Documents, in the event that the Company engages in any transaction
pursuant to Section 10.03, the Trustee shall cooperate with the Company in
order to facilitate such transaction in accordance with any reasonable time
schedule proposed by the Company, including by delivering and releasing the
Note Collateral in a prompt and reasonable manner.
SECTION 10.11. COLLATERAL AGENT.
The Trustee may, from time to time, appoint one or more Collateral Agents
hereunder. Each of such Collateral Agents may be delegated any one or more of
the duties or rights of the Trustee hereunder or under the Collateral Documents
or which are specified in any Collateral Documents, including without
limitation, the right to hold any Note Collateral in the name of, registered
to, or in the physical possession of, such Collateral Agent, for the rateable
benefit of the Holders of the Notes. Each such Collateral Agent shall have
such rights and duties as may be specified in an agreement between the Trustee
and such Collateral Agent. The Trustee and any Collateral Agent shall be
authorized hereunder to give any acknowledgment reasonably requested by any
party to confirm the rights and obligations of the parties.
SECTION 10.12. CASH COLLATERAL ACCOUNTS.
(a) As security for the payment of the Obligations under the Indenture,
the Notes and the Collateral Documents, the Company hereby pledges to the
Trustee and grants to the Trustee for the ratable benefit of the Holders of the
Notes a duly perfected first priority security interest in the Construction
Account, the Working Capital Account, the Completion Reserve
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Account, the Interest Reserve Account, the Asset Sale Account and the Event of
Loss Account (collectively, the "Cash Collateral Accounts"), together with all
amounts in, and investments of amounts in, each and every such account. The
Company also agrees not to further pledge or grant other security interests in
the foregoing Note Collateral to any Person, except as otherwise provided in
this Indenture. The Company shall establish the Cash Collateral Accounts in
the name of the Trustee pursuant to the terms of the Cash Collateral and
Disbursement Agreement. The Cash Collateral Accounts shall be maintained with
an Eligible Institution, which initially shall be the Disbursement Agent, and
all funds therein may only be invested in accordance with Section 10.12(e)
below.
(b) Cash in any Cash Collateral Account may be withdrawn pursuant to the
terms of the Cash Collateral and Disbursement Agreement. The Company further
covenants to maintain each Cash Collateral Account in existence so long as any
Obligations under the Notes are outstanding.
(c) The Company agrees to do or cause to be done all things, and to make
all filings, and to enter into any agreements or instruments reasonably
requested by the Eligible Institution at which any Cash Collateral Account is
located, to evidence and perfect the first priority security interest in favor
of the Trustee for the ratable benefit of the Noteholders granted therein, the
rights and interest hereunder of the Trustee, for the ratable benefit of the
Holders of the Notes, in such Cash Collateral Account and to otherwise effect
the intention and purposes of the parties hereunder with respect to such Cash
Collateral Account.
(d) In its discretion, the Company may request the Disbursement Agent to,
and, provided that no Event of Default or Default shall exist, the Disbursement
Agent shall, (i) invest any Cash Collateral in the Cash Collateral Accounts in
Cash Equivalents and (ii) invest interest paid on the Cash Equivalents referred
to in clause (i) above, and reinvest other proceeds of any such Cash
Equivalents that may mature or be sold in the name of the Trustee as the
Company may select (the Cash Equivalents referred to in clauses (i) and (ii)
above being, collectively, the "Collateral Investments"), provided, that the
Trustee shall retain an exclusive, valid and perfected security interest in the
proceeds of the funds so invested. Interest and proceeds that are not invested
or reinvested in Collateral Investments as provided in the immediately
preceding sentence shall be deposited and held in the Cash Collateral Accounts
to which such initial investments were allocated. The Trustee shall have no
liability for investments made in accordance with the Company's written
instructions.
(e) The Company shall establish each Cash Collateral Account in the name
of the Trustee and the Trustee shall have sole dominion and control thereof and
in all amounts in, and investments of amounts in, such accounts, to the full
extent necessary to ensure the validity, effectiveness, perfection, priority
and enforceability of the foregoing pledge and security interest in favor of
the Trustee.
SECTION 10.13. ADDITIONAL COLLATERAL.
At such time that the Company commences construction of a new vessel to
function as the Permanent Vessel, the Company hereby agrees to execute and
deliver (i) pending construction of such Permanent Vessel, a Construction
Assignment with respect to each
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material construction contract in the form attached hereto as Annex A-1 and the
Construction Security Agreement in the form attached hereto as Annex A-2, each
with such changes or modifications as are deemed appropriate by the Company and
the Trustee at the time of execution, including any such changes or
modifications relating to the law of the state of the site of construction of
the Permanent Vessel and (ii) upon Delivery of such Permanent Vessel, the First
Preferred Ship Mortgage in the form attached hereto as Annex A-3, with such
changes or modifications as are deemed appropriate by the Company and the
Trustee at the time of execution.
SECTION 10.14. GAMING LAWS.
(a) Each of the provisions of this Indenture is subject to, and shall be
enforced in compliance with, the provisions of any applicable laws, including
without limitation, the rules and regulations of the IGC (together with the
Indiana Riverboat Gambling Act, the "Gaming Laws").
(b) The Trustee acknowledges, understands and agrees that the Gaming Laws
may impose certain licensing or transaction approval requirements prior to the
exercise of the rights and remedies granted to it under this Indenture with
respect to the Note Collateral subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in connection with
the taking of any of the actions which may be taken by the Trustee in the
exercise of its rights hereunder, then the Company agrees to use its reasonable
best efforts to secure such consent and to cooperate with the Trustee in
obtaining any such consent. Upon the occurrence and during the continuation of
any Event of Default, the Company shall promptly execute and/or cause the
execution of all applications, certificates, instruments, and other documents
and papers that the Trustee may be required to file in order to obtain any
necessary approvals under the Gaming Laws, and if the Company fails or refuses
to execute such documents, the Trustee or the clerk of the court with
jurisdiction may execute such documents on behalf of the Company.
(d) Notwithstanding any other provision of this Indenture to the contrary,
nothing in this Indenture shall (i) effect any transfer of any ownership
interest (within the meaning of 68 Indiana Administrative Code 5) in the
Company or (ii) effect any transfer, sale, purchase, lease or hypothecation of,
or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including the
Company, under any of the Gaming Laws, including Indiana Code 4-33.
(84)
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ARTICLE 11
MISCELLANEOUS
SECTION 11.01. 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 11.02. NOTICES.
Any notice or communication by the Company 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:
If to the Company:
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center - Suite 2400
Detroit, Michigan 48243
Attention: Vice President
Telecopy:
(313) 259-0154
With a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Attention: Frank K. Zinn, Esq.
Telecopy:
(313) 568-6915
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If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Telecopy:
(212) 858-2952
With a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
150 West Jefferson
Detroit, Michigan 48226
Attention: Charles L. Burleigh, Jr., Esq.
Telecopy:
(313) 496-8450
The Company 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.
(86)
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SECTION 11.03. 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).
SECTION 11.04. CERTIFICATE AND OPTIONS 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 11.05
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 11.05
hereof) stating that, subject to customary assumptions and exclusions, in the
opinion of such counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 11.05. 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 11.06. 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.
(87)
<PAGE> 96
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
MEMBERS.
No officer or office holder, employee, agent, representative, or member of
the Company as such, shall have any liability for any obligations of the
Company under the Notes, this Indenture or the Collateral Documents, as
applicable, 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.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW (EXCLUSIVE OF CHOICE OF LAWS PRINCIPLES) OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES,
EXCEPT TO THE EXTENT THAT THE LAWS OF OTHER JURISDICTIONS ARE MANDATORILY
APPLICABLE WITH RESPECT TO THE SECURITY INTERESTS CONTEMPLATED BY ARTICLE 10
HEREOF.
SECTION 11.09. 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 of any other Person. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes, as
applicable, shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.11. 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 11.12. 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 11.13. 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.
(88)
<PAGE> 97
SIGNATURES
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
Dated as of May 22, 1996
By: Kenneth L. Kramer
----------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
Dated as of May 22, 1996 By: Nancy R. Besse
----------------------------
Name: Nancy R. Besse
Title: Vice President
(89)
<PAGE> 98
ANNEX A-1
ASSIGNMENT OF CONSTRUCTION CONTRACTS
THIS ASSIGNMENT OF CONSTRUCTION CONTRACTS ("Assignment") is
made and entered into as of this ____ day of ________, 199_, by THE MAJESTIC
STAR CASINO, LLC, an Indiana limited liability company("Assignor"), in favor of
IBJ SCHRODER BANK & TRUST COMPANY as trustee ("Assignee" or "Trustee") for the
benefit of the holders from time to time of those certain Senior Secured Notes
due 2003 of The Majestic Star Casino, LLC (the "Holders"). Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Indenture (as hereinafter defined).
FOR VALUE RECEIVED, Assignor does hereby assign, transfer, and
set over to Assignee, for the equal and ratable benefit of the Holders, all of
its right, title and interest in and to the contracts and agreements listed on
Exhibit A attached hereto along with all amendments, modifications, general
conditions, change orders and addenda thereto (the "Contracts")by and between
the Assignor and the contractors parties thereto (the "Contractors") entered
into in connection with the construction and development (the "Construction")
of the vessel more particularly described on Exhibit B attached hereto (the
"Vessel") and certain personal property located on the Vessel.
A. THIS ASSIGNMENT IS MADE FOR THE PURPOSE OF SECURING:
1. the payment of (i) the maximum principal sum of
$105,000,000, in the aggregate plus all accrued interest thereon to be
paid pursuant to the provisions of that certain Indenture, dated as of
May __, 1996 (the "Indenture"), by and between Assignor and Assignee
for the benefit of the Holders and the promissory notes of Assignor
issued pursuant to said Indenture (said Indenture and the promissory
notes being hereinafter collectively referred to as the "Loan
Agreement"), (ii) any and all other sums due or to become due under
the Loan Agreement, the Collateral Documents, or any other Financing
Document (hereinafter defined), (iii) any further or subsequent
advances made under the Loan Agreement, the Collateral Documents or
any other Financing Document, and (iv) any amendments, extensions,
renewals, replacements, modifications, restatements or supplements of
the Loan Agreement or any other Financing Document (the items set
forth in clauses (i) through (iv) hereof being hereinafter
collectively referred to as the "Indebtedness"); and
<PAGE> 99
2. the performance of all of the terms, covenants,
conditions, agreements, obligations and liabilities of Assignor
(collectively the "Obligations") under (i) the Loan Agreement (ii) the
Collateral Documents, (iii) any supplemental agreements, undertakings,
instruments, documents or other writings executed by Assignor as a
condition to advances under the Loan Agreement or otherwise in
connection with the Loan Agreement, (iv) all chattel mortgages,
pledges, powers of attorney, consents, assignments, notices, leases
and financing statements heretofore, now or hereafter executed by or
on behalf of Assignor or any other Person (hereinafter defined) in
connection with the Loan Agreement or the transactions contemplated
thereby, and (v) any extensions, renewals, replacements or
modifications of any of the foregoing (all of the foregoing documents
being hereinafter collectively referred to as the "Financing
Documents").
B. Concurrently herewith Assignor has granted to Assignee a
security interest in the Contracts pursuant to the Construction Security
Agreement.
C. ASSIGNOR AGREES:
(1) To faithfully abide by, perform and discharge each and
every material obligation, covenant and agreement of the Contracts to be
performed by Assignor thereunder, at no cost or expense to Assignee, and (a)
to enforce or secure the performance of each and every material obligation,
covenant, condition and agreement contained in the Contracts and to be
performed by Contractors to the extent reasonably necessary to effect the
purposes of the Contracts; and (b) not to modify, extend or in any way alter
the terms of the Contracts in any way which would materially and adversely
affect the security of Assignee's interest therein or accept a surrender
thereof, or to waive, excuse, condone or in any manner release or discharge
Contractors of or from the material obligations, covenants, conditions and
agreements to be performed by Contractors in the manner and at the place and
time specified therein. Assignor hereby expressly releases, relinquishes and
surrenders unto Assignee all its right, power and authority to amend or modify
the Contracts in any way which would materially and adversely affect the
security of Assignee's interest therein and all its right, power and authority
to cancel or terminate the Contracts without the prior written consent of
Assignee.
(2) That at no cost or expense to Assignee, Assignor shall
appear in and defend any action or proceeding arising under, growing out of or
in any manner connected with the Contracts or the obligations, duties or
liabilities of Assignor thereunder, and shall pay all reasonable costs and
expenses of Assignee, including reasonable attorneys' fees and expenses,
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<PAGE> 100
except to the extent that such fees and expenses arise as a result of a
wrongful act of Assignee, in any action or proceeding concerning the Contracts
in which Assignee may appear.
(3) That if Assignor fails to make any payment or to do any
act as herein provided or fails to do so promptly upon demand by Assignee, then
Assignee shall have the right, but not the obligation, (i) to make such payment
or do such act in such manner and to such extent as Assignee may deem necessary
to protect the security hereof, including, without limiting the generality of
the foregoing, the right to appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of Assignee,
and (ii) to perform and discharge each and every obligation, covenant and
agreement of Assignor contained in the Contracts. In exercising any such
rights or powers, Assignee may employ counsel and Assignor shall pay such
reasonable costs and expenses as Assignee shall incur, including, without
limitation, reasonable attorneys' fees. Notwithstanding the foregoing,
Assignor shall not be released from any obligation hereunder.
(4) To pay immediately upon demand all sums expended by
Assignee under the authority hereof, together with interest thereon at a rate
equal to the sum of the fixed rate of interest set forth in the Loan Agreement
and 1.00% (the "Interest Rate").
D. THE PARTIES HERETO MUTUALLY AGREE THAT:
(1) As long as no Event of Default has occurred and is
continuing under the Loan Agreement (as Event of Default is defined therein),
Assignor shall have the right to exercise all of its rights (other than its
rights to amend, modify, cancel, terminate or in any way alter the terms of the
Contracts except as aforesaid) under the Contracts.
(2) Assignor agrees that Assignee does not assume any of
Assignor's obligations or duties concerning the Contracts until and unless
Assignee shall exercise its rights hereunder. Assignor, and Contractors by
execution of the Consent to this Assignment, further agree that no increase in
the cost of the Contracts shall be effective without Assignee's prior written
consent.
(3) Assignee shall not exercise its rights under this
Assignment until the occurrence of an Event of Default. Upon the occurrence of
such an Event of Default, and for so long as such Event of Default continues,
Assignee may, at its option, upon written notice to Contractors, exercise all
of its rights granted under this Assignment. Upon giving such notice to
Contractors, Assignee shall thereby assume all obligations of Assignor under
the Contracts, including, without limitation, the right to receive and collect
all moneys and other payments receivable by,
- 3 -
<PAGE> 101
or payable to, Assignor under the Contracts, the right to give and receive
copies of all notices and other instruments or communications, and the right to
cure or take action with respect to a default under the Contracts. Assignor
hereby irrevocably constitutes and appoints Assignee, upon the occurrence and
during the continuation of an Event of Default, as its attorney-in-fact to
demand, receive and enforce Assignor's rights with respect to the Contracts, to
give appropriate receipts, releases and satisfactions for and on behalf of
Assignor, and to do any and all acts in the name of Assignor or in the name of
Assignee with the same force and effect as Assignor could do if this Assignment
had not been made. The exercise of any of the foregoing rights or remedies by
Assignee under this Assignment shall not cure or waive any Event of Default
under the Financing Documents, or waive, modify or affect any notice of Event
of Default under any of the foregoing, or invalidate any act done pursuant to
any such notice. Assignee may exercise its rights under this Paragraph 3 as
often as any such Event of Default may occur. The exercise of such rights
shall not constitute a waiver of any of the remedies of Assignee under the
Financing Documents, or any other document or agreement existing at law or in
equity, by statute or otherwise.
(4) Assignor shall and does hereby agree to indemnify, defend
and hold Assignee harmless from any and all liability, loss or damage, which it
may incur under the Contracts or under or by reason of this Assignment and from
any and all claims and demands whatsoever which may be asserted against it by
reason of any alleged obligation or undertaking on its part to perform or
discharge any of the terms, covenants or agreements contained in the Contracts
or under or by reason of this Assignment; provided, however, that such
indemnification shall exclude any such liability, loss, damage, claim or demand
arising out of any gross negligence or willful act or omission of Assignee, its
agents or employees. Should Assignee incur any such liability, loss or damage
under the Contracts or under or by reason of this Assignment, or in the defense
of any such claim or demand, the amount thereof, including costs, expenses and
reasonable attorneys' fees, together with interest thereon at the Interest
Rate, shall be secured hereby, and Assignor shall reimburse Assignee therefor
immediately upon demand.
(5) Until the Indebtedness secured hereby shall have been
paid in full and all of the Obligations secured hereunder shall have been
satisfied, Assignor covenants and agrees to transfer and assign to Assignee any
and all subsequent agreements which are entered into pursuant to, in
replacement of or to serve substantially the same purpose as the Contracts upon
the same or substantially the same terms and conditions as herein contained,
and to make, execute and deliver to Assignee, upon demand, any and all
instruments that may be necessary therefor.
- 4 -
<PAGE> 102
(6) Upon the payment in full of all of the Indebtedness and
the satisfaction of all Obligations secured hereunder, this Assignment shall
become and be void and of no effect, but the affidavit of any officer of
Assignee showing any part of said Indebtedness remaining unpaid or any
Obligation not satisfied shall be and constitute rebuttable evidence of the
validity, effectiveness and continuing force of this Assignment, and any person
may and is hereby authorized to rely thereon. Upon such termination, all the
estate, right, title, interest, claim and demand of Assignee under the
Contracts shall revert to Assignor, and Assignee shall deliver to Assignor an
instrument cancelling the Assignment and reassigning the Contracts to Assignor.
(7) Assignor warrants that the Contracts have not been
amended or modified except as set forth herein, that no default by Assignor
exists thereunder and that no event has occurred or exists which, with notice
or lapse of time or both, would constitute a default by Assignor thereunder,
and that, to the best knowledge of Assignor, no default by any of the
Contractors exists thereunder and that no event has occurred or exists which,
with notice or lapse of time or both, would constitute a default by Contractors
thereunder.
(8) All notices and other communications provided for
hereunder shall be delivered in the manner set forth in the Indenture.
(9) Assignor hereby represents and warrants to Assignee
that no previous assignment of its interest in the Contracts have been made,
and, except for transfers to Assignee, Assignor agrees not to assign, sell,
pledge, transfer, or otherwise encumber its interest in the Contracts so long
as this Assignment is in effect.
(10) This Assignment shall be binding upon and inure to
the benefit of the heirs, legal representatives, assigns or successors in
interest of the Assignor and Assignee.
(11) This Assignment and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State
of ___________ without regard to principles of conflicts of laws, except that
the law of the State of New York (without regard to principles of conflicts of
laws) shall govern the resolution of issues arising under the Loan Agreement to
the extent that such resolution is necessary to the interpretation of this
Assignment. Whenever possible, each provision of this Assignment shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Assignment shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the
- 5 -
<PAGE> 103
extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Assignment.
(12) Unless expressly provided to the contrary herein,
Assignee agrees that in exercising any of its rights hereunder, it shall act
reasonably and without unreasonable delay.
(13) Except as otherwise provided by the Indenture, the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for Notes) shall be required to amend, modify, supplement, or
waive any provision of this Assignment. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
- 6 -
<PAGE> 104
IN WITNESS WHEREOF, Assignor has caused this Agreement to be
duly executed and delivered as of the date first above written.
"ASSIGNOR"
THE MAJESTIC STAR CASINO, LLC,
By: Barden Development, Inc.
By:_______________________
Name:
Title:
Witness:
___________________
<PAGE> 105
EXHIBIT A
Contracts
<PAGE> 106
EXHIBIT B
Description of Vessel
<PAGE> 107
CONSENT TO ASSIGNMENT OF CONSTRUCTION CONTRACT
In consideration of the holders (the "Holders") from time to
time of those certain Senior Secured Notes due 2003 of The Majestic Star
Casino, LLC, an Indiana limited liability company (in such capacity, the
"Assignor"), extending financing to Assignor pursuant to the Indenture dated as
of May __, 1996 between the Assignor and IBJ Schroder Bank & Trust Company (the
"Trustee" or "Assignee") in the maximum principal sum of $105,000,000, for the
purpose, among other things, of financing the construction of certain personal
property located on the Vessel (the "Vessel") described in and to be
constructed under that certain [Standard Form of Agreement Between Owner and
Contractor] (the "Contract") dated _____________, between Assignor and
__________________, a ___________ [corporation] ("Contractor"), Contractor
hereby consents to the assignment by Assignor to the Assignee, for the benefit
of the Holders, of all of Assignor's right, title and interest in, to and under
the Contract and agrees with Assignee as follows:
1. Contractor will, at the same time it gives any written
notice of default under the Contract to Assignor, send a copy of such written
notice to Assignee, by the manner and means provided for the giving of notices
under the Contract addressed to IBJ SCHRODER BANK & TRUST COMPANY, in its
capacity as Assignee for the benefit of the Holders, at One State Street, New
York, NY 10004, Attn.: Corporate Trust Administration, with a copy to Miller,
Canfield, Paddock & Stone, 150 W. Jefferson, Suite 2500, Detroit, MI 48226,
Attn.: Charles L. Burleigh, Jr., Esq. Assignee shall have forty-five (45)
days from the receipt of such notice of default to remedy or cure said default;
provided, however, that nothing herein shall require Assignee to cure said
default but Assignee shall, in its sole discretion, have the option to do so.
2. In the event of a default by Assignor under the Contract,
Contractor, at Assignee's request, shall continue its performance under the
Contract on Assignee's behalf in accordance with the terms thereof, and in such
event, Contractor shall be paid in accordance with the Contract for all work,
labor and materials rendered.
3. Contractor will complete all construction contemplated by
the Contract, including, without limitation, construction of the building
shell, in accordance with the provisions of the Contract. Contractor covenants
and agrees to discharge or cause to be discharged all liens or claims of lien
filed or otherwise asserted against the Vessel by any of its suppliers, vendors
or subcontractors, provided Contractor has been paid in accordance with the
terms of the Contract.
4. The Contract is in full force and effect and is binding on
Contractor. No default by Contractor exists under the
<PAGE> 108
Contract, no event has occurred which, with notice or lapse of time or both,
would constitute a default by Contractor thereunder, and all conditions to the
effectiveness or continuing effectiveness thereof required to be satisfied as
of the date hereof have been satisfied.
This Consent to Assignment of Construction Contract is made
as of this _____ day of ________, 199_.
"CONTRACTOR"
___________________,
a ______________ [corporation]
By: _______________________
Name:
Title:
<PAGE> 109
Annex A-2
SECURITY AGREEMENT
DATED AS OF _______ __, 199_
between
THE MAJESTIC STAR CASINO, LLC
AND
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
<PAGE> 110
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Perfection and Maintenance of Security Interest and Lien . . . . . . . . . . 5
SECTION 7. Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Filing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 9. Schedule of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 10. [Equipment and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Partial Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 12. Release of the Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 13. General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 14. Trustee Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . 9
SECTION 15. Trustee May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 16. Trustee's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 17. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 18. Exercise of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 20. Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 21. Interpretation and Inconsistencies; Merger . . . . . . . . . . . . . . . . . 12
SECTION 22. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 23. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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<PAGE> 111
<TABLE>
<S> <C> <C>
SECTION 25. Continuing Security Interest; Termination . . . . . . . . . . . . . . . . . 13
SECTION 26. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 27. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL . . . . . . . . . . 14
(A) NON-EXCLUSIVE JURISDICTION . . . . . . . . . . . . . . . . . . . . 14
(B) OTHER JURISDICTIONS . . . . . . . . . . . . . . . . . . . . . . . 14
(D) WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . 15
(E) WAIVER OF BOND . . . . . . . . . . . . . . . . . . . . . . . 15
(F) ADVICE OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 29. Gaming Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 30. Interaction with Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 31. Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 32. Appointment of Collateral Agent . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<PAGE> 112
SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of ______ __, 199_,
is made by The Majestic Star Casino, LLC, an Indiana limited liability company
("Grantor"), in favor of IBJ SCHRODER BANK & TRUST COMPANY, as trustee (the
"Trustee"), for the benefit of the "Holders" (as defined below) who are, or may
hereafter become, parties to the "Indenture" referred to below.
PRELIMINARY STATEMENT
Grantor has entered into a certain Indenture dated as of May 22, 1996
between Grantor and the Trustee (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"),
pursuant to which Grantor and the Trustee have agreed to certain terms for the
benefit of Grantor and the Holders. It is a condition to the Indenture that
Grantor shall grant the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Indenture are used herein as therein defined, and the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and the plural forms of the terms defined):
"Agreement" shall mean this Security Agreement, as the same may from
time to time be amended, restated, modified or supplemented, and shall refer to
this Agreement as the same may be in effect at the time such reference becomes
operative.
"Builders" shall mean ___________________, a _____________
[corporation], and ________________, a [corporation].
"Collateral" shall mean all property and rights in property now owned
or hereafter at any time acquired by Grantor in or upon which a Lien is granted
in favor of the Trustee by Grantor or a Subsidiary of Grantor under this
Agreement, including, without limitation, the property described in Section 2.
"Construction Contracts" shall mean Contracts as defined in the
Construction Contract Assignment.
<PAGE> 113
"Holders" shall mean the holders of the Secured Obligations from time
to time and shall include their respective successors, transferees and assigns.
"Secured Obligations" shall mean the Obligations under the Indenture.
"Shipyard" shall mean the Builders' construction facilities in
__________, ____________.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of ________; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Trustee's and the Holders' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of ______________, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
"Vessel" shall mean the vessel being built by the Grantor pursuant to
the Construction Contracts.
SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of the Secured Obligations, Grantor hereby
assigns and pledges to Trustee, for the equal and ratable benefit of the
Holders, and grants to Trustee for the equal and ratable benefit of the Holders
an exclusive first priority security interest in all of Grantor's right, title
and interest in and to the following, whether now owned or existing or
hereafter arising or acquired and wheresoever located:
(a) the Vessel, together with any and all present and future
materials, components, engines, boilers, machinery, masts, boats, anchors,
cables, chains, rigging, tackle, apparel, furniture, capstans, outfit, tools,
pumps, gear, furnishings, appliances, fittings, spare and replacement parts and
any and all manuals, materials, supplies and components in any way related to
the construction of such vessel and any and all appurtenances thereto,
appertaining or belonging to the vessel to be constructed, whether now or
hereafter acquired, and whether onboard or not onboard, together with any and
all present and future additions, improvements and replacements therefor, made
in or to said vessel, or any part or parts thereof;
(b) all materials (other than piping, cables, fittings and other
materials taken out of Builders' stock), all items of machinery and all items
of equipment (other than equipment taken out of Builders' stock), which are
purchased or acquired for use
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in the construction of the Vessel, which will, when so used, form part of the
Vessel and which have been delivered to the Shipyard;
(c) all parts and components of the Vessel which are fabricated by
the Builders for use in the construction of the Vessel, which will, when so
used, form a part of the Vessel and the fabrication of which is commenced at
the Shipyard;
(d) if the Vessel has a keel, the keel; and if the Vessel does not
have a keel, the bottom plates, and all Materials, machinery, equipment,
components, and fabrications forming a part of the Vessel when permanently
installed in place;
(e) The Construction Contracts; and
(f) all accessories, attachments, accessions, substitutions,
replacements and additions to the foregoing, whether added now or later, and
all proceeds derived or to be derived therefrom including without limitation,
any equipment purchased with proceeds, and all insurance proceeds if any, and
proceeds and refunds of insurance proceeds, if any, and any sums that may be
due from third parties who may cause damage to any of the foregoing, or from
any insurer, whether due to judgment, settlement or other process, and any and
all present and future accounts, chattel paper, instruments, notes and moneys
that may be derived from the sale, lease or other disposition of any of the
foregoing, and any rights of the Grantor to collect or enforce payment thereof,
as well as to enforce any guaranties of the foregoing and security therefore,
and all present and future general intangibles of the Grantor, in any way
related or pertaining to the acquisition, fabrication, construction,
assemblage, fitting, ownership, operation or use of the foregoing, and all
rights of the Grantor with regard thereto.
SECTION 3. Authorization. Grantor hereby authorizes Trustee to
retain and each Holder, and each Affiliate of Trustee and of each Holder, to
pay or deliver to Trustee, for the benefit of the Holders, without any
necessity on any Holder's part to resort to other security or sources of
reimbursement for the Secured Obligations, at any time following the occurrence
and during the continuance of any Event of Default, and without further notice
to Grantor (such notice being expressly waived), any sums or property held by
such Person, for application against any portion of the Secured Obligations,
irrespective of whether any demand has been made or whether such portion of the
Secured Obligations is mature. Trustee will promptly notify Grantor of
Trustee's receipt of such funds or other property for application against the
Secured Obligations, but failure to do so will not affect the validity or
enforceability thereof. Trustee may give notice of the above grant of security
interest and assignment of the aforesaid sums, and authorization, to, and make
any suitable arrangements with, any such Holder for effectuation thereof, and
Grantor hereby irrevocably appoints Trustee as its attorney to
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collect, following the occurrence and during the continuance of an Event of
Default, any and all such sums to the extent any such payment is not made to
Trustee by such Holder or Affiliate thereof.
SECTION 4. Intentionally Omitted.
SECTION 5. Representations and Warranties. Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter
(except for changes permitted or contemplated by this Agreement) until
termination of this Agreement pursuant to Section 25:
(a) The correct name of Grantor is set forth in the first paragraph
of this Agreement. The chief place of business and chief executive office of
Grantor are located at One Buffington Harbor, Gary, Indiana 46406-3000.
(b) This Agreement creates in favor of Trustee a legal, valid and
enforceable security interest in the Collateral. When financing statements
have been filed in the appropriate offices against Grantor in the locations
listed on Schedule 1, Trustee will have a fully perfected lien on, and security
interest in, the Collateral in which a security interest may be perfected by
such filing, subject only to Permitted Liens under the Indenture.
(c) Grantor is the legal and beneficial owner of the Collateral free
and clear of all Liens except for Permitted Liens as defined in the Indenture.
Grantor currently conducts business under the name The Majestic Star Casino,
LLC and, in certain areas and for certain operations, the trade names listed on
Schedule 2. The Grantor uses no trade names or fictitious names, except as set
forth on Schedule 2.
(d) No authorization, approval or other action by, notice to or
filing with any Governmental Authority (as defined in the Security Agreement)
that has not already been taken or made and which is in full force and effect,
or contemplated by this Agreement is required (i) for the grant by Grantor of
the security interest in the Collateral granted hereby; or (ii) the execution,
delivery or performance of this Agreement by Grantor.
SECTION 6. Perfection and Maintenance of Security Interest and
Lien. Grantor agrees that until all of the Secured Obligations have been fully
satisfied and the Indenture has been terminated, Trustee's security interests
in and Liens on and against the Collateral and all proceeds and products
thereof, shall continue in full force and effect. Grantor shall perform any
and all steps required by Trustee to perfect, maintain and protect Trustee's
security interests in and Liens on and against the Collateral granted or
purported to be granted hereby or to
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enable Trustee to exercise its rights and remedies hereunder with respect to
any Collateral, including, without limitation, (i) executing and filing
financing or continuation statements, or amendments thereof, in form and
substance reasonably satisfactory to Trustee, (ii) delivering to Trustee all
certificates, notes and other instruments (including, without limitation, all
letters of credit on which Grantor is named as a beneficiary) representing or
evidencing Collateral, which certificates, notes and other instruments have
been duly endorsed and are accompanied by duly executed instruments of transfer
or assignment, including, but not limited to, note powers, all in form and
substance satisfactory to Trustee, (iii) delivering to Trustee warehouse
receipts covering that portion of the Collateral, if any, located in warehouses
and for which warehouse receipts are issued, (iv) after the occurrence and
during the continuance of an Event of Default, transferring inventory and
equipment to warehouses designated by Trustee or taking such other steps as are
deemed reasonably necessary by Trustee to maintain Trustee's control of the
inventory and equipment, and (v) marking conspicuously each document, contract,
chattel paper and all records pertaining to the Collateral with a legend, in
form and substance satisfactory to Trustee, indicating that such document,
contract, chattel paper, or Collateral is subject to the security interest
granted hereby.
SECTION 7. Financing Statements. To the extent permitted by
applicable law, Grantor hereby authorizes Trustee to file one or more financing
or continuation statements and amendments thereto, disclosing the security
interest granted to Trustee under this Agreement without Grantor's signature
appearing thereon and Trustee agrees to notify Grantor when such a filing has
been made. Grantor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any inventory or equipment is in the possession or
control of any warehouseman or Grantor's agents or processors, Grantor shall,
upon Trustee's request, notify such warehouseman, agent or processor of
Trustee's security interest in such inventory and equipment and, upon Trustee's
request, instruct them to hold all such inventory or equipment for Trustee's
account and subject to Trustee's instructions.
SECTION 8. Filing Costs. Grantor shall pay the costs of, or
incidental to, all recordings or filings of all financing statements,
including, without limitation, any filing expenses incurred by Trustee pursuant
to Section 7.
SECTION 9. Schedule of Collateral. Grantor shall furnish to
Trustee from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Trustee may reasonably request, all in reasonable detail.
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SECTION 10. Equipment and Inventory. Grantor covenants and agrees
with Trustee that from the date of this Agreement and until termination of this
Agreement pursuant to Section 25, Grantor shall:
(a) Keep any Collateral constituting equipment or inventory (other
than equipment or inventory sold in the ordinary course of business) at the
Shipyard, except for equipment and inventory (i) temporarily in transit between
such locations or (ii) temporarily stored at locations set forth on Schedule
2-A, and use its best efforts to deliver written notice to Trustee at least
thirty (30) days prior to establishing any other location at which a third
party with which it reasonably expects to maintain inventory and/or equipment
in which location or with which third party all action required by this
Agreement shall have been taken with respect to all such equipment and
inventory;
(b) Cause all property used or useful in the conduct of its business
which is included in the Collateral hereunder to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of Grantor may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 10(b) shall prevent Grantor from discontinuing the
operation or maintenance of any of such property if such discontinuance is, in
the judgment of Grantor, desirable in the conduct of its business and not
disadvantageous in any material respect to the Trustee or the Holders;
(c) Comply with the terms of the Indenture with respect to any
Collateral constituting equipment and inventory, including, without limitation,
the maintenance of insurance provisions set forth in Section 4.22 of the
Indenture.
SECTION 11. Partial Release of Collateral. So long as no Event of
Default has occurred and is continuing under the Indenture, Collateral may be
released from the security interest created by this Agreement at any time or
from time to time upon the request of the Grantor pursuant to an Officers'
Certificate (as defined in the Indenture) certifying that all terms for release
and conditions precedent hereunder and in the Indenture have been met and
specifying: (a) the identity of the Collateral to be released and (b) the
provision of the Indenture or this Agreement which authorizes such release.
The Trustee shall release (at the sole cost and expense of the Grantor) (w)
equipment which may have become obsolete or unfit for use or no longer useful,
necessary or profitable in the conduct of the business of the Grantor, upon
substituting other equipment not necessarily of the same character but of at
least equal value to the Grantor as the property disposed of, which shall
become
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Collateral hereunder, subject to the security interest of this Agreement and
(x) Collateral that is condemned, seized or taken by the power of eminent
domain; (y) Collateral which is destroyed or damaged in an Event of Loss (as
defined in the Indenture) provided that the net proceeds thereof are applied as
required by the Indenture or (z) as otherwise permitted by the Indenture.
SECTION 12. Release of the Collateral. The Trustee shall release
all of the Collateral hereunder upon Delivery of the Permanent Vessel and the
execution of the First Preferred Ship Mortgage on the Permanent Vessel by
Grantor and the Trustee.
SECTION 13. General Covenants. Grantor covenants and agrees with
Trustee that from and after the date of this Agreement and until termination of
this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory
and complete records of Grantor's Collateral in a manner consistent with
Grantor's current business practice, including, without limitation, a record of
all payments received and all credits granted with respect to such Collateral.
Grantor shall, for Trustee's further security, at Trustee's request deliver and
turn over to Trustee or Trustee's designated representatives at any time
following the occurrence and during the continuation of an Event of Default,
any such books and records (including, without limitation, any and all computer
tapes, programs and source and object codes relating to such Collateral in
which Grantor has an interest or any part or parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is necessary to
remove, any Lien on such Collateral other than Permitted Liens, and will defend
the right, title and interest of Trustee in and to Grantor's rights to such
Collateral, including, without limitation, the proceeds and products thereof,
against the claims and demands of all Persons whatsoever.
SECTION 14. Trustee Appointed Attorney-in-Fact. Grantor hereby
irrevocably appoints Trustee as Grantor's attorney-in-fact, with full authority
in the place and stead of Grantor and in the name of Grantor or otherwise, from
time to time in Trustee's discretion, to take any action and to execute any
instrument which Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, (a) following the
occurrence and during the continuance of an Event of Default, to:
(i) obtain and adjust insurance required to be paid to the
Trustee or any Holders pursuant to the Indenture;
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(ii) ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(iii) receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(i) or (ii) above; and
(iv) file any claims or take any action or institute any
proceedings which Trustee may deem necessary or desirable for the
collection of any of the Collateral, or otherwise to enforce the
rights of Trustee with respect to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by
computer services companies and other service companies or bureaus;
and
(ii) do all other things reasonably necessary to carry out
this Agreement.
SECTION 15. Trustee May Perform. If Grantor fails to perform
any agreement contained herein or in the Indenture, Trustee may, upon three
days prior notice to the Grantor, perform, or cause performance of, such
agreement, and the expenses of Trustee incurred in connection therewith shall
be payable by Grantor under Section 22.
SECTION 16. Trustee's Duties. The powers conferred on
Trustee hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
safe custody of any Collateral in its possession and the accounting for monies
actually received by it hereunder, Trustee shall not have any duty as to any
Collateral. Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which Trustee accords its own
property, it being understood that Trustee shall be under no obligation to take
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral, but may do so at its option, and all
reasonable expenses incurred in connection therewith shall be for the sole
account of Grantor and shall be added to the Secured Obligations.
SECTION 17. Remedies. (a) If any Event of Default shall
have occurred and be continuing:
(i) Trustee shall have, in addition to other rights and remedies
provided for herein or otherwise available to it, all
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the rights and remedies of a secured party upon default under the UCC (whether
or not the UCC applies to the affected Collateral) and further, Trustee may,
without notice, demand or legal process of any kind (except as may be required
by law), all of which Grantor waives, at any time or times, (x) enter Grantor's
owned or leased premises and take physical possession of the Collateral and
maintain such possession on Grantor's owned or leased premises, at no cost to
Trustee or any of the Holders, or remove the Collateral, or any part thereof,
to such other place(s) as Trustee may desire, (y) require Grantor to, and
Grantor hereby agrees that it will at its expense and upon request of Trustee
forthwith, assemble all or any part of the Collateral as directed by Trustee
and make it available to Trustee at a place to be designated by Trustee which
is reasonably convenient to Trustee and (z) without notice except as specified
below, sell, lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof at public or private sale, at any
exchange, broker's board or at any of the offices of Trustee or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Trustee
may deem commercially reasonable. Grantor agrees that, to the extent notice of
sale shall be required by law, at least thirty (30) days' notice to Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Trustee may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned;
(ii) Trustee shall apply all cash proceeds received by
Trustee in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral (after payment of any amounts payable to
Trustee pursuant to Section 22), for the benefit of the Holders, against all or
any part of the Secured Obligations in such order as may be required by the
Indenture. Any surplus of such cash or cash proceeds held by Trustee and
remaining after payment in full of all the Secured Obligations shall be paid
over to Grantor or to whomsoever may be lawfully entitled to receive such
surplus;
(iii) to the fullest extent permitted by applicable law, the
Grantor specifically and unconditionally agrees that, upon the occurrence of
any Event of Default the Trustee shall have the right, acting on its own behalf
and on behalf of the Holders, to enter upon the Shipyard, to take possession of
the Collateral, and to continue and complete construction of the Vessel. If
the Trustee takes possession of the Vessel, it may take, but shall have no
obligation to take, any and all actions necessary in its judgment to continue
and complete construction of the Vessel, including but not limited to making
changes in the plans and specifications, as well as the right to enter into,
modify or terminate any contractual arrangement, subject to, the Trustee's
right at any time to discontinue any work without liability. If the Trustee
elects to complete the Vessel, it will not assume any liability to the Grantor
or to any other person for completing the Vessel or for the manner or quality
of the construction of the Vessel, and the Grantor expressly waives any
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such liability. The Grantor irrevocably appoints the Trustee as its
attorney-in-fact with full power of substitution, to employ third parties to
complete the Vessel, at the Trustee's option, either in the Grantor's name or
in the Trustee's name. In any event, all sums expended by the Trustee or such
third parties in completing construction of the Vessel will be considered to be
disbursed to the Grantor and will be secured in the manner provided in the
Indenture. For these purposes, the Grantor assigns to the Trustee, for the
benefit of the Holders, all of its rights, title and interest in and to the
Construction Contracts; however neither the Trustee nor the Lenders will have
any obligation under the Construction Contracts unless the Lenders expressly
thereafter agree to assume such obligations in writing. The Trustee, for the
benefit of the Holders, will have the right to exercise any rights of the
Grantor under the Construction Contracts upon the occurrence of an Event of
Default.
(b) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law or equity.
SECTION 18. Exercise of Remedies. In connection with the
exercise of its remedies pursuant to Section 17, Trustee may, (i) exchange,
enforce, waive or release any portion of the Collateral and any other security
for the Secured Obligations; (ii) apply such Collateral or security and direct
the order or manner of sale thereof as Trustee may, from time to time,
determine; and (iii) settle, compromise, collect or otherwise liquidate any
such Collateral or security in any manner following the occurrence of an Event
of Default, without affecting or impairing Trustee's right to take any other
further action with respect to any Collateral or security or any part thereof.
SECTION 19. Intentionally Omitted.
SECTION 20. Injunctive Relief. Grantor recognizes that in
the event Grantor fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Holders; therefore, Grantor agrees that the Holders,
if Trustee so determines and requests, shall be entitled to temporary and
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permanent injunctive relief in any such case without the necessity of proving
actual damages.
SECTION 21. Interpretation and Inconsistencies; Merger.
(a) The rights and duties created by this Agreement shall, in
all cases, be interpreted consistently with, and shall be in addition to (and
not in lieu of), the rights and duties created by the Indenture and the other
Collateral Documents.
(b) Except as provided in subsection (a) above, this
Agreement represents the final agreement of the Grantor and the Trustee with
respect to the matters contained herein and may not be contradicted by evidence
of prior or contemporaneous agreements, or subsequent oral agreements, between
the Grantor and the Trustee or any other Holder.
SECTION 22. Expenses. Grantor will upon demand pay to
Trustee and/or the Holders the amount of any and all reasonable fees and
expenses, including the reasonable fees and expenses of their counsel and
agents, as provided in Section 7.07 of the Indenture.
SECTION 23. Amendments, Etc. Except as otherwise provided by
the Indenture, the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Notes) shall be required to amend,
modify, supplement, or waive any provision of this Agreement. Any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 24. Notices. All notices and other communications
provided for hereunder shall be delivered in the manner set forth in Section
11.02 of the Indenture.
SECTION 25. Continuing Security Interest; Termination. (a)
Except as provided in Section 25(b), this Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until the later of the payment or satisfaction in full of the Secured
Obligations (other than contingent indemnity obligations) and the termination
of the Indenture, (ii) be binding upon Grantor, its successors and
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assigns and (iii) except to the extent that the rights of any transferor, or
assignor are limited by the terms of the Indenture, inure, together with the
rights and remedies of Trustee hereunder, to the benefit of Trustee and any of
the Holders. Nothing set forth herein or in any other Collateral Document is
intended or shall be construed to give any other Person any right, remedy or
claim under, to or in respect of this Agreement or any other Collateral
Document or any Collateral. Grantor's successors and assigns shall include,
without limitation, a receiver, trustee or debtor-in-possession thereof or
therefor.
(b) Upon the payment in full in cash of the Secured
Obligations (other than contingent indemnity obligations) and the termination
of the Indenture, this Agreement and the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantor. Upon any
such termination of security interest, Grantor shall be entitled to the return,
upon its request and at its expense, of such of the Collateral held by Trustee
as shall not have been sold or otherwise applied pursuant to the terms hereof
and Trustee will, at Grantor's expense, execute and deliver to Grantor such
other documents as Grantor shall reasonably request to evidence such
termination. In connection with any sales of assets permitted under the
Indenture, the Trustee will release and terminate the liens and security
interests granted under this Agreement with respect to such assets.
SECTION 26. Severability. It is the parties' intention that
this Agreement be interpreted in such a way that it is valid and effective
under applicable law. However, if one or more of the provisions of this
Agreement shall for any reason be found to be invalid or unenforceable, the
remaining provisions of this Agreement shall be unimpaired.
SECTION 27. GOVERNING LAW. ANY DISPUTE BETWEEN THE GRANTOR
AND THE TRUSTEE OR ANY HOLDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ____________.
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SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY
TRIAL.
(A) NON-EXCLUSIVE JURISDICTION. THE GRANTOR HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM,
BUT THE GRANTOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE TRUSTEE OR
ANY HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION
OVER THE GRANTOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PERSON. GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. GRANTOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON
HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS; INCONVENIENT FORUM. THE GRANTOR
WAIVES PERSONAL SERVICE OF PROCESS UPON IT AND AS ADDITIONAL SECURITY FOR THE
SECURED OBLIGATIONS, IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, WHOSE ADDRESS
IS ONE NORTH CAPITOL AVENUE, INDIANAPOLIS, INDIANA 46204, AS GRANTOR'S AGENT
FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. THE
GRANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN NEW YORK,
NEW YORK.
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(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF
THE PARTIES HERETO 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 HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO
EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY,
THE PROVISIONS OF THIS SECTION 28, WITH ITS COUNSEL.
SECTION 29. Gaming Laws. (a) Each of the provisions of this
Agreement is subject to, and shall be enforced in compliance with, the
provisions of any applicable laws, including, without limitation, the rules and
regulations of the Indiana Gaming Commission (together with the Indiana
Riverboat Gambling Act, the "Gaming Laws").
(b) The Trustee acknowledges, understands and agrees that
the Gaming Laws may impose certain licensing or transaction approval
requirements prior to the exercise of the rights and remedies granted to it
under the Agreement with respect to the Collateral subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in
connection with the taking of any of the actions which may be taken by the
Trustee in the exercise of its rights hereunder, then Grantor agrees to use its
reasonable best efforts to secure
- 14 -
<PAGE> 126
such consent and to cooperate with the Trustee in obtaining any such consent.
Upon the occurrence and during the continuation of any Event of Default,
Grantor shall promptly execute and/or cause the execution of all applications,
certificates, instruments, and other documents and papers that the Trustee may
be required to file in order to obtain any necessary approvals under the Gaming
Laws, and if Grantor fails or refuses to execute such documents, the Trustee or
the clerk of the court with jurisdiction may execute such documents on behalf
of Grantor.
(d) Notwithstanding any other provision of this Agreement to
the contrary, nothing in this Agreement shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Grantor or (ii) effect any transfer, sale, purchase, lease or hypothecation of,
or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including
Grantor, under any of the Gaming Laws, including Indiana Code 4-33.
SECTION 30. Interaction with Indenture. All terms,
covenants, conditions, provisions and requirements of the Indenture are
incorporated by reference in this Security Agreement. In the event of any
conflict or inconsistency between the provisions of this Security Agreement and
those of the Indenture, including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the provisions or
definitions of the Indenture shall govern.
SECTION 31. Trust Indenture Act. If any provision of this
Agreement conflicts with any provision of the Trust Indenture Act, the
provisions of the Trust Indenture Act shall control.
SECTION 32. Appointment of Collateral Agent. The Trustee
may, solely at its discretion, appoint a collateral agent to enforce the
rights and remedies available to the Trustee under this Agreement.
SECTION 33. Interaction with Assignment. Concurrently
herewith the Grantor is also executing and delivering to the Trustee, for the
benefit of the Holders, an Assignment of
- 15 -
<PAGE> 127
Construction Contract (the "Assignment") pursuant to which the Grantor is
assigning to the Trustee, for the benefit of the Holders, an assignment of the
Grantor's rights under the Construction Contracts. The provisions of the
Assignment are supplemental to this Agreement and nothing contained therein
shall derogate from any rights or remedies of the Trustee or any of the Holders
hereunder nor shall anything contained in the Assignment be deemed to prevent
or extend the time of attachment or perfection of any security interest in such
Collateral created hereby.
SECTION 34. Excluded Property. Notwithstanding anything
contained in this Agreement, the security interest granted pursuant to this
Agreement shall not include any personal property or equipment which has been
financed or refinanced by Indebtedness permitted to be incurred pursuant to
clause (f) of Section 4.09 of the Indenture to the extent that a Permitted Lien
has been incurred with respect to such financing.
- 16 -
<PAGE> 128
IN WITNESS WHEREOF, Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
THE MAJESTIC STAR CASINO, LLC
as the GRANTOR
By: Barden Development, Inc.
By:_______________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as TRUSTEE
By:_______________________________
Name:
Title:
- 17 -
<PAGE> 129
SCHEDULE 1
TO
SECURITY AGREEMENT
Financing Statement Filing Locations:
None, except:
<PAGE> 130
SCHEDULE 2
TO
SECURITY AGREEMENT
Trade Names:
Majestic Star
Majestic Star Casino
M-Star Slot Club
<PAGE> 131
SCHEDULE 2A
TO
SECURITY AGREEMENT
Third Party Locations:
<TABLE>
<CAPTION>
Corporate Name of Description of Maximum
Third Party Address Relationship Amount
----------------- ------- -------------- -------
<S> <C> <C> <C>
</TABLE>
<PAGE> 132
Annex A-3
------------------------------
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF
THE MAJESTIC STAR
(Official Number _______)
$105,000,000
------------------------------
THE MAJESTIC STAR CASINO, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
Owner and Mortgagor
In Favor of
IBJ SCHRODER
BANK & TRUST COMPANY
One State Street
New York, NY 10004
in its capacity as trustee under
that certain Indenture dated as of
May 22, 1996 by and between
The Majestic Star Casino, LLC and
IBJ Schroder Bank & Trust Company
Mortgagee
------------------------------
Dated ________, 199___
------------------------------
Discharge Amount: $105,000,000 Together
With Interest and Performance
of Mortgage Covenants
<PAGE> 133
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
WHEREAS CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
VESSEL MORTGAGED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.02. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.01. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 3.01. Status of Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02. Outstanding Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.03. Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.04. Operation of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.05. Payment of Taxes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.06. Notice of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.07. Release From Arrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.08. Maintenance of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.09. Access to Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.10. Documentation of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.11. Sale, Charter or Mortgage of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.13. Requisition of Title to Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.14. Requisition of Vessel but not Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.15. Execution of Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
A. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.02. Sale of Vessel by Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.03. Mortgagee to Sign for Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.04. Mortgagee to Collect Hire, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.05. Mortgagee's Right to Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-ii-
<PAGE> 134
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.07. Right of Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.08. Cure of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.09. Restoration of Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.10. Proceeds of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.11. Repairs to Vessel and Sale of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
ASSIGNMENT OF WARRANTIES OF TITLE
SECTION 5.01. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VVI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.02. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.03. Interest of Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.04. Survivorship of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.05. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.06. Discharge of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.07. Incorporation into Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.09. Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.10. Gaming Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
SIGNATURE PAGE
ACKNOWLEDGMENT
-iii-
<PAGE> 135
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE executed on _______, 199__,
is granted by:
THE MAJESTIC STAR CASINO, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
Attn: Vice President and Chief Financial Officer
a limited liability company organized and existing under and by virtue of the
laws of the State of Indiana (the "Mortgagor") in favor of:
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, NY 10004
Attn: Corporate Trust Administration
as trustee under that certain Indenture (the "Indenture") dated as of May 22,
1996 by and between Mortgagor and IBJ Schroder Bank & Trust Company, as trustee
(the "Mortgagee").
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the vessel
identified and described in the Granting Clause of this Preferred Ship Mortgage
(this "Mortgage").
B. Pursuant to the terms and conditions of the Indenture,
Mortgagor has duly authorized the creation of an issue of up to $105,000,000
aggregate principal amount of its Senior Secured Notes due ____, 2003 (the
"Notes") of substantially the tenor and amount set forth in the Indenture, and
in order to secure the due and punctual payment of the principal of and
interest on the Notes and the performance of the Obligations under the
Indenture (the "Secured Obligations") of the Mortgagor, the Mortgagor has
agreed to execute and deliver this Mortgage as follows:
GRANTING CLAUSE
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are
<PAGE> 136
hereby acknowledged, and for the purpose of securing as a first priority lien
in favor of the Mortgagee (1) the due and punctual payment of the indebtedness
evidenced by the Notes, (2) the payment and performance of all other amounts
and obligations due or to become due under or in connection with the Indenture
and all other Secured Obligations, and (3) the performance of the covenants and
agreement of the Mortgagor contained herein (hereinafter, sometimes referred to
collectively as the "Obligations"), THE MORTGAGOR HAS granted, conveyed,
mortgaged, pledged, hypothecated, set over and confirmed AND THE MORTGAGOR DOES
BY THESE PRESENTS grant, convey, mortgage, pledge, hypothecate, set over and
confirm UNTO AND IN FAVOR OF THE MORTGAGEE, for the equal and ratable benefit
of the Holders, the whole of the following named and described vessel (referred
to hereinafter as the "Vessel") to wit:
<TABLE>
<CAPTION>
OFFICIAL HOME
NAME NUMBER PORT
---- -------- ----
<S> <C> <C>
______________ __________ ________
</TABLE>
TOGETHER WITH all of its boilers, engines, machinery, masts, spars, boats,
cables, motors, tools, anchors, chains, booms, cranes, rigs, pumps, pipe,
tanks, tackle, apparel, furniture, fixtures, rigging, supplies, fittings and
gaming machinery, equipment and accessories relating to the gaming operations,
including but not limited to communication systems, visual and electronic
surveillance systems and transportation systems, tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies,
fuel, all gaming equipment and devices, computer equipment, calculators, adding
machines, video game and slot machines, and any other electronic equipment of
every nature used in connection with the operation of the Vessel, all
machinery, equipment, engines, appliances and fixtures for generating or
distributing air, water, heat, electricity, light, fuel or refrigeration, or
for ventilating or sanitary purposes, or for the exclusion of vermin or
insects, or for the removal of dust, refuse or garbage, all wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers,
partitions, doorstops, vaults, motors, elevators, dumb-waiters, awnings, window
shades, venetian blinds, light fixtures, fire hoses and brackets and boxes for
the same, fire sprinklers, alarm, surveillance and security systems, computers,
drapes, drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets
and carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water
closets, laundry equipment, washers, dryers, ice-boxes and heating units, all
kitchen and restaurant equipment, including but not limited to
silverware, dishes, menus, cooking utensils, stoves, refrigerators, ovens,
ranges, dishwashers, disposals, water heaters, incinerators, furniture,
fixtures and furnishings, all cocktail lounge supplies, including but not
-2-
<PAGE> 137
limited to bars, glassware, bottles and tables used in connection with the
Vessel, all recreational equipment (computerized and otherwise), beauty and
barber equipment, and maintenance supplies used in connection with the Vessel,
all specifically designed installations and furnishings, and all furniture,
furnishings and personal property of every nature whatsoever now or hereafter
owned by Mortgagor or in which Mortgagor has any rights or interest and located
in or on, or attached to, or used or intended to be used or which are now or
may hereafter be appropriated for use on or in connection with the operation of
the Vessel, or in connection with any construction being conducted or which may
be conducted thereon, and all extensions, additions, accessions, improvements,
betterments, renewals, substitutions, and replacements to any of the foregoing,
all of which (to the fullest extent permitted by law) shall be conclusively
deemed appurtenances to the Vessel, and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made
in or to the Vessel. Mortgagor and Mortgagee acknowledge that significant
structures, improvements, additions, equipment and other appurtenances will be
added to the Vessel after the execution of this Mortgage, and the Mortgagor
specifically affirms and agrees that all such appurtenances to the Vessel shall
be subject to this Mortgage.
Notwithstanding the foregoing, the security interest granted
pursuant to this Mortgage shall not include any personal property or equipment
not part of the Vessel which has been financed or refinanced by Indebtedness
permitted to be incurred pursuant to clause (f) of Section 4.09 of the
Indenture to the extent that a Permitted Lien has been incurred with respect to
such financing.
TO HAVE AND HOLD the same unto Mortgagee, its successors and
assigns, forever upon the terms herein set forth to secure the performance and
observance of and compliance with the covenants, terms and conditions in the
Secured Obligations.
PROVIDED, only, and the condition of these presents is such,
that if the Secured Obligations shall be paid and performed in full, then these
presents and the rights hereunder shall cease, terminate and be void; otherwise
to be and remain in full force and effect.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND
DECLARE that the Vessel is to be held subject to the following covenants,
conditions, provisions, terms and uses:
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<PAGE> 138
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
For all purposes of this Mortgage, unless the context
otherwise requires:
SECTION 1.01. Definition of Terms.
(a) Act shall mean Chapter 313 of Title 46 United States Code.
(b) Office of the Documentation Officer shall mean the Office
of the Documentation Officer of the United States Coast Guard, at
__________________.
(c) Capitalized terms used herein and not otherwise defined
herein but defined in the Indenture shall have the definitions provided in the
Indenture, substituting "Mortgagor" for "Company" and "Mortgagee" for
"Trustee," as the case may be.
SECTION 1.02. Rules of Construction. Unless the context
otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the
plural include the singular;
(d) All references herein to particular articles or sections,
unless otherwise provided, are references to articles or sections of this
Mortgage.
(e) The headings herein are solely for convenience of
reference and shall not constitute a part of this Mortgage nor shall they
affect its meaning, construction or effect.
(f) References to the Notes, the Indenture and any Collateral
Documents and other instruments shall be deemed to refer to such Notes, the
Indenture, Collateral Documents and any other related instruments as the same
may from time to time be amended, supplemented or modified by the parties
hereto in accordance with the terms thereof.
-4-
<PAGE> 139
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.01. General. For purposes of this Mortgage and in
order to comply with Title 46, Section 31321(b)(3), the parties to this
Mortgage hereby declare that the indebtedness which is now or may in the future
be owed under the Secured Obligations hereby secured is an amount up to the sum
of $105,000,000, together with interest and performance of the covenants of the
Secured Obligations. The discharge amount is the same as the total amount,
together with interest and performance of the covenants of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
The Mortgagor represents, warrants, covenants and agrees with
Mortgagee as follows:
SECTION 3.01. Status of Mortgagor. The Mortgagor is a
limited liability company in good standing organized and existing under and by
virtue of the laws of the State of Indiana and is and will remain a citizen of
the United States of America within the meaning of Title 46, Section 802, of
the United States Code, entitled to own and document the Vessel under the laws
of the United States of America.
SECTION 3.02. Outstanding Liens. The Mortgagor lawfully owns
and is lawfully possessed of the Vessel free and clear of all liens, mortgages,
taxes and encumbrances except liens accrued in the ordinary course of business
which are not yet past due; Permitted Liens (as defined in the Indenture); and
those liens created by the Indenture and the Collateral Documents and the
Mortgagor will and does hereby warrant and defend the title and possession
thereto and to every part thereof for the benefit of Mortgagee against the
claims and demands of all persons whomsoever.
SECTION 3.03. Compliance With Law. The Mortgagor will comply
with and satisfy all applicable formalities and provisions of the laws and
regulations of the United States of America including causing the filing of the
Mortgage with the United States Coast Guard, Office of Documentation at the
home port of the Vessel, in order to perfect, establish and maintain this
Mortgage, and any supplement or amendment thereto as a first preferred mortgage
upon the Vessel and upon all additions, improvements and replacements made in
or to the same. The Mortgagor shall promptly pay and discharge all United
States
-5-
<PAGE> 140
Coast Guard fees and expenses in connection with the recordation of this
Mortgage and any supplement or amendment thereto.
SECTION 3.04. Operation of Vessel. The Mortgagor will not
cause or permit the Vessel to be operated in any manner contrary to law and the
Mortgagor will not engage in any unlawful trade or violate any law or expose
the Vessel to penalty or forfeiture, and will not do, or suffer or permit to be
done, anything which can or may injuriously affect the registration or flag of
the Vessel under the laws and regulations of the United States of America.
Mortgagor will never operate the Vessel outside the navigation limits of the
insurance carried pursuant to Section 3.12 of this Mortgage.
SECTION 3.05. Payment of Taxes, etc. The Mortgagor will,
subject to Section 4.07 of the Indenture, pay or cause to be paid before the
same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Vessel and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become
a Lien upon the Vessel; provided, however, that the Mortgagor shall not be
required to pay or to discharge or to cause to be paid or discharged, any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and, if required by
GAAP, for which adequate provision has been made.
SECTION 3.06. Notice of Mortgage. The Mortgagor will place,
and at all times will retain a properly certified copy of this Mortgage and a
Notice of this Mortgage with the Certificate of Documentation of the Vessel on
board the Vessel.
SECTION 3.07. Release From Arrest. If the Vessel is
attached, arrested, levied upon or taken into custody by virtue of any legal
proceeding in any court, the Mortgagor will immediately notify Mortgagee
thereof by telephone facsimile, confirmed by letter, and within seven (7)
business days will cause the Vessel to be released by posting security in the
form of a Letter of Undertaking or a Release Bond, and will promptly notify
Mortgagee thereof in the manner aforesaid.
SECTION 3.08. Maintenance of Vessel. The Mortgagor will at
its own expense at all times maintain, preserve and keep the Vessel in good
repair and condition and will from time to time make all needful and proper
repairs, renewals, replacements, betterments and improvements, including
without limitation those replacements required by Section 4.11 of Article IV.
The Vessel shall, and the Mortgagor covenants that it will, at all times comply
with all applicable laws, treaties and covenants and rules and regulations
issued thereunder. Except as permitted by the Indenture, the Mortgagor will
not make, or permit to be made, any
-6-
<PAGE> 141
substantial change in the structure, type, name or rig of the Vessel without
first receiving written approval thereof from Mortgagee.
SECTION 3.09. Access to Vessel. The Mortgagor at all
reasonable times will afford Mortgagee or its authorized representatives full
and complete access to the Vessel for the purpose of inspecting the same and
its papers and records, upon reasonable notice of Mortgagee's desire to do so.
SECTION 3.10. Documentation of Vessel. The Mortgagor will
keep the Vessel duly documented as a vessel of the United States of America,
under the flag of the United States of America, entitled to engage in the
operations conducted by the Mortgagor.
SECTION 3.11. Sale, Charter or Mortgage of Vessel. The
Mortgagor will not mortgage, transfer, demise charter or change the flag or
port of documentation of the Vessel without the written consent of Mortgagee
first had and obtained, which consent shall be at the sole discretion of
Mortgagee; and any such written consent to any one mortgage, transfer, or
demise charter shall not be construed to be a waiver of this provision in
respect of any subsequent proposed mortgage, transfer, or demise charter. Any
such mortgage, transfer, or demise charter of the Vessel shall be subject to
the provisions of this Mortgage and the lien it creates, unless released
therefrom by the Mortgagee.
SECTION 3.12. Insurance.
(a) The Mortgagor shall, without cost to the Mortgagee,
maintain insurance on the Vessel (and all additions, improvements and
replacements made in and to the Vessel, or any part thereof) as set forth in
Section 4.22 of the Indenture, which insurance shall include coverage for such
risks as are generally covered by marine hull and machinery insurance, marine
protection and indemnity insurance and public or general liability insurance.
Such marine hull and machinery insurance shall cover against all loss or damage
caused by or resulting from fire, lightning, windstorm, tornado, hail and such
other further additional hazards of whatever kind or nature as now or hereafter
may be covered by standard extended coverage "all risk" endorsements
(including, without limitation, and specifically, piracy, barratry and water
damage) of whatsoever kind. Mortgagor shall have the right to procure
insurance coverage for such risks with such types or forms of insurance
coverage as are recommended by an independent insurance broker appointed by the
Mortgagor and reasonably satisfactory to the Mortgagee as to type and form of
insurance and identity of broker. In any event, for purposes of insurance
against total loss, the Vessel, its equipment,
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appurtenances, etc. shall be insured for a declared value in an amount not less
than the replacement value thereof as valued by an independent appraiser
appointed by the Mortgagor and reasonably acceptable to Mortgagee as to amounts
and identity of appraiser, and for purposes of insurance against liability,
such coverage shall be in the highest amount from time to time commercially
reasonable for similar vessels engaged in the business of passenger cruising
and gaming in northern Indiana. Protection and indemnity insurance (as well as
any required insurance against liability for pollution) in respect of the
Vessel shall be in the highest amount from time to time obtainable for vessels
of the same type, size, age and flag as the Vessel, but in any event, shall be
in an amount for each occurrence of not less than the declared value of the
Vessel under its hull and machinery insurance.
(b) The Mortgagor, at its own expense, shall furnish to the
Mortgagee simultaneously with the execution and delivery hereof, and thereafter
at intervals of every 12 calendar months, a detailed report, in form and
substance satisfactory to the Mortgagee (which shall set forth, without
limitation, with respect to each type of insurance coverage, each policy or
certificate of entry, its form, its number, its amount, each direct or indirect
or participating insurer or underwriter, the type of risk covered and the
expiration date), signed by a firm of independent insurance brokers appointed
by the Mortgagor and reasonably acceptable to the Mortgagee as to type and form
of insurance and identity of broker, with respect to the insurance carried and
maintained in respect of the Vessel, together with the written opinion of such
brokers, in form and substance reasonably satisfactory to the Mortgagee, as to
the compliance of such insurance with the provisions of this Section 3.12.
(c) At all times when any construction is in progress the
Mortgagor shall, without cost to the Mortgagee, maintain insurance for (i)
worker's compensation insurance covering all persons employed by Mortgagor in
connection with the construction, in an amount at least equal to the minimum
amount of such insurance required by law, and (ii) builder's risk insurance,
completed value form, covering all physical loss, in an amount reasonably
satisfactory to Mortgagee.
(d) All insurance provided hereunder (except workman's
compensation) shall name Mortgagee as a named insured under a standard
"non-contributory mortgagee" endorsement or its equivalent, which shall be
acceptable to Mortgagee, shall provide for loss payable to Mortgagee as its
interest may appear and shall be provided by insurance companies acceptable to
Mortgagee in its reasonable discretion. Mortgagor shall use best efforts to
assure that every policy of insurance referred to in this Paragraph 3.12(d)
shall contain an agreement by the insurer that
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it will not cancel such policy except after thirty (30) days prior written
notice to Mortgagee and that any loss payable thereunder shall be payable
notwithstanding any act or negligence, breach of warranty or otherwise.
Mortgagor shall assign and deliver to Mortgagee all such policies of insurance,
or duplicate originals thereof or cover notes, binders or certificates of
insurance, certified to Mortgagee by the insurer as being true copies, as
collateral and further security for payment of the Indebtedness and performance
of the Secured Obligations. If any insurance required to be provided hereunder
shall expire, be withdrawn, become void by breach of any condition thereof by
Mortgagor, or become void or questionable by reason of the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
any such insurance shall become unsatisfactory to Mortgagee, Mortgagor
immediately shall obtain new or additional insurance which shall be
satisfactory to Mortgagee in its sole discretion. Mortgagor shall not take out
any separate or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to Mortgagee in all
respects.
(e) Mortgagor shall (i) pay as they become due all premiums
for the insurance required hereunder, and (ii) not later than thirty (30) days
prior to the expiration of each such policy, deliver a renewal policy or a
duplicate original thereof and a certificate of insurance certified to
Mortgagee by the insurer as being a true copy evidencing the insurance required
to be provided hereunder, marked "premium paid," or accompanied by such other
evidence of payment as shall be satisfactory to Mortgagee in its sole
discretion.
(f) If Mortgagor shall be in default of its obligation to so
insure or deliver any such prepaid policy or policies of insurance to Mortgagee
in accordance with the provisions hereof, Mortgagee, at its option and without
notice, may effect such insurance from year to year, and pay the premium or
premiums therefor, and, in such event, the amount of all such premium or
premiums (i) shall be deemed to be Indebtedness secured hereby and (ii) shall
be immediately due and payable, on demand, together with interest thereon at
the rate of interest which is equal to sum of the fixed interest rate payable
on the Notes and 1.00% (the "Interest Rate"), from the date of any such payment
by Mortgagee to the date of repayment to Mortgagee.
(g) Mortgagor promptly shall comply with, and shall cause the
Vessel to comply with, (i) all of the provisions of each such insurance policy
and (ii) all of the requirements of the insurers thereunder applicable to
Mortgagor or to the Vessel or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair of the Vessel, even if such
compliance would necessitate structural changes or improvements
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or would result in interference with the use or enjoyment of the Vessel or any
portion thereof. If Mortgagor shall use the Vessel or any portion thereof in
any manner which would permit the insurer to cancel any insurance required to
be provided hereunder, Mortgagor immediately shall obtain a substitute policy
which shall be satisfactory to Mortgagee and which shall be effective on or
prior to the date on which any such other insurance policy shall be canceled.
(h) If the Vessel or any portion thereof shall be damaged,
destroyed or injured by fire or any other casualty (whether insured or
uninsured) in an amount in excess of $500,000, Mortgagor shall give immediate
notice thereof to Mortgagee.
(i) In the case of any Event of Loss relating to the Vessel,
any Net Loss Proceeds with respect to the Vessel shall be applied as provided
for in the Indenture and the Cash Collateral Disbursement Agreement.
(j) In the event that any claim or Lien is asserted against
the Vessel for loss, damage or expense which is covered by insurance required
hereunder, and it is necessary for the Mortgagor to obtain a bond or supply
other security to prevent arrest of the Vessel or to release the Vessel from
arrest on account of such claim or Lien, the Mortgagee, on request of the
Mortgagor or its agent, may assign to any person, firm or corporation executing
a surety or guarantee bond or other agreement to save or release the Vessel
from such arrest, all right, title and interest of the Mortgagee in and to said
insurance covering said loss, damage or expense, as collateral security to
indemnify against liability under said bond or other agreement.
SECTION 3.13. Requisition of Title to Vessel. In the event
that the title or ownership of the Vessel shall be requisitioned, purchased or
taken by the United States of America or any government of any state of the
United States or any other country or any department, agency or representative
thereof, pursuant to any present or future law, proclamation, decree, order or
otherwise, the lien of this Mortgage shall be deemed to attach to the claim for
compensation, and the compensation, purchase price, reimbursement or award for
such requisition, purchase or other taking of such title or ownership is hereby
declared payable to Mortgagee, who shall be entitled to receive the same and
shall apply it as provided in the Indenture or to the extent not provided for
in the Indenture, in accordance with the provisions of Section 4.10 hereof. In
the event of any such requisition, purchase or taking, the Mortgagor shall
promptly execute and deliver to Mortgagee such documents, if any, as in the
opinion of counsel for Mortgagee may be necessary or useful
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to facilitate or expedite the collection by Mortgagee of such compensation,
purchase price, reimbursement or award.
SECTION 3.14. Requisition of Vessel but not Title. In the
event that the United States of America or any government of any other country
or any department, agency or representative thereof shall not take the title or
ownership of the Vessel but shall requisition, charter, or in any manner take
over the use of the Vessel pursuant to any present or future law, proclamation,
decree, order or otherwise, and in the event Mortgagor is in default of the
terms of this Mortgage, all charter hire and compensation resulting therefrom
shall be payable to Mortgagee, and if, as a result of such requisitioning,
chartering or taking of the use of the Vessel such government, department,
agency or representative thereof shall pay or become liable to pay any sum by
reason of the loss of or injury to or depreciation of the Vessel any such sum
is hereby made payable to Mortgagee, who shall be entitled to receive the same
and shall apply any such sums referred to in this Section as provided in the
Indenture or to the extent not provided for in the Indenture, in accordance
with the provisions of Section 4.10 hereof. In the event of any such
requisitioning, chartering or taking of the use of the Vessel, the Mortgagor
shall promptly execute and deliver to Mortgagee such documents, if any, and
shall promptly do and perform such acts, if any, as in the opinion of counsel
for Mortgagee may be necessary or useful to facilitate or expedite the
collection by Mortgagee of such claims arising out of the requisitioning,
chartering or taking of the use of the Vessel.
SECTION 3.15. Execution of Additional Documents. Mortgagor
agrees to execute all additional documents, instruments, UCC Financing
Statements and other agreements necessary and appropriate, to keep this
mortgage in effect, to better reflect the true intent of this Mortgage, and to
consummate fully all of the transactions contemplated by the Notes, and the
Indenture, hereby.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01.
A. Events of Default. The term "Event of Default," wherever
used in this Mortgage, shall mean any one or more of the following events:
(1) The occurrence of an Event of Default as defined
in Section 6.01 of the Indenture; or
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(2) Default in the due and punctual observance and
performance of any provisions of Sections 3.04, 3.07, 3.10 and 3.12 of Article
III herein; or
(3) Default in the due observance or performance of
any of the other covenants and conditions herein required to be kept and
performed and continuance of such default for thirty (30) days after receipt of
a notice of any such Event of Default; provided, however, that the Mortgagor
shall not be deemed to be in default for failure to keep the Vessel in good
repair and safe condition pursuant to Section 3.08 of Article III if the
Mortgagor shall be diligently taking steps to comply with the requirements of
said Section and prosecutes any such work so that such work is completed within
a reasonable time; or
(4) The Mortgagor shall (i) abandon the Vessel
without due cause; or (ii) cease to be a citizen of the United States of
America within the meaning of Title 46, Section 802 of the United States Code.
The Mortgagee shall not be deemed to have knowledge of an
Event of Default unless actually known by the Mortgagee.
B. Remedies. Then and in each and every such case Mortgagee
shall have the right to:
(1) Exercise all the rights and remedies in
foreclosure and otherwise given to Mortgagee by the laws and regulations of the
United States of America or of the country wherein the Vessel shall then be
found or of any country wherein the Vessel may thereafter be found or of any
other applicable jurisdiction;
(2) Bring suit at law, in equity or in admiralty, as
it may be advised, to recover judgment for any and all amounts due under the
Notes, the Indenture, the other Collateral Documents and this Mortgage;
(3) Take the Vessel without legal process wherever
the same may be; and the Mortgagor or other person in possession, forthwith
upon demand of Mortgagee shall surrender to Mortgagee possession of the Vessel
and Mortgagee may, without being responsible for loss or damage, hold, lay up,
lease, charter, operate or otherwise use the Vessel for such time and upon such
terms as it may deem to be for its best advantage, accounting only for the net
profits, if any, arising from such use of the Vessel and charging upon all
receipts from the use of the Vessel or from the sale thereof by court
proceedings or pursuant to Subsection (4) of Section 4.01 next following, all
costs, expenses, charges, damages or losses by reason of such use; and if at
any time Mortgagee shall avail itself of the right
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herein given it to take the Vessel, Mortgagee shall have the right to dock the
Vessel for a reasonable time at any dock, pier, or other premises of the
Mortgagor or leased by the Mortgagor without charge, or to dock it at any other
place at the cost and expense of the Mortgagor;
(4) Without being responsible for loss or damage,
sell the Vessel at any place and at such time as Mortgagee may specify and in
such manner as Mortgagee may deem advisable free from any claim by the
Mortgagor in admiralty, in equity, at law or by statute, after first giving
notice of the time and place of sale with a general description of the property
in the following manner:
(a) By publishing such notice for three (3)
times a week for two consecutive weeks, with the last date of publication not
more than twenty (20) nor less than five (5) days immediately preceding the
sale, in a daily newspaper of general circulation published in
__________________;
(b) If the place of sale should not be
___________, then also by publication of a similar notice in a daily newspaper,
if any, published at the place of sale; and
(c) By mailing a similar notice to the
Mortgagor on the day of first publication.
Mortgagee may adjourn any such sale from time to time by
announcement at the time and place appointed for such sale or for such
adjourned sale, and without further notice or publication Mortgagee may make
any such sale at the time and place to which the same shall be so adjourned.
Any such sale may be conducted without bringing the Vessel to be sold to the
place designated for such sale and in such manner as Mortgagee may deem to be
for its best advantage.
(5) Mortgagor hereby consents to the appointment of
a consent keeper or substitute custodian by Mortgagee with the costs thereof to
be a cost of the sale to be paid from the proceeds of the sale or by Mortgagor.
SECTION 4.02. Sale of Vessel by Mortgagee. Any sale of the
Vessel made in pursuance of this Mortgage, whether under the power of sale
hereby granted or any judicial proceedings, shall operate to divest all right,
title and interest of any nature whatsoever of the Mortgagor therein and
thereto, and shall bar the Mortgagor, its successors and assigns, and all
persons claiming by, through or under them. At any such sale, Mortgagee or any
other holder of the Notes (the "holder/purchaser") may bid for and purchase the
Vessel and upon compliance with the terms of sale may hold, retain and dispose
of such property without
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further accountability therefor. In case of any such sale the holder/purchaser
shall be entitled, for the purpose of making settlement or payment for the
property purchased, to use and apply the Notes or any portion thereof in order
that there may be credited against the amount remaining due and unpaid thereon
the sums payable to the holder/purchaser out of the net proceeds of such sale
after allowing for the costs and expense of sale and other charges; and
thereupon the holder/purchaser shall be credited, on account of such purchase
price, with the net proceeds that shall have been so credited upon the Notes.
No purchaser shall be bound to inquire whether notice has been given, or
whether any default has occurred, or as to the propriety of the sale or as to
the application of the proceeds thereof.
SECTION 4.03. Mortgagee to Sign for Mortgagor. Upon the
occurrence and continuance of an Event of Default, Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor to execute and deliver to any
purchaser aforesaid and is hereby vested with full power and authority to make,
in the name and in behalf of the Mortgagor, a good conveyance of the title to
the Vessel so sold. In the event of any sale of the Vessel, under any power
herein contained, the Mortgagor will, if and when required by Mortgagee,
execute such form of conveyance of such Vessel as Mortgagee may direct or
approve.
SECTION 4.04. Mortgagee to Collect Hire, etc. Upon the
occurrence and continuance of an Event of Default, Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor upon the happening of any Event of
Default, in the name of the Mortgagor to demand, collect, receive, compromise
and sue for, so far as may be permitted by law, all earnings, tolls, rents,
issues, revenues, income and profits of the Vessel and all amounts due from
underwriters under any insurance thereon as payment of losses or as return
premiums or otherwise, and all other sums, due or to become due at the time of
the happening of any Event of Default in respect of the Vessel, or in respect
of any insurance thereof from any person whomsoever, and to make, give and
execute in the name of the Mortgagor acquittances, receipts, releases, or other
discharges for the same, whether under seal or otherwise, and to endorse and
accept in the name of the Mortgagor all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
All amounts so received shall first be applied to operating expenses and then
to unpaid Secured Obligations.
SECTION 4.05. Mortgagee's Right to Possession. Whenever any
right to enter and take possession of the Vessel accrues to Mortgagee, it may
require the Mortgagor to deliver, and the Mortgagor shall on demand, at its own
cost and expense, deliver the Vessel to Mortgagee as demanded. If any legal
proceedings
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shall be taken to enforce any right under this Mortgage, Mortgagee shall, to
the extent permitted by law, be entitled as a matter of right to the
appointment of a receiver of the Vessel and the earnings, tolls, rents, issues,
revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor.
The Mortgagor authorizes and empowers Mortgagee or its appointees or any of
them to appear in the name of the Mortgagor, its successors and assigns, in any
court where a suit is pending against the Vessel because of or on account of
any alleged lien against the Vessel from which the Vessel has not been released
and to take such proceedings as to them or any of them may seem proper towards
the defense of such suit and the discharge of such lien, in the event that the
Mortgagor shall not be taking proceedings reasonably satisfactory to Mortgagee,
and in such case all expenditures made or incurred by Mortgagee or its
appointees for the purpose of such defense or discharge shall be a debt due
from the Mortgagor, its successors and assigns, to Mortgagee, and shall be
secured by the lien of this Mortgage in like manner and extent as if the amount
and description thereof were written herein.
SECTION 4.07. Right of Mortgagee. Each and every power and
remedy herein given to Mortgagee shall be cumulative and shall be in addition
to every other power and remedy herein given or now or hereafter existing at
law, in equity, in admiralty or by statute, and each and every power and remedy
whether herein given or otherwise existing may be exercised from time to time
and as often and in such order as may be deemed expedient by Mortgagee, and the
exercise or the beginning of the exercise of any power to remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other power or remedy. No delay or omission by Mortgagee in the
exercise of any right or power or in the pursuance of any remedy accruing upon
any default as above defined shall impair any such right, power or remedy or be
construed to be a waiver of any such Event of Default or to be any acquiescence
therein; nor shall the acceptance by Mortgagee of any security or of any
payment of or on account of the Notes after any Event of Default or of any
payment on account of any past default be construed to be a waiver of any right
to take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby.
SECTION 4.08. Cure of Defaults. If at any time after an
Event of Default and prior to the actual sale of the Vessel by Mortgagee or
prior to any foreclosure proceedings, the Mortgagor completely cures all Events
of Default and pays all expenses, advances and damages to Mortgagee consequent
on such Events of
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Default, then Mortgagee shall retain the option to restore the Mortgagor to its
former position, but such action, if any, shall not affect any subsequent Event
of Default or impair any rights consequent thereon.
SECTION 4.09. Restoration of Position. In case Mortgagee
shall have proceeded to enforce any right, power or remedy under this Mortgage
by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to Mortgagee, then and in every such case the Mortgagor and Mortgagee
shall be restored to their former positions and rights hereunder with respect
to the property subject or intended to be subject to this Mortgage, and all
rights, remedies and powers of Mortgagee shall continue as if no such
proceedings had been taken.
SECTION 4.10. Proceeds of Sale. The proceeds of any sale of
the Vessel and the net earnings from the hire or from any operation or use of
the Vessel by Mortgagee under any of the powers herein specified and any and
all other money received by Mortgagee pursuant to or under the terms of this
Mortgage or in any proceedings hereunder, the application of which has not
elsewhere been specifically provided, shall be applied as follows:
FIRST: To the payment of all reasonable expenses and
charges, including the expenses of any sale, and expenses of any retaking,
attorneys' fees, court costs, keepers' fees, necessary repairs and any other
expenses or advances made or incurred by Mortgagee in the protection of its
rights or the pursuance of its remedies hereunder, and to provide adequate
indemnity against liens claiming priority over or equality with the lien of
this Mortgage;
SECOND: To the payment in full of any amounts then
due and unpaid under the Notes and the Secured Obligations.
THIRD: To the payment of any surplus thereafter
remaining to the Mortgagor or to whomsoever may be entitled thereto.
SECTION 4.11. Repairs to Vessel and Sale of Equipment. Until
one or more of the Events of Default hereinabove described shall happen, the
Mortgagor (a) shall be suffered and permitted to retain actual possession and
use of the Vessel; (b) may at any time alter, repair, change or re-equip the
Vessel, subject, however, to the provisions of Section 3.08 of Article III and
Section 4.11 of the Indenture; and (c) subject to Section 10.07 of the
Indenture shall have the right, from time to time in its discretion and without
obtaining a release thereof by Mortgagee, to dispose of, free from the lien
hereof, equipment or other
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appurtenances, of the Vessel that may become worn out or obsolete or otherwise
are no longer useful, necessary, profitable or advantageous in the operation of
the Vessel, provided that either prior to or promptly following such removal
any such property shall be replaced with serviceable equipment or other
appurtenances of substantially equal utility and of a value at least equal to
that of the replaced property when first acquired and free of any security
interest of any other person (except Permitted Liens as defined in the
Indenture), which shall forthwith become subject to the lien of this Mortgage
as a preferred mortgage thereon.
ARTICLE V
ASSIGNMENT OF WARRANTIES OF TITLE
SECTION 5.01. Assignment. [Mortgagor, in further
consideration of the premises and of the additional covenants herein contained,
does hereby assign, transfer and set over and confirm unto Mortgagee, and its
successors and assigns IN TRUST FOREVER, all representations, warranties and
covenants as to title and freedom from liens made, granted and agreed to by
________________ in that certain Bill of Sale, dated __________ pertaining to
the Vessel, to the extent permitted by any applicable law, including the laws
of the state of _______________.][to be added if appropriate].
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Addresses. Any notice to be given under this
Mortgage shall, except as otherwise expressly provided herein, be made in
accordance with Section 11.02 of the Indenture.
SECTION 6.02. Counterparts. This Mortgage may be executed in
any number of counterparts and all such counterparts executed and delivered
each as an original shall constitute but one and the same instrument.
SECTION 6.03. Interest of Mortgagor. The interest of the
Mortgagor in the Vessel and the interest mortgaged by this Mortgage is that of
one hundred percent (100%) absolute and sole ownership.
SECTION 6.04. Survivorship of Covenants. All the covenants,
promises, stipulations and agreements of the Mortgagor in the Secured
Obligations contained shall bind the Mortgagor and
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its successors and assigns and shall inure to the benefit of Mortgagee and its
successors and assigns.
SECTION 6.05. Amendments. Except as otherwise provided by the
Indenture, the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Notes) shall be required to amend,
modify, supplement, or waive any provision of this Mortgage. Any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 6.06. Discharge of Lien. When the Notes have been
paid in full and the Secured Obligations of the Mortgagor to the Mortgagee have
been satisfied in full, Mortgagee shall, at the Mortgagor's expense, execute
and deliver to the Mortgagor such documents as the Mortgagor shall reasonably
request to evidence the surrender and discharge of the lien hereof upon the
Vessel.
SECTION 6.07. Incorporation into Mortgage. The Whereas
Clauses and the Granting Clause of this Mortgage are incorporated in and are
made a part of this Mortgage.
SECTION 6.08. Governing Law. This Mortgage shall be governed
by and construed according to the provisions of the Act, and where silent, by
the General Maritime Law of the United States.
SECTION 6.09. Conflict. In the event that the provisions of
this Mortgage shall conflict with or be inconsistent with the provisions of the
Indenture, the terms and provisions of the Indenture shall control and govern
the obligations, rights and responsibilities of the parties hereto. If any
provision of this Mortgage conflicts with any provision of the Trust Indenture
Act, the provisions of the Trust Indenture Act shall control.
SECTION 6.10. No Waiver. No provision of this Mortgage, the
Indenture or any Collateral Document shall be deemed to constitute a waiver by
the Mortgagee of the preferred status of this Mortgage given by federal law and
any provision of this Mortgage, the Indenture or any Collateral Document which
would otherwise constitute such a waiver shall to such extent be of no force or
effect.
SECTION 6.11. Gaming Laws. (a) Each of the provisions of
this Mortgage is subject to, and shall be enforced in compliance with, the
provisions of any applicable laws, including, without limitation, the rules and
regulations of the Indiana Gaming commission (together with the Indiana
Riverboat Gambling Act, the "Gaming Laws").
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(b) The Mortgagee acknowledges, understands and agrees that
the Gaming Laws may impose certain licensing or transaction approval
requirements prior to the exercise of the rights and remedies granted to it
under the Mortgage with respect to the Vessel subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in
connection with the taking of any of the actions which may be taken by the
Mortgagee in the exercise of its rights hereunder, then Mortgagor agrees to use
its reasonable best efforts to secure such consent and to cooperate with the
Trustee in obtaining any such consent. Upon the occurrence and during the
continuation of any Event of Default, Mortgagor shall promptly execute and/or
cause the execution of all applications, certificates, instruments, and other
documents and papers that the Mortgage may be required to file in order to
obtain any necessary approvals under the Gaming Laws, and if Mortgagor fails or
refuses to execute such documents, the Trustee or the clerk of the court with
jurisdiction may execute such documents on behalf of Mortgagor.
(d) Notwithstanding any other provision of this Mortgage to
the contrary, nothing in this Mortgage shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Mortgagor or (ii) effect any transfer, sale, purchase, lease or hypothecation
of, or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including
Mortgagor, under any of the Gaming Laws, including Indiana Code 4-33.
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IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage
in multiple original counterparts on the day and year first above written.
WITNESSES: THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
_________________________ By: _____________________________
Title: _________________________
ATTEST:
_________________________
Title:___________________
<PAGE> 155
ACKNOWLEDGMENT
STATE OF ________ )
: ss.:
COUNTY OF ______)
BE IT KNOWN, that on _________, 199__, personally appeared
before me, ________________who, being duly sworn, deposed and said:
That he/she is the ___________ of the Manager of The Majestic
Star Casino, LLC, the limited liability company described in and which executed
the foregoing Preferred Ship Mortgage; that by order of the Board of Directors
of said Manager he/she signed his/her name thereto and acknowledged to me that
he executed said Preferred Ship Mortgage as such officer of said corporation on
behalf to The Majestic Star Casino, LLC; and that the same is the free and
voluntary act and deed of said corporation, and of himself/herself as such
officer thereof, for the uses and purposes therein expressed.
______________________________
Sworn to and Subscribed
before me this ______ day
of ________, 199____
_______________________
NOTARY PUBLIC
<PAGE> 156
NOTICE OF MORTGAGE
____________
(OFFICIAL NO. ________)
This Vessel, owned by The Majestic Star Casino, LLC (the
"Owner"), is subject to a First Preferred Ship Mortgage in the principal amount
of $105,000,000, dated ________,199__, as the same may be amended or
supplemented, in favor of IBJ Schroder Bank & Trust Company, as trustee. The
Owner hereby gives notice that it has not granted to itself, any charterer, the
Master of this Vessel or any other person, and none thereof has any right,
power or authority to create, incur or permit to exist upon this Vessel any
liens or encumbrances whatsoever other than liens for crew's wages or salvage.
Any such right, power or authority is also prohibited under the terms of said
Mortgage.
<PAGE> 157
================================================================================
EXHIBIT A-I-1
(Face of Note)
12-3/4% SENIOR SECURED NOTES due 2003
WITH CONTINGENT INTEREST
No.
CUSIP No. $_____________________
THE MAJESTIC STAR CASINO, LLC
promises to pay to
or registered assigns,
the principal sum of
Dollars on May 15, 2003.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Dated: May 22, 1996
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By: _________________________
Name:
Title:
By: _________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: ___________________________________
Authorized Signatory
================================================================================
A-I-1
<PAGE> 158
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]1
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE.
___________________________
1
This paragraph is to be included only if the Note is in global form.
A-I-2
<PAGE> 159
(Back of Note)
12-3/4% Senior Secured Notes due 2003
With Contingent Interest
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST. The Majestic Star Casino, LLC, or any successor thereto as
provided in the Indenture (the "Company"), promises to pay interest at the rate
of 12-3/4% per annum of the principal amount of this Note (the "Fixed
Interest") from the Issuance Date to the date of payment of such principal
amount of this Note and shall pay the Liquidated Damages payable pursuant to
Section 5 of the Registration Rights Agreement. Installments of Fixed Interest
and Liquidated Damages shall become due and payable semi-annually in arrears on
each May 15 and November 15, commencing November 15, 1996, to the holder of
record at the close of business on the preceding May 1 or November 1.
Additionally, installments of accrued and unpaid Fixed Interest shall become
due and payable with respect to any principal amount of this Note that matures
(whether at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise) upon such maturity of such principal amount of this
Note. 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 a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of Fixed
Interest and Liquidated Damages (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Fixed Interest on this Note shall be computed on the basis of a 360-day year,
consisting of twelve 30-day months. Each installment of Fixed Interest shall
be calculated to accrue from and including the most recent date to which Fixed
Interest has been paid or provided for (or from and including the Issuance Date
if no installment of Fixed Interest has been paid) to, but not including, the
date of payment.
In addition, this Note shall bear Contingent Interest, calculated as
described below, from the Commencement Date to the date of payment of this
Note. Installments of accrued or deferred Contingent Interest on this Note
accrued through the Accrual Period last ended shall become due and payable
semi-annually on each May 15 and November 15 after the Commencement Date to the
holder of record at the close of business on the preceding May 1 or November 1,
provided that no Contingent Interest shall be payable with respect to any
period prior to the Commencement Date and that such installment of Contingent
Interest is not permitted to be deferred on such date. Additionally, all
installments of accrued or deferred Contingent Interest shall become due and
payable (and may not be further deferred) with respect to any principal amount
of this Note that matures (whether at stated maturity, upon acceleration,
maturity of repurchase obligation or otherwise) upon such maturity of such
principal amount of this Note.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the
extent that, (a) the payment of such portion of Contingent Interest shall cause
the Company's Adjusted Fixed Charge Coverage
A-I-3
<PAGE> 160
Ratio for the four consecutive fiscal quarters last completed prior to such
interest payment date to be less than 2.0 to 1 on a pro forma basis after
giving effect to the assumed payment of such Contingent Interest and (b) the
principal amount of this Note corresponding to such Contingent Interest has not
then matured and become due and payable (at stated maturity, upon acceleration,
upon maturity of repurchase obligation or otherwise). Contingent Interest that
is deferred shall become due and payable, in whole or in part, on the earlier
of (i) the next succeeding interest payment date on which all or a portion of
such Contingent Interest is not permitted to be deferred, and (ii) upon the
maturity of the corresponding principal amount of this Note (whether at stated
maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). No interest shall accrue on any Contingent Interest deferred and
which has not yet become due and payable. To the extent permitted by law,
interest shall accrue on overdue Contingent Interest at the same rate as the
Fixed Interest plus 1% per annum.
Each installment of Contingent Interest shall be calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to, and including, either (a) the last day of the
next Semiannual Period if the corresponding principal amount of this Note has
not become due and payable or (b) the date of payment if the corresponding
principal amount of this Note has become due and payable (whether at stated
maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). With respect to each Accrual Period, Contingent Interest shall
accrue daily on the principal amount of this Note outstanding during such
period as follows: (i) for any portion of an Accrual Period which consists of
all or part of a Semiannual Period that ends during such Accrual Period, 1/180
of the Base Contingent Interest with respect to such principal amount for such
Semiannual Period until fully accrued and (ii) for any other portion of an
Accrual Period, 1/180 of the Base Contingent Interest with respect to such
principal amount for the Semiannual Period that began and last ended after the
Commencement Date.
Any reference in this Note to "accrued and unpaid interest" includes the
amount of unpaid Contingent Interest and Liquidated Damages, if any, due and
payable.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person at
any time the Fixed Charge Coverage Ratio of such Person on such date adjusted
as follows: (a) for purposes of the calculation of the Fixed Charge Coverage
Ratio, Fixed Charges shall be adjusted to include (rather than exclude)
Contingent Interest, whether paid or accrued, and (b) the amount of Contingent
Interest on a pro forma basis shall equal the Contingent Interest accrued and
reflected in the financial statements for the last two Semiannual Periods with
respect to which Contingent Interest was accruable or payable or, if two such
Semiannual Periods have not occurred, then the amount accrued and reflected in
the financial statements with respect to the previous Semiannual Period
multiplied by 2.0.
"Base Contingent Interest" means with respect to any principal amount of
Notes as of any date after the Commencement Date, an amount equal to the
product of (a) 5.0% of the Company's Consolidated Cash Flow for the Semiannual
Period last completed and (b) a
A-I-4
<PAGE> 161
fraction, the numerator of which is the amount of such principal and the
denominator of which is $105.0 million; provided however that additional
Contingent Interest will cease accruing on any outstanding principal amount of
the Notes if the aggregate amount of such Base Contingent Interest in respect
of any two consecutive Semiannual Periods (and excluding any deferred
Contingent Interest from prior periods) exceeds the Maximum Contingent
Interest.
"Commencement Date" means the first day that the Majestic Star Casino
becomes Operating.
"Consolidated Cash Flow" shall have the meaning set forth in the
Indenture.
"Contingent Interest" means, as of any payment date, Base Contingent
Interest on this Note accrued through the Accrual Period last ended (including
any Accrual Period that ends on such payment date) and any Base Contingent
Interest previously accrued and the payment of which has been permitted to be
deferred.
"Maximum Contingent Interest" means with respect to any amount of
principal of Notes, an amount equal to the product of (a) 5.0% of $60.0 million
and (b) a fraction, the numerator of which is the amount of such principal and
the denominator of which is $105.0 million.
"Semiannual Period" means each period that begins on October 1 and ends on
the next succeeding March 31, or each period that begins on April 1 and ends on
the next succeeding September 30.
2. METHOD OF PAYMENT. The Company shall pay interest (including
Contingent Interest, if any) on the Notes (except defaulted interest) and
Liquidated Damages to the Persons who are registered Holders of Notes at the
close of business on May 1 or November 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date (the "Record Date"), except as provided in Section
2.12 of the Indenture with respect to defaulted interest or as provided with
respect to Notes called for redemption after such record date and on or before
such Interest Payment Date. The Holder hereof must surrender this Note to a
Paying Agent to collect principal payments. The Notes shall be payable as to
principal, premium, if any, interest (including Contingent Interest, if any)
and Liquidated Damages 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 (including Contingent Interest, if
any) and Liquidated Damages 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 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, IBJ Schroder Bank & Trust
Company (including any successor appointed under the Indenture, the
"Trustee"), the
A-I-5
<PAGE> 162
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
4. INDENTURE AND COLLATERAL DOCUMENTS. The Company issued the Notes
under an Indenture dated as of May 22, 1996 (as it may be amended from time to
time, the "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 Section Section 77aaa-77bbbb) as in effect on the Issuance Date. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are obligations of the
Company limited to $105 million in aggregate principal amount. The terms of
the Indenture shall govern any inconsistencies between the Indenture and the
Notes. The Notes are secured by certain collateral, pursuant to the Collateral
Documents referred to in the Indenture, which may be released pursuant to the
terms thereof.
5. OPTIONAL REDEMPTION. Except as set forth below, the Company shall not
have the option to redeem the Notes prior to May 15, 2000. From and after May
15, 2000, the Company shall have the option to redeem the Notes, in whole or in
part, 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 (including Contingent Interest and Liquidated
Damages, if any) thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on May 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2000 106.375
2001 104.250
2002 102.125
2003 100.00
</TABLE>
The Company shall have the option on and after May 15, 1997 and prior to
May 15, 1998, to redeem up to $12.0 million principal amount of the Notes
solely out of any amounts remaining in the Interest Reserve Account, upon not
less than 30 nor more than 60 days' notice, at the redemption price of 112.75%
of the principal amount thereof plus accrued and unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon to the applicable
redemption date.
Notwithstanding any other provisions of Article 3 of the Indenture, if any
Gaming Regulatory Authority requires that a Holder or beneficial owner of the
Notes be licensed, qualified or found suitable under any applicable gaming laws
in order to maintain any gaming license or franchise of the Company under any
applicable gaming laws, and the Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Regulatory Authority (or such lesser period
that may be required by such Gaming Regulatory Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Company
has the right, at its option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
of such notice of such finding by the applicable Gaming
A-I-6
<PAGE> 163
Regulatory Authority (or such earlier dates as may be required by the
applicable Gaming Regulatory Authority) or (ii) to call for redemption of the
Notes of such Holder or beneficial owner at a redemption price equal to the
lesser of the principal amount thereof or the price at which such Holder or
beneficial owner acquired the Notes, together with, in either case, accrued and
unpaid interest (including Contingent Interest, if any), to the earlier of the
date of redemption or the date of the finding of suitability by such Gaming
Regulatory Authority, which may be less than 30 days following the notice of
redemption if so ordered by such Gaming Regulatory Authority. The Company
shall not be required to pay or reimburse any Holder or beneficial owner of
Notes who is required to apply for any such license, qualification or finding
of suitability for the costs of the licensure or investigation for such
qualification or finding of suitability. Such expenses shall be the obligation
of such Holder or beneficial owner.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as
provided in the Indenture, the Company may be required to purchase all or a
portion of the Notes. Holders of Notes that are subject to an offer to
purchase will receive an offer to purchase from the Company prior to any
related purchase date, and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall 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 (including Contingent Interest or
Liquidated Damages, if any) ceases to accrue on Notes or portions thereof
called for redemption.
9. 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. 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.
10. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee for
registration of the transfer of this Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name this Note is registered as
its absolute owner for the purpose of receiving payment of principal of and
interest on this Note and for all other purposes whatsoever, whether or not
this Note is overdue, and neither the Trustee, any
A-I-7
<PAGE> 164
Agent, nor the Company shall be affected by notice to the contrary. The
registered Holder of a Note shall be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or the Collateral Documents 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 any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any Holder of a Note, the Indenture, the Notes or the
Collateral Documents 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, to comply with Article 5 of the Indenture, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act, to enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel pursuant to Article 10 of the Indenture or to secure the Notes
with additional collateral.
12. DEFAULTS AND REMEDIES. Events of Default include (as more fully
described, and subject to, the terms and conditions of the Indenture as it may
be amended from time to time): (i) default in payment of interest (including
Continent Interest or Liquidated Damages, if any) when due and payable on any
Note for 30 days; (ii) default in payment of principal of or premium, if any,
on any Note when due; (iii) failure by the Company to comply with Section 4.07,
4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28, 4.29, 4.31 or 5.01 of the Indenture;
(iv) failure by the Company for 30 days after written notice to it to comply
with any of its other agreements in the Indenture, the Notes or the Collateral
Documents; (v) for any reason, other than due to the act of the Trustee, the
Disbursement Agent or the Holders and other than the satisfaction in full and
discharge of all obligations secured thereby, to the extent permitted by the
Indenture, any Collateral Document ceases to be in full force and effect or any
Lien intended to be perfected thereby ceases to be or is not a valid and
perfected Lien having the ranking or priority contemplated thereby, except for
Permitted Liens, and such condition continues for a period of 30 consecutive
days after the Company receives notice of such condition; (vi) prior to
Delivery of the Permanent Vessel, the Charter ceases to be in full force and
effect or any default occurs under the Charter or any Collateral Document that
continues beyond any applicable cure period; (vii) payment defaults under and
the acceleration prior to express maturity of certain other indebtedness which
aggregates $1.0 million or more; (viii) certain final judgments that remain
unpaid, undischarged and unstayed if the aggregate of all such undischarged
judgments exceeds $1.0 million; (ix) breach of any representation or warranty
in, or the repudiation by the Company of its obligations with respect to the
Charter, the Berthing Agreement or any of the Collateral Documents; (x) certain
events of bankruptcy or insolvency; (xi) revocation, termination, suspension or
other cessation of effectiveness of any Gaming License which results in the
cessation or suspension of gaming operations for a period of more than 90
consecutive days at the Majestic Star Casino; (xii) cessation of gaming
operations for a period of more than 90 consecutive days at the Majestic Star
Casino (other than as a result of a casualty loss) after the Majestic Star
Casino becomes Operating; (xiii) cessation of gaming operations for a period of
more than 180 consecutive days as a result of
A-I-8
<PAGE> 165
a casualty loss except if the Company is diligently pursuing reconstruction and
opening of the Majestic Star Casino and such reconstruction and operating can
be accomplished with the funds available to the Company; (xiv) the Majestic
Star Casino is not Operating by December 31, 1996 and continues to be not
Operating; and (xv) the Permanent Vessel has not been Delivered by June 30,
1998. 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 Notes may
declare the principal, premium, if any, interest (including all Contingent
Interest accrued or deferred and Liquidated Damages) and any other monetary
obligations on all of the Notes to be due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes shall become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest (including Contingent Interest, if any)) if it determines
that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the 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 interest (including
Contingent Interest, if any) on, or the principal of, the Notes. The Company
is required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required, within five Business Days upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee. In the event that the Trustee
acquires any conflicting interest, it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as Trustee or resign.
14. NO RECOURSE AGAINST OTHERS. No officer or office holder, employee,
agent, representative or member of the Company, as such, shall have any
liability for any obligations of the Company under the Notes, the Indenture or
the Collateral Documents, as applicable, 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.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or any authenticating agent.
16. 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).
A-I-9
<PAGE> 166
17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to
Holders of Notes under the Indenture, Holders shall have all the rights set
forth in the Collateral Documents.
18. 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
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or any of the Collateral Documents.
Requests may be made to:
The Majestic Star Casino, LLC
One Buffington Drive
Gary, Indiana 46406
Attention: Executive Vice President
A-I-10
<PAGE> 167
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(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.
<PAGE> 168
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10, 4.11, 4.16, 4.28 or 4.29 of the Indenture, check the box
below:
/ / Section 4.10 / / Section 4.11 / / Section 4.16
/ / Section 4.28 / / Section 4.29
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10, Section 4.11, Section 4.16, Section 4.28 or
Section 4.29 of the Indenture, state the principal amount you elect to have
purchased: $___________________.
Date:__________________ Your Signature:______________________
(Sign exactly as your name appears
on the Note)
Tax Identification No.: _____________
Signature Guarantee.
<PAGE> 169
================================================================================
EXHIBIT A-II-1
(Face of Note)
12-3/4% SENIOR EXCHANGE SECURED NOTES due 2003
WITH CONTINGENT INTEREST
No.
CUSIP No. $_____________________
THE MAJESTIC STAR CASINO, LLC
promises to pay to
or registered assigns,
the principal sum of
Dollars on May 15, 2003.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Dated: May 22, 1996
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: _______________________________
Authorized Signatory
================================================================================
<PAGE> 170
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York;) ("DTC"), to the issuer or its agent for registration or transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.]1
- ------------------
1
This paragraph is to be included only if the Note is in global form.
A-II-2
<PAGE> 171
(Back of Note)
12-3/4% Senior Exchange Secured Notes due 2003
With Contingent Interest
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless other indicated.
1. INTEREST. The Majestic Star Casino, LLC, or any successor thereto as
provided in the Indenture (the "Company"), promises to pay interest at the rate
of 12-3/4% per annum of the principal amount of this Note (the "Fixed
Interest") from the Issuance Date to the date of payment of such principal
amount of this Note. Installments of Fixed Interest shall become due and
payable semi-annually in arrears on each May 15 and November 15, commencing
November 15, 1996, to the holder of record at the close of business on the
preceding May 1 or November 1. Additionally, installments of accrued and
unpaid Fixed Interest shall become due and payable with respect to any
principal amount of this Note that matures (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or otherwise) upon such
maturity of such principal amount of this Note. 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 a rate
that is 1% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under Bankruptcy
Law) on overdue installments of Fixed Interest and Liquidated Damages (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful. Fixed Interest on this Note shall be computed on
the basis of a 360-day year, consisting of twelve 30-day months. Each
installment of Fixed Interest shall be calculated to accrue from and including
the most recent date to which Fixed Interest has been paid or provided for (or
from and including the Issuance Date if no installment of Fixed Interest has
been paid) to, but not including, the date of payment.
In addition, this Note shall bear Contingent Interest, calculated as
described below, from the Commencement Date to the date of payment of this
Note. Installments of accrued or deferred Contingent Interest on this Note
accrued through the Accrual Period last ended shall become due and payable
semi-annually on each May 15 and November 15 after the Commencement Date to the
holder of record at the close of business on the preceding May 1 or November 1,
provided that no Contingent Interest shall be payable with respect to any
period prior to the Commencement Date and that such installment of Contingent
Interest is not permitted to be deferred on such date. Additionally, all
installments of accrued or deferred Contingent Interest shall become due and
payable (and may not be further deferred) with respect to any principal amount
of this Note that matures (whether at stated maturity, upon acceleration,
maturity of repurchase obligation or otherwise) upon such maturity of such
principal amount of this Note.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the
extent that, (a) the payment of such portion of Contingent Interest shall cause
the Company's Adjusted Fixed Charge Coverage Ratio for the four consecutive
fiscal quarters last completed prior to such interest payment date to be less
than 2.0 to 1 on a pro forma basis after giving effect to the assumed payment
A-II-3
<PAGE> 172
of such Contingent Interest and (b) the principal amount of this Note
corresponding to such Contingent Interest has not then matured and become due
and payable (at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise). Contingent Interest that is deferred shall become
due and payable, in whole or in part, on the earlier of (i) the next succeeding
interest payment date on which all or a portion of such Contingent Interest is
not permitted to be deferred, and (ii) upon the maturity of the corresponding
principal amount of this Note (whether at stated maturity, upon acceleration,
upon maturity of repurchase obligation or otherwise). No interest shall accrue
on any Contingent Interest deferred and which has not yet become due and
payable. To the extent permitted by law, interest shall accrue on overdue
Contingent Interest at the same rate as the Fixed Interest plus 1% per annum.
Each installment of Contingent Interest shall be calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to , and including, either (a) the last day of the
next Semiannual Period if the corresponding principal amount of this Note has
not become due and payable or (b) the date of payment if the corresponding
principal amount of this Note has become due and payable (whether at stated
maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). With respect to each Accrual Period, Contingent Interest shall
accrue daily on the principal amount of this Note outstanding during such
period as follows: (i) for any portion of an Accrual Period which consists of
all or part of a Semiannual Period that ends during such Accrual Period, 1/180
of the Base Contingent Interest with respect to such principal amount for such
Semiannual Period until fully accrued and (ii) for any other portion of an
Accrual Period, 1/180 of the Base Contingent Interest with respect to such
principal amount for the Semiannual Period that began and last ended after the
Commencement Date.
Any reference in this Note to "accrued and unpaid interest" includes the
amount of unpaid Contingent Interest and Liquidated Damages, if any, due and
payable.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person at
any time the Fixed Charge Coverage Ratio of such Person on such date adjusted
as follows: (a) for purposes of the calculation of the Fixed Charge Coverage
Ratio, Fixed Charges shall be adjusted to include (rather than exclude)
Contingent Interest, whether paid or accrued, and (b) the amount of Contingent
Interest on a pro forma basis shall equal the Contingent Interest accrued and
reflected in the financial statements for the last two Semiannual Periods with
respect to which Contingent Interest was accruable or payable or, if two such
Semiannual Periods have not occurred, then the amount accrued and reflected in
the financial statements with respect to the previous Semiannual Period
multiplied by 2.0.
"Base Contingent Interest" means with respect to any principal amount of
Notes as of any date after the Commencement Date, an amount equal to the
product of (a) 5.0% of the Company's Consolidated Cash Flow for the Semiannual
Period last completed and (b) a fraction, the numerator of which is the amount
of such principal and the denominator of which is $105.0 million; provided
however that additional Contingent Interest will cease accruing on
A-II-4
<PAGE> 173
any outstanding principal amount of the Notes if the aggregate amount of such
Base Contingent Interest in respect of any two consecutive Semiannual Periods
(and excluding any deferred contingent Interest from prior periods) exceeds the
Maximum Contingent Interest.
"Commencement Date" means the first day that the Majestic Star Casino
becomes Operating.
"Consolidated Cash Flow" shall have the meaning set forth in the
Indenture.
"Contingent Interest" means, as of any payment date, Base Contingent
Interest on this Note accrued through the Accrual Period last ended (including
any Accrual Period that ends on such payment date) and any Base Contingent
Interest previously accrued and the payment of which has been permitted to be
deferred.
"Maximum Contingent Interest" means with respect to any amount of
principal of Notes, an amount equal to the product of (a) 5.0% of $60.0 million
and (b) a fraction, the numerator of which is the amount of such principal and
the denominator of which is $105.0 million.
"Semiannual Period" means each period that begins on October 1 and ends on
the next succeeding March 31, or each period that begins on April 1 and ends on
the next succeeding September 30.
2. METHOD OF PAYMENT. The Company shall pay interest (including
Contingent Interest, if any) on the Notes (except defaulted interest) and
Liquidated Damages to the Persons who are registered Holders of Notes at the
close of business on May 1 or November 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date (the "Record Date"), except as provided in Section
2.12 of the Indenture with respect to defaulted interest or as provided with
respect to Notes called for redemption after such record date and on or before
such Interest Payment Date. The Holder hereof must surrender this Note to a
Paying Agent to collect principal payments. The Notes shall be payable as to
principal, premium, if any, interest (including Contingent Interest, if any)
and Liquidated Damages at the office or agency of the Company maintained for
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest (including Contingent Interest, if any) and
Liquidated Damages 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 Liquidated Damages 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 the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Schroder Bank & Trust
Company (including any successor appointed under the Indenture, the "Trustee"),
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
A-II-5
<PAGE> 174
4. INDENTURE AND COLLATERAL DOCUMENTS. The Company issued the Notes under
an Indenture dated as of May 22, 1996 (as it may be amended from time to time,
the "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 Section
Section 77aaa-77bbbb) as in effect on the Issuance Date. The Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Notes are obligations of the Company
limited to $105 million in aggregate principal amount. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
The Notes are secured by certain collateral, pursuant to the Collateral
Documents referred to in the Indenture, which may be released pursuant to the
terms thereof.
5. OPTIONAL REDEMPTION. Except as set forth below, the Company shall not
have the option to redeem the Notes prior to May 15, 2000. From and after May
15, 2000, the Company shall have the option to redeem the Notes, in whole or in
part, 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 (including Contingent Interest and Liquidated
Damages, if any) thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on May 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2000 106.375
2001 104.250
2002 102.125
2003 100.00
</TABLE>
The Company shall have the option on and after May 15, 1997 and prior to
May 15, 1998, to redeem up to $12.0 million principal amount of the Notes
solely out of any amounts remaining in the Interest Reserve Account, upon not
less than 30 nor more than 60 days' notice, at the redemption price of 112.75%
of the principal amount thereof plus accrued and unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon to the applicable
redemption date.
Notwithstanding any other provisions of Article 3 of the Indenture, if any
Gaming Regulatory Authority requires that a Holder or beneficial owner of the
Notes be licensed, qualified or found suitable under any applicable gaming laws
in order to maintain any gaming license or franchise of the Company under any
applicable gaming laws, and the Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Regulatory Authority (or such lesser period
that may be required by such Gaming Regulatory Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Company
has the right, as its option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
of such notice of such finding by the applicable Gaming Regulatory Authority
(or such earlier dates as may be required by the applicable Gaming Regulatory
Authority) or (ii) to call for redemption of the Notes of such Holder or
beneficial owner at a redemption price equal to the lesser of the principal
amount thereof or the price at
A-II-6
<PAGE> 175
which such Holder or beneficial owner acquired the Notes, together with, in
either case, accrued and unpaid interest (including Contingent Interest, if
any), to the earlier of the date of redemption or the date of the finding of
unsuitability by such Gaming Regulatory Authority, which may be less than 30
days following the notice of redemption if so ordered by such Gaming Regulatory
Authority. The Company shall not be required to pay or reimburse any Holder or
beneficial owner of Notes who is required to apply for any such license,
qualification or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability. Such expenses
shall be the obligation of such Holder or beneficial owner.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as
provided in the Indenture, the Company may be required to purchase all or a
portion of the Notes. Holders of Notes that are subject to an offer to
purchase will receive an offer to purchase from the Company prior to any
related purchase date, and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall 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 (including Contingent Interest or
Liquidated Damages, if any) ceases to accrue on Notes or portions thereof
called for redemption.
9. 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. 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.
10. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee for
registration of the transfer of this Note, the Trustee, any agent and the
Company may deem and treat the Person in whose names this Note is registered as
its absolute owner for the purpose of receiving payment of principal of and
interest (including Contingent Interest, if any) on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent, nor the Company shall be affected by notice to the
contrary. The registered Holder of a Note shall be treated as its owner for
all purposes.
A-II-7
<PAGE> 176
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or the Collateral Documents may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes, any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any Holder of a Note, the Indenture, the Notes or the
Collateral Documents 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, to comply with Article 5 of the Indenture, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act, to enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel pursuant to Article 10 of the Indenture or to secure the Notes
with additional collateral.
12. DEFAULTS AND REMEDIES. Events of Default include (as more fully
described, and subject to, the terms and conditions of the Indenture as it may
be amended from time to time): (i) default in payment of interest (including
Contingent Interest, if any) when due and payable on any Note for 30 days;
(ii) default in payment of principal of or premium, if any, on any Note when
due; (iii) failure by the Company to comply with Section 4.07, 4.09, 4.10,
4.11, 4.15, 4.16, 4.18, 4.28, 4.29, 4.31 or 5.01 of the Indenture; (iv) failure
by the Company for 30 days after written notice to it to comply with any of its
other agreements in the Indenture, the Notes or the Collateral Documents; (v)
for any reason, other than due to the act of the Trustee, the Disbursement
Agent or the Holders and other than the satisfaction in full and discharge of
all obligations secured thereby, to the extent permitted by the Indenture, any
Collateral Document ceases to be in full force and effect or any Lien intended
to be perfected thereby ceases to be or is not a valid and perfected Lien
having the ranking or priority contemplated thereby, except for Permitted
Liens, and such condition continues for a period of 30 consecutive days after
the Company receives of such condition; (vi) prior to Delivery of the Permanent
Vessel, the Charter ceases to be in full force and effect or any default occurs
under the Charter or any Collateral Document that continues beyond any
applicable cure period; (vii) payment defaults under and the acceleration prior
to express maturity of certain other indebtedness which aggregates $1.0 million
or more; (viii) certain final judgments that remain unpaid, undischarged and
unstayed if the aggregate of all such undischarged judgments exceeds $1.0
million; (ix) breach of any representation or warranty in, or the repudiation
by the Company of its obligations with respect to, the Charter, the Berthing
Agreement or any of the Collateral Documents; (x) certain events of bankruptcy
or insolvency; (xi) revocation, termination, suspension or other cessation of
effectiveness of any Gaming License which results in the cessation or
suspension of gaming operations for a period of more than 90 consecutive days
at the Majestic Star Casino; (xii) cessation of gaming operations for a period
of more than 90 consecutive days at the Majestic Star Casino (other than as a
result of a casualty loss) after the Majestic Star Casino becomes Operating;
(xiii) cessation of gaming operations for a period of more than 180 consecutive
days as a result of a casualty loss except if the Company is diligently
pursuing reconstruction and opening of the Majestic Star Casino and such
reconstruction and opening can be accomplished with the funds available to the
Company; (xiv) the Majestic Star Casino is not Operating by December
A-II-8
<PAGE> 177
31, 1996 and continues to be not Operating; and (xv) the Permanent Vessel has
not been Delivered by June 30, 1998. 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 Notes may declare the principal, premium, if any, interest
(including all Contingent Interest accrued or deferred) and any other monetary
obligations on all of the Notes to be due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes shall become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest (including Contingent Interest, if any)) if it determines
that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default in the payment of interest (including Contingent
Interest, if any) on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required, within five Business Days upon becoming
aware of any Default or Event or Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee. In the event that the Trustee
acquires any conflicting interest, it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as Trustee or resign.
14. NO RECOURSE AGAINST OTHERS. No officer or office holder, employee,
agent, representative or member of the Company, as such, shall have any
liability for any obligations of the Company under the Notes, the Indenture or
the Collateral Documents, as applicable, 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.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating Agent.
16. 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).
17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to
Holders of Notes under the Indenture, Holders shall have all the rights set
forth in the Collateral Documents.
A-II-9
<PAGE> 178
18. 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
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or any of the Collateral Documents.
Requests may be made to:
The Majestic Star Casino, LLC
One Buffington Drive
Gary, Indiana 46406
Attention: Executive Vice President
A-II-10
<PAGE> 179
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(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.
A-II-11
<PAGE> 180
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10, 4.11, 4.16, 4.28 or 4.29 of the Indenture, check the box
below:
/ / Section 4.10 / /Section 4.11 / /Section 4.16
/ / Section 4.28 / /Section 4.29
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10, Section 4.11, Section 4.16 , Section 4.28 or
Section 4.29 of the Indenture, state the principal amount you elect to have
purchased: $______________________________.
Date:______________ Your Signature: ____________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.: ___________________
Signature Guarantee.
A-II-12
<PAGE> 181
===============================================================================
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 12-3/4% Senior Secured Notes due 2003 of The Majestic Star Casino, LLC.
This Certificate relates to $_____ principal amount of Notes held in
*_______ book-entry or *___________ definitive form by ___________ (the
"Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations is an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
[ ] In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
[ ] Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A)or Section 2.06(d)(i)(A) of
the Indenture).
[ ] Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(A) or Section 2.06(d)(i)(B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
______________________________
*Check applicable box.
B-1
===============================================================================
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
SECURITY AGREEMENT
DATED AS OF MAY 22, 1996
between
THE MAJESTIC STAR CASINO, LLC
AND
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
<PAGE> 2
TABLE OF CONTENTS
SECTION 1. Defined Terms.................................................. 1
SECTION 2. Grant of Security.............................................. 2
SECTION 3. Authorization.................................................. 4
SECTION 4. Grantor Remains Liable......................................... 5
SECTION 5. Representations and Warranties................................. 5
SECTION 6. Perfection and Maintenance of Security Interest and Lien....... 6
SECTION 7. Financing Statements........................................... 8
SECTION 8. Filing Costs................................................... 8
SECTION 9. Schedule of Collateral......................................... 8
SECTION 10. Equipment and Inventory........................................ 8
SECTION 11. Partial Release of Collateral.................................. 9
SECTION 12. Intentionally Omitted.......................................... 9
SECTION 13. General Covenants.............................................. 9
SECTION 14. Trustee Appointed Attorney-in-Fact............................. 10
SECTION 15. Trustee May Perform............................................ 11
SECTION 16. Trustee's Duties............................................... 11
SECTION 17. Remedies....................................................... 11
SECTION 18. Exercise of Remedies........................................... 12
SECTION 19. License........................................................ 12
SECTION 20. Injunctive Relief.............................................. 13
SECTION 21. Interpretation and Inconsistencies; Merger..................... 13
SECTION 22. Expenses....................................................... 13
SECTION 23. Amendments, Etc................................................ 13
SECTION 24. Notices........................................................ 13
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SECTION 25. Continuing Security Interest; Termination...................... 13
SECTION 26. Severability................................................... 14
SECTION 27. GOVERNING LAW.................................................. 14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL........ 14
(A) NON-EXCLUSIVE JURISDICTION............................. 14
(B) OTHER JURISDICTIONS.................................... 15
(D) WAIVER OF JURY TRIAL................................... 15
(E) WAIVER OF BOND......................................... 16
(F) ADVICE OF COUNSEL...................................... 16
SECTION 29. Gaming Laws.................................................... 16
SECTION 30. Interaction with Indenture..................................... 16
SECTION 31. Trust Indenture Act............................................ 17
SECTION 32. Appointment of Collateral Agent................................ 17
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SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of May 22, 1996 is
made by The Majestic Star Casino, LLC, an Indiana limited liability company
("Grantor"), in favor of IBJ SCHRODER BANK & TRUST COMPANY, as trustee (the
"Trustee"), for its benefit and for the benefit of the "Holders" (as defined
below) who are, or may hereafter become, parties to the "Indenture" referred to
below.
PRELIMINARY STATEMENT
Grantor has entered into a certain Indenture of even date herewith
between Grantor and the Trustee (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which Grantor and the Trustee have agreed to certain terms for the benefit of
Grantor and the Holders. It is a condition precedent to the Indenture that
Grantor shall have granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Indenture are used herein as therein defined, and the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and the plural forms of the terms defined):
"Accounts" shall mean "accounts" as such term is defined in Section
9-106 of the UCC, whether now owned or hereafter acquired or arising.
"Agreement" shall mean this Security Agreement, as the same may from
time to time be amended, restated, modified or supplemented, and shall refer to
this Agreement as the same may be in effect at the time such reference becomes
operative.
"Collateral" shall mean all property and rights in property now owned
or hereafter at any time acquired by Grantor in or upon which a Lien is granted
in favor of the Trustee by Grantor or a Subsidiary of Grantor under this
Agreement, including, without limitation, the property described in Section 2.
"Governmental Authority" shall mean any nation or government, or any
federal, state, local or political subdivision
<PAGE> 5
thereof, or any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Holders" shall mean the holders of the Secured Obligations from time
to time and shall include their respective successors, transferees and assigns.
"Secured Obligations" shall mean the Obligations under the Indenture.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Indiana; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Trustee's and the Holders' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Indiana, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of the Secured Obligations, Grantor hereby
assigns and pledges to Trustee, for the equal and ratable benefit of the
Holders, and grants to Trustee for the equal and ratable benefit of the Holders
an exclusive first priority security interest in all of Grantor's right, title
and interest in and to the following, whether now owned or existing or hereafter
arising or acquired and wheresoever located:
INVENTORY: All "inventory" as defined in Section 9-109(4) of the UCC, whether
now owned or hereafter acquired or arising; Grantor intends that the term
"inventory", as used herein, be construed in its broadest sense, and such term
shall include, without limitation, all goods now owned or hereafter acquired by
Grantor (wherever located, whether in the possession of Grantor or of a bailee
or other person for sale, storage, transit, processing, use or otherwise and
whether consisting of whole goods, spare parts, components, supplies,
materials, or consigned, returned or repossessed goods) which are held for sale
or lease, which are to be furnished (or have been furnished) under any contract
of service or which are raw materials, work in process or materials used or
consumed in Grantor's business (collectively, "Inventory");
EQUIPMENT: All "equipment" as such term is defined in Section 9-109(2) of the
UCC, whether now owned or hereafter acquired or arising; Grantor intends that
the term "equipment", as used herein, be construed in its broadest sense, and
such term shall
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include, without limitation, all machinery, all manufacturing, distribution,
selling, data processing and office equipment, all furniture, furnishings,
appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles,
vessels, trucks, buses, motor vehicles and all other goods of every type and
description (other than Inventory), in each instance whether now owned or
hereafter acquired by Grantor and wherever located (collectively, "Equipment");
GENERAL INTANGIBLES: All "general intangibles" as defined in Section 9-106 of
the UCC, whether now owned or hereafter acquired or arising; Grantor intends
that the term "general intangibles", as used herein, be construed in its
broadest sense, and such term shall include, without limitation, all rights,
interests, choses in action, causes of actions, claims and all other intangible
property of Grantor of every kind and nature (other than Accounts), in each
instance whether now owned or hereafter acquired by Grantor and however and
whenever arising, including, without limitation, all corporate and other
business records; all loans, royalties, and other obligations receivable;
customer lists, credit files, correspondence, and advertising materials; firm
sale orders, other contracts and contract rights; all tax refunds and tax refund
claims; all right, title and interest under leases, subleases, licenses and
concessions and other agreements relating to real or personal property; all
payments due or made to Grantor in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property by any person
or governmental authority; all credits with and other claims against carriers
and shippers; all rights to indemnification; all patents, and patent
applications (including all reissues, divisions, continuations and extensions);
all trade secrets and inventions; all copyrights (including all computer
software and related documentation); all rights and interests in and to
trademarks, trademark registrations and applications therefor, service marks,
service mark registrations and applications therefor, trade names, corporate
names, brand names, slogans, all goodwill associated with the foregoing; all
license agreements and franchise agreements, all reversionary interests in
pension and profit sharing plans and reversionary, beneficial and residual
interest in trusts; all proceeds of insurance of which Grantor is beneficiary;
and all letters of credit, guaranties, liens, security interests and other
security held by or granted to Grantor; and all other intangible property,
whether or not similar to the foregoing;
CONTRACT RIGHTS: All rights and interests in and to any pending or executory
contracts, requests for quotations, invitations for bid, agreements, leases and
arrangements of which Grantor is a party to or in which Grantor has an interest;
CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, leases, all
instruments, including, without limitation, the notes and debt instruments
described in Schedule 1 (the "Pledged Debt")
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<PAGE> 7
and all payments thereunder and instruments and other property from time to time
delivered in respect thereof or in exchange therefor, and all bills of sale,
bills of lading, warehouse receipts and other documents of title, in each
instance whether now owned or hereafter acquired by Grantor;
OTHER PROPERTY: All property or interests in property now owned or hereafter
acquired by Grantor which now may be owned or hereafter may come into the
possession, custody or control of Trustee or any of the Holders or any agent or
Affiliate of any of them in any way and for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise);
and all rights and interests of Grantor, now existing or hereafter arising and
however and wherever arising, in respect of any and all (i) notes, drafts,
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same; (ii) money; (iii) proceeds of loans,
including, without limitation, loans made under the Indenture; (iv) insurance
proceeds and books and records relating to any of the property covered by this
Agreement; together, in each instance, with all accessions and additions
thereto, substitutions therefor, and replacements, proceeds and products
thereof; and (v) all right, title and interest in the Berthing Agreement dated
as of April 23, 1996 by and between Grantor and Buffington Harbor Riverboats,
L.L.C., as amended, supplemented or modified from time to time (the "Berthing
Agreement").
EXCLUDED ITEMS: Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, any and all of the following items are hereby
expressly excluded from the Collateral and no security interest is granted
therein:
(v) any certificate of suitability or any owner's license heretofore
or hereafter issued to any person, including Grantor, under any of the Gaming
Laws, including Indiana Code 4-33,
(w) all of the Grantor's right, title and interest in the Charter
Agreement dated as of August 17, 1995 by and among New Yorker Acquisition
Corporation, President Casinos, Inc. and Grantor, as amended, modified or
supplemented from time to time (the "Charter Agreement"),
(x) Accounts,
(y) any property which if pledged, hypothecated or given as
collateral security would require the Trustee or a Holder to be licensed,
qualified or found suitable and
(z) any property to the extent such property is permitted to be
financed by Indebtedness permitted to be incurred pursuant to the covenant in
the Indenture entitled "Limitations
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<PAGE> 8
on Incurrence of Indebtedness and Issuance of Disqualified Capital Stock" and
such Indebtedness is permitted to be secured pursuant to the covenant entitled
"Liens" pursuant to the definition of "Permitted Liens".
SECTION 3. Authorization. Grantor hereby authorizes Trustee to
retain and each Holder, and each Affiliate of Trustee and of each Holder, to pay
or deliver to Trustee, for the benefit of the Holders, without any necessity on
any Holder's part to resort to other security or sources of reimbursement for
the Secured Obligations, at any time following the occurrence and during the
continuance of any Event of Default, and without further notice to Grantor (such
notice being expressly waived), any sums or property held by such Person, for
application against any portion of the Secured Obligations, irrespective of
whether any demand has been made or whether such portion of the Secured
Obligations is mature. Trustee will promptly notify Grantor of Trustee's
receipt of such funds or other property for application against the Secured
Obligations, but failure to do so will not affect the validity or enforceability
thereof. Trustee may give notice of the above grant of security interest and
assignment of the aforesaid sums, and authorization, to, and make any suitable
arrangements with, any such Holder for effectuation thereof, and Grantor hereby
irrevocably appoints Trustee as its attorney to collect, following the
occurrence and during the continuance of an Event of Default, any and all such
sums to the extent any such payment is not made to Trustee by such Holder or
Affiliate thereof.
SECTION 4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain solely liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Trustee of any of its
rights hereunder shall not release Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral, and (c) neither
Trustee nor the Holders shall have any responsibility, obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Trustee or the Holders be required or obligated, in any
manner, to (i) perform or fulfill any of the obligations or duties of Grantor
thereunder, (ii) make any payment, or make any inquiry as to the nature or
sufficiency of any payment received by Grantor or the sufficiency of any
performance by any party under any such contract or agreement or (iii) present
or file any claim, or take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 5. Representations and Warranties. Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter (except
for changes permitted or
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<PAGE> 9
contemplated by this Agreement) until termination of this Agreement pursuant to
Section 25:
(a) The correct name of Grantor is set forth in the first paragraph
of this Agreement. The locations listed on Schedule 2 constitute all locations
at which Inventory and/or Equipment is located and Grantor has exclusive
possession and control of such Inventory and Equipment, except for such
Inventory and Equipment which is (i) temporarily in transit between such
locations, or (ii) temporarily stored with third parties or held by third
parties for processing, engineering, evaluation or repairs, and the location of
such Inventory and/or Equipment is set forth in Schedule 2-A. The chief place
of business and chief executive office of Grantor are located at 1 Buffington
Harbor, Gary, Indiana 46406-3000.
(b) This Agreement creates in favor of Trustee a legal, valid and
enforceable security interest in the Collateral. When financing statements have
been filed in the appropriate offices against Grantor in the locations listed on
Schedule 2-B, Trustee will have a fully perfected lien on, and security interest
in, the Collateral in which a security interest may be perfected by such filing,
subject only to Permitted Liens under the Indenture.
(c) Grantor is the legal and beneficial owner of the Collateral free
and clear of all Liens except for Permitted Liens as defined in the Indenture.
Grantor currently conducts business under the name The Majestic Star Casino, LLC
and, in certain areas and for certain operations, the trade names listed on
Schedule 3. The Grantor uses no trade names or fictitious names, except as set
forth on Schedule 3.
(d) No authorization, approval or other action by, notice to or
filing with any Governmental Authority that has not already been taken or made
and which is in full force and effect, or contemplated by this Agreement is
required (i) for the grant by Grantor of the security interest in the Collateral
granted hereby; (ii) the execution, delivery or performance of this Agreement by
Grantor.
(e) The Pledged Debt issued by any Affiliate of Grantor, and to the
best of Grantor's knowledge, all other Pledged Debt, has been duly authorized,
issued and delivered, and is the legal, valid, binding and enforceable
obligation of the respective issuers thereof.
SECTION 6. Perfection and Maintenance of Security Interest and Lien.
Grantor agrees that until all of the Secured Obligations (other than contingent
indemnity obligations) have been fully satisfied and the Indenture has been
terminated, Trustee's security interests in and Liens on and against the
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<PAGE> 10
Collateral and all proceeds and products thereof, shall continue in full force
and effect. Grantor shall perform any and all steps required to perfect,
maintain and protect Trustee's security interests in and Liens on and against
the Collateral granted or purported to be granted hereby or to enable Trustee to
exercise its rights and remedies hereunder with respect to any Collateral,
including, without limitation, (i) executing and filing financing or
continuation statements, or amendments thereof, in form and substance reasonably
satisfactory to Trustee, (ii) delivering to Trustee all certificates, notes and
other instruments (including, without limitation, all letters of credit on which
Grantor is named as a beneficiary) representing or evidencing Collateral, which
certificates, notes and other instruments have been duly endorsed and are
accompanied by duly executed instruments of transfer or assignment, including,
but not limited to, note powers, all in form and substance satisfactory to
Trustee, (iii) delivering to Trustee warehouse receipts covering that portion of
the Collateral, if any, located in warehouses and for which warehouse receipts
are issued, (iv) after the occurrence and during the continuance of an Event of
Default, transferring Inventory and Equipment to warehouses designated by
Trustee or taking such other steps as are deemed reasonably necessary by Trustee
to maintain Trustee's control of the Inventory and Equipment, (v) marking
conspicuously each document, contract, chattel paper and all records pertaining
to the Collateral with a legend, in form and substance satisfactory to Trustee,
indicating that such document, contract, chattel paper, or Collateral is subject
to the security interest granted hereby.
SECTION 7. Financing Statements. To the extent permitted by
applicable law, Grantor hereby authorizes Trustee to file one or more financing
or continuation statements and amendments thereto, disclosing the security
interest granted to Trustee under this Agreement without Grantor's signature
appearing thereon and Trustee agrees to notify Grantor when such a filing has
been made. Grantor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any Inventory or Equipment is in the possession or
control of any warehouseman or Grantor's agents or processors, Grantor shall,
upon Trustee's request, notify such warehouseman, agent or processor of
Trustee's security interest in such Inventory and Equipment and, upon Trustee's
request, instruct them to hold all such Inventory or Equipment for Trustee's
account and subject to Trustee's instructions.
SECTION 8. Filing Costs. Grantor shall pay the costs of, or
incidental to, all recordings or filings of all financing statements, including,
without limitation, any filing expenses incurred by Trustee pursuant to
Section 7.
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SECTION 9. Schedule of Collateral. Grantor shall furnish to Trustee
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Trustee may reasonably request, all in reasonable detail.
SECTION 10. Equipment and Inventory. Grantor covenants and agrees
with Trustee that from the date of this Agreement and until termination of this
Agreement pursuant to Section 25, Grantor shall:
(a) Keep the Equipment and Inventory (other than Equipment or
Inventory sold in the ordinary course of business) at the places specified in
Section 5(a), except for Equipment and Inventory (i) temporarily in transit
between such locations or (ii) temporarily stored at locations set forth on
Schedule 2-A, and use its best efforts to deliver written notice to Trustee at
least thirty (30) days prior to establishing any other location at which or
third party with which it reasonably expects to maintain Inventory and/or
Equipment in which location or with which third party all action required by
this Agreement shall have been taken with respect to all such Equipment and
Inventory;
(b) Cause all property used or useful in the conduct of its business
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of Grantor may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 10(b) shall prevent Grantor from
discontinuing the operation or maintenance of any of such property if such
discontinuance is, in the judgment of Grantor, desirable in the conduct of its
business and not disadvantageous in any material respect to the Trustee or the
Holders;
(c) Comply with the terms of the Indenture with respect to such
Equipment and Inventory, including, without limitation, the maintenance of
insurance provisions set forth in Section 4.22 of the Indenture.
SECTION 11. Partial Release of Collateral. So long as no Event of
Default has occurred and is continuing under the Indenture, Collateral may be
released from the security interest created by this Agreement at any time or
from time to time upon the request of the Grantor pursuant to an Officers'
Certificate (as defined in the Indenture) certifying that all terms for release
and conditions precedent hereunder and in the Indenture have been met and
specifying: (i) the identity of the Collateral to be released and (ii) the
provision of the Indenture or this Agreement which authorizes such release. The
Trustee shall release (at the sole cost and expense of the Grantor) (i)
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Equipment which may have become obsolete or unfit for use or no longer useful,
necessary or profitable in the conduct of the business of the Grantor, upon
substituting other Equipment not necessarily of the same character but of at
least equal value to the Grantor as the property disposed of, which shall
become Collateral hereunder, subject to the security interest of this
Agreement; (ii) Collateral that is condemned, seized or taken by the power of
eminent domain; (iii) upon Delivery of the Permanent Vessel and the execution
of the First Preferred Ship Mortgage on the Permanent Vessel by the Trustee,
the Collateral which is directly required and used solely in connection with
the Chartered Vessel, provided that the net proceeds thereof are applied as
required by the Indenture; (iv) Collateral which is destroyed or damaged in an
Event of Loss (as defined in the Indenture) provided that the net proceeds
thereof are applied as required by the Indenture or (v) as otherwise permitted
by the Indenture.
SECTION 12. Trademark Licenses. As long as no Event of Default has
occurred and is continuing, nothing set forth herein or in any other Collateral
Document is intended or shall be construed to prevent the Grantor from entering
into license agreements pertaining to the Trademarks (as such term is defined in
the Trademark Security Agreement); provided that Grantor will not, without the
Trustee's prior written consent, enter into any license agreement which is
inconsistent with the Trademark Security Agreement.
SECTION 13. General Covenants. Grantor covenants and agrees with
Trustee that from and after the date of this Agreement and until termination of
this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory
and complete records of Grantor's Collateral in a manner consistent with
Grantor's current business practice, including, without limitation, a record of
all payments received and all credits granted with respect to such Collateral.
Grantor shall, for Trustee's further security, at Trustee's request deliver and
turn over to Trustee or Trustee's designated representatives at any time
following the occurrence and during the continuation of an Event of Default, any
such books and records (including, without limitation, any and all computer
tapes, programs and source and object codes relating to such Collateral in which
Grantor has an interest or any part or parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is necessary to
remove, any Lien on such Collateral other than liens permitted by the Indenture,
and will defend the right, title and interest of Trustee in and to Grantor's
rights to such Collateral, including, without limita-
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<PAGE> 13
tion, the proceeds and products thereof, against the claims and demands of all
Persons whatsoever.
SECTION 14. Trustee Appointed Attorney-in-Fact. Grantor hereby
irrevocably appoints Trustee as Grantor's attorney-in-fact, with full authority
in the place and stead of Grantor and in the name of Grantor or otherwise, from
time to time in Trustee's discretion, to take any action and to execute any
instrument which Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, (a) following the
occurrence and during the continuance of an Event of Default, to:
(i) obtain and adjust insurance required to be paid to the Trustee or
any Holders pursuant to the Indenture;
(ii) ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(iii) receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above;
and
(iv) file any claims or take any action or institute any proceedings
which Trustee may deem necessary or desirable for the collection of any of
the Collateral, or otherwise to enforce the rights of Trustee with respect
to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by
computer services companies and other service companies or
bureaus; and
(ii) do all other things reasonably necessary to carry out
this Agreement.
SECTION 15. Trustee May Perform. If Grantor fails to perform any
agreement contained herein or in the Indenture, Trustee may, upon three days
prior notice to the Grantor, perform, or cause performance of, such agreement,
and the expenses of Trustee incurred in connection therewith shall be payable by
Grantor under Section 22.
SECTION 16. Trustee's Duties. The powers conferred on Trustee hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for monies actually received by
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<PAGE> 14
it hereunder, Trustee shall not have any duty as to any Collateral. Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Trustee accords its own property,
it being understood that Trustee shall be under no obligation to take any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral, but may do so at its option, and all reasonable
expenses incurred in connection therewith shall be for the sole account of
Grantor and shall be added to the Secured Obligations.
SECTION 17. Remedies. (a) If any Event of Default shall have
occurred and be continuing:
(i) Trustee shall have, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party upon default under the UCC (whether or not the UCC applies to the
affected Collateral) and further, Trustee may, without notice, demand or legal
process of any kind (except as may be required by law), all of which Grantor
waives, at any time or times, (x) enter Grantor's owned or leased premises and
take physical possession of the Collateral and maintain such possession on
Grantor's owned or leased premises, at no cost to Trustee or any of the Holders,
or remove the Collateral, or any part thereof, to such other place(s) as Trustee
may desire, (y) require Grantor to, and Grantor hereby agrees that it will at
its expense and upon request of Trustee forthwith, assemble all or any part of
the Collateral as directed by Trustee and make it available to Trustee at a
place to be designated by Trustee which is reasonably convenient to Trustee and
(z) without notice except as specified below, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of the Collateral or any part
thereof at public or private sale, at any exchange, broker's board or at any of
the offices of Trustee or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as Trustee may deem commercially reasonable. Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten
(10) days' notice to Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. Trustee shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Trustee may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned;
(ii) Trustee shall apply all cash proceeds received by Trustee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral (after payment of any amounts payable to Trustee pursuant
to Section 22), for the benefit of the Holders, against all or any part of the
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<PAGE> 15
Secured Obligations in such order as may be required by the Indenture. Any
surplus of such cash or cash proceeds held by Trustee and remaining after
payment in full of all the Secured Obligations shall be paid over to Grantor or
to whomsoever may be lawfully entitled to receive such surplus;
(b) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law or equity.
SECTION 18. Exercise of Remedies. In connection with the exercise
of its remedies pursuant to Section 17, Trustee may, (i) exchange, enforce,
waive or release any portion of the Collateral and any other security for the
Secured Obligations; (ii) apply such Collateral or security and direct the order
or manner of sale thereof as Trustee may, from time to time, determine; and
(iii) settle, compromise, collect or otherwise liquidate any such Collateral or
security in any manner following the occurrence of an Event of Default, without
affecting or impairing Trustee's right to take any other further action with
respect to any Collateral or security or any part thereof.
SECTION 19. License. Trustee is hereby granted a license or other
right to use, following the occurrence and during the continuance of an Event of
Default, without charge, (a) Grantor's labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, customer lists and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral,
provided that Trustee uses quality standards at least substantially equivalent
to those of Grantor for the manufacture, advertising, sale and distribution of
Grantor's products and services and (b) Grantor's rights under all licenses and
all franchise agreements shall inure to Trustee's benefit.
SECTION 20. Injunctive Relief. Grantor recognizes that in the event
Grantor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Holders; therefore, Grantor agrees that the Holders, if Trustee so
determines and requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
SECTION 21. Interpretation and Inconsistencies; Merger.
(a) The rights and duties created by this Agreement shall, in all
cases, be interpreted consistently with, and shall be in addition to (and not in
lieu of), the rights and duties created by the Indenture and the other
Collateral Documents. In
- 12 -
<PAGE> 16
the event that any provision of this Agreement shall be inconsistent with any
provision of any other Collateral Document, such provision of the other
Collateral Document shall govern.
(b) Except as provided in subsection (a) above, this Agreement
represents the final agreement of the Grantor and the Trustee with respect to
the matters contained herein and may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral agreements, between the Grantor
and the Trustee or any other Holder.
SECTION 22. Expenses. Grantor will upon demand pay to Trustee and/or
the Holders the amount of any and all reasonable fees and expenses, including
the reasonable fees and expenses of their counsel and agents, as provided in
Section 7.07 of the Indenture.
SECTION 23. Amendments, Etc. Except as otherwise provided by the
Indenture, the consent of the Holders of at least a majority in principal amount
of the Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Notes) shall be required to amend, modify,
supplement, or waive any provision of this Agreement. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 24. Notices. All notices and other communications provided
for hereunder shall be delivered in the manner set forth in Section 11.02 of the
Indenture.
SECTION 25. Continuing Security Interest; Termination. (a) Except as
provided in Section 25(b), this Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the later of the payment or satisfaction in full of the Secured Obligations
(other than contingent indemnity obligations) and the termination of the
Indenture, (ii) be binding upon Grantor, its successors and assigns and (iii)
except to the extent that the rights of any transferor, or assignor are limited
by the terms of the Indenture, inure, together with the rights and remedies of
Trustee hereunder, to the benefit of Trustee and any of the Holders. Nothing
set forth herein or in any other Collateral Document is intended or shall be
construed to give any other Person any right, remedy or claim under, to or in
respect of this Agreement or any other Collateral Document or any Collateral.
Grantor's successors and assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession thereof or therefor.
(b) Upon the payment in full in cash of the Secured Obligations
(other than contingent indemnity obligations) and the termination of the
Indenture, this Agreement and the security interest granted hereby shall
terminate and all rights to the
- 13 -
<PAGE> 17
Collateral shall revert to Grantor. Upon any such termination of security
interest, Grantor shall be entitled to the return, upon its request and at its
expense, of such of the Collateral held by Trustee as shall not have been sold
or otherwise applied pursuant to the terms hereof and Trustee will, at Grantor's
expense, execute and deliver to Grantor such other documents as Grantor shall
reasonably request to evidence such termination. In connection with any sales
of assets permitted under the Indenture, the Trustee will release and terminate
the liens and security interests granted under this Agreement with respect to
such assets.
SECTION 26. Severability. It is the parties' inten tion that this
Agreement be interpreted in such a way that it is valid and effective under
applicable law. However, if one or more of the provisions of this Agreement
shall for any reason be found to be invalid or unenforceable, the remaining
provisions of this Agreement shall be unimpaired.
SECTION 27. GOVERNING LAW. ANY DISPUTE BETWEEN THE GRANTOR AND THE
TRUSTEE OR ANY HOLDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT,
AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF INDIANA.
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) NON-EXCLUSIVE JURISDICTION. THE GRANTOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE GRANTOR HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM, BUT THE GRANTOR
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK, NEW YORK.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE TRUSTEE OR ANY
HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION
OVER THE GRANTOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PERSON. GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER
- 14 -
<PAGE> 18
COURT ORDER IN FAVOR OF SUCH PERSON. GRANTOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS; INCONVENIENT FORUM. THE GRANTOR WAIVES
PERSONAL SERVICE OF PROCESS UPON IT AND AS ADDITIONAL SECURITY FOR THE SECURED
OBLIGATIONS, IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, WHOSE ADDRESS IS ONE
NORTH CAPITOL AVENUE, INDIANAPOLIS, INDIANA 46204, AS GRANTOR'S AGENT FOR THE
PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. THE GRANTOR
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN NEW YORK, NEW YORK.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO 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 HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 28, WITH ITS COUNSEL.
SECTION 29. Gaming Laws. (a) Each of the provisions of this
Agreement is subject to, and shall be enforced in compliance with, the
provisions of any applicable laws, including, without limitation, the rules and
regulations of the Indiana Gaming Commission (together with the Indiana
Riverboat Gambling Act, the "Gaming Laws").
- 15 -
<PAGE> 19
(b) The Trustee acknowledges, understands and agrees that the Gaming
Laws may impose certain licensing or transaction approval requirements prior to
the exercise of the rights and remedies granted to it under the Agreement with
respect to the Collateral subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in connection
with the taking of any of the actions which may be taken by the Trustee in the
exercise of its rights hereunder, then Grantor agrees to use its reasonable best
efforts to secure such consent and to cooperate with the Trustee in obtaining
any such consent. Upon the occurrence and during the continuation of any Event
of Default, Grantor shall promptly execute and/or cause the execution of all
applications, certificates, instruments, and other documents and papers that the
Trustee may be required to file in order to obtain any necessary approvals under
the Gaming Laws, and if Grantor fails or refuses to execute such documents, the
Trustee or the clerk of the court with jurisdiction may execute such documents
on behalf of Grantor.
(d) Notwithstanding any other provision of this Agreement to the
contrary, nothing in this Agreement shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Grantor or (ii) effect any transfer, sale, purchase, lease or hypothecation of,
or any borrowing or loaning of money against, or any establishment of any voting
trust agreement or other similar agreement with respect to (all within the
meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including Grantor,
under any of the Gaming Laws, including Indiana Code 4-33.
SECTION 30. Interaction with Indenture. All terms, covenants,
conditions, provisions and requirements of the Indenture are incorporated by
reference in this Security Agreement. In the event of any conflict or
inconsistency between the provisions of this Security Agreement and those of the
Indenture, including, without limitation, any conflicts or inconsistencies in
any definitions herein or therein, the provisions or definitions of the
Indenture shall govern.
SECTION 31. Trust Indenture Act. If any provision of this Agreement
conflicts with any provision of the Trust Indenture Act, the provisions of the
Trust Indenture Act shall control.
SECTION 32. Appointment of Collateral Agent. The Trustee may, solely
at its discretion, appoint a collateral agent to enforce the rights and remedies
available to the Trustee under this Agreement.
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<PAGE> 20
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
THE MAJESTIC STAR CASINO, LLC
as the GRANTOR
By: Barden Development, Inc.
By: Kenneth L. Kramer
-------------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as TRUSTEE
By: Nancy R. Besse
-------------------------------
Name: Nancy R. Besse
Title: Vice President
<PAGE> 21
SCHEDULE 1
TO
SECURITY AGREEMENT
Pledged Debt:
None.
<PAGE> 22
SCHEDULE 2
TO
SECURITY AGREEMENT
Locations of Collateral:
One Buffington Drive
Gary, Indiana 46406
504 Broadway
Gary, Indiana 46402
<PAGE> 23
SCHEDULE 2-A
TO
SECURITY AGREEMENT
Third Party Locations:
Corporate Name of Description Maximum
Third Party Address of Relationship Amount
None.
<PAGE> 24
SCHEDULE 2-B
TO
SECURITY AGREEMENT
Financing Statement Filing Locations:
None, except:
Office of Secretary of State of Indiana
<PAGE> 25
SCHEDULE 3
TO
SECURITY AGREEMENT
Trade Names:
Majestic Star
Majestic Star Casino
Club M-Star
<PAGE> 1
EXHIBIT 4.5
EXECUTION COPY
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of May 22, 1996 by
Barden Development, Inc. an Indiana corporation, ("Pledgor"), and a member
of THE MAJESTIC STAR CASINO, LLC, an Indiana limited liability company
("Majestic Star"),and IBJ Schroder Bank & Trust Company (the "Trustee"), for
its benefit and the benefit of the "Holders" (as such term is defined in the
"Indenture" defined below). Capitalized terms used herein and not herein
defined shall have the same meanings assigned to such terms in the Indenture
described below.
W I T N E S S E T H:
WHEREAS, Majestic Star and the Trustee have entered into the Indenture
dated as of May 22, 1996 (as amended, restated, supplemented or modified
from time to time, the "Indenture"), pursuant to which Majestic Star and the
Trustee have agreed to certain terms for the benefit of Majestic Star and
the Holders;
WHEREAS, the Pledgor, as a member of Majestic Star, will directly and
indirectly receive substantial benefits by reason of the financial
accommodations made by the Trustee and the Holders under the Indenture;
WHEREAS, it is a condition precedent to the Indenture that this
Agreement shall be executed and delivered by the Pledgor to the Trustee and
that this Agreement shall be in full force and effect; and
WHEREAS, the Pledgor desires to secure its "Liabilities" (as
hereinafter defined) to the Holders by the grant to the Trustee on behalf of
the Holders of a first priority security interest in the "Pledged
Collateral" (as hereinafter defined);
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, the purchase of the "Notes" (as defined in the Indenture) by the
Holders) heretofore, now or hereafter made to or for the benefit of Pledgor
pursuant to the Indenture or any other agreement, instrument or document
executed pursuant to or in connection
<PAGE> 2
therewith, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,the Pledgor and the Trustee
hereby agree as follows:
1. Pledge. The Pledgor hereby pledges, grants and assigns to the
Trustee, for the equal and ratable benefit of the Holders, and grants to
the Trustee for the equal and ratable benefit of the Holders, a security
interest in, the following (collectively, the "Pledged Collateral"):
(a) (i) The membership interests of Pledgor in Majestic Star now
or at any time or times hereafter owned by the Pledgor, and any
certificates representing such membership interest in Majestic Star
(such membership interest being identified on Exhibit A attached
hereto and made a part hereof), (ii) all of the right, title and
interest of the Pledgor in, to and under its respective percentage
interest, shares or units as a member including, without limitation,
Pledgor's interest in (or allocation of) the profits, losses, income,
gains, deductions, credits or similar items of Majestic Star and the
right to receive distributions of Majestic Star's cash, other
property, assets, and all options and warrants for the purchase of
membership interests, whether now existing or hereafter arising,
whether arising under the terms of the Certificate of Formation, the
First Amended or Restated Operating Agreement or any of the other
organizational documents (such documents hereinafter collectively
referred to as the "Operating Agreements") of Majestic Star, or at law
or in equity, or otherwise and (iii) any and all of the proceeds
thereof (all of said membership interest, certificates, and warrants
being hereinafter collectively referred to as the "Pledged Membership
Interest") herewith delivered to the Trustee accompanied by the
certificates or other writings evidencing the same, accompanied by
duly executed instruments of transfer or assignments in blank, all in
form and substance satisfactory to the Trustee (such instruments being
collectively referred to hereinafter as the "Powers") duly executed in
blank, and all distributions, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of, or in exchange for, any or all of the Pledged Membership
Interest;
(b) Any additional membership interests in Majestic Star from
time to time acquired by the Pledgor in any manner, and any
certificates representing such additional membership interests or any
additional percentage
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<PAGE> 3
interests, shares, units, options or warrants of membership interests
in Majestic Star (any such additional interests shall constitute part
of the Pledged Membership Interest and the Trustee is irrevocably
authorized to amend Exhibit A from time to time to reflect such
additional shares), and all options, warrants, distributions, cash,
instruments and other rights and options from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such shares and will promptly thereafter deliver to the
Trustee, a certificate duly executed by the Pledgor describing such
percentage interests, certificates, units, options or warrants and
certifying that the same have been duly pledged hereunder;
(c) The property and interests in property described in Section 3
below; and
(d) All proceeds of the foregoing.
2. Security for Liabilities. The Pledged Collateral secures the
prompt payment, performance and observance of (i) the Obligations under the
Indenture (hereinafter referred to as the "Secured Obligations") and (ii) the
Pledgor's obligations and liabilities under this Agreement and each agreement,
document or instrument executed pursuant to or in connection with this Agreement
(all such obligations and liabilities of the Pledgor and Majestic Star now or
hereafter existing being hereinafter referred to as the "Liabilities").
3. Pledged Collateral Adjustments. If, during the term of this
Agreement:
(a) Any reclassification, readjustment or other change is
declared or made in the capital structure of Majestic Star, or any
option included within the Pledged Collateral is exercised, or both,
or
(b) Any subscription, warrants or any other rights or options
shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional membership interests, certificates,
warrants, rights, options or other securities, issued by reason of any of the
foregoing, shall be immediately delivered to and held by the Trustee under the
terms of this Agreement and shall constitute Pledged Collateral hereunder;
provided, however, that nothing contained in this Section 3 shall be deemed to
permit any distribution, issuance of
-3-
<PAGE> 4
additional membership interests, warrants, rights or options, reclassification,
readjustment or other change in the capital structure of Majestic Star which is
not expressly permitted in the Indenture.
4. Subsequent Changes Affecting Pledged Collateral. The Pledgor
represents and warrants that it has made its own arrangements for keeping
itself informed of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert, rights to
subscribe, cash distributions or other distributions, reorganization or
other exchanges, tender offers and voting rights), and the Pledgor agrees
that neither the Trustee nor any of the Holders shall have any obligation to
inform the Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. The Trustee may,
after the occurrence of an Event of Default, without notice and at its
option, transfer or register the Pledged Collateral or any part thereof into
its or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder. In addition, the
Trustee may at any time exchange certificates or instruments representing or
evidencing Pledged Membership Interests for certificates or instruments of
smaller or larger denominations.
5. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of the
membership interests in Majestic Star pledged to the Trustee pursuant
to this Agreement, free and clear of any Lien except for the security
interest created by this Agreement;
(b) This Agreement has been duly and validly authorized,
executed and delivered by Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by moratorium laws from
time to time in effect and general equitable principles;
(c) Such Pledgor is the direct beneficial owner of the Pledged
Collateral hereby pledged by it;
-4-
<PAGE> 5
(d) The Pledgor owns such Pledged Collateral free and clear of
any pledge, mortgage, hypothecation, lien, charge, encumbrance or any
security interest therein, except for the pledge and security interest
granted to the Trustee and the Holders hereunder and any rights of the
other members as set forth in the Majestic Star Articles of
Organization and Operating Agreement (together, the "Organizational
Documents");
(e) The Pledgor shall cause Majestic Star to make a notation on
its records, which notation shall indicate the security interest
granted hereby, and such Pledgor agrees to execute and file financing
statements pursuant to the Uniform Commercial Code and continuation
statements as may be required to perfect the security interest granted
hereby, and such Pledgor agrees to execute and deliver to Majestic
Star a Pledge Instruction in the form of Exhibit B hereto;
(f) The pledge of the Pledged Collateral hereby pledged by such
Pledgor does not violate (1) the Operating Agreements of Majestic Star
or any of the other organizational documents of Majestic Star, or any
indenture, mortgage, bank loan or credit agreement to which such
Pledgor or Majestic Star is a party or by which any of their
respective properties or assets may be bound; or (2) any restriction
on such transfer or encumbrance of such Pledged Collateral;
(g) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral except
as set forth in the Organizational Documents;
(h) The Pledgor has the right to vote, pledge, assign and grant
a security interest in or otherwise transfer such Pledged Collateral
free of any Liens;
(i) No authorization, approval, or other action by, and no
notice to or filing with, any Governmental Authority (as defined in
the Security Agreement) is required either (i) for the pledge of the
Pledged Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Pledgor or (ii) for
the exercise by the Trustee of the voting or other rights provided for
in this Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement (except as may be required in connection
with such
-5-
<PAGE> 6
disposition by laws affecting the offering and sale of
securities generally);
(j) The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and, upon filing of the financing statements
referred to herein, a perfected security interest in the Pledged
Collateral, in favor of the Trustee for the benefit of the Trustee and
the Holders, securing the payment and performance of the Liabilities;
6. Voting Rights and Other Powers. During the term of this Agreement, and
except as provided in this Section 6 below, the Pledgor shall have (i) the right
to vote the Pledged Membership Interest on all questions in a manner not
inconsistent with the terms of this Agreement, the Indenture and any other
agreement, instrument or document executed pursuant thereto or in connection
therewith, and (ii) the right to be the member and manager of Majestic Star, and
shall be entitled to exercise all managerial, election and other rights relating
to the Pledged Collateral. After the occurrence and during the continuance of
an Event of Default, the Trustee or the Trustee's nominee may, at the Trustee's
or such nominee's option and following written notice ("Election Notice") from
the Trustee to the Pledgor (x) exercise, or direct such Pledgor as to the
exercise of (whereupon such Pledgor shall exercise as so directed) all voting,
consent, managerial, election and other membership and manager rights to the
Pledged Collateral of the Pledgor; such authorization shall constitute an
irrevocable voting proxy from the Pledgor to the Trustee or, at the Trustee's
option, to the Trustee's nominee; and (y) exercise, or direct such Pledgor as to
the exercise of (whereupon the Pledgor shall exercise as so directed) any and
all rights of conversion, exchange, subscription or any other rights, privileges
or options pertaining to the Pledged Collateral of the Pledgor as if the Trustee
were the absolute owner thereof, all without liability except to account for
property actually received by it, but the Trustee shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure so to do or delay in so doing. Under no circumstances shall the
Trustee have, or be deemed to have or to have had, any right to exercise, or to
direct the Pledgor to exercise, any voting, managerial, election or other rights
of an owner of the Pledged Collateral, or arising under the Pledged Collateral,
unless and until the Trustee shall have delivered to such Pledgor an Election
Notice as described hereinabove.
-6-
<PAGE> 7
7. Cash and Other Distributions. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and
all cash distributions and interest paid in respect of the Pledged
Collateral (including a distribution of net cash flow) to the extent
such distributions are not prohibited by the Indenture, provided,
however, that any and all
(A) distributions and interest paid or payable other than
in cash with respect to, and instruments and other property
received, receivable or otherwise distributed with respect to,
or in exchange for, any of the Pledged Collateral;
(B) other distributions paid or payable in cash with
respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in
surplus; and
(C) cash paid, payable or otherwise distributed with
respect to principal of, or in redemption of, or in exchange
for, any of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the
Trustee to hold, for the benefit of the Trustee and the Holders, as
Pledged Collateral and shall, if received by the Pledgor, be received
in trust for the Trustee, for the benefit of the Trustee and the
Holders, be segregated from the other property or funds of the
Pledgor, and be delivered immediately to the Trustee as Pledged
Collateral in the same form as so received (with any necessary
endorsement); and
(ii) The Trustee shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the distributions or interest payments
which it is authorized to receive and retain pursuant to clause (i)
above.
(b) After the occurrence and during the continuance of an Event of Default:
-7-
<PAGE> 8
(i) All rights of the Pledgor to receive the distributions and
interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 7(a)(i) hereof shall cease, and all
such rights shall thereupon become vested in the Trustee, for the
benefit of the Trustee and the Holders, which shall thereupon have the
sole right to receive and hold as Pledged Collateral such
distributions and interest payments;
(ii) All distributions and interest payments which are received
by the Pledgor contrary to the provisions of clause (i) of this
Section 7(b) shall be received in trust for the Trustee, for the
benefit of the Trustee and the Holders, shall be segregated from other
funds of the Pledgor and shall be paid over immediately to the Trustee
as Pledged Collateral in the same form as so received (with any
necessary endorsements).
8. Transfers and Other Liens. The Pledgor agrees that it will not (a)
sell or otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral without the prior written consent of the Trustee, or (b)
create or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the security interest under this Agreement. To the
extent additional or different members of Majestic Star are permitted, Pledgor
shall cause as a condition to permitting such entity to become a member that the
new member consent to (i) the terms of this Agreement applicable to such new
member; (ii) the Pledge and assignment of the Pledged Collateral; and (iii) the
rights granted hereunder for the Trustee to become the/a member of Majestic Star
at its election.
9. Remedies. (a) The Trustee shall have, in addition to any other rights
given under this Agreement or by law, all of the rights and remedies with
respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of Indiana. After the occurrence and
during the continuance of an Event of Default and following written notice to
the Pledgor, the Trustee (personally or through an agent) is hereby authorized
and empowered to transfer and register in its name or in the name of its nominee
the whole or any part of the Pledged Collateral, to exercise all voting rights
with respect thereto, to collect and receive all cash distributions and other
distributions made thereon, and to otherwise act with respect to the Pledged
Collateral as though the Trustee were the outright owner thereof and the sole
member and manager of Majestic Star, the Pledgor hereby irrevocably
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<PAGE> 9
constituting and appointing the Trustee as the proxy and attorney-in-fact of the
Pledgor, with full power of substitution to do so, such proxy becoming effective
upon the occurrence of an Event of Default and following written notice thereof;
provided, however, that the Trustee shall have no duty to exercise any such
right or to preserve the same and shall not be liable for any failure to do so
or for any delay in doing so. In addition, after the occurrence of an Event of
Default, the Trustee shall have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged Collateral or any part
thereof which shall then be in or shall thereafter come into the possession or
custody of the Trustee or which the Trustee shall otherwise have the ability to
transfer under applicable law, the Trustee may, in its sole discretion, without
notice except as specified below, after the occurrence of an Event of Default,
sell or cause the same to be sold at any exchange, broker's board or at public
or private sale, in one or more sales or lots, at such price as the Trustee may
deem best, for cash or on credit or for future delivery, without assumption of
any credit risk, and the purchaser of any or all of the Pledged Collateral so
sold shall thereafter own the same, absolutely free from any claim, encumbrance
or right of any kind whatsoever. The Trustee and each of the Holders may, in
its own name, or in the name of a designee or nominee, buy the Pledged
Collateral at any public sale and, if permitted by applicable law, buy the
Pledged Collateral at any private sale. The Pledgor will pay to the Trustee all
reasonable expenses (including, without limitation, court costs and reasonable
attorneys' and paralegals' fees and expenses) of, or incidental to, the
enforcement of any of the provisions hereof. The Trustee agrees to distribute
any proceeds of the sale of the Pledged Collateral in accordance with the
Indenture and the Pledgor shall remain liable for any deficiency following the
sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline speedily
in value or is or becomes of a type sold on a recognized market, the Trustee
will give the Pledgor reasonable notice of the time and place of any public
sale thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Pledged Collateral conducted in
conformity with reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be
commercially reasonable. Notwithstanding any provision to the contrary
contained herein, the Pledgor agrees that any requirements of reasonable
notice shall be met if such notice is received by the
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<PAGE> 10
Pledgor as provided in Section 25 below at least five (5) Business Days before
the time of the sale or disposition; provided, however, that Trustee may give
any shorter notice that is commercially reasonable under the circumstances. Any
other requirement of notice, demand or advertisement for sale is waived, to the
extent permitted by law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgor agrees
that after the occurrence of an Event of Default, the Trustee may, from time
to time, attempt to sell all or any part of the Pledged Collateral by means
of a private placement restricting the bidders and prospective purchasers to
those who are qualified and will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, the
Trustee may solicit offers to buy
the Pledged Collateral, or any part of it, from a limited number of
investors deemed by the Trustee, in its reasonable judgment, to be
financially responsible parties who might be interested in purchasing the
Pledged Collateral. If the Trustee solicits such offers from not less than
four (4) such investors, then the acceptance by the Trustee of the highest
offer obtained therefrom shall be deemed to be a commercially reasonable
method of disposing of such Pledged Collateral; provided, however, that this
Section does not impose a requirement that the Trustee solicit offers from
four or more investors in order for the sale to be commercially reasonable.
10. Security Interest Absolute. All rights of the Trustee and
security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) Any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(ii) Any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Liabilities, or any other
amendment or waiver of or any consent to any departure from the
Indenture;
(iii) Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the Liabilities;
or
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<PAGE> 11
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Agreement.
11. Trustee Appointed Attorney-in-Fact. The Pledgor hereby appoints
the Trustee its attorney-in-fact, with full authority, in the name of the
Pledgor or otherwise, after the occurrence and during the continuance of an
Event of Default, from time to time in the Trustee's sole discretion, to
take any action and to execute any instrument which the Trustee may deem
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing
any cash distribution, interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for
the same, to exercise all rights of a member and manager (upon the election
of the Trustee) such as all voting, consent, managerial and other member
rights, and to arrange for the transfer of all or any part of the Pledged
Collateral on the books of Majestic Star to the name of the Trustee or the
Trustee's nominee.
12. Waivers. The Pledgor waives presentment and demand for payment of
any of the Liabilities, protest and notice of dishonor or default with
respect to any of the Liabilities and all other notices to which the Pledgor
might otherwise be entitled except as otherwise expressly provided herein or
in the Indenture.
13. Term. This Agreement shall remain in full force and effect until
the Liabilities (other than continuing indemnity obligations) have been
fully and indefeasibly paid in cash and the Indenture has terminated
pursuant to its terms. Upon the termination of this Agreement as provided
above (other than as a result of the sale of the Pledged Collateral), the
Trustee will release the security interest created hereunder and, if it then
has possession of the Pledged Membership Interest, will deliver the Pledged
Membership Interest and the Powers to the Pledgor.
14. Definitions. The singular shall include the plural and vice versa
and any gender shall include any other gender as the context may require.
15. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Pledgor, the Trustee, for the benefit of itself
and the Holders, and their respective successors and assigns. The Pledgor's
successors and
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<PAGE> 12
assigns shall include, without limitation, a receiver, trustee or debtor-in-
possession of or for the Pledgor.
16. GOVERNING LAW. ANY DISPUTE BETWEEN THE TRUSTEE AND THE PLEDGOR
ARISING OUT OF OR RELATED TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL
LAWS, AND NOT THE CONFLICTS OF LAW PROVISIONS, OF THE STATE OF INDIANA.
17. Consent to Jurisdiction; Counterclaims; Forum Non Conveniens. (A)
NON-EXCLUSIVE JURISDICTION. THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT AND THE PLEDGOR HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM, BUT THE
PLEDGOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK.
(B) OTHER JURISDICTIONS. PLEDGOR AGREES THAT THE TRUSTEE OR ANY
HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST PLEDGOR OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER THE PLEDGOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SUCH PERSON. PLEDGOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON. PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION.
(C) INCONVENIENT FORUM. THE PLEDGOR IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH IN NEW YORK, NEW YORK.
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<PAGE> 13
18. Service of Process. The Pledgor waives personal service of any
process upon it and, as security for the Liabilities, irrevocably appoints
CT Corporation System, One North Capital Avenue, Indianapolis, Indiana 46204
as its registered agent for the purpose of accepting service of process
issued by any court.
19. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE TRUSTEE WAIVES
ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE TRUSTEE AND THE PLEDGOR ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EITHER THE PLEDGOR OR THE TRUSTEE MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
20. Waiver of Bond. The Pledgor waives the posting of any bond
otherwise required of the Trustee in connection with any judicial process or
proceeding to realize on the Pledged Collateral or any other security for
the Liabilities, to enforce any judgment or other court order entered in
favor of the Trustee, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Agreement or
any other agreement or document between the Trustee and the Pledgor.
21. Advice of Counsel. The Pledgor represents and warrants to the
Trustee and the Holders that it has consulted with its legal counsel
regarding all waivers under this Agreement, including without limitation
those under Section 12 and Sections 16 through 20 hereof, that it believes
that it fully understands all rights that it is waiving and the effect of
such waivers, that it assumes the risk of any misunderstanding that it may
have regarding any of the foregoing, and that it intends that such waivers
shall be a material inducement to the Trustee and the Holders to extend the
indebtedness secured hereby.
22. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Agreement shall be held to be
prohibited or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
-13-
<PAGE> 14
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
23. Further Assurances. The Pledgor agrees that it will cooperate with
the Trustee and will execute and deliver, or cause to be executed and delivered,
all such other stock powers, proxies, instruments and documents, and will take
all such other actions, including, without limitation, the execution and filing
of financing statements, as the Trustee may reasonably request from time to time
in order to carry out the provisions and purposes of this Agreement.
24. The Trustee's Duty of Care. The Trustee shall not be liable for
any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with
respect to the Pledged Collateral, except for those arising out of or in
connection with the Trustee's (i) gross negligence or willful misconduct, or
(ii) failure to use reasonable care with respect to the safe custody of the
Pledged Collateral in the Trustee's possession. Without limiting the
generality of the foregoing, the Trustee shall be under no obligation to
take any steps necessary to preserve rights in the Pledged Collateral
against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the
Pledgor, and shall constitute part of the Liabilities secured hereby.
25. Notices. All notices and other communications required or desired
to be served, given or delivered hereunder shall be made in writing or by a
telecommunications device capable of creating a written record and shall be
addressed to the party to be notified as follows:
if to the Pledgor, at
Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Attention: Kenneth L. Kramer
Vice President
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<PAGE> 15
if to the Trustee, at
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications
shall be deemed to be validly served, given or delivered (i) when sent after
receipt of confirmation of answer back if sent by telecopy; (ii) upon
delivery thereof if delivered by hand to the party to be notified; (iii) one
(1) business day after deposit with a reputable overnight courier service,
with all charges prepaid.
26. Amendments, Etc. Except as otherwise provided by the Indenture,
the consent of the Holders of at least a majority in principal amount of the
Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Notes) shall be required to amend,
modify, supplement, or waive any provision of this Agreement. Any such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
27. Section Headings. The section headings herein are for convenience
of reference only, and shall not affect in any way the interpretation of any
of the provisions hereof.
28. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
29. Merger. This Agreement represents the final agreement of the
Pledgor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or
subsequent oral agreements, between the Pledgor and the Trustee or any
Holder.
30. Gaming Laws. (a) Each of the provisions of this Agreement is
subject to, and shall be enforced in compliance with, the provisions of any
applicable laws, including, without limitation, the rules and regulations of
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<PAGE> 16
the Indiana Gaming Commission (together with the Indiana Riverboat Gambling
Act, the "Gaming Laws").
(b) The Trustee acknowledges, understands and agrees that the Gaming
Laws may impose certain licensing or transaction approval requirements prior
to the exercise of the rights and remedies granted to it under the Agreement
with respect to the Pledged Collateral subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in connection
with the taking of any of the actions which may be taken by the Trustee in
the exercise of its rights hereunder, then Pledgor agrees to use its
reasonable best efforts to secure such consent and to cooperate with the
Trustee in obtaining any such consent. Upon the occurrence and during the
continuation of any Event of Default, Pledgor shall promptly execute and/or
cause the execution of all applications, certificates, instruments, and
other documents and papers that the Trustee may be required to file in order
to obtain any necessary approvals under the Gaming Laws, and if Pledgor
fails or refuses to execute such documents, the Trustee or the clerk of the
court with jurisdiction may execute such documents on behalf of Pledgor.
(d) Notwithstanding any other provision of this Agreement to the
contrary, nothing in this Agreement shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5)
in Pledgor or (ii) effect any transfer, sale, purchase, lease or
hypothecation of, or any borrowing or loaning of money against, or any
establishment of any voting trust agreement or other similar agreement with
respect to (all within the meaning of Indiana Code 4-33-4-21), any
certificate of suitability or any owner's license heretofore or hereafter
issued to any person, including Pledgor, under any of the Gaming Laws,
including Indiana Code 4-33.
31. Interaction with Indenture. All terms, covenants, conditions,
provisions and requirements of the Indenture are incorporated by reference
in this Agreement. In the event of any conflict or inconsistency between
the provisions of this Agreement and those of the Indenture, including,
without limitation, any conflicts or inconsistencies in any definitions
herein or therein, the provisions or definitions of the Indenture shall
govern.
32. Trust Indenture Act. If any provision of this Agreement conflicts
with any provision of the Trust Indenture Act, the provisions of the Trust
Indenture Act shall control.
-16-
<PAGE> 17
33. Appointment of Collateral Agent. The Trustee may, solely at its
discretion, appoint a collateral agent to enforce the rights and remedies
available to the Trustee under this Agreement.
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<PAGE> 18
IN WITNESS WHEREOF, the Pledgor and the Trustee have executed this
Agreement as of the date set forth above.
BARDEN DEVELOPMENT, INC.
as the Pledgor
By: Kenneth L. Kramer
----------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: Nancy R. Besse'
-----------------------------
Name: Nancy R. Besse'
Title: Vice President
<PAGE> 19
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Agreement, agrees promptly to note on its books the security interests and
assignment granted under such Agreement, and waives any rights or
requirement at any time hereafter to receive a copy of such Agreement in
connection with the registration of any Pledged Collateral in the name of
the Trustee or its nominee or the exercise of voting rights by the Trustee
or its nominee.
The Majestic Star Casino, LLC
By: Barden Development, Inc.
By: /s/ Kenneth L. Kramer
-------------------------------
Name: Kenneth L. Kramer
Title: Vice President
<PAGE> 20
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of May 22, 1996
Pledged Membership Interests
----------------------------
Percentage of
Membership Interest
Name by the Pledgor
- ---- --------------
The Majestic Star Casino, LLC 85%
<PAGE> 21
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of May 22, 1996
Instruction in Connection with
Uncertificated Securities
May 22, 1996
Limited Liability Company:
The Majestic Star Casino, LLC
MEMBERSHIP INTEREST OWNER:
BARDEN DEVELOPMENT, INC.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Reference is hereby made to that certain Pledge Agreement dated as of
May 22, 1996 (the "Pledge") between Barden Development, Inc. ("Interest
Owner"), a member of The Majestic Star Casino, LLC. ("Majestic Star") and
IBJ Schroder Bank & Trust Company as Trustee, as pledgee ("Pledgee").
1. Pledge Instructions. Majestic Star is hereby instructed by the
Interest Owner to register all of the Interest Owner's right, title and
interest in and to all of the Interest Owner's rights in connection with any
membership interest in Majestic Star now and hereafter owned by the Interest
Owner as subject to a pledge (or assignment) in favor of Pledgee who, upon
such registration of pledge, shall become the registered pledgee (or
assignee) of the membership interests with all rights incident thereto.
2. Initial Transaction Statement. Majestic Star is further instructed
by the Interest Owner to promptly inform Pledgee of the registration of the
pledge by sending the initial transaction statement, in the form attached
hereto as Annex A, to Pledgee at its office located at One State Street, New
York, New York 10004.
3. Warranties of the Interest Owner. The Interest Owner hereby
warrants that (i) the Interest Owner is an appropriate person to originate
this instruction; (ii) the
<PAGE> 22
Interest Owner is entitled to effect the instruction here given; and (iii) the
Interest Owner's taxpayer identification number is 35-1904135.
IN WITNESS WHEREOF, the Interest Owner has caused this Pledge
Instruction to be duly signed and delivered by its officer duly authorized
as of the date first above written.
BARDEN DEVELOPMENT, INC.
By:__________________________
Title:_______________________
CONSENT OF THE LIMITED LIABILITY COMPANY
The undersigned,______________________________________________________,
in his/her capacity as____________ of the manager of Majestic Star
(in such capacity, the "Authorized Officer") hereby certifies that Majestic
Star consents and agrees to cause to be registered on the books and records
of Majestic Star the pledge of the membership interests referenced above and
further agrees that upon receipt of written notice from the Pledgee that a
default by the Interest Owner under the terms of any of the loan documents
between the Interest Owner and Pledgee has occurred and is continuing,
Majestic Star shall pay and remit to the Pledgee all distributions and other
amounts payable to the Interest Owner upon redemption, termination and
dissolution of Majestic Star or otherwise and will otherwise act in
accordance with the instructions of the Pledgee without seeking further
consent from the Interest Owner.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By:_________________________
Name:_______________________
Title:______________________
<PAGE> 23
Annex A
to
Pledge Instruction
Form of Initial Transaction Statement
IBJ Schroder Bank & Trust Company, as Trustee
One State Street
New York, New York
Attention: Corporate Trust Administration
Reference is hereby made to that certain Pledge Agreement dated as of May
22, 1996 (the "Pledge") between Barden Development, Inc. ("Interest Owner"), a
member of The Majestic Star Casino, LLC ("Majestic Star") and IBJ Schroder Bank
& Trust Company as Trustee, as pledgee ("Pledgee").
On ___________, 199_, Majestic Star caused the pledge (or assignment) of
[number and description of Membership Interests] ("Membership Interests") by
Interest Owner in favor of the Pledgee to be registered on the books and
records of Majestic Star. Except for the pledge in favor of the Pledgor, to
the knowledge of Majestic Star, there are no liens, restrictions or adverse
claims (as to which Majestic Star has a duty under Section 8-403 of the Uniform
Commercial Code) to which the Membership Interests are, or may be subject, as
of the date hereof.
The name of the owner of record of the Membership Interests is the
Interest Owner. The address of the Interest Owner is set forth above. The
taxpayer identification number of the Interest Owner is 35-1904135.
The name of the registered pledgee of the Membership Interests is IBJ
Schroder Bank & Trust Company, as Trustee, for its benefit and the benefit of
Holders. The address of the Pledgee is set forth above. The taxpayer
identification number of the Pledgee is 13-5375195.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS OF
THE TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO
RIGHTS ON THE RECIPIENTS. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT
NOR A SECURITY.
BARDEN DEVELOPMENT, INC.
By:______________________
Name:____________________
Title:___________________
<PAGE> 24
EXHIBIT B
INSTRUCTION IN CONNECTION WITH UNCERTIFICATED SECURITIES
<PAGE> 25
Instruction in Connection with
Uncertificated Securities
May 22, 1996
Limited Liability Company:
The Majestic Star Casino, LLC
MEMBERSHIP INTEREST OWNER:
BARDEN DEVELOPMENT, INC.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Reference is hereby made to that certain Pledge Agreement dated as of May
22, 1996 (the "Pledge") between Barden Development, Inc. ("Interest Owner"), a
member of The Majestic Star Casino, LLC. ("Majestic Star") and IBJ Schroder
Bank & Trust Company as Trustee, as pledgee ("Pledgee").
1. Pledge Instructions. Majestic Star is hereby instructed by the
Interest Owner to register all of the Interest Owner's right, title and
interest in and to all of the Interest Owner's rights in connection with any
membership interest in Majestic Star now and hereafter owned by the Interest
Owner as subject to a pledge in favor of Pledgee who, upon such registration of
pledge, shall become the registered pledgee of the membership interests with
all rights incident thereto.
2. Initial Transaction Statement. Majestic Star is further instructed by
the Interest Owner to promptly inform Pledgee of the registration of the pledge
by sending the initial transaction statement, in the form attached hereto as
Annex A, to Pledgee at its office located at One State Street, New York, New
York 10004.
3. Warranties of the Interest Owner. The Interest Owner hereby warrants
that (i) the Interest Owner is an appropriate person to originate this
instruction; (ii) the Interest Owner is entitled to effect the instruction here
given; and (iii) the Interest Owner's taxpayer identification number is
35-1904135.
<PAGE> 26
IN WITNESS WHEREOF, the Interest Owner has caused this Pledge Instruction
to be duly signed and delivered by its officer duly authorized as of the date
first above written.
BARDEN DEVELOPMENT, INC.
By: Kenneth L. Kramer
--------------------------
Title: Vice President
----------------------
CONSENT OF THE LIMITED LIABILITY COMPANY
The undersigned, Kenneth L. Kramer, in his/her capacity as of the
manager of Majestic Star (in such capacity, the "Authorized Officer") hereby
certifies that Majestic Star consents and agrees to cause to be registered on
the books and records of Majestic Star the pledge of the membership interests
referenced above and further agrees that upon receipt of written notice from
the Pledgee that a default by the Interest Owner under the terms of any of the
loan documents between the Interest Owner and Pledgee has occurred and is
continuing, Majestic Star shall pay and remit to the Pledgee all distributions
and other amounts payable to the Interest Owner upon redemption, termination
and dissolution of Majestic Star or otherwise and will otherwise act in
accordance with the instructions of the Pledgee without seeking further consent
from the Interest Owner.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By: Kenneth L. Kramer
Name: Kenneth L. Kramer
Title: Vice President
<PAGE> 27
Annex A
to
Pledge Instruction
Form of Initial Transaction Statement
IBJ Schroder Bank & Trust Company, as Trustee
One State Street
New York, New York
Attention: Corporate Trust Administration
Reference is hereby made to that certain Pledge Agreement dated as of May
22, 1996 (the "Pledge") between Barden Development, Inc. ("Interest Owner"), a
member of The Majestic Star Casino, LLC ("Majestic Star") and IBJ Schroder Bank
& Trust Company as Trustee, as pledgee ("Pledgee").
On ___________, 199_, Majestic Star caused the pledge (or assignment) of
[number and description of Membership Interests] ("Membership Interests") by
Interest Owner in favor of the Pledgee to be registered on the books and
records of Majestic Star. Except for the pledge in favor of the Pledgor, to
the knowledge of Majestic Star, there are no liens, restrictions or adverse
claims (as to which Majestic Star has a duty under Section 8-403 of the Uniform
Commercial Code) to which the Membership Interests are, or may be subject, as
of the date hereof.
The name of the owner of record of the Membership Interests is the
Interest Owner. The address of the Interest Owner is set forth above. The
taxpayer identification number of the Interest Owner is 35-1904135.
The name of the registered pledgee of the Membership Interests is IBJ
Schroder Bank & Trust Company, as Trustee, for its benefit and the benefit of
Holders. The address of the Pledgee is set forth above. The taxpayer
identification number of the Pledgee is 13-5375195.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS OF
THE TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO
RIGHTS ON THE RECIPIENTS. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT
NOR A SECURITY.
BARDEN DEVELOPMENT, INC.
By:______________________
Name:____________________
Title:___________________
<PAGE> 28
ANNEX A TO EXHIBIT B
INITIAL TRANSACTION STATEMENT
<PAGE> 29
Initial Transaction Statement
IBJ Schroder Bank & Trust Company, as Trustee
One State Street
New York, New York
Attention: Corporate Trust Administration
Reference is hereby made to that certain Pledge Agreement dated as of May
22, 1996 (the "Pledge") between Barden Development, Inc. ("Interest Owner"), a
member of The Majestic Star Casino, LLC ("Majestic Star") and IBJ Schroder Bank
& Trust Company as Trustee, as pledgee ("Pledgee").
On May 22, 1996, Majestic Star caused the pledge of the entire membership
interest of the Interest Owner in The Majestic Star Casino, LLC (as described
in the Pledge, the "Membership Interests") by Interest Owner in favor of the
Pledgee to be registered on the books and records of Majestic Star. Except for
the pledge in favor of the Pledgor, to the knowledge of Majestic Star, there
are no liens, restrictions or adverse claims (as to which Majestic Star has a
duty under Section 8-403 of the Uniform Commercial Code) to which the
Membership Interests are, or may be subject, as of the date hereof.
The name of the owner of record of the Membership Interests is the
Interest Owner. The address of the Interest Owner is set forth above. The
taxpayer identification number of the Interest Owner is 35-1904135.
The name of the registered pledgee of the Membership Interests is IBJ
Schroder Bank & Trust Company, as Trustee, for its benefit and the benefit of
Holders. The address of the Pledgee is set forth above. The taxpayer
identification number of the Pledgee is 13-5375195.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS OF
THE TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO
RIGHTS ON THE RECIPIENTS. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT
NOR A SECURITY.
BARDEN DEVELOPMENT, INC.
By: Kenneth L. Kramer
Name: Kenneth L. Kramer
Title: Vice President
<PAGE> 1
EXHIBIT 4.6
EXECUTION COPY
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of May 22, 1996 by The
Majestic Star Casino, LLC, an Indiana limited liability company ("Pledgor")
and a member of Buffington Harbor Riverboats, L.L.C., a Delaware limited
liability company (the "BHR Joint Venture"), and IBJ Schroder Bank & Trust
Company (the "Trustee"), for its benefit and the benefit of the "Holders"
(as such term is defined in the "Indenture" defined below). Capitalized
terms used herein and not herein defined shall have the same meanings
assigned to such terms in the Indenture described below.
W I T N E S S E T H:
WHEREAS, Pledgor and the Trustee have entered into the Indenture dated
as of May 22, 1996 (as amended, restated, supplemented or modified from time
to time, the "Indenture"), pursuant to which Pledgor and the Trustee have
agreed to certain terms for the benefit of Pledgor and the Holders;
WHEREAS, it is a condition precedent to the Indenture that this
Agreement shall be executed and delivered by the Pledgor to the Trustee and
that this Agreement shall be in full force and effect; and
WHEREAS, the Pledgor desires to secure its "Liabilities" (as
hereinafter defined) to the Holders by the grant to the Trustee on behalf of
the Holders of a first priority security interest in the "Pledged
Collateral" (as hereinafter defined);
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, the purchase of the "Notes" (as defined in the Indenture) by the
Holders) heretofore, now or hereafter made to or for the benefit of Pledgor
pursuant to the Indenture or any other agreement, instrument or document
executed pursuant to or in connection therewith, and for other good and
valuable consideration, the
<PAGE> 2
receipt and sufficiency of which are hereby acknowledged, the Pledgor and the
Trustee hereby agree as follows:
1. Pledge. The Pledgor hereby pledges, grants and assigns to the
Trustee, for the equal and ratable benefit of the Holders, and grants to the
Trustee for the equal and ratable benefit of the Holders, a security
interest in, the following (collectively, the "Pledged Collateral"):
(a) (i) The membership interest of Pledgor in the BHR Joint
Venture now or at any time or times hereafter owned by the Pledgor,
and any certificates representing such membership interest in the BHR
Joint Venture (such membership interest being identified on Exhibit A
attached hereto and made a part hereof), (ii) all of the right, title
and interest of the Pledgor in, to and under its respective percentage
interest, shares or units as a member including, without limitation,
Pledgor's interest in (or allocation of) the profits, losses, income,
gains, deductions, credits or similar items of the BHR Joint Venture
and the right to receive distributions of the BHR Joint Venture's
cash, other property, assets, and all options and warrants for the
purchase of membership interests, whether now existing or hereafter
arising, whether arising under the terms of the Certificate of
Formation, the Operating Agreement (as amended, supplemented, or
modified from time to time) or any of the other organizational
documents (such documents hereinafter collectively referred to as the
"Operating Agreements") of the BHR Joint Venture, or at law or in
equity, or otherwise and (iii) any and all of the proceeds thereof
(all of said membership interest, certificates, and warrants being
hereinafter collectively referred to as the "Pledged Membership
Interest") herewith delivered to the Trustee accompanied by the
certificates or other writings evidencing the same, accompanied by
duly executed instruments of transfer or assignments in blank, all in
form and substance satisfactory to the Trustee (such instruments being
collectively referred to hereinafter as the "Powers") duly executed in
blank, and all distributions, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of, or in exchange for, any or all of the Pledged Membership
Interest;
(b) Any additional membership interests in the BHR Joint Venture
from time to time acquired by the Pledgor in any manner, and any
certificates representing such
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additional membership interests or any additional percentage
interests, shares, units, options or warrants of membership interests in
the BHR Joint Venture (any such additional interests shall constitute
part of the Pledged Membership Interest and the Trustee is irrevocably
authorized to amend Exhibit A from time to time to reflect such
additional shares), and all options, warrants, distributions, cash,
instruments and other rights and options from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of such shares and will promptly thereafter deliver to the
Trustee, a certificate duly executed by the Pledgor describing such
percentage interests, certificates, units, options or warrants and
certifying that the same have been duly pledged hereunder;
(c) The property and interests in property described in Section
3 below; and
(d) All proceeds of the foregoing.
2. Security for Liabilities. The Pledged Collateral secures the
prompt payment, performance and observance of (i) the Obligations under the
Indenture (hereinafter referred to as the "Secured Obligations") and (ii)
the Pledgor's obligations and liabilities under this Agreement and each
agreement, document or instrument executed pursuant to or in connection with
this Agreement (all such obligations and liabilities of the Pledgor now or
hereafter existing being hereinafter referred to as the "Liabilities").
3. Pledged Collateral Adjustments. If, during the term of this
Agreement:
(a) Any reclassification, readjustment or other change is
declared or made in the capital structure of the BHR Joint Venture, or
any option included within the Pledged Collateral is exercised, or
both, or
(b) Any subscription, warrants or any other rights or options
shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional membership interests, certificates,
warrants, rights, options or other securities, issued by reason of any of
the foregoing, shall be immediately delivered to and held by the Trustee
under the terms of this Agreement and shall constitute Pledged Collateral
hereunder;
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provided, however, that nothing contained in this Section 3 shall be
deemed to permit any distribution, issuance of additional membership
interests, warrants, rights or options, reclassification, readjustment or
other change in the capital structure of the BHR Joint Venture which is not
expressly permitted in the Indenture.
4. Subsequent Changes Affecting Pledged Collateral. The Pledgor
represents and warrants that it has made its own arrangements for keeping
itself informed of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert, rights to
subscribe, cash distributions or other distributions, reorganization or
other exchanges, tender offers and voting rights), and the Pledgor agrees
that neither the Trustee nor any of the Holders shall have any obligation to
inform the Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. The Trustee may,
after the occurrence of an Event of Default, without notice and at its
option, transfer or register the Pledged Collateral or any part thereof into
its or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder. In addition, the
Trustee may at any time exchange certificates or instruments representing or
evidencing Pledged Membership Interests for certificates or instruments of
smaller or larger denominations.
5. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of the
membership interests in the BHR Joint Venture pledged to the Trustee
pursuant to this Agreement, free and clear of any Lien except for the
security interest created by this Agreement;
(b) This Agreement has been duly and validly authorized,
executed and delivered by Pledgor and constitutes the legal, valid
and binding obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting the enforcement
of creditors' rights generally and by moratorium laws from time to time
in effect and general equitable principles;
(c) Such Pledgor is the direct beneficial owner of the Pledged
Collateral hereby pledged by it;
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<PAGE> 5
(d) The Pledgor owns such Pledged Collateral free and clear of
any pledge, mortgage, hypothecation, lien, charge, encumbrance or any
security interest therein, except for the pledge and security interest
granted to the Trustee and the Holders hereunder and any rights of the
other members as set forth in the BHR Joint Venture Articles of
Organization and Operating Agreement (together, the "Organizational
Documents");
(e) The Pledgor shall cause the BHR Joint Venture to make a
notation on its records, which notation shall indicate the security
interest granted hereby, and such Pledgor agrees to (i) execute and
file financing statements pursuant to the Uniform Commercial Code and
continuation statements as may be required to perfect the security
interest granted hereby; (ii) execute and deliver to the BHR Joint
Venture a Pledge Instruction in the form of Exhibit B hereto; and
(iii) promptly execute and deliver to Trump Indiana, Inc. a Pledge
Notice in the form of Exhibit C hereto.
(f) The pledge of the Pledged Collateral hereby pledged by such
Pledgor does not violate (1) the Operating Agreements of the BHR Joint
Venture or any of the other organizational documents of the BHR Joint
Venture, or any indenture, mortgage, bank loan or credit agreement to
which such Pledgor or the BHR Joint Venture is a party or by which any
of their respective properties or assets may be bound; or (2) any
restriction on such transfer or encumbrance of such Pledged
Collateral;
(g) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral
except as set forth in the Organizational Documents;
(h) The Pledgor has the right to vote, pledge, assign and grant
a security interest in or otherwise transfer such Pledged Collateral
free of any Liens;
(i) No authorization, approval, or other action by, and no
notice to or filing with, any Governmental Authority (as defined in
the Security Agreement) is required either (i) for the pledge of the
Pledged Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Pledgor or (ii) for
the exercise by the Trustee of the voting or other rights provided for
in this Agreement or the remedies in respect
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<PAGE> 6
of the Pledged Collateral pursuant to this Agreement (except as
may be required in connection with such disposition by laws affecting
the offering and sale of securities generally);
(j) The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and, upon filing of the financing statements
referred to herein, a perfected security interest in the Pledged
Collateral, in favor of the Trustee for the benefit of the Trustee and
the Holders, securing the payment and performance of the Liabilities;
6. Voting Rights and Other Powers. During the term of this Agreement,
and except as provided in this Section 6 below and the Organizational
Documents, the Pledgor shall have (i) the right to vote the Pledged
Membership Interest on all questions in a manner not inconsistent with the
terms of this Agreement, the Indenture and any other agreement, instrument
or document executed pursuant thereto or in connection therewith, and (ii)
the right to be the member and manager of the BHR Joint Venture, and shall
be entitled to exercise all managerial, election and other rights relating
to the Pledged Collateral. After the occurrence and during the continuance
of an Event of Default, the Trustee or the Trustee's nominee may, at the
Trustee's or such nominee's option and following written notice ("Election
Notice") from the Trustee to the Pledgor (x) exercise, or direct such
Pledgor as to the exercise of (whereupon such Pledgor shall exercise as so
directed) all voting, consent, managerial, election and other membership and
manager rights to the Pledged Collateral of the Pledgor; such authorization
shall constitute an irrevocable voting proxy from the Pledgor to the
Trustee or, at the Trustee's option, to the Trustee's nominee; and (y)
exercise, or direct such Pledgor as to the exercise of (whereupon the Pledgor
shall exercise as so directed) any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to the
Pledged Collateral of the Pledgor as if the Trustee were the absolute owner
thereof, all without liability except to account for property actually
received by it, but the Trustee shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure so to do or delay in so doing. Under no circumstances shall the
Trustee have, or be deemed to have or to have had, any right to exercise, or
to direct the Pledgor to exercise, any voting, managerial, election or other
rights of an owner of the Pledged Collateral, or arising under the Pledged
Collateral, unless and until the Trustee shall have delivered to such Pledgor
an Election Notice as described hereinabove.
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<PAGE> 7
7. Cash and Other Distributions. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and
all cash distributions and interest paid in respect of the Pledged
Collateral (including a distribution of net cash flow) to the extent
such distributions are not prohibited by the Indenture, provided,
however, that any and all
(A) distributions and interest paid or payable other than
in cash with respect to, and instruments and other property
received, receivable or otherwise distributed with respect to,
or in exchange for, any of the Pledged Collateral;
(B) other distributions paid or payable in cash with
respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution;
(C) cash paid, payable or otherwise distributed with
respect to principal of, or in redemption of, or in exchange
for, any of the Pledged Collateral; and
(D) other distributions paid or payable in cash in
connection with a reduction of capital, capital surplus or
paid-in surplus attributable to a capital contribution made
from a Cash Collateral Account
shall be Pledged Collateral, and shall be forthwith delivered to the
Trustee to hold, for the benefit of the Trustee and the Holders, as
Pledged Collateral and shall, if received by the Pledgor, be received
in trust for the Trustee, for the benefit of the Trustee and the
Holders, be segregated from the other property or funds of the
Pledgor, and be delivered immediately to the Trustee as Pledged
Collateral in the same form as so received (with any necessary
endorsement); and
(ii) The Trustee shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the distributions or interest payments
which it is authorized to receive and retain pursuant to clause (i)
above.
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<PAGE> 8
(b) After the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgor to receive the distributions and
interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 7(a)(i) hereof shall cease, and all
such rights shall thereupon become vested in the Trustee, for the
benefit of the Trustee and the Holders, which shall thereupon have the
sole right to receive and hold as Pledged Collateral such
distributions and interest payments;
(ii) All distributions and interest payments which are received
by the Pledgor contrary to the provisions of clause (i) of this
Section 7(b) shall be received in trust for the Trustee, for the
benefit of the Trustee and the Holders, shall be segregated from other
funds of the Pledgor and shall be paid over immediately to the Trustee
as Pledged Collateral in the same form as so received (with any
necessary endorsements).
8. Transfers and Other Liens. The Pledgor agrees that it will not (a)
sell or otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral without the prior written consent of the Trustee, or
(b) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement.
To the extent additional or different members of the BHR Joint Venture are
permitted, Pledgor shall use its best efforts to cause such member to
consent to (i) the terms of this Agreement; (ii) the Pledge and assignment
of the Pledged Collateral; and (iii) the rights granted hereunder for the
Trustee to become the/a member of the BHR Joint Venture at its election.
9. Remedies. (a) The Trustee shall have, in addition to any other
rights given under this Agreement or by law, all of the rights and remedies
with respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of Indiana. After the occurrence
and during the continuance of an Event of Default and following written
notice to the Pledgor, the Trustee (personally or through an agent) is
hereby authorized and empowered to transfer and register in its name or in
the name of its nominee the whole or any part of the Pledged Collateral, to
exercise all voting rights with respect thereto, to collect and receive all
cash distributions and other distributions made thereon, and to
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otherwise act with respect to the Pledged Collateral as though the
Trustee were the outright owner thereof and the sole member and manager of the
BHR Joint Venture, the Pledgor hereby irrevocably constituting and appointing
the Trustee as the proxy and attorney-in-fact of the Pledgor, with full power
of substitution to do so, such proxy becoming effective upon the occurrence of
an Event of Default and following written notice thereof; provided, however,
that the Trustee shall have no duty to exercise any such right or to preserve
the same and shall not be liable for any failure to do so or for any delay in
doing so. In addition, after the occurrence of an Event of Default, the
Trustee shall have such powers of sale and other powers as may be conferred by
applicable law. With respect to the Pledged Collateral or any part thereof
which shall then be in or shall thereafter come into the possession or custody
of the Trustee or which the Trustee shall otherwise have the ability to
transfer under applicable law, the Trustee may, in its sole discretion,
without notice except as specified below, after the occurrence of an Event of
Default, sell or cause the same to be sold at any exchange, broker's board
or at public or private sale, in one or more sales or lots, at such price as
the Trustee may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk, and the purchaser of any or all of
the Pledged Collateral so sold shall thereafter own the same, absolutely
free from any claim, encumbrance or right of any kind whatsoever. The
Trustee and each of the Holders may, in its own name, or in the name of a
designee or nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at any private sale.
The Pledgor will pay to the Trustee all reasonable expenses (including,
without limitation, court costs and reasonable attorneys' and paralegals'
fees and expenses) of, or incidental to, the enforcement of any of the
provisions hereof. The Trustee agrees to distribute any proceeds of the
sale of the Pledged Collateral in accordance with the Indenture and the
Pledgor shall remain liable for any deficiency following the sale of the
Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline speedily
in value or is or becomes of a type sold on a recognized market, the Trustee
will give the Pledgor reasonable notice of the time and place of any public
sale thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Pledged Collateral conducted in
conformity with reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be
commercially
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reasonable. Notwithstanding any provision to the contrary contained herein,
the Pledgor agrees that any requirements of reasonable notice shall be met if
such notice is received by the Pledgor as provided in Section 25 below at
least five (5) Business Days before the time of the sale or disposition;
provided, however, that Trustee may give any shorter notice that is
commercially reasonable under the circumstances. Any other requirement of
notice, demand or advertisement for sale is waived, to the extent permitted by
law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgor agrees
that after the occurrence of an Event of Default, the Trustee may, from time
to time, attempt to sell all or any part of the Pledged Collateral by means
of a private placement restricting the bidders and prospective purchasers to
those who are qualified and will represent and agree that they are purchasing
for investment only and not for distribution. In so doing, the Trustee may
solicit offers to buy the Pledged Collateral, or any part of it, from a
limited number of investors deemed by the Trustee, in its reasonable judgment,
to be financially responsible parties who might be interested in purchasing
the Pledged Collateral. If the Trustee solicits such offers from not less
than four (4) such investors, then the acceptance by the Trustee of the
highest offer obtained therefrom shall be deemed to be a commercially
reasonable method of disposing of such Pledged Collateral; provided, however,
that this Section does not impose a requirement that the Trustee solicit
offers from four or more investors in order for the sale to be commercially
reasonable.
10. Security Interest Absolute. All rights of the Trustee and
security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) Any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(ii) Any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Liabilities, or any other
amendment or waiver of or any consent to any departure from the
Indenture;
(iii) Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of
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or consent to departure from any guaranty, for all or any part of the
Liabilities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Agreement.
11. Trustee Appointed Attorney-in-Fact. The Pledgor hereby appoints
the Trustee its attorney-in-fact, with full authority, in the name of the
Pledgor or otherwise, after the occurrence and during the continuance of an
Event of Default, from time to time in the Trustee's sole discretion, to
take any action and to execute any instrument which the Trustee may deem
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any cash distribution, interest
payment or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same, to exercise all rights of a
member and manager (upon the election of the Trustee) such as all voting,
consent, managerial and other member rights, and to arrange for the transfer
of all or any part of the Pledged Collateral on the books of the BHR Joint
Venture to the name of the Trustee or the Trustee's nominee.
12. Waivers. The Pledgor waives presentment and demand for payment of
any of the Liabilities, protest and notice of dishonor or default with
respect to any of the Liabilities and all other notices to which the Pledgor
might otherwise be entitled except as otherwise expressly provided herein or
in the Indenture.
13. Term. This Agreement shall remain in full force and effect until
the Liabilities (other than continuing indemnity obligations) have been
fully and indefeasibly paid in cash and the Indenture has terminated
pursuant to its terms. Upon the termination of this Agreement as provided
above (other than as a result of the sale of the Pledged Collateral), the
Trustee will release the security interest created hereunder and, if it then
has possession of the Pledged Membership Interest, will deliver the Pledged
Membership Interest and the Powers to the Pledgor.
14. Definitions. The singular shall include the plural and vice versa
and any gender shall include any other gender as the context may require.
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15. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Pledgor, the Trustee, for the benefit of itself
and the Holders, and their respective successors and assigns. The Pledgor's
successors and assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession of or for the Pledgor.
16. GOVERNING LAW. ANY DISPUTE BETWEEN THE TRUSTEE AND THE PLEDGOR
ARISING OUT OF OR RELATED TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS,
AND NOT THE CONFLICTS OF LAW PROVISIONS, OF THE STATE OF INDIANA.
17. Consent to Jurisdiction; Counterclaims; Forum Non Conveniens. (A)
NON-EXCLUSIVE JURISDICTION. THE PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT AND THE PLEDGOR HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM, BUT THE
PLEDGOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK.
(B) OTHER JURISDICTIONS. PLEDGOR AGREES THAT THE TRUSTEE OR ANY
HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST PLEDGOR OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER THE PLEDGOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SUCH PERSON. PLEDGOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON. PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION.
(C) INCONVENIENT FORUM. THE PLEDGOR IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER
HAVE TO
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THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH IN NEW YORK, NEW YORK.
18. Service of Process. The Pledgor waives personal service of any
process upon it and, as security for the Liabilities, irrevocably appoints
CT Corporation System, One North Capitol Avenue, Indianapolis, Indiana 46204
as its registered agent for the purpose of accepting service of process issued
by any court.
19. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE TRUSTEE WAIVES
ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE TRUSTEE AND THE PLEDGOR ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EITHER THE PLEDGOR OR THE TRUSTEE MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
20. Waiver of Bond. The Pledgor waives the posting of any bond
otherwise required of the Trustee in connection with any judicial process or
proceeding to realize on the Pledged Collateral or any other security for
the Liabilities, to enforce any judgment or other court order entered in
favor of the Trustee, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Agreement or
any other agreement or document between the Trustee and the Pledgor.
21. Advice of Counsel. The Pledgor represents and warrants to the
Trustee and the Holders that it has consulted with its legal counsel
regarding all waivers under this Agreement, including without limitation
those under Section 12 and Sections 16 through 20 hereof, that it believes
that it fully understands all rights that it is waiving and the effect of
such waivers, that it assumes the risk of any misunderstanding that it may
have regarding any of the foregoing, and that it intends that such waivers
shall be a material inducement to the Trustee and the Holders to extend the
indebtedness secured hereby.
22. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be
13
<PAGE> 14
effective and valid under applicable law, but, if any provision of this
Agreement shall be held to be prohibited or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
23. Further Assurances. The Pledgor agrees that it will cooperate
with the Trustee and will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without limitation, the
execution and filing of financing statements, as the Trustee may reasonably
request from time to time in order to carry out the provisions and purposes
of this Agreement.
24. The Trustee's Duty of Care. The Trustee shall not be liable for
any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with
respect to the Pledged Collateral, except for those arising out of or in
connection with the Trustee's (i) gross negligence or willful misconduct, or
(ii) failure to use reasonable care with respect to the safe custody of the
Pledged Collateral in the Trustee's possession. Without limiting the
generality of the foregoing, the Trustee shall be under no obligation to
take any steps necessary to preserve rights in the Pledged Collateral
against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the
Pledgor, and shall constitute part of the Liabilities secured hereby.
25. Notices. All notices and other communications required or desired
to be served, given or delivered hereunder shall be made in writing or by a
telecommunications device capable of creating a written record and shall be
addressed to the party to be notified as follows:
if to the Pledgor, at
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Attention: Kenneth L. Kramer
Vice President
14
<PAGE> 15
if to the Trustee, at
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications
shall be deemed to be validly served, given or delivered (i) when sent after
receipt of confirmation of answer back if sent by telecopy; (ii) upon
delivery thereof if delivered by hand to the party to be notified; (iii) one
(1) business day after deposit with a reputable overnight courier service,
with all charges prepaid.
26. AMENDMENTS, ETC. EXCEPT AS OTHERWISE PROVIDED BY THE INDENTURE,
THE CONSENT OF THE HOLDERS OF AT LEAST A MAJORITY IN PRINCIPAL AMOUNT OF THE
NOTES THEN OUTSTANDING (INCLUDING CONSENTS OBTAINED IN CONNECTION WITH A
TENDER OFFER OR EXCHANGE OFFER FOR NOTES) SHALL BE REQUIRED TO AMEND,
MODIFY, SUPPLEMENT, OR WAIVE ANY PROVISION OF THIS AGREEMENT. ANY SUCH
WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR
THE SPECIFIC PURPOSE FOR WHICH GIVEN.
27. Section Headings. The section headings herein are for convenience
of reference only, and shall not affect in any way the interpretation of any
of the provisions hereof.
28. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
29. Merger. This Agreement represents the final agreement of the
Pledgor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or
subsequent oral agreements, between the Pledgor and the Trustee or any
Holder.
30. GAMING LAWS. (A) EACH OF THE PROVISIONS OF THIS AGREEMENT IS
SUBJECT TO, AND SHALL BE ENFORCED IN COMPLIANCE WITH, THE PROVISIONS OF ANY
APPLICABLE LAWS, INCLUDING, WITHOUT LIMITATION, THE RULES AND REGULATIONS OF
15
<PAGE> 16
THE INDIANA GAMING COMMISSION (TOGETHER WITH THE INDIANA RIVERBOAT GAMBLING
ACT, THE "GAMING LAWS").
(B) THE TRUSTEE ACKNOWLEDGES, UNDERSTANDS AND AGREES THAT THE GAMING
LAWS MAY IMPOSE CERTAIN LICENSING OR TRANSACTION APPROVAL REQUIREMENTS PRIOR
TO THE EXERCISE OF THE RIGHTS AND REMEDIES GRANTED TO IT UNDER THE AGREEMENT
WITH RESPECT TO THE PLEDGED COLLATERAL SUBJECT TO THE GAMING LAWS.
(C) IF ANY CONSENT UNDER THE GAMING LAWS IS REQUIRED IN CONNECTION
WITH THE TAKING OF ANY OF THE ACTIONS WHICH MAY BE TAKEN BY THE TRUSTEE IN
THE EXERCISE OF ITS RIGHTS HEREUNDER, THEN PLEDGOR AGREES TO USE ITS
REASONABLE BEST EFFORTS TO SECURE SUCH CONSENT AND TO COOPERATE WITH THE
TRUSTEE IN OBTAINING ANY SUCH CONSENT. UPON THE OCCURRENCE AND DURING THE
CONTINUATION OF ANY EVENT OF DEFAULT, PLEDGOR SHALL PROMPTLY EXECUTE AND/OR
CAUSE THE EXECUTION OF ALL APPLICATIONS, CERTIFICATES, INSTRUMENTS, AND
OTHER DOCUMENTS AND PAPERS THAT THE TRUSTEE MAY BE REQUIRED TO FILE IN ORDER
TO OBTAIN ANY NECESSARY APPROVALS UNDER THE GAMING LAWS, AND IF PLEDGOR
FAILS OR REFUSES TO EXECUTE SUCH DOCUMENTS, THE TRUSTEE OR THE CLERK OF THE
COURT WITH JURISDICTION MAY EXECUTE SUCH DOCUMENTS ON BEHALF OF PLEDGOR.
(D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, NOTHING IN THIS AGREEMENT SHALL (I) EFFECT ANY TRANSFER OF ANY
OWNERSHIP INTEREST (WITHIN THE MEANING OF 68 INDIANA ADMINISTRATIVE CODE 5)
IN PLEDGOR OR (II) EFFECT ANY TRANSFER, SALE, PURCHASE, LEASE OR
HYPOTHECATION OF, OR ANY BORROWING OR LOANING OF MONEY AGAINST, OR ANY
ESTABLISHMENT OF ANY VOTING TRUST AGREEMENT OR OTHER SIMILAR AGREEMENT WITH
RESPECT TO (ALL WITHIN THE MEANING OF INDIANA CODE 4-33-4-21), ANY
CERTIFICATE OF SUITABILITY OR ANY OWNER'S LICENSE HERETOFORE OR HEREAFTER
ISSUED TO ANY PERSON, INCLUDING PLEDGOR, UNDER ANY GAMING LAWS, INCLUDING
INDIANA CODE 4-33.
31. INTERACTION WITH INDENTURE. ALL TERMS, COVENANTS, CONDITIONS,
PROVISIONS AND REQUIREMENTS OF THE INDENTURE ARE INCORPORATED BY REFERENCE
IN THIS AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN
THE PROVISIONS OF THIS AGREEMENT AND THOSE OF THE INDENTURE, INCLUDING,
WITHOUT LIMITATION, ANY CONFLICTS OR INCONSISTENCIES IN ANY DEFINITIONS
HEREIN OR THEREIN, THE PROVISIONS OR DEFINITIONS OF THE INDENTURE SHALL
GOVERN.
32. TRUST INDENTURE ACT. IF ANY PROVISION OF THIS AGREEMENT CONFLICTS
WITH ANY PROVISION OF THE TRUST INDENTURE ACT, THE PROVISIONS OF THE TRUST
INDENTURE ACT SHALL CONTROL.
16
<PAGE> 17
33. APPOINTMENT OF COLLATERAL AGENT. THE TRUSTEE MAY, SOLELY AT ITS
DISCRETION, APPOINT A COLLATERAL AGENT TO ENFORCE THE RIGHTS AND REMEDIES
AVAILABLE TO THE TRUSTEE UNDER THIS AGREEMENT.
<PAGE> 18
IN WITNESS WHEREOF, the Pledgor and the Trustee have executed this
Agreement as of the date set forth above.
THE MAJESTIC STAR CASINO, LLC
as the Pledgor
By: Barden Development, Inc.
By: /s/ Kenneth L. Kramer
----------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/ Nancy R. Besse
-----------------------------
Name: Nancy R. Besse
Title: Vice President
<PAGE> 19
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of May 22, 1996
Pledged Membership Interests
Percentage of
Membership Interest
Name by the Pledgor
---- -------------------
Buffington Harbor Riverboats, L.L.C. 50%
<PAGE> 20
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of May 22, 1996
Instruction in Connection with
Uncertificated Securities
May __, 1996
Limited Liability Company:
Buffington Harbor Riverboats, L.L.C.
MEMBERSHIP INTEREST OWNER:
THE MAJESTIC STAR CASINO, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Attention: Kenneth L. Kramer
Vice President
Reference is hereby made to that certain Pledge Agreement dated as of
May 22, 1996 (the "Pledge") between The Majestic Star Casino, LLC ("Interest
Owner"), a member of Buffington Harbor Riverboats, L.L.C. (the"BHR Joint
Venture") and IBJ Schroder Bank & Trust Company as Trustee, as pledgee
("Pledgee").
1. Pledge Instructions. The BHR Joint Venture is hereby instructed by
the Interest Owner to register all of the Interest Owner's right, title and
interest in and to the fifty percent (50%) limited liability company
interest in the BHR Joint Venture currently owned by it and any limited
liability company interest in the BHR Joint Venture hereafter owned by the
Interest Owner as subject to a pledge in favor of Pledgee who, upon such
registration of pledge, shall become the registered pledgee of the limited
liability company interests with all rights incident thereto.
2. Initial Transaction Statement. The BHR Joint Venture is further
instructed by the Interest Owner to promptly inform Pledgee of the
registration of the pledge by sending the initial transaction statement, in
the form attached hereto as Annex A, to Pledgee at its office located at One
State Street, New York, New York 10004.
<PAGE> 21
3. Warranties of the Interest Owner. The Interest Owner hereby
warrants that (i) the Interest Owner is an appropriate person to originate
this instruction; (ii) the Interest Owner is entitled to effect the
instruction here given; and (iii) the Interest Owner's taxpayer
identification number is 43-1664986.
IN WITNESS WHEREOF, the Interest Owner has caused this Pledge
Instruction to be duly signed and delivered by its officer duly authorized
as of the date first above written.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By:__________________________
Title:_______________________
<PAGE> 22
Annex A
to
PLEDGE INSTRUCTION
dated as of May 22, 1996
Form of Initial Transaction Statement
May __, 1996
IBJ Schroder Bank & Trust Company, as Trustee
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Reference is hereby made to that certain Pledge Agreement dated as of
May 22, 1996 (the "Pledge") between The Majestic Star Casino, LLC ("Interest
Owner"), a member of Buffington Harbor Riverboats, L.L.C. (the "BHR Joint
Venture") and IBJ Schroder Bank & Trust Company as Trustee, as pledgee
("Pledgee").
On ___________, 199_, the pledge of the fifty percent (50%) limited
liability company interest in the BHR Joint Venture owned by the Interest
Owner (the "Pledged Membership Interests") by Interest Owner in favor of the
Pledgee was registered on the books and records of the BHR Joint Venture.
Except for the pledge in favor of the Pledgee, there are no liens or
restrictions of the BHR Joint Venture or adverse claims (as to which the BHR
Joint Venture has a duty under Section 8-403(4) of the Uniform Commercial
Code) to which the Pledged Membership Interests are or may be subject as of
the date of the registration of this pledge.
The name of the registered owner of the Pledged Membership Interests is
The Majestic Star Casino, LLC. The address of the Interest Owner is set
forth above. The taxpayer identification number of the Interest Owner is
43-1664986.
The name of the registered pledgee of the Pledged Membership Interests
is IBJ Schroder Bank & Trust Company, as Trustee. The address of the
Pledgee is set forth above. The taxpayer identification number of the Pledgee
is 13-5375195.
<PAGE> 23
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS OF
THE TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO
RIGHTS ON THE RECIPIENTS. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT
NOR A SECURITY.
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
By: The Majestic Star Casino, LLC
By: Barden Development, Inc.
By:
Name:
Title:
<PAGE> 24
EXHIBIT C
to
PLEDGE AGREEMENT
dated as of May 22, 1996
Notice in Connection with
Uncertificated Securities
May __, 1996
Facsimile and
First Class Mail
Nicholas L. Ribis
President
Trump Indiana, Inc.
725 Fifth Avenue
New York, New York 10022
Re: Buffington Harbor Riverboats, L.L.C.
NOTICE OF PLEDGE OF MEMBERSHIP INTEREST
Dear Mr. Ribis:
This will advise you that we have this date pledged our entire membership
interest in Buffington Harbor Riverboats, L.L.C. (the "Company") to IBJ
Schroder Bank & Trust Company, as trustee (the "Pledgee"), as security for
financing as permitted under Section 8 of the Company's Operating Agreement.
To register this pledge, we have made notation in the Company's records in
the form attached hereto, a copy of which is furnished for your information.
In the event that you receive written notice from the Pledgee that a default
has occurred under the terms of any of the loan documents between The
Majestic Star Casino, LLC and the Pledgee, you may agree to remit to the
Pledgee all distributions and
<PAGE> 25
payments that would otherwise be payable to us upon redemption, termination
or dissolution of the Company.
Very truly yours,
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By: _________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.7
EXECUTION COPY
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT ("Agreement") is made as of May 22,
1996, by and between The Majestic Star Casino, LLC, an Indiana limited
liability company ("Grantor"), and IBJ Schroder Bank & Trust Company, as
trustee (the "Trustee") for the "Holders" (as such term is defined in the
"Indenture" defined below).
W I T N E S S E T H:
WHEREAS, Grantor and the Trustee are parties to that certain Indenture of
even date herewith (as the same may hereafter be modified, amended, restated or
supplemented from time to time, the "Indenture"), pursuant to which Grantor and
the Trustee have agreed to certain terms for the benefit of Grantor and the
Holders; and
WHEREAS, Grantor and the Trustee are parties to that certain Security
Agreement of even date herewith (as the same may hereafter be modified,
amended, restated or supplemented from time to time, the "Security Agreement"),
pursuant to which Grantor has granted a security interest in certain of its
assets to the Trustee for the benefit of the Trustee and the Holders; and
WHEREAS, the Holders have required Grantor to execute and deliver this
Agreement (i) in order to secure the prompt and complete payment, observance
and performance of all of the "Secured Obligations" (as defined in the Security
Agreement) and (ii) as a condition precedent to any extension of credit under
the Indenture;
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor agrees as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, each capitalized term used herein
that is defined in the Indenture shall have the meaning specified for such term
in the Indenture. Unless otherwise defined herein or in the Indenture, each
capitalized term used herein that is defined in the Security Agreement shall
have the meaning specified for such term in the Security Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of like import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section references are to this
Agreement unless otherwise specified.
<PAGE> 2
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa, unless otherwise
specified.
2. Incorporation of Premises. The premises set forth above are
incorporated into this Agreement by this reference thereto and are made a part
hereof.
3. Incorporation of the Indenture. The Indenture and the terms and
provisions thereof are hereby incorporated herein in their entirety by this
reference thereto. In the event of any conflict or inconsistency between the
provisions of this Agreement and those of the Indenture, including, without
limitation, any conflicts or inconsistencies in any definitions herein or
therein, the provisions or definitions of the Indenture shall govern.
4. Security Interest in Trademarks. To secure the complete and timely
payment, performance and satisfaction of all of the Secured Obligations,
Grantor hereby grants to the Trustee, for the equal and ratable benefit of the
Holders, a security interest in, as and by way of a first mortgage and security
interest having priority over all other security interests, with power of sale
to the extent permitted by applicable law, all of Grantor's now owned or
existing and hereafter acquired or arising:
(i) trademarks, registered trademarks, trademark applications,
service marks, registered service marks and service mark applications,
including, without limitation, the trademarks, registered trademarks,
trademark applications, service marks, registered service marks and
service mark applications listed on Schedule A attached hereto and made a
part hereof, and (a) all renewals thereof, (b) all income, royalties,
damages and payments now and hereafter due and/or payable under and with
respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (c) the right to
sue for past, present and future infringements and dilutions thereof, (d)
the goodwill of Grantor's business symbolized by the foregoing and
connected therewith, and (e) all of Grantor's rights corresponding
thereto throughout the world (all of the foregoing trademarks, registered
trademarks and trademark applications, and service marks, registered
service marks and service mark applications, together with the items
described in clauses (a)-(e) in this paragraph 4(i), are sometimes
hereinafter individually and/or collectively referred to as the
"Trademarks"); and
(ii) rights under or interest in any trademark license agreements or
service mark license agreements with any other party, whether Grantor is
a licensee or licensor under any such license agreement, including,
without limitation, those trademark license agreements and service mark
license
-2-
<PAGE> 3
agreements listed on Schedule B attached hereto and made a part hereof,
together with any goodwill connected with and symbolized by any such
trademark license agreements or service mark license agreements, (all of
the foregoing are hereinafter referred to collectively as the
"Licenses"). Notwithstanding the foregoing provisions of this Section 4,
the Licenses shall not include any license agreement in effect as of the
date hereof which by its terms prohibits the grant of the security
contemplated by this Agreement; provided, however, that upon the
termination of such prohibitions for any reason whatsoever, the
provisions of this Section 4 shall be deemed to apply thereto
automatically.
5. Future Agreements. As long as no Event of Default has occurred and is
continuing, nothing set forth herein or in any other Collateral Document is
intended or shall be construed to prevent the Grantor from entering into
license agreements pertaining to the Trademarks; provided that Grantor will
not, without the Trustee's prior written consent, enter into any agreement,
including, without limitation, any license agreement, which is inconsistent
with this Agreement, and Grantor further agrees that it will not take any
action, and will use its best efforts not to permit any action to be taken by
others, including, without limitation, licensees, or fail to take any action,
which would in any respect affect the validity or enforcement of the rights
transferred to the Trustee under this Agreement or the rights associated with
the Trademarks or Licenses.
6. New Trademarks and Licenses. Grantor represents and warrants that,
from and after the Issuance Date, (a) the Trademarks listed on Schedule A
include all of the trademarks, registered trademarks, trademark applications,
service marks, registered service marks and service mark applications now owned
or held by Grantor, (b) the Licenses listed on Schedule B include all of the
trademark license agreements and service mark license agreements under which
Grantor is the licensee or licensor and (c) no liens, claims or security
interests in such Trademarks and Licenses have been granted by Grantor to any
Person other than the Trustee. If, prior to the termination of this Agreement,
Grantor shall (i) obtain rights to any new trademarks, registered trademarks,
trademark applications, service marks, registered service marks or service mark
applications, (ii) become entitled to the benefit of any trademarks, registered
trademarks, trademark applications, trademark licenses, trademark license
renewals, service marks, registered service marks, service mark applications,
service mark licenses or service mark license renewals whether as licensee or
licensor, or (iii) enter into any new trademark license agreement or service
mark license agreement, the provisions of paragraph 4 above shall automatically
apply thereto. Grantor shall give to the Trustee written notice of events
described in clauses (i), (ii) and (iii) of the preceding sentence promptly
after the occurrence thereof, but in any event not less frequently than on a
quarterly basis. Grantor hereby
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<PAGE> 4
authorizes the Trustee to modify this Agreement unilaterally (i) by amending
Schedule A to include any future trademarks, registered trademarks, trademark
applications, service marks, registered service marks and service mark
applications and by amending Schedule B to include any future trademark license
agreements and service mark license agreements, which are Trademarks or
Licenses under paragraph 4 above or under this paragraph 6, and (ii) by filing,
in addition to and not in substitution for this Agreement, a duplicate original
of this Agreement containing on Schedule A or B thereto, as the case may be,
such future trademarks, registered trademarks, trademark applications, service
marks, registered service marks and service mark applications, and trademark
license agreements and service mark license agreements.
7. Royalties. Grantor hereby agrees that the use by the Trustee of the
Trademarks and Licenses as authorized hereunder in connection with the
Trustee's exercise of its rights and remedies under paragraph 15 or pursuant to
the Security Agreement or any other Collateral Document shall be coextensive
with Grantor's rights thereunder and with respect thereto and without any
liability for royalties or other related charges from the Trustee or the
Holders to Grantor.
8. Right to Inspect; Further Assignments and Security Interests. The
Trustee may at all reasonable times (and at any time when an Event of Default
exists) have access to, examine, audit, make copies (at Grantor's expense) and
extracts from and inspect Grantor's premises and examine Grantor's books,
records and operations relating to the Trademarks and Licenses; provided, that
in conducting such inspections and examinations, the Trustee shall use
reasonable efforts not to disturb unnecessarily the conduct of Grantor's
ordinary business operations. Grantor agrees (i) not to sell or assign its
respective interests in, or grant any license under, the Trademarks or the
Licenses without the prior and express written consent of the Trustee, (ii) to
maintain the quality of such products as of the date hereof, and (iii) not to
change the quality of such products in any material respect without the
Trustee's prior and express written consent.
9. Nature and Continuation of the Trustee's Security Interest; Termination
of the Trustee's Security Interest. This Agreement is made for collateral
security purposes only. This Agreement shall create a continuing security
interest in the Trademarks and Licenses and shall terminate only when the
Secured Obligations have been paid in full in cash and the Indenture and the
Security Agreement have been terminated. When this Agreement has terminated,
the Trustee shall promptly execute and deliver to Grantor, at Grantor's
expense, all termination statements and other instruments as may be necessary
or proper to terminate the Trustee's security interest in the Trademarks and
the Licenses, subject to any disposition thereof which may have been made by
the Trustee pursuant to this Agreement or the Security Agreement.
-4-
<PAGE> 5
10. Duties of Grantor. Grantor shall have the duty, to the extent
desirable in the normal conduct of Grantor's business, to: (a) prosecute
diligently any trademark application or service mark application that is part
of the Trademarks pending as of the date hereof or hereafter until the
termination of this Agreement, and (b) make application for trademarks or
service marks. Grantor further agrees (i) not to abandon any Trademark or
License without the prior written consent of the Trustee, and (ii) to use its
best efforts to maintain in full force and effect the Trademarks and the
Licenses that are or shall be necessary or economically desirable in the
operation of Grantor's business. Any expenses incurred in connection with the
foregoing shall be borne by Grantor. Neither the Trustee nor any of the
Holders shall have any duty with respect to the Trademarks and Licenses.
Without limiting the generality of the foregoing, neither the Trustee nor any
of the Holders shall be under any obligation to take any steps necessary to
preserve rights in the Trademarks or Licenses against any other parties, but
the Trustee may do so at its option from and after the occurrence of an Event
of Default, and all expenses incurred in connection therewith shall be for the
sole account of Grantor and shall be added to the Secured Obligations secured
hereby.
11. The Trustee's Right to Sue. From and after the occurrence of an Event
of Default, the Trustee shall have the right, but shall not be obligated, to
bring suit in its own name to enforce the Trademarks and the Licenses and, if
the Trustee shall commence any such suit, Grantor shall, at the request of the
Trustee, do any and all lawful acts and execute any and all proper documents
required by the Trustee in aid of such enforcement. Grantor shall, upon
demand, promptly reimburse the Trustee for all costs and expenses incurred by
the Trustee in the exercise of its rights under this paragraph 11 (including,
without limitation, reasonable fees and expenses of attorneys and paralegals
for the Trustee).
12. Waivers. The Trustee's failure, at any time or times hereafter, to
require strict performance by Grantor of any provision of this Agreement shall
not waive, affect or diminish any right of the Trustee thereafter to demand
strict compliance and performance therewith nor shall any course of dealing
between Grantor and the Trustee have such effect. No single or partial
exercise of any right hereunder shall preclude any other or further exercise
thereof or the exercise of any other right.
13. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but the provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part hereof, in such jurisdiction, and shall not
in any manner affect such clause or
-5-
<PAGE> 6
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
14. Amendments, Etc. Except as otherwise provided by the Indenture, the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for Notes) shall be required to amend, modify, supplement, or
waive any provision of this Agreement. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
15. Cumulative Remedies; Power of Attorney. Grantor hereby irrevocably
designates, constitutes and appoints the Trustee (and all Persons designated by
the Trustee in its sole and absolute discretion) as Grantor's true and lawful
attorney-in-fact, and authorizes the Trustee and any of the Trustee's
designees, in Grantor's or the Trustee's name, to take any action and execute
any instrument which the Trustee may deem necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, from and after
the occurrence of an Event of Default and the giving by the Trustee of notice
to Grantor of the Trustee's intention to enforce its rights and claims against
Grantor, to (i) endorse Grantor's name on all applications, documents, papers
and instruments necessary or desirable for the Trustee in the use of the
Trademarks or the Licenses, (ii) assign, pledge, convey or otherwise transfer
title in or dispose of the Trademarks or the Licenses to anyone on commercially
reasonable terms, (iii) grant or issue any exclusive or nonexclusive license
under the Trademarks or, to the extent permitted, under the Licenses, to anyone
on commercially reasonable terms, and (iv) take any other actions with respect
to the Trademarks or the Licenses as the Trustee deems in its own or the
Holders' best interest. Grantor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable until all of the Secured
Obligations shall have been paid in full in cash and the Indenture shall have
been terminated. Grantor acknowledges and agrees that this Agreement is not
intended to limit or restrict in any way the rights and remedies of the Trustee
or the other Holders under the Security Agreement, but rather is intended to
facilitate the exercise of such rights and remedies.
The Trustee shall have, in addition to all other rights and remedies given
it by the terms of this Agreement, all rights and remedies allowed by law and
the rights and remedies of a secured party under the Uniform Commercial Code as
enacted in any jurisdiction in which the Trademarks or the Licenses may be
located or deemed located. Upon the occurrence of an Event of Default and the
election by the Trustee to exercise any of its remedies under Section 9-504 or
Section 9-505 of the Uniform Commercial Code with respect to the Trademarks and
Licenses, Grantor agrees to assign, convey and otherwise transfer title in
-6-
<PAGE> 7
and to the Trademarks and the Licenses to the Trustee or any transferee of the
Trustee and to execute and deliver to the Trustee or any such transferee all
such agreements, documents and instruments as may be necessary, in the
Trustee's sole discretion, to effect such assignment, conveyance and transfer.
All of the Trustee's rights and remedies with respect to the Trademarks and the
Licenses, whether established hereby, by the Security Agreement, by any other
agreements or by law, shall be cumulative and may be exercised separately or
concurrently. Notwithstanding anything set forth herein to the contrary, it is
hereby expressly agreed that upon the occurrence of an Event of Default, the
Trustee may exercise any of the rights and remedies provided in this Agreement,
the Indenture and any of the other Collateral Documents. Grantor agrees that
any notification of intended disposition of any of the Trademarks and Licenses
required by law shall be deemed reasonably and properly given if given at least
ten (10) days before such disposition; provided, however, that the Trustee may
give any shorter notice that is commercially reasonable under the
circumstances.
16. Successors and Assigns. This Agreement shall be binding upon Grantor
and its successors and assigns, and shall inure to the benefit of each of the
Holders and its nominees, successors and assigns. Grantor's successors and
assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for Grantor; provided, however, that Grantor shall
not voluntarily assign or transfer its rights or obligations hereunder without
the Trustee's prior written consent.
17. Governing Law. This Agreement shall be construed and enforced and the
rights and duties of the parties shall be governed by in all respects in
accordance with the internal laws (as opposed to conflict of laws provisions)
and decisions of the State of Indiana.
18. Notices. All notices or other communications hereunder shall be given
in the manner and to the addresses set forth in the Indenture.
19. Section Titles. The section titles herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of
the provisions hereof.
20. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
21. Merger. This Agreement represents the final agreement of the Grantor
with respect to the matters contained herein and may not be contradicted by
evidence of prior or contemporaneous agreements, or subsequent oral agreements,
between the Grantor and the Trustee or any Holder.
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<PAGE> 8
22. Gaming Laws. (a) Each of the provisions of this Agreement is subject
to, and shall be enforced in compliance with, the provisions of any applicable
laws, including, without limitation, the rules and regulations of the Indiana
Gaming Commission (together with the Indiana Riverboat Gambling Act, the
"Gaming Laws").
(b) The Trustee acknowledges, understands and agrees that the Gaming Laws
may impose certain licensing or transaction approval requirements prior to the
exercise of the rights and remedies granted to it under the Agreement with
respect to the Trademarks subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in connection with
the taking of any of the actions which may be taken by the Trustee in the
exercise of its rights hereunder, then Grantor agrees to use its reasonable
best efforts to secure such consent and to cooperate with the Trustee in
obtaining any such consent. Upon the occurrence and during the continuation of
any Event of Default, Grantor shall promptly execute and/or cause the execution
of all applications, certificates, instruments, and other documents and papers
that the Trustee may be required to file in order to obtain any necessary
approvals under the Gaming Laws, and if Grantor fails or refuses to execute
such documents, the Trustee or the clerk of the court with jurisdiction may
execute such documents on behalf of Grantor.
(d) Notwithstanding any other provision of this Agreement to the
contrary, nothing in this Agreement shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Grantor or (ii) effect any transfer, sale, purchase, lease or hypothecation of,
or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including
Grantor, under any of the Gaming Laws, including Indiana Code 4-33.
23. Trust Indenture Act. If any provision of this Agreement conflicts
with any provision of the Trust Indenture Act, the provisions of the Trust
Indenture Act shall control.
24. Appointment of Collateral Agent. The Trustee may, solely at its
discretion, appoint a collateral agent to enforce the rights and remedies
available to the Trustee under this Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.,
By: Kenneth L. Kramer
----------------------------
Name: Kenneth L. Kramer
Title: Vice President
ATTEST:
By: Michael E. Kelly
-------------------------
Name: Michael E. Kelly
Title: Chief Financial Officer
Accepted and agreed to as of the day and
year first above written.
IBJ Schroder Bank & Trust Company,
as Trustee
By: Nancy R. Besse
-------------------------
Name: Nancy R. Besse
Title: Vice President
<PAGE> 10
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
The foregoing Trademark Security Agreement was acknowledged before me this
21 day of May, 1996, by Kenneth L. Kramer, a VP of the Manager of The Majestic
Star Casino, LLC, an Indiana limited liability company, on behalf of such
limited liability company.
Monique Wilson
------------------------------
Notary Public
____________, ___________
My commission expires: 1/16/98
-------
MONIQUE WILSON
Notary Public, State of New York
No. 01WI5054453
Qualified in Queens County
Commission Expires January 16, 1998
<PAGE> 11
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
The foregoing Trademark Security Agreement was acknowledged before me this
21 day of May, 1996, by Nancy R. Besse, a Vice President of IBJ Schroder, a ,
on behalf of such limited liability company.
Monique Wilson
------------------------------
Notary Public
____________, ___________
My commission expires: 1/16/98
-------
MONIQUE WILSON
Notary Public, State of New York
No. 01WI5054453
Qualified in Queens County
Commission Expires January 16, 1998
<PAGE> 12
Schedule A
to
Trademark Security Agreement
Dated as of May 22, 1996
TRADEMARKS
None
SERVICE MARKS
None
TRADEMARK AND SERVICE MARK APPLICATIONS
None, except:
Servicemark Application Date Serial No.
- ----------------- ------------------ ---------------
MAJESTIC STAR 2/16/96 75/052418
THE MAJESTIC STAR
CASINO M
(and design) 2/1/96 75/052416
<PAGE> 13
Schedule B
to
Trademark Security Agreement
Dated as of May 22, 1996
License Agreements
None
<PAGE> 1
EXHIBIT 4.8
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
DATED MAY 22, 1996
AMONG
IBJ SCHRODER BANK & TRUST COMPANY,
AS TRUSTEE,
NBD BANK,
AS DISBURSEMENT AGENT,
AND
THE MAJESTIC STAR CASINO, LLC
<PAGE> 2
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
CASH COLLATERAL AND DISBURSEMENT AGREEMENT, dated May 22, 1996, among IBJ
Schroder Bank & Trust Company, as trustee (in such capacity, together with its
successor in trust, if any, appointed pursuant to the Indenture, the "Trustee")
under an Indenture dated the date hereof between the Company (as defined below)
and the Trustee (such Indenture as amended, supplemented or otherwise modified
from time to time, the "Indenture"), The Majestic Star Casino, LLC, an Indiana
limited liability company (the "Company") and NBD Bank, Detroit, Michigan, as
Disbursement Agent for the Trustee (the "Disbursement Agent"). Capitalized
terms used and not defined herein shall have the meanings set forth in the
Indenture.
PRELIMINARY STATEMENTS:
(1) The Company has entered into the Indenture pursuant to which the
Company will issue $105,000,000 of its 12-3/4% Senior Secured Notes due May 15,
2003 (the "Senior Notes"). The Senior Notes will also bear contingent interest
as described in the Indenture.
(2) As security for the prompt and complete payment and performance in
full of the Indenture Obligations, the Company intends to grant to the Trustee
a security interest in, among other things, the Cash Collateral.
(3) The Disbursement Agent has agreed to take such action with respect to
the Cash Collateral Accounts as is specified herein.
(4) The execution and delivery of this Cash Collateral and Disbursement
Agreement is a condition to the issuance of the Senior Notes under the terms of
the Purchase Agreement dated May 16, 1996 by and between the Company and
Wasserstein Perella Securities, Inc., as initial purchaser.
(5) Amounts expended in accordance with this Agreement for capital
contributions to the BHR Joint Venture will be released from the security
interest thereunder, and any assets or properties acquired or developed in
connection with such disbursements will not constitute collateral hereunder.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
<PAGE> 3
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. Capitalized terms used but not
defined herein and in any schedules and exhibits hereto shall have the meanings
set forth in the Indenture. In addition, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Asset Sale" has the meaning specified in the Indenture.
"Asset Sale Account" has the meaning specified in Section 2.1.
"BHR Joint Venture" has the meaning specified in the Indenture.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banks in New York City or Detroit are
authorized or obligated by law to close.
"Cash Collateral" has the meaning specified in Section 2.5.
"Cash Collateral Accounts" has the meaning specified in Section 2.1.
"Cash Equivalents" has the meaning specified in the Indenture.
"Chartered Vessel" has the meaning specified in the Indenture.
"Chartered Vessel Project" means the project for the chartering,
refitting and equipping of the Chartered Vessel.
"Closing Date" means May 22, 1996.
"Company" has the meaning specified in the recital of parties.
"Completion Reserve Account" has the meaning specified in Section
2.1.
"Construction Account" has the meaning specified in Section 2.1.
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<PAGE> 4
"Construction Budget" means, for each of the Chartered Vessel and
the Land Project, a budget provided by the Company, not in excess of
funds available in the relevant Sub-Account and otherwise available to
the Company for the Chartered Vessel Project or the Land Project, as
applicable, and for the Permanent Vessel, a budget to be provided by the
Company, not in excess of funds available in the Permanent Vessel
Sub-Account and otherwise available to the Company for the Permanent
Vessel Project.
"Construction Consultant" means the consultant engaged by the
Company to monitor the construction of the Permanent Vessel on behalf of
the Trustee as set forth herein.
"Construction Schedule" means for each of the Projects the
construction schedule proposed by the Company.
"Construction Supervisor" means for each Project the Person
responsible for approving and monitoring the relevant Construction
Budget, Plans and Specifications and changes thereto, cost breakdowns and
estimates; the Construction Supervisor shall make periodic inspections of
the appropriate Project, as applicable, monitor the appropriate Project,
as applicable, and have responsibility to approve Project Disbursements.
The Construction Supervisor shall be Guido Perla & Associates or a
Project Architect or an outside contractor with respect to the Permanent
Vessel Project.
"Contract" means any contract or subcontract for work or materials
for any Project.
"Costs" means all Hard Costs and all Soft Costs.
"Disbursement Agent" has the meaning specified in the recital of
parties.
"Event of Loss" has the meaning specified in the Indenture.
"Event of Loss Account" has the meaning specified in Section 2.1.
"Gaming License" has the meaning specified in the Indenture.
"Hard Costs" means the costs and expenses in respect of supplying
goods, materials and labor for the construction of the Projects.
"Indenture" has the meaning specified in the recital of parties.
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<PAGE> 5
"Indenture Obligations" means any obligations of the Company
pursuant to the Indenture now or hereafter existing, including the
obligation to pay principal and interest, including contingent interest,
on the securities issued under the Indenture when due and payable,
whether by acceleration or otherwise, and all other amounts due or to
become due in connection with the Indenture and the Collateral Documents,
including all fees and expenses incurred by the Trustee or the Holders in
the collection or enforcement of any such obligations or realization upon
the Collateral or the security of any Collateral Documents.
"Initial Phase" shall mean the first phase of the development of the
Projects, which includes the land, the Chartered Vessel, gaming equipment
and initial berthing and support facilities, as described in the Offering
Memorandum.
"Interest Reserve Account" has the meaning specified in Section 2.1.
"Land Contracts" means each Contract for the Land Project.
"Land Project" means the Project relating to the construction of
initial berthing and support facilities for the Initial Phase, including
equipment and other capital costs relating to the berthing and support
facilities.
"Line Item" means an item of cost set forth in a Construction Budget
for a specific Project.
"Major Contract" means any Contract or series of related Contracts
for substantially the same work or materials in connection with Hard
Costs or Soft Costs for an amount equal to or in excess of $500,000.
"Major Contractor" means any counterparty under a Major Contract.
"Minor Contract" means any Contract or series of related Contracts
for substantially the same work or materials that is not a Major
Contract.
"Offering Memorandum" means the final Offering Memorandum dated May
16, 1996 of the Company relating to the Senior Notes.
"Permanent Vessel" has the meaning specified in the Indenture.
"Permanent Vessel Project" means the project for the construction of
the Permanent Vessel, including equipping
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<PAGE> 6
the Permanent Vessel but excluding gaming equipment and related casino
fixtures, furniture and equipment.
"Person" means an individual, partnership, limited liability
company, corporation (including a business trust), joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plans and Specifications" means for each of the Projects the plans
and specifications developed by the Company.
"Projects" means each of the Chartered Vessel Project, the Permanent
Vessel Project and the Land Project.
"Project Architect" means, in the case of any Project, any Person
acting as an architect for any aspect of the applicable Project selected
by the Company.
"Project Disbursement" means a disbursement to or as directed by the
Company, the proceeds of which will be applied solely to pay or reimburse
construction and other costs directly related to the applicable Project.
"Project Disbursement Date" has the meaning specified in Section
3.1.
"Project Disbursement Documentation" means a certificate of the
Company substantially in the form of Annex 1-A or 1-B to Exhibit A
hereto, together with all documentation referred to in such certificate
and any other accompanying documentation required by this Agreement.
"Request for a Project Disbursement" has the meaning specified in
Section 3.1.
"Retainage" means, with respect to any Major Contract for Hard
Costs, an amount to be withheld with respect to any payment made or to be
made to any contractor, subcontractor, mechanic, materialman, vendor or
any other Person under such Major Contract, which amount shall be at
least equal to the amounts referred to in Schedules 1 or 2, as
applicable; provided, however, that Retainage is not required for a Major
Contract not involving construction where Retainage is not customary.
"Senior Notes" has the meaning specified in the Preamble hereof and
includes any notes issued in exchange therefor pursuant to the Indenture.
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<PAGE> 7
"Ship Contract" means each Contract for the Permanent Vessel
Project.
"Shipyard" means any shipyard chosen by the Company to construct the
Permanent Vessel.
"Soft Costs" means all costs of the Company other than Hard Costs
that are related to the Projects, including, without limitation,
pre-opening costs.
"Sub-Accounts" has the meaning specified in Section 2.1.
"Termination of Construction Date" means the date that a Project is
completed, as certified in writing by the Construction Supervisor for
such Project.
"Trustee" shall have the meaning set forth in the recitals hereof.
"Working Capital Account" has the meaning specified in Section 2.1.
SECTION 1.2 Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
ARTICLE II
ESTABLISHMENT OF CASH COLLATERAL ACCOUNTS;
INITIAL DEPOSITS; PRIORITY RELEASES
SECTION 2.1 Establishment of Accounts. There is hereby established with
the Disbursement Agent the following separate custodial accounts (collectively,
the "Cash Collateral Accounts") under the sole dominion and control of the
Disbursement Agent: (a) an account in the name of the Company for construction
and related disbursements of the Company, including amounts to be contributed
to the BHR Joint Venture (the "Construction Account") consisting of the
following sub-accounts: (i) a sub-account for the chartering, refitting and
equipping of the Chartered Vessel prior to construction of the Permanent Vessel
(the "Chartered Vessel Sub-Account"), (ii) a sub-account for the construction
of the Permanent Vessel, including the equipping thereof (the "Permanent Vessel
Sub-Account") and (iii) a sub-account for the construction of the Land Project,
including contributions required to be made to the BHR Joint Venture (the "Land
Sub-Account" and, together with the Chartered Vessel Sub-Account and the
Permanent Vessel Sub-Account, the "Sub-
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<PAGE> 8
Accounts"); (b) an account in the name of the Company for working capital and
general purposes, including the funding of remaining pre-opening expenses and
equipment purchases (the "Working Capital Account"); (c) an account in the name
of the Company for payment of the first two fixed interest payments scheduled
to be paid on the Senior Notes (the "Interest Reserve Account"); (d) an account
in the name of the Company to be used as a reserve to assure completion of the
Projects (the "Completion Reserve Account"); (e) an account in the name of the
Company to be used upon the occurrence of an Event of Loss (the "Event of Loss
Account"); (f) an account in the name of the Company to be used upon the
occurrence of an Asset Sale (the "Asset Sale Account"); and (g) an account in
the name of the Company to be used upon the liquidation of assets in connection
with an Uncompleted Project (the "Uncompleted Project Account"). Each of the
above listed Cash Collateral Accounts and Sub-Accounts shall clearly indicate
on the title thereof that it is held "subject to the lien of IBJ Schroder Bank
& Trust Company, as trustee for the holders of 12-3/4% Senior Secured Notes due
2003 of The Majestic Star Casino, LLC."
The Sub-Accounts shall be for bookkeeping purposes only and all cash or
other property credited to any Sub-Account (including interest) shall be the
property of the Construction Account. All Project Disbursements pursuant to
Article III and IV in respect of the Chartered Vessel Project shall be charged
to the Chartered Vessel Sub-Account, in respect of the Permanent Vessel Project
shall be charged to the Permanent Vessel Sub-Account and in respect of the Land
Project shall be charged to the Land Sub-Account.
SECTION 2.2 Initial Deposits to Accounts. The initial deposits to the
Cash Collateral Accounts shall be as follows:
<TABLE>
<S> <C>
Chartered Vessel Sub-Account $ 0
Permanent Vessel Sub-Account $ 40,000,000
Land Sub-Account $ 8,148,415
TOTAL DEPOSIT TO
CONSTRUCTION ACCOUNTS $ 48,148,415
------------
Working Capital Account $ 29,654,644
Interest Reserve Account $ 12,902,000
Completion Reserve Account $ 10,759,000
TOTAL DEPOSIT TO
CASH COLLATERAL ACCOUNTS $101,464,059
------------
</TABLE>
-7-
<PAGE> 9
In addition to transfers pursuant to Section 3.3(b), the Company may, at
any time and in its sole discretion, cause to be deducted from one or more Cash
Collateral Accounts or Sub-Accounts and be added to one or more other Cash
Collateral Account(s) or Sub-Account(s) up to an aggregate for all such
transfers collectively of $4,500,000; provided, however, that transfers to or
from the Interest Reserve Account may only be made pursuant to the provisions
of Section 5.2 and transfers to and from the Completion Reserve Account may
only be made pursuant to the provisions of Section 5.3.
SECTION 2.3 Initial Disbursements. Upon execution of this Agreement and
the funding of the Cash Collateral Accounts in an aggregate amount equal to the
net proceeds of the Senior Notes, after giving effect to the expenses incurred
in connection with such offering in accordance with the Offering Memorandum
under the heading "Use of Proceeds", the Disbursement Agent is hereby directed
to and shall release and transfer (i) from the Land Sub-Account $3,648,415 to
fund the balance of the required capital contributions to the BHR Joint Venture
to a bank account identified by the Company in writing at least two Business
Days prior thereto, (ii) from the Working Capital Account $5,464,059 to fund
the refitting and equipping of the Chartered Vessel and certain other
pre-opening expenses to an account identified by the Company in writing at
least two Business Days prior thereto, and (iii) from the Working Capital
Account $18,166,556 to repay certain advances of funds to the Company by Barden
Development, Inc. as evidenced by the promissory note or notes attached hereto
as Exhibit B to an account identified by the Company in writing at least two
Business Days prior thereto.
SECTION 2.4 Default Releases. Upon the occurrence of an Event of Default
under the Indenture which (except in the case of a Change of Control Offer,
Uncompleted Project Offer or Uncompleted Vessel Offer) has resulted in
acceleration of the Senior Notes pursuant to Section 6.02 of the Indenture,
funds in the Cash Collateral Accounts shall be released by the Disbursement
Agent to any account specified by the Trustee, upon receipt of an executed
Trustee's Certificate substantially in the form of Exhibit C hereto, certifying
that such Event of Default and acceleration of the Senior Notes, if applicable,
has occurred. Such released amounts will promptly be used for the purpose of
making any required payment of principal or interest (including contingent
interest, if any) to Noteholders, including, without limitation, payments to
Noteholders accepting any Change of Control Offer, Uncompleted Project Offer or
Uncompleted Vessel Offer pursuant to the terms of the Indenture; provided, that
funds shall be released to the Trustee from the Interest Reserve Account in
connection with any Change of Control Offer as set forth above only in an
amount equal to (i) the interest payable on the Senior Notes to be purchased in
such offer in connection with such purpose, plus (ii) solely in the
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<PAGE> 10
case where the purchase date for such offer occurs prior to November 15, 1996,
the interest that would be payable on November 15, 1996 on the Senior Notes to
be purchased were such Senior Notes then to be outstanding. The Disbursement
Agent shall sell such portions of investments in Cash Equivalents as shall be
necessary to satisfy any such request for release within two Business Days of
receiving such Trustee's Certificate.
SECTION 2.5 Trust Estate and Security Interest. As security for the
prompt and complete payment and performance in full of all the Indenture
Obligations, the Company hereby conveys, pledges and assigns to the Trustee for
the equal and ratable benefit of the Holders, and grants to the Trustee for the
equal and ratable benefit of the Holders an exclusive first priority security
interest in, all of its right, title and interest in the following collateral
(the "Cash Collateral"):
(a) the Cash Collateral Accounts, all funds, investments and
securities held therein and all certificates and instruments, if
any, from time to time representing or evidencing the Cash
Collateral Accounts;
(b) all investments from time to time credited to any of the
accounts constituting the Cash Collateral Accounts, and all
certificates and instruments, if any, from time to time representing
or evidencing the investment in Cash Equivalents or other
investments;
(c) all notes, certificates of deposits, deposit amounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Disbursement Agent for or on behalf of
the Trustee for the benefit of the Holders;
(d) all interest, cash and instruments from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Cash Collateral; and
(e) all proceeds of any and all of the foregoing.
SECTION 2.6 Appointment of Disbursement Agent. The Trustee hereby
appoints NBD Bank, Detroit, Michigan, to act as the Disbursement Agent in
connection with this agreement, and to take all actions as set forth in this
Agreement on behalf of the Trustee in order to comply with the terms of this
Cash Collateral and Disbursement Agreement. Reimbursable fees and expenses of
the Trustee shall include any fees and expenses of the Disbursement Agent which
are payable by the Trustee; provided that the Trustee shall be under no
obligation to pay fees and expenses of the Disbursement Agent to the extent
funds are not received from the Company.
-9-
<PAGE> 11
SECTION 2.7 Resignation of Disbursement Agent. The Disbursement Agent
may resign upon giving written notice to the Company and the Trustee. The
Trustee may appoint a successor Disbursement Agent provided that said successor
Disbursement Agent is a bank or trust company having a combined capital and
surplus (as set forth in its most recent published report of condition) of at
least $100,000,000.
ARTICLE III
REQUESTING AND MAKING PROJECT
DISBURSEMENTS FROM THE CONSTRUCTION ACCOUNTS
SECTION 3.1 Requesting the Project Disbursements. Subject to the
provisions of Section 3.2 below, the Company may request that a Project
Disbursement be made from any Construction Account by delivering notice to the
Disbursement Agent, not later than 11:00 A.M. (New York time) on the Business
Day immediately preceding the date of the proposed Project Disbursement. Each
such request shall be substantially in the form of Exhibit A (a "Request for a
Project Disbursement"), shall be executed by an Officer of the Company and
shall specify therein (i) the requested date of such Project Disbursement (the
"Project Disbursement Date"), (ii) the aggregate amount of such Project
Disbursement and (iii) the Sub-Account from which such disbursement will be
made. Simultaneously with the delivery of each Request for a Project
Disbursement, the Company shall deliver or shall cause to be delivered the
Project Disbursement Documentation to the Disbursement Agent, the Trustee, the
applicable Construction Supervisor and in the case of Project Disbursements
relating to the Permanent Vessel Project, the Construction Consultant.
SECTION 3.2 Making the Project Disbursements. Upon fulfillment of the
terms and conditions set forth herein including, without limitation, the
applicable conditions set forth in Article IV hereof, the Disbursement Agent
shall make each Project Disbursement, no later than 1:00 P.M. (New York time)
on each Project Disbursement Date, by deducting the amount of each Project
Disbursement from the appropriate Sub-Account of the Construction Account and
depositing such amount in the Company's account maintained with the
Disbursement Agent for such purpose or as otherwise directed by the Company.
At least two Business Days prior to any Project Disbursement Date, the Company
shall instruct the Disbursement Agent to sell such portion of the investments
in Cash Equivalents held in the Construction Account as shall be necessary to
fund the requested Project Disbursement. Notwithstanding the foregoing, if on
any Project Disbursement Date the cash on deposit in the relevant Account or
Sub-Account is less than the amount of the Project Disbursement to be made on
such date, the Disbursement Agent shall make only such portion of such Project
Disbursement equal to such cash on deposit in the
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<PAGE> 12
relevant Account or Sub-Account, provided, that, if such cash is not available
solely because the sale of Cash Equivalents contemplated in the preceding
sentence has not been completed, then the Disbursement Agent shall make such
Project Disbursement or any portion thereof as soon as the funds from such sale
are available.
SECTION 3.3 Additional Project Disbursement Requirements. (a) Disputed
Items. (i) If, with respect to any Project Disbursement, the Construction
Supervisor disputes in writing to the Company and the Disbursement Agent the
appropriateness of any item or items funded with the proceeds of such Project
Disbursement, the Disbursement Agent shall, to the extent all other conditions
to such Project Disbursement have been satisfied, make a Project Disbursement
less an amount equal to the portion of the requested Project Disbursement
allocated to such disputed item or items. The Construction Supervisor shall
not authorize a Project Disbursement with respect to any disputed item unless
and until such dispute has been resolved either (i) pursuant to Article IX
hereto or (ii) as set forth in a writing signed by the Company and the
Construction Supervisor.
(ii) If, after a Project Disbursement has been made relating to the
Permanent Vessel Project, the Construction Consultant disputes the
appropriateness of any item or items funded with the proceeds of such Project
Disbursement by providing written notice of such dispute to the Company, the
Trustee and the Disbursement Agent within 21 days of the date of such Project
Disbursement, the Disbursement Agent shall not make any further Project
Disbursements if the amount of such disputed item or items exceeds $250,000
until such dispute is resolved. Any such dispute shall be resolved either (A)
pursuant to Article IX hereto or (B) as set forth in a writing signed by an
authorized officer of the Company and the Construction Consultant.
(b) Line Item Reallocation. Subject to the terms of Section 3.4, in the
event that (i) the work to be performed in respect of any Line Item in a
particular Construction Budget (either for Hard Costs or Soft Costs) shall be
completed without the expenditure of all amounts in the applicable Construction
Budget allocated to such Line Item (or the Company certifies in an Officer's
Certificate (x) that at least three-fourths of the work to be performed in
respect of such Line Item has been completed and (y) that such work is
projected to be completed without the expenditure of all amounts in the
applicable Construction Budget allocated to such Line Item) and (ii) all
contractors under contracts entered into with the Company and other Persons
with whom the Company has contracted and directly entitled to payment have been
paid in full for work completed as of the date of request for disbursement in
respect of such Line Item (except as may be disputed in good faith and as to
which
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appropriate reserves are being maintained), the Company may, subject to the
other terms and conditions of this Agreement regarding the making of Project
Disbursements, reallocate the undisbursed portion of the Construction Budget
allocable to such Line Item to other uncompleted Line Items within such
Construction Budget or, if no uncompleted Line Items remain, to another Cash
Collateral Account, as selected by the Company.
(c) Use of Contingency. In the event that the Company advises the
Disbursement Agent in writing that the cost of the work performed or projected
to be performed in respect of any Line Item shall exceed the amount allocated
to such Line Item in the applicable Construction Budget, the Disbursement
Agent, subject to the other terms and conditions of this Agreement regarding
the making of Project Disbursements, shall at the request of the Company
disburse funds to pay such excess from the undisbursed portion of any general
contingency Line Item contained in such Construction Budget, provided, that the
Company shall certify that the Plans and Specifications for the entire Project
can still be met after such reallocation.
(d) Payment of Fees. Each Project Disbursement shall include an amount
equal to the amount necessary to pay all fees due and payable to the
Construction Supervisor and the Disbursement Agent in relation to such Project
Disbursement.
(e) Funds from BHR Joint Venture. If funds disbursed to the BHR Joint
Venture from one of the Cash Collateral Accounts are returned or distributed to
the Company by the BHR Joint Venture, said funds shall be deposited in the Cash
Collateral Account or the applicable Sub-Account thereof from which such
disbursement was originally made. Funds received by the Company from BHR Joint
Venture which are not required by the Indenture or any Collateral Document to
be deposited in a Cash Collateral Account may be retained by the Company.
SECTION 3.4 Completion of the Project. If the Termination of
Construction Date for the Permanent Vessel Project is later than June 30, 1998,
or if the Termination of Construction Date for the Land Project or the
Chartered Vessel Project is later than December 31, 1996, and subject to the
first paragraph of Section 2.2, any undisbursed, unreleased funds remaining in
the relevant Cash Collateral Account or Sub-Account shall be retained in the
Construction Account until such time as the Company may be required pursuant to
Article 4 of the Indenture to make (i) an Uncompleted Project Offer because the
project has not been certified in writing as complete by the Construction
Supervisor prior to December 31, 1996 or (ii) an Uncompleted Vessel Offer
because the Permanent Vessel has not been Delivered prior to June 30, 1998. In
the case of an Uncompleted Project Offer, the Disbursement Agent shall deposit
the proceeds of any liquidation of assets contemplated by Section
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4.28 of the Indenture relating to such Uncompleted Project in an Uncompleted
Project Account. The Disbursement Agent shall, upon receipt of written
direction of the Trustee, promptly release and transfer to the Trustee such
amounts as the Trustee shall reasonably deem necessary to make payments to
Holders accepting any Uncompleted Project Offer or any Uncompleted Vessel Offer
pursuant to the terms of the Indenture. Undisbursed, unreleased funds
remaining in the Construction Account following such Uncompleted Project Offer
or Uncompleted Vessel Offer shall remain in the relevant Cash Collateral
Account or Sub-Account and not be released to the Company except as provided
herein. Upon the date construction is certified in writing as complete by the
Construction Supervisor for all of the Projects and the Permanent Vessel has
been Delivered, any undisbursed, unreleased amounts remaining on deposit in the
Construction Account shall be transferred to the Working Capital Account and
any undisbursed, unreleased amounts remaining on deposit in the Completion
Reserve Account shall be released to the Company in accordance with the
provisions of Section 5.3 hereof.
All Project Disbursements pursuant to this Article III shall be made to or
as directed by the Company. The Company may make disbursements from the Land
Sub-Account notwithstanding the fact that the construction is being undertaken
by the BHR Joint Venture.
ARTICLE IV
CONDITIONS OF PROJECT DISBURSEMENTS
FROM THE CONSTRUCTION ACCOUNTS
SECTION 4.1 Conditions Precedent to Project Disbursements. The
Disbursement Agent shall make Project Disbursements from the applicable
Sub-Account of the Construction Account upon satisfaction in connection with
each Project Disbursement of the following conditions:
(a) Documents. The Disbursement Agent shall have received the following,
in form and substance satisfactory to the Disbursement Agent:
(i) an executed Request for a Project Disbursement in substantially
the form of Exhibit A;
(ii) the Project Disbursement Documentation;
(iii) in the case of Project Disbursements for Hard Costs, (x)
copies of unpaid invoices, bills, receipts or other evidence of amounts
due or paid in connection with the Project in excess of $10,000, and (y)
a certificate of the Company indicating a trade payment breakdown showing
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payments that previously have been made and payments that are to be made
by or on behalf of the Company to each contractor, subcontractor, and
materialman with the proceeds of such Project Disbursement; and
(iv) in the case of Project Disbursements for Soft Costs, copies of
unpaid invoices, bills, receipts or other evidence of amounts due or paid
in connection with the applicable Project.
(b) Representations and Warranties. The giving of each Request for a
Project Disbursement and the acceptance by the Company of the proceeds of such
Project Disbursement shall constitute a representation and warranty by the
Company to the Disbursement Agent, the Trustee and the Holders that:
(i) The representations and warranties contained in the applicable
Project Disbursement Documentation are correct, in each case on and as of
the date of such Project Disbursement, before and after giving effect to
such Project Disbursement and to the application of the proceeds
therefrom, as though made on and as of such date, except to the extent
that any such representation or warranty by its terms relates to a
specified prior date;
(ii) No event has occurred and is continuing, or would result from
such disbursement or from the application of the proceeds thereof, that
constitutes an Event of Default under the Indenture or would constitute
an Event of Default but for the requirement that notice be given or time
elapse or both; and
(iii) The Company has satisfied all of the conditions herein to the
release of such funds.
(c) No Notice of Default. The Disbursement Agent shall not have received
written notice from the Trustee that an Event of Default has occurred and is
continuing under the Indenture.
(d) Cessation of Disbursements. In the event that the Disbursement Agent
has received a notice from the Trustee of an Event of Default under the
Indenture pursuant to clause (c) above, the Disbursement Agent shall not
disburse any additional funds until notified in writing by the Trustee.
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ARTICLE V
OTHER DISBURSEMENTS
SECTION 5.1 Disbursements from the Working Capital Account.
Notwithstanding Articles III and IV, but subject to Section 4.1(c), the
Disbursement Agent shall release from time to time amounts on deposit in the
Working Capital Account to a bank account of the Company, identified in writing
at least 2 Business Days prior thereto by the Company upon receipt of an
Officer's Certificate (a copy of which shall be delivered to the Trustee) to
the effect that:
(i) such funds will not be applied in violation of the terms of the
Indenture;
(ii) the representations and warranties referred to in Section
4.1(b)(ii) herein are true and correct as if set forth in such Officer's
Certificate, and the conditions set forth in Section 4.1(b) have been
satisfied; and
(iii) from and after the date granted, no Gaming License required
for the Company to operate its business in the manner described in the
Offering Memorandum shall have been rescinded, suspended, conditioned,
restricted, nullified or revoked and such rescission, suspension,
condition, restriction, nullification or revocation is continuing.
SECTION 5.2 Disbursements from the Interest Reserve Account.
Notwithstanding Articles III and IV, the Disbursement Agent shall, without the
prior approval of any other party, release and transfer to the Trustee such
amounts on deposit in the Interest Reserve Account as specified by the Company
to make payments to Noteholders of the first and/or second scheduled fixed
interest payments on the Senior Notes, upon receipt of an Officer's Certificate
from the Company, certifying that such amounts will promptly be used for
payment of the first or second scheduled fixed interest payment on the Senior
Notes, as applicable. Such Officer's Certificate shall be delivered to the
Disbursement Agent (with a copy to the Trustee) at least two days prior to the
date of the scheduled fixed interest payment.
Following payment in full of the first scheduled fixed interest payment on
the Senior Notes, an amount equal to the undisbursed, unreleased amounts
remaining on deposit in the Interest Reserve Account less the amount of the
second scheduled fixed interest payment shall be transferred to the Working
Capital Account upon the written request of the Company.
Following payment in full of the first two scheduled fixed interest
payments on the Senior Notes, all undisbursed, unreleased amounts remaining on
deposit in the Interest Reserve
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Account upon written notice of the Company shall be transferred to the Working
Capital Account.
SECTION 5.3 Disbursements from the Completion Reserve Account. (a)
Notwithstanding Articles III and IV, but subject to Section 4.1(c), the
Disbursement Agent shall release amounts on deposit in the Completion Reserve
Account to a bank account of the Company, identified in writing to the
Disbursement Agent (with a copy to the Trustee) at least 2 Business Days prior
thereto by the Company upon receipt of an Officer's Certificate to the effect
that:
(i) (A) construction has been completed for all of the
Projects, or (B) the funds are required for completion of a
Project (specifying details);
(ii) if construction has been completed for all of the
Projects, a mortgage on the Permanent Vessel substantially in the
form of the First Preferred Ship Mortgage attached to the
Indenture has been filed with the United States Coast Guard at the
home port of the Permanent Vessel;
(iii) such funds will not be applied in violation of the
terms of the Indenture;
(iv) the representations and warranties referred to in
Section 4.1(b)(ii) herein are true and correct as if set forth in
such Officer's Certificate, and the conditions set forth in
Section 4.1(b) have been satisfied; and
(v) from and after the date granted, no Gaming License
required for the Company to operate its business in the manner
described in the Offering Memorandum has been rescinded,
suspended, conditioned, restricted, nullified or revoked and such
rescission, suspension, condition, restriction, nullification or
revocation is continuing.
(b) If funds in the Completion Reserve Account are required to be used for
completion of a Project, the amounts required shall be transferred to a
Sub-Account of the Construction Account as specified in the written request of
the Company.
(c) Notwithstanding Articles III and IV or Section 5.3(a), but subject to
Section 4.1(c), the Disbursement Agent shall release $5 million on deposit in
the Completion Reserve Account to a bank account of the Company, identified in
writing at least 2 Business Days prior thereto by the Company, upon receipt of
an Officers' Certificate to the effect that:
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(i) the Majestic Star Casino has been operating for 90 days;
(ii) the Fixed Charge Coverage Ratio as calculated on the last day of
such 90-day period or the last day of any fiscal quarter thereafter is
greater than 2.5 to 1, and Cash Equivalents (other than Cash Equivalents
then remaining in the Cash Collateral Accounts) available to the Company
on any such date of calculation exceed $5.0 million;
(iii) a guaranteed maximum price construction contract or contracts
to construct the Permanent Vessel have been entered into and such
contract or contracts provide for the Permanent Vessel to be constructed
and delivered to the Company in Gary, Indiana no later than September 30,
1997;
(iv) such funds will not be applied in violation of the Indenture;
(v) the representation and warranties referred to in Section
4.1(b)(ii) herein are true and correct as if set forth in such
Officers' Certificate; and
(vi) from and after the date granted, no Gaming License
required for the Company to operate its business in the manner
described in the Offering Memorandum has been rescinded,
suspended, conditioned, restricted, nullified or revoked and such
rescission, suspension, condition, restriction, nullification or
revocation is continuing.
(d) Upon the occurrence of an Event of Default under the Indenture, funds
in the Completion Reserve Account shall at the direction of the Trustee be
transferred to the Trustee to pay principal and interest on the Senior Notes or
as otherwise determined pursuant to the Indenture.
SECTION 5.4. Event of Loss Account. The Company shall deposit any Net
Loss Proceeds in excess of $1,000,000 and any BHR Loss Proceeds in the Event of
Loss Account. If the Net Loss Proceeds are less than $15,000,000 and if the
Company delivers an Officers' Certificate that the conditions set forth in
Section 4.11(a) of the Indenture have been satisfied, the Disbursement Agent
shall release amounts on deposit in the Event of Loss Account to the applicable
Sub-Account of the Construction Account designated in such Officers'
Certificate. If the Company is required to make an Event of Loss Offer, the
Disbursement Agent shall release amounts on deposit in the Event of Loss
Account to a bank account of the Trustee, identified in writing at least 2
Business Days prior thereto by the Trustee, upon receipt of an Officers'
Certificate from the Company certifying that such funds are required by Section
4.11 of the Indenture to
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pay in whole or in part for the purchase of Senior Notes pursuant to the Event
of Loss Offer. Following satisfaction of the requirements of Section 4.11 of
the Indenture, undisbursed, unreleased amounts remaining on deposit in the
Event of Loss Account shall be transferred to the Working Capital Account upon
the written request of the Company.
SECTION 5.5 Asset Sale Account. The Company shall deposit the Net
Proceeds of an Asset Sale in the Asset Sale Account. If the Company delivers
an Officer's Certificate certifying that the Net Proceeds from such Asset Sale
will be applied to (i) an investment in the Principal Business or in tangible
long-term assets used or useful in the Principal Business or (ii) permanently
reduce Indebtedness that is not Subordinated Indebtedness, the Disbursement
Agent shall release amounts on deposit in the Asset Sale Account to the
applicable Sub-Account of the Construction Account or directly to make such
investment or to reduce such indebtedness as designated in such Officer's
Certificate. If the Company is required to make an Asset Sale Offer, the
Disbursement Agent shall release amounts on deposit in the Asset Sale Account
to a bank account of the Trustee identified in writing at least 2 Business Days
prior thereto by the Trustee upon receipt of an Officers' Certificate from the
Company certifying that such funds are required by Section 4.10 of the
Indenture to pay in whole or in part for the purchase of Senior Notes pursuant
to the Asset Sale Offer. Following satisfaction of the requirements of Section
4.10 of the Indenture, undisbursed, unreleased amounts remaining on deposit in
the Asset Sale Account shall be transferred to the Working Capital Account upon
the written request of the Company.
ARTICLE VI
COVENANTS
SECTION 6.1 Covenants of the Company. For so long as this Agreement
shall remain in effect, the Company shall:
(a) Construction Consultant. Within 30 days of the date hereof, enter
into an agreement with a construction consultant experienced in marine
construction matters and providing for (i) such consultant to perform the
services of the Construction Consultant set forth in this Agreement, including,
without limitation, the services set forth in Schedules 1 and 3 hereto, and
(ii) the Company to pay all of the fees and expenses of such Construction
Consultant arising under such agreement.
(b) Construction Supervisor. Select a Construction Supervisor for the
Permanent Vessel Project as soon as practicable.
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(c) Budgets, etc. As soon as practicable, prepare (or cause to be
prepared) Plans and Specifications, a Construction Budget and a Construction
Schedule for the Chartered Vessel (if applicable) Project, for the Land Project
(if applicable) and for the Permanent Vessel Project, which Construction
Budgets shall not exceed amounts previously expended for such Projects, cash on
deposit in the relevant Sub-Account, plus cash reasonably available from other
sources, including equipment and other financing.
(d) General Contractor. Use reasonable efforts to cause the general
contractor, if any, of the Land Project (or, if different general contractors
are utilized, the general contractor for each aspect of such Project), the
Chartered Vessel Project, if any, and the Permanent Vessel Project to complete
the work (or the construction of a Permanent Vessel) in a timely and efficient
manner and in accordance with the requirements of the Indenture.
(e) Copies of Contracts, Etc. Deliver to the Disbursement Agent, the
Construction Consultant (only with respect to the Permanent Vessel Project) and
the applicable Construction Supervisor (i) upon the request of the Disbursement
Agent, the Construction Consultant (if applicable) or the applicable
Construction Supervisor, copies of all Major and Minor Contracts, (ii) as
promptly as practicable, copies of all work permits, building permits and other
permits required with respect to each of the Projects, and (iii) on the first
Business Day of each month a list of all Major Contractors that have performed
work on or supplied materials for each of the Projects during the previous
month and that are scheduled to perform work or supply materials to one or both
of the Projects during the current month; provided that at any time after the
delivery of the initial list of such Major Contractors, the Company may fulfill
its obligations hereunder by delivering a list of changes from the most recent
list delivered to the Construction Consultant (if applicable) and the
applicable Construction Supervisor.
(f) Changes in Budget and Plans. (i) Cause the proceeds from the Offering
to be utilized in accordance with Section 4.18 of the Indenture, and not make,
any changes in such Plans and Specifications and Construction Budgets, except
such changes that (x) do not materially alter the scope of the applicable
Project, or (y) changes which are set forth in revised Plans and Specifications
or a revised Construction Budget which are delivered to the applicable
Construction Supervisor and the Construction Consultant with respect to
Permanent Vessel Project, together with an Officers' Certificate to the effect
that such revised Construction Budget does not exceed funds previously expended
for the applicable Project, cash on deposit in the relevant Account or
Sub-Account, plus cash reasonably available from other sources including, as
applicable, equipment and other
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financing (which Officers' Certificate shall provide a reasonably detailed
listing of such other sources, if applicable), (ii) deliver to the Construction
Consultant (only with respect to the Permanent Vessel Project) and the
applicable Construction Supervisor, as promptly as possible, copies of material
change orders for each Project, and (iii) keep complete and accurate records of
all changes in the applicable Plans and Specifications and Construction
Budgets.
(g) Access to Information. Permit the Disbursement Agent and the Trustee
and any of their respective agents on reasonable notice and at such times as
shall be reasonably requested (i) to inspect each of the Plans and
Specifications and Construction Budgets, (ii) to inspect and review (and
receive copies of, if requested) (A) all changes to the Plans and
Specifications and Construction Budgets, (B) all contracts or subcontracts
relating to the Projects and any changes thereto, (C) all books and records of
the Company related to the Projects and (D) such other information as such
parties shall reasonably request relating to the performance of the Projects
(including copies of receipts, invoices and other supporting documentation to
substantiate the costs to be paid from the proceeds of any requested
disbursement hereunder), (iii) to attend any job progress meetings and (iv) to
discuss, in the presence of a designated employee of the Company, the Projects
and other matters related thereto with any Project Architect, any contractor or
subcontractor performing work or supplying material for the Projects or any
employee of the Company, provided, further, that the Company shall also grant
the Construction Consultant and any of its respective agents on reasonable
notice and at such times as shall be reasonably requested each of the foregoing
rights with respect to the Permanent Vessel Project.
(h) Certain Rights. The Company shall not have any rights with respect to
the Cash Collateral Accounts except as specifically set forth in the Indenture
or herein.
(i) Further Assurances. The Company will from time to time at the expense
of the Company, promptly execute, deliver, file and record all further
instruments, endorsements and other documents, and take such further action as
the Trustee may deem reasonably desirable in obtaining the full benefits of
this Cash Collateral and Disbursement Agreement and of the rights, remedies and
powers herein granted, including, without limitation, the following:
(i) the filing of any financing statements, in form acceptable to
the Trustee under the Uniform Commercial Code in effect in any
jurisdiction with respect to the liens and security interests granted
hereby. The Company also hereby authorizes the Trustee to file any such
financing statement without the signature of the Company to the extent
permitted
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by applicable law. A photocopy or other reproduction of this Cash
Collateral and Disbursement Agreement shall be sufficient as a financing
statement and may be filed in lieu of the original to the extent
permitted by applicable law. The Company will pay or reimburse the
Trustee for all filing fees and related expenses;
(ii) upon commencement of construction of the Permanent Vessel, the
assignment of any Major Contract to the Trustee and the granting of a
security interest in the work-in-progress at the Shipyard relating to the
construction of the Permanent Vessel, including, without limitation, the
execution of the Construction Contract Assignment and the Construction
Security Agreement substantially in the forms attached to the Indenture;
(iii) upon completion of the construction of the Permanent
Vessel to be owned by the Company, the filing of a mortgage on the
Permanent Vessel substantially in the form of the First Preferred
Ship Mortgage attached to the Indenture, with the appropriate
office of the United States Coast Guard, and the delivery of the
legal opinion relating to the First Preferred Ship Mortgage
required by Section 10.02(c) of the Indenture; and
(iv) furnish to the Trustee from time to time statements and
schedules further identifying and describing the Cash Collateral and such
other reports in connection with the Cash Collateral as the Trustee may
reasonably request, all in reasonable detail and in form satisfactory to
the Trustee.
(j) Change of Name; Identity; Corporate Structure; or Chief Executive
Office. The Company will not change its name, identity, corporate structure or
the location of its chief executive office without (i) giving the Trustee at
least thirty (30) days' prior written notice clearly describing such new name,
identity, corporate structure or new location and providing such other
information in connection therewith as the Trustee may reasonably request, and
(ii) taking all action satisfactory to the Trustee as the Trustee may
reasonably request to maintain the security interest of the Trustee in the Cash
Collateral intended to be granted hereby at all times fully perfected with the
same or better priority and in full force and effect.
SECTION 6.2 Covenants of the Disbursement Agent. For so long as this
Agreement shall remain in effect, in addition to its other undertakings, the
Disbursement Agent shall agree as follows:
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(a) The Cash Collateral Accounts.
(i) Each of the Cash Collateral Accounts is and will be held in
trust on behalf of the Trustee for the benefit of the Holders and not
commingled with any ordinary deposit or commercial bank account, will be
maintained with the corporate trust department of the Disbursement Agent
solely for the Trustee for the benefit of the Holders and will be subject
to the written instructions of the Trustee as set forth in this Agreement
and the Indenture.
(ii) Unless otherwise instructed in writing by the Trustee for the
benefit of the Holders, the Disbursement Agent shall invest amounts on
deposit in the Cash Collateral Accounts in accordance with the written
instructions of the Company pursuant to Section 10.12 of the Indenture
and all interest, cash and instruments from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of then existing Cash Collateral in any Cash Collateral Account
shall be allocated to the applicable Cash Collateral Account or any
applicable Sub-Account thereof.
(iii) All disbursements and releases pursuant to this Agreement
shall be made by the Disbursement Agent irrespective of, and without
deduction for, any counterclaim, defense, recoupment or set-off and shall
be final, and the Disbursement Agent will not seek to recover the same
from the Trustee for any reason any such payment once made.
(iv) All service charges and fees with respect to this Agreement or
the Cash Collateral Accounts shall be paid by the Company.
(v) The Disbursement Agent irrevocably waives and renounces any
pledge, security interest (whether consensual, statutory or otherwise) or
right of offset or compensation that it has or may ever have for its own
benefit with respect to the Cash Collateral Accounts.
(b) Books and Records. The Disbursement Agent shall maintain appropriate
books and records with respect to the Cash Collateral Accounts (including each
Sub-Account) in which shall be recorded all transactions related thereto
including, without limitation, all disbursements hereunder and any investment
of Cash Equivalents made by the Disbursement Agent and shall permit the Company
or any of its agents or representatives and the Trustee or any of its agents or
representatives at reasonable times to inspect and to make copies of such books
and records at the Company's sole cost and expense.
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ARTICLE VII
EVENTS OF DEFAULT; REMEDIES; RIGHTS UPON DEFAULT
SECTION 7.1 Event of Default. For purposes of this Cash Collateral and
Disbursement Agreement, the term "Event of Default" shall have the meaning
provided in the Indenture and shall also include any default in the
performance, or breach, of any covenant of the Company set forth in Section 6.1
hereof that continues for 30 days after written notice has been given from the
Trustee or from holders of at least 25% of the aggregate principal amount of
the Senior Notes then outstanding to the Company and the Disbursement Agent,
specifying such default and requiring that it be remedied.
SECTION 7.2 Rights and Remedies Generally. If an Event of Default shall
occur and be continuing, then and in every such case, the Trustee shall have
all the rights of a secured party under the Uniform Commercial Code, shall have
all rights now or hereafter existing under all other applicable laws, and,
subject to any mandatory requirements of applicable law then in effect, shall
have all the rights set forth in this Cash Collateral and Disbursement
Agreement and all the rights set forth with respect to the Cash Collateral or
this Cash Collateral and Disbursement Agreement and in any other security
agreement or Collateral Document between the parties.
SECTION 7.3 Assembly of Collateral. If an Event of Default shall occur
and be continuing, upon five days notice to the Company, the Company shall, at
its own expense, assemble any and all Cash Collateral in the possession of the
Company (or from time to time any portion thereof) and make it available to the
Trustee at any place or places designated by the Trustee which is reasonably
convenient to both parties.
SECTION 7.4 Disposition of Collateral. The Trustee will give the Company
notice in accordance with Section 10.08 of the Indenture of the time and place
of any public sale of the Cash Collateral or any part thereof or of the time
after which any private sale or any other intended disposition thereof is to be
made.
SECTION 7.5 Recourse. The Company shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Cash Collateral are
insufficient to satisfy the Indenture Obligations. The Company shall also be
liable for all fees and expenses of the Trustee incurred in connection with
collecting such deficiency, including, without limitation, the fees, expenses
and disbursements of any attorneys employed by the Trustee to collect such
deficiency.
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SECTION 7.6 Expenses; Attorneys' Fees. The Company shall reimburse the
Trustee and the Disbursing Agent for all its fees and expenses in connection
with the exercise of its rights hereunder, including, without limitation, all
reasonable attorneys' fees and legal expenses incurred by the Trustee or the
Disbursement Agent. Expenses of retaking, holding, preparing for sale, selling
or the like shall include the reasonable attorneys' fees and legal expenses of
the Trustee and the Disbursement Agent. All such expenses shall be secured
hereby.
SECTION 7.7 Limitation on Duties Regarding Preservation of Cash
Collateral. (a) The Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of any Cash Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to
deal with it in the same manner as the Trustee deals with similar property for
its own account.
(b) The Trustee shall have no obligation to take any steps to preserve
rights against prior parties to any Cash Collateral.
(c) Neither the Trustee nor any of its directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Cash Collateral or for any delay in doing so or shall be under
any obligation to sell or otherwise dispose of any Cash Collateral upon the
request of the Company or otherwise.
(d) Neither the Trustee nor the Disbursement Agent nor any of their
directors, officers, employees or agents shall be liable for disbursements made
in good faith reliance on any certificate provided to either of them pursuant
to the terms of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendments, Etc. No amendment, modification or waiver of
any provision of this Agreement may be made except in accordance with Article 9
of the Indenture; provided, that any such amendment, modification or waiver of
this Agreement shall require the prior written consent of the Disbursement
Agent.
SECTION 8.2 Notices, Etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be sufficiently given if
made by registered overnight courier, by hand delivery, by telex, by facsimile
or
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registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
To the Company:
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Attention: Vice President
Telecopy No.: (313) 259-0154
with a copy to:
Dykema Gossett
400 Renaissance Center
Detroit, Michigan 48243
Attention: Frank K. Zinn, Esq.
Telecopy No.: (313) 568-6915
To the Indenture Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Telecopy No.: (212) 858-2952
To The Disbursement Agent:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate Trust Department
Telecopy No.: (313) 225-3420
Any party hereto may by notice to each other party designate such
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to any party shall be deemed to have been
given or made: as of the date so delivered, if personally delivered; on the
next business day, if sent by registered overnight courier; when answered back,
if telexed; when receipt is acknowledged, if faxed; and five calendar days
after mailing, if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually
received by the addressee).
SECTION 8.3 No Waiver, Remedies. No failure on the part of the
Disbursement Agent, the Trustee or any Holder to
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<PAGE> 27
exercise, and no delay in exercising, any right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of
any other right.
SECTION 8.4 Indemnity and Expenses. (a) The Company agrees to indemnify
the Trustee, the Holders, the Disbursement Agent and the Construction
Consultant (the "Indemnified Parties") from and against any and all claims,
losses and liabilities growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from such Indemnified Party's bad faith, gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction.
(b) The Company will upon demand pay to the Disbursement Agent, the
Trustee or the Construction Consultant the amount of any and all reasonable
fees and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that the Disbursement Agent or the Trustee may
incur in connection with (i) the administration of this Agreement, (ii) the
exercise or enforcement of any of the rights of the Disbursement Agent, the
Trustee, or the Holders hereunder or (iii) the failure by the Company to
perform or observe any of the provisions hereof.
(c) Notwithstanding any other provision of this Agreement, the fees and
expenses (but not indemnities) payable to any Construction Supervisor and
included in the relevant Construction Budget shall be paid from the relevant
Sub-Account upon request by the Company.
(d) The making of any Project Disbursement or part thereof shall not
constitute an approval or acceptance of the work or material by the Trustee,
the Construction Consultant or the Disbursement Agent nor shall such approval
give rise to any liability or responsibility related to:
(i) the quality of the work, the quantity of the work, the rate or
progress in completion of the work, or the sufficiency of materials or
labor being supplied in connection therewith; and
(ii) any errors, omissions, inconsistencies or other defects of any
nature in the Plans and Specifications and any inspection of the work
that either the Trustee, the Disbursement Agent or the Construction
Consultant may choose to make, whether through any consulting engineer,
agent or employee or officer, during the progress of the work shall be
solely for the Trustee, the Disbursement Agent's or the Construction
Consultant's information, and under no
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<PAGE> 28
circumstances will any such inspection be deemed to have been made for
the purpose of supervising or superintending the work or for the
information or protection of any right or interest of any Persons other
than the Trustee, the Construction Consultant, the Disbursement Agent or
the Holders.
(e) In no event shall either the Trustee or the Disbursement Agent be
liable for any Liens which may be filed by third parties against the Projects.
SECTION 8.5 Execution in Counterparts. This Agreement may be executed in
any number of separate counterparts and by different parties hereto in separate
counterparts, each of which, when so executed, shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.6 Relationship of Parties. Neither the Trustee nor the
Disbursement Agent shall be under any responsibility in respect of the validity
or sufficiency of this Agreement or the execution and delivery hereof by any
other party or in respect of the validity or sufficiency of any document or
agreement delivered in connection herewith, including, but not limited to, any
document or agreement the forms of which are attached hereto as Exhibits to
this Agreement. Neither the Trustee nor the Disbursement Agent shall be
accountable for the use or application of the funds in the Cash Collateral
Accounts or for Project Disbursements, except as set forth in the Indenture or
herein.
SECTION 8.7 Duties of Disbursement Agent. (a) The Disbursement Agent
shall have only those duties as are specifically provided herein. The
Disbursement Agent shall neither be responsible for, nor chargeable with
knowledge of, the terms and conditions of any other agreement, instrument, or
document between the other parties hereto, in connection herewith, except as
specifically set forth in this Agreement and shall be required to act only
pursuant to the terms and provisions of this Agreement. This Agreement sets
forth all matters pertinent to the duties of the Disbursement Agent
contemplated hereunder and no additional obligations shall be implied from the
terms of this Agreement or any other agreement.
(b) The Disbursement Agent shall be entitled to deem the signatories of
any documents or instruments submitted to it hereunder as being those purported
to be authorized to sign such documents or instruments and shall be entitled to
rely on the genuineness of such signatures without requiring substantiating
evidence of any kind. In the absence of bad faith on its part,
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<PAGE> 29
the Disbursement Agent may conclusively rely upon certificates or documents
conforming to the requirements of this Agreement as for the truth of the
statements expressed therein.
SECTION 8.8 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Michigan.
SECTION 8.9 Gaming Laws. Each of the provisions of this Agreement is
subject to, and shall be enforced in compliance with, the provisions of any
applicable laws, including, without limitation, the rules and regulations of
the Indiana Gaming Commission.
SECTION 8.10 Waiver Of Jury Trial. Each of the Company, the Trustee and
the Disbursement Agent hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, or the actions of any
party hereto in the negotiation, administration, performance or enforcement
thereof.
SECTION 8.11 Termination. This Agreement shall terminate upon mutual
written agreement of each of the parties hereto or upon payment in full of all
Obligations under the Indenture.
SECTION 8.12 Third Party Beneficiaries. Except as provided in Section 8.4
with respect to the Construction Consultant and except as to the Holders, no
Person shall be a third party beneficiary of this Agreement.
ARTICLE IX
ARBITRATION
Section 9.1 Arbitration. (a) Any disagreement with respect to the
release of funds from the Construction Account, or any related disagreement
with respect to the construction, meaning or effect of this Agreement, arising
out of this Agreement or concerning the rights or obligations of the parties
hereunder shall be submitted to arbitration, one arbitrator to be chosen by the
Company, one by the Trustee, and a third to be chosen by the first two
arbitrators before they enter into arbitration. The arbitrators shall be
impartial and shall be active or retired persons with experience in
construction, development and/or construction lending (and in the case of the
Chartered Vessel Sub-Account or the Permanent Vessel Sub-Account, maritime
construction, development and/or construction lending).
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<PAGE> 30
(b) In the event that either party should fail to choose an arbitrator
within 15 days following a written request by the other party to enter into
arbitration, the requesting party may choose two arbitrators who shall, in
turn, choose the third arbitrator. If the first two arbitrators have not
chosen a third arbitrator at the end of 15 days following the last day of the
selection of the first two arbitrators, each of the first two arbitrators shall
name three candidates, of whom the other arbitrator shall eliminate two, and
the determination of the third arbitrator shall be made from the remaining two
candidates by drawing lots. Each party shall present its case to the
arbitrators within 15 days following the date of the appointment of the third
arbitrator. The decision of a majority of the three arbitrators shall be final
and binding upon both parties. Judgment may be entered upon the arbitration
award in any court having jurisdiction. Each party shall bear the expense of
its own arbitrator and shall jointly and equally bear with the other the
expense of the third arbitrator and of the arbitration. In the event that the
two arbitrators are chosen by one party, as above provided, the expense of the
arbitrators and the arbitration shall be equally divided between the two
parties. Any such arbitration shall take place in Detroit, Michigan unless
some other location is mutually agreed upon by the parties. The arbitrators
shall resolve any dispute arising hereunder in a manner consistent with the
intent of the parties as expressed in this Agreement. The arbitrators shall
not award any punitive, consequential or exemplary damages or any amount in
excess of the amount to be released from the relevant Cash Collateral Account
or Sub-Account. All awards by the arbitrators shall be payable solely from the
amounts on deposit in the relevant Cash Collateral Account or Sub-Account.
(c) Notwithstanding the provisions of clauses (a) and (b) above, in the
event that a dispute relates to the construction of the Permanent Vessel, upon
the written request of the Company, any controversy or claim arising out of or
relating to the construction of the Permanent Vessel and the meaning or effect
of this Agreement or the rights or obligations of the parties hereunder shall
be settled by arbitration administered by the American Arbitration Association
under its Construction Industry Arbitration Rules. The parties shall use their
best efforts to resolve the dispute as soon as practicable and to comply, if
available, with the fast track procedures specified in the Construction
Industry Arbitration Rules. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By: Kenneth L. Kramer
---------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: Nancy R. Besse
----------------------------
NBD BANK,
as Disbursement Agent
By: J. Michael Banas
----------------------------
Name: J. Michael Banas
Title: Vice President
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<PAGE> 32
Schedule 1
Requirements for Major
Ship Contracts
1. In the case of the principal agreement or agreements for the construction
of the Permanent Vessel (the "Ship Construction Contracts"), such
Contracts shall be maximum guaranteed price contracts not in excess of an
aggregate of $40 million plus any additional capital contributions
deposited into the Permanent Vessel Sub-Account by the Company for such
construction and the Company shall have delivered a copy of such contracts
to the Construction Consultant.
2. The Construction Consultant shall have certified within 15 days of the
receipt thereof that such Ship Construction Contracts are customary or
commercially reasonably for a construction project of similar design and
scope. If the Construction Consultant is not able to make such
certification because such Contracts are not, in the opinion of such
Construction Consultant, customary or commercially reasonable, the
Construction Consultant shall deliver notice to the Company specifying in
reasonable detail its objections and the Company shall use its reasonable
best efforts to modify, amend or replace such contracts to address such
objections. If the Company disputes the appropriateness of such
objections, such dispute shall be resolved either (i) pursuant to Article
IX of the Agreement or (ii) as set forth in writing by the Company and the
Construction Supervisor. If the Construction Consultant does not make
such certification or deliver such objections to the Company within such
15-day period, the Construction Consultant shall have been deemed to have
made such certification.
3. Such contract (other than the Ship Construction Contracts and other than
contracts not involving construction where Retainage is not customary)
shall provide for at least 5% Retainage until final completion of the
applicable work, including all "punch list" items.
4. The Ship Construction Contracts shall be assigned to the Trustee as
additional security and any necessary consents to such assignment shall be
obtained.
5. The Company shall grant a security interest to the work-in-process
relating to the construction of the Permanent Vessel at the Shipyard to
the Trustee.
<PAGE> 33
Schedule 2
Requirements for Major
Contracts Other than Ship Contracts
1. Such contract shall be a maximum guaranteed price contract not in excess
of the amount of the items reflected on the Construction Budget to which
such contract relates or otherwise contain customary and prudent
conditions to protect against cost overruns.
2. Such contract shall provide for at least 5% Retainage until 50%
completion of the applicable work (as reasonably determined by a Project
Architect and reasonably approved by the applicable Construction
Supervisor) and at least 5% Retainage until final completion of the
applicable work, including all "punch list" items, provided that Retainage
will not be required for contracts not involving construction where
Retainage is not customary.
<PAGE> 34
Schedule 3
Additional Conditions to
Disbursements from Permanent Vessel Sub-Account
1. For any Project Disbursements from the Permanent Vessel
Sub-Account,(i) from and after the date granted, the Gaming License
issued to the Company by the Indiana Gaming Commission shall not have
elapsed and shall not have been rescinded, suspended, nullified or
revoked and any such rescission, suspension, nullification or revocation
shall be continuing, nor shall proceedings instituted by the Indiana
Gaming Commission for any such action be pending and (ii) the Company
shall not have received notice that the Company will not receive a
riverboat owner's license.
2. The Company shall have delivered to the Disbursement Agent and the
Construction Consultant a copy of the Major Contract to which such
Project Disbursement relates which satisfies the requirements of Schedule
1.
3. The Company shall continue to retain a Construction Supervisor and the
Construction Consultant for the Permanent Vessel Project in accordance
with the Cash Collateral and Disbursement Agreement.
4. Following preparation of the design specifications for the Permanent
Vessel, the Company shall have completed or caused to be completed
initial drafts of the Plans and Specifications sufficient to reasonably
define the scope and major elements of the Project, a preliminary
Construction Budget and a preliminary Construction Schedule and the
Company shall deliver a copy of such Plans and Specifications to the
Construction Consultant.
5. The Construction Consultant shall have certified within 15 days of
receipt thereof that such Plans and Specifications are customary or
commercially reasonable for a construction project of similar design and
scope. If the Construction Consultant is not able to make such
certification because such Plans and Specifications are not, in the
opinion of such Construction Consultant, customary or commercially
reasonable, the Construction Consultant shall deliver notice to the
Company specifying in reasonable detail its objections and the Company
shall use its reasonable best efforts to modify, amend or replace such
Plans and Specification to address such objections. If the Company
disputes the appropriateness of such objections, such dispute shall be
resolved either (i) pursuant to Article IX of the Agreement or (ii) as
set forth in writing by the Company and the Construction Consultant. If
the Construction Consultant does not make such certification or deliver
such objections to the Company within such 15 day period, the
Construction Consultant shall have been deemed to have made such
certification.
<PAGE> 35
Schedule 4
Additional Conditions to
Disbursements from Land Sub-Account
During the Initial Phase
1. For any Project Disbursements from the Land Sub-Account (i) from and
after the date granted, the Certificate of Suitability issued to the
Company by the Indiana Gaming Commission shall not have elapsed and shall
not have been rescinded, suspended, nullified or revoked and any such
rescission, suspension, nullification or revocation shall be continuing,
nor shall proceedings for any such action be pending and (ii) the Company
shall not have received notice that the Company will not receive a
riverboat owner's license.
2. (i) The Company shall have delivered to the Disbursement Agent a copy
of each of the Major Contracts required by (and complying with) paragraph
1 of Schedule 2. Such contract may take the form of a preliminary letter
agreement for the first 120 days of construction.
3. The Company shall continue to retain a Construction Supervisor, if
applicable, for the Project in accordance with the Cash Collateral and
Disbursement Agreement.
4. The Company shall have completed or caused to be completed the Plans
and Specifications sufficient to reasonably define the scope and major
elements of the Project, a preliminary Construction Budget and a
preliminary Construction Schedule.
5. In the case of disbursements to the BHR Joint Venture, such
disbursements, after giving effect to all prior disbursements, may not
exceed in the aggregate $56.1 million.
<PAGE> 36
EXHIBIT A
REQUEST FOR A PROJECT DISBURSEMENT
[Letterhead of the Company]
__________________, 19____
NBD Bank
as Disbursement Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate Trust Department
Project
Gentlemen:
The undersigned refers to the Cash Collateral and Disbursement Agreement,
dated May 22, 1996 (the "Collateral Disbursement Agreement"; the terms defined
therein being used herein as therein defined), among the Trustee, the
undersigned and you and hereby requests, pursuant to Section 3.1 of the
Collateral Disbursement Agreement, that a Project Disbursement from the
__________ [Cash Collateral Account] [Sub-Account] in the aggregate amount of
$____________ (the "Project Disbursement") be made available to the undersigned
on _____________, 199_, which is a Business Day.
The undersigned hereby certifies that the following statements are true on
the date hereof and will be true on the date of the Project Disbursement:
(i) The Project Disbursement will be applied to the following uses
permitted under Section 4.18 of the Indenture in the following amounts:
Description Amount
___________________ ___________
___________________ ___________
<PAGE> 37
(ii) No event has occurred and is continuing, or would result from
such Project Disbursement or from the application of the proceeds thereof,
that constitutes an Event of Default under the Indenture or would
constitute an Event of Default under the Indenture but for the
requirement that notice be given or time elapse or both;
(iii) The Company has not exceeded, and after giving effect to this
Project Disbursement (and after taking into account all adjustments
permitted by Section 3.3(b)) will not exceed, the Line Item or Line Items
with respect to the applicable construction budget for the costs to be
paid with the proceeds of this Project Disbursement;
(iv) The amount of the requested Project Disbursement, together with
the amounts on deposit in the applicable Cash Collateral Account and the
amount of any financing of Project costs permitted under the Indenture
and reasonably available to the Company are sufficient to finance the
completion of the Project;
(v) The amount shown on each Line 12 of the attached Project
Disbursement Documentation is the actual amount presently payable or paid
to the applicable Contractor, and this Project Disbursement shall be used
solely for the purpose of paying the items of cost specified herein or
for reimbursing the Company for such items previously paid by the
Company;
(vi) The Company has no knowledge of and has received no notices of
Liens, except Permitted Liens, or claims of lien either filed or
threatened against the Project;
(vii) All amounts shown on each Line 7 and Line 10 of the Project
Disbursement Documentation have been paid by the Company;
(viii) The Company approves all work and materials for which payment
is due (as shown on each Line 12 of the Project Disbursement
Documentation) and confirms that such work and materials and all work and
materials to be prepaid conform in all material respects with the Plans
and Specifications, as such Plans and Specifications may be modified in
accordance with the terms of the Collateral Disbursement Agreement;
(ix) Approximately __% of the _________ Project has been completed
as of this date;
(x) Construction of the Project is progressing in such manner so as
to achieve substantial completion thereof, substantially in accordance
with the Plans and
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<PAGE> 38
Specifications, on or before the completion date in the Construction
Schedule;
(xi) All previous Project Disbursements have been expended for the
sole purpose of paying the costs ("Costs") previously certified to the
Disbursement Agent and the Trustee and no part of said funds has been
used, and this Project Disbursement shall not be used, for any other
purpose. No item of Costs previously certified to the Disbursement Agent
and the Trustee remains unpaid as of the date hereof except for any item
of Cost where payment had been reasonably withheld by the Company as a
result of a good faith dispute; and
(xii) All conditions to this Project Disbursement have been met in
accordance with the terms of the Collateral Disbursement Agreement,
including, without limitation, the conditions set forth in Schedules 1-4
thereto.
Documentation for this Project Disbursement is provided in Annex 1-A or,
in the alternative, Annex 1-B hereto. A copy of this Request for a Project
Disbursement and the attached documentation have been delivered to the Trustee
at its address for notices provided in the Indenture.
Very truly yours,
[REQUESTING PARTY]
By:____________________
Name:
Title:
<PAGE> 39
ANNEX I-B TO REQUEST FOR PROJECT DISBURSEMENT
(To be used as an alternative to Annex I-A in cases where the Project
Architect is acting as the Construction Supervisor.]
AIA FORM
<PAGE> 40
EXHIBIT B
PROMISSORY NOTES
<PAGE> 41
EXHIBIT C
FORM OF TRUSTEE'S CERTIFICATE
[Date]
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate Trust Department
Re: Request of $_______ from
[______________ Account(s)]
Gentlemen:
Pursuant to Section 2.4 of the Cash Collateral and Disbursement Agreement
dated May 22, 1996, to which you are a party, IBJ Schroder Bank & Trust
Company, a New York banking corporation (the "Trustee"), requests that a
disbursement of $_________ be made from the [________________ Account(s)] to
Account No._________. In connection with the requested release of funds, the
Trustee hereby represents, warrants and certifies that an Event of Default has
occurred under the Indenture which (except in the case of a Change of Control
Offer, Uncompleted Project Offer or Uncompleted Vessel Offer) has been
accelerated pursuant to Section 6.02 of the Indenture.
The foregoing representations, warranties and certifications are true and
correct and Disbursement Agent is entitled to rely on the foregoing and is
authorized in making the release of funds.
IBJ SCHRODER BANK & TRUST COMPANY
By:______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.9
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MAY 22, 1996
BY AND BETWEEN
THE MAJESTIC STAR CASINO, LLC
AND
WASSERSTEIN PERELLA SECURITIES, INC.
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 22, 1996 by and between The Majestic Star Casino, LLC
(the "Company"), and Wasserstein Perella Securities, Inc. (the "Initial
Purchaser") who has agreed to purchase the Company's 12-3/4% Senior Secured
Notes due 2003 (the "Notes") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated May
16, 1996 (the "Purchase Agreement"), by and between the Company and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Notes
issued in connection with an offering of $105,000,000 aggregate principal amount
of Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchaser set forth in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to not open for business.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Exchange Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Notes that
such Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Notes acquired directly from
the Company or any of its affiliates).
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of
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<PAGE> 3
Exchange Notes in the same aggregate principal amount as the aggregate principal
amount of Notes tendered by Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Notes, each Interest
Payment Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5 hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE NOTES: The Company's 12-3/4% Exchange Notes due 2003 to be
issued pursuant to the Indenture (a) in the Exchange Offer or (b) upon the
request of any Holder of Notes covered by a Shelf Registration Statement, in
exchange for such Notes.
EXCHANGE OFFER: The registration by the Company under the Act of the
Exchange Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchaser
proposes to sell the Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain institutional
"accredited investors," as such term is defined in Rule 501(a)(1) ,(2), (3) and
(7) of Regulation D under the Act.
HOLDERS: As defined in Section 2 hereof.
IGC: The Indiana Gaming Commission.
INDENTURE: The Indenture, dated the Closing Date, between the Company
and IBJ Schroder Bank & Trust Company, as trustee (the "Trustee"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture and the Notes.
MANAGER: Barden Development, Inc., an Indiana corporation, or any
successor thereto.
NASD: National Association of Securities Dealers, Inc.
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<PAGE> 4
OFFERING MEMORANDUM: The final offering memorandum, dated May __,
1996, relating to the Company and the Notes.
PERSON: An individual, partnership, corporation, trust,
unincorporated organization, or other entity, or a government or agency or
political subdivision thereof.
PRELIMINARY OFFERING MEMORANDUM: The preliminary offering memorandum,
dated April 30, 1996, relating to the Company and the Notes.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
SENIOR NOTES: The Notes and the Exchange Notes.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Senior Note, until the earliest
to occur of (a) the date on which such Senior Note is exchanged by a Person
other than a broker-dealer for an Exchange Note in the Exchange Offer, (b)
following the exchange by a broker-dealer in the Exchange Offer of a Note for an
Exchange Note, the date on which such Exchange Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (c) the
date on which such Senior Note is effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (d)
the date on which such Senior Note is distributed to the public pursuant to Rule
144 under the Act.
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<PAGE> 5
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING. A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 45 days
after the Closing Date, the Exchange Offer Registration Statement, (ii) use its
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after filing with the Commission, (iii) in connection with the foregoing, (A)
file all pre-effective amendments to such Exchange Offer Registration Statement
as may be necessary in order to cause such Exchange Offer Registration Statement
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all filings, if any, in connection with the registration and
qualification of the Exchange Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Notes to be offered in
exchange for the Notes that are Transfer Restricted Securities and to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement
to be effective continuously, and shall keep the Exchange Offer open, for a
period of not less than the minimum period required under applicable federal and
state securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 Business Days. The Company shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws and all applicable laws, regulations and/or ordinances. No
securities other than the Senior Notes shall be included in the Exchange Offer
Registration Statement. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 45 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted
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<PAGE> 6
Broker-Dealer who holds Notes that are Transfer Restricted Securities and that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities, may exchange such Notes (other than
Transfer Restricted Securities acquired directly from the Company) pursuant to
the Exchange Offer; however, such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Exchange Note received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirements may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Senior Notes held by any
such Broker-Dealer except to the extent required by the Commission as a result
of a change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period expiring on the earlier of (i) the date that all Holders of
Transfer Restricted Securities have registered such securities pursuant to the
Exchange Offer and (ii) 365 days from the date on which the Exchange Offer
Registration Statement is declared effective.
The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers upon request at any
time during such 365-day period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to file
the Exchange Offer Registration Statement with respect to the Exchange Notes or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a)(i) below have been complied with) or (ii) any Holder of $500,000
aggregate principal amount or more of Transfer Restricted Securities notifies
the Company within 20 Business Days following the Consummation of the Exchange
Offer that (A) such Holder is prohibited by law or Commission policy from
participating in the Exchange Offer, (B) such Holder may not resell the Exchange
Notes 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)
such
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<PAGE> 7
Holder is a Broker-Dealer and holds Notes acquired directly from the Company or
an affiliate of the Company, then the Company shall
(x) cause to be filed on or prior to (1) in the case of a
Registration Statement filed pursuant to clause (i) above, 30 days after the
date on which the Company determines that it is not required to file the
Exchange Offer Registration Statement and (2) in the case of a Registration
Statement filed pursuant to clause (ii) above, 30 days after the date on which
the Company receives the notice specified in clause (ii) above, a shelf
registration statement pursuant to Rule 415 under the Act, (which may be an
amendment to the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement")), relating to all Transfer Restricted Securities
the Holders of which shall have provided the information required pursuant to
Section 4(b) hereof, and
(y) use its best efforts to cause such Shelf Registration Statement
to become effective on or prior to the date 120 days after the date on which the
Company becomes obligated to file such Shelf Registration Statement. If, after
the Company has filed an Exchange Offer Registration Statement which satisfies
the requirements of Section 3(a) above, the Company is required to file and make
effective a Shelf Registration Statement solely because the Exchange Offer is
not permitted under applicable federal law, then the filing of the Exchange
Offer Registration Statement shall be deemed to satisfy the requirements of
clause (x) above. Such an event shall have no effect on the requirements of
this clause (y), or on the Effectiveness Target Date as defined in Section 5
below.
The Company shall use its best efforts to keep the Shelf Registration
Statement discussed in this Section 4(a) continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefit of this Section 4(a),
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period expiring on the earlier of (i) the date that all Holders
of Transfer Restricted Securities have registered such securities pursuant to
the Exchange Offer and (ii) three years following the Closing Date.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 Business Days after receipt of a request
therefor, such information specified in item 507 of Regulation S-K under the
Act, or otherwise required by the Act or the Commission for use in connection
with any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder of Transfer Restricted Securities shall be entitled
to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have provided all such information required to be provided by such Holder
for inclusion therein. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company in writing, for so
long as the Registration Statement is
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<PAGE> 8
effective, all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Company fails to file any of the Registration Statements
required by this Agreement on or before the date specified for such filing in
this Agreement, (ii) any of such Registration Statements is not declared
effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (iii) the Company fails to
Consummate the Exchange Offer within 30 business days after the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
this Agreement without being succeeded immediately by a post effective amendment
to such Registration Statement that cures such failure and that is itself
declared effective within such five Business Day period (each such event
referred to in clauses (i) through (iv) above, a "Registration Default"), then
commencing on the day following the date on which such Registration Default
occurs, the Company agrees to pay to each Holder of Transfer Restricted
Securities, for the first 90-day period immediately following the occurrence of
such Registration Default, liquidated damages in an amount equal to $.05 per
week per $1,000 principal amount of Notes constituting Transfer Restricted
Securities held by such Holder for each week or pro rata for a portion of each
week thereof that the Registration Default continues. The amount of liquidated
damages payable to each Holder shall increase by an additional $.05 per week per
$1,000 principal amount of Notes constituting Transfer Restricted Securities
held by such Holder for each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum of $.35 per week per $1,000 principal
amount of Notes constituting Transfer Restricted Securities held by such Holder.
All accrued liquidated damages shall be paid to the holder of the
Global Note by wire transfer of immediately available funds or by federal funds
check and to Holders of Certificated Securities by mailing checks to their
registered addresses by the Company on each Damages Payment Date. All
obligations of the Company set forth in the preceding paragraph that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of the Broker-Dealer Transfer Restricted
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<PAGE> 9
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a question as to whether the Exchange Offer is permitted
by applicable federal law, the Company hereby agrees to seek a no-action
letter or other favorable decision from the Commission allowing the Company
to Consummate an Exchange Offer for such Notes. The Company hereby agrees
to pursue the issuance of such a decision to the Commission staff level.
In connection with the foregoing, the Company hereby agrees to take all
such other actions as are requested by the Commission or otherwise required
in connection with the issuance of such decision, including without
limitation (A) participating in telephonic conferences with the Commission,
(B) delivering to the Commission staff an analysis prepared by counsel to
the Company setting forth the legal bases, if any, upon which such counsel
has concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes to be issued in the
Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary
course of business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by item 507 or 508, as applicable, of
Regulation S-K if the resales are of Exchange Notes obtained by such Holder
in exchange for Notes acquired by such Holder directly from the Company or
an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the
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<PAGE> 10
Company is registering the Exchange Offer in reliance on the position of
the Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and,
if applicable, any no-action letter obtained pursuant to clause (i) above,
(B) including a representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the Exchange
Notes to be received in the Exchange Offer and that, to the best of the
Company's information and belief, each Holder participating in the Exchange
Offer is acquiring the Exchange Notes in its ordinary course of business
and has no arrangement or understanding with any Person to participate in
the distribution of the Exchange Notes received in the Exchange Offer and
(C) any other undertaking or representation required by the Commission as
set forth in any no-action letter obtained pursuant to clause (i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof),
consistent with this Agreement and pursuant thereto the Company will as
expeditiously as possible prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended or methods of distribution thereof within the
specified time periods and otherwise in accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without
limitation, any Exchange Offer Registration Statement and the related
Prospectus, to the extent that the same are required to be available to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 hereof, as applicable. Upon the
occurrence of any event that would cause any such Registration Statement or
the Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company shall file promptly an appropriate amendment to such Registration
Statement, (1) in the case of clause (A), correcting any such misstatement
or omission, and (2) in the case of either clause (A) or (B), use its best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purposes(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the
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<PAGE> 11
Registration Statement effective for the applicable period set forth in Section
3 or 4 hereof, as applicable, or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Registration Statement have been
sold; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Act, and to comply fully with Rules 424 and 430A, as applicable, under the Act
in a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the suspension
by any state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
(iv) furnish to each selling Holder named in any Registration
Statement or Prospectus and each of the underwriter(s) in connection with such
sale, if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or supplements to
any such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment of such
Holders and underwriter(s) in connection with such sale, if any, for a period of
at least five Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by reference)
to which the selling Holders of the Transfer
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<PAGE> 12
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably objected
to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with the applicable
requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s) in connection with such sale, if any, and make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the selling
Holders, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney or accountant retained by such
selling Holders or any of such underwriter(s), all financial and other
records, pertinent documents and properties of the Company and cause the
Company's officers, managers and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior
to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Senior Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s) in
connection with such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents
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<PAGE> 13
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use of
the Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in connection with
the offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including, unless not required
pursuant to Section 10 hereof, an underwriting agreement) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any Holder
of Transfer Restricted Securities or underwriter in connection with any
sale or resale pursuant to any Registration Statement contemplated by this
Agreement, and in such connection, whether or not an underwriting agreement
is entered into and whether or not the registration is an Underwritten
Registration, the Company shall:
(A) furnish to each selling Holder and each underwriter, if any, upon
the effectiveness of the Shelf Registration Statement and to each
Restricted Broker-Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of effectiveness of the Shelf
Registration Statement or the date of Consummation of the Exchange
Offer, as the case may be, signed by the Manager confirming, as of the
date thereof, the matters set forth in paragraph (c) of Section 6 of
the Purchase Agreement and such other matters as the Holders and/or
underwriter(s) may reasonably request;
(2) an opinion, dated the date of effectiveness of the Shelf
Registration Statement or the date of Consummation of the Exchange
Offer, as the case may be, of counsel for the Company, covering (i)
due authorization and enforceability of the Senior Notes, (ii) a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
the Initial Purchaser's representatives and counsel to the Initial
Purchaser in connection with the preparation of such Registration
Statement and the related Prospectus and have considered the matters
required to be stated therein and the statements contained therein,
although such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying as to materiality
to a large extent upon facts provided to such counsel by
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<PAGE> 14
officers and other representatives of the Company), no facts came to
such counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective,
and, in the case of the Exchange Offer Registration Statement, as of
the date of Consummation, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that
the Prospectus contained in such Registration Statement as of its date
and, in the case of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (iii)
such other matters of the type customarily covered in opinions of
counsel or an issuer in connection with similar securities offerings,
as may reasonably be requested by such parties. Without limiting the
foregoing, such counsel may state further than such counsel assumes no
responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and
schedules and other financial, statistical and accounting data
included in any Registration Statement contemplated by this Agreement
or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, in connection with any sale or resale pursuant to any
Shelf Registration Statement the indemnification provisions and procedures
of Section 8 hereof with respect to all parties to be indemnified pursuant
to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company pursuant to this
clause (xi), if any.
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent thereunder, and if at any time the
representations and warranties of the Company contemplated in (A)(1) above cease
to be true and correct, the Company shall so advise the Initial Purchaser and
the underwriter(s), if any, and selling Holders promptly and if requested by
such Persons, shall confirm such advice in writing;
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<PAGE> 15
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws
of such jurisdictions as the selling Holders or underwriter(s), if any, may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement; provided,
however, that the Company shall not be required to register or qualify to
do business in any jurisdiction in which it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(xiii) issue, upon the request of any Holder of Notes covered by any
Registration Statement contemplated by this Agreement, Exchange Notes
having an aggregate principal amount equal to the aggregate principal
amount of Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Exchange Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Senior Notes, as the case may be; in return, the Notes held by such Holder
shall be surrendered to the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted Securities in
such denominations and such names as the Holders or the underwriter(s), if
any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xv) use its best efforts to cause the Transfer Restricted Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities, including, without
limitation the IGC, as may be necessary to enable the seller or sellers
thereof or the underwriter(s), if any, to consummate the disposition of
such Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xvi) if any fact or event contemplated by Section 6(c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
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<PAGE> 16
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities;
(xix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to any applicable Registration Statement,
as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xx) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate with the Trustee and the
Holders of Senior Notes to effect such changes to the Indenture as may be
required for such 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 that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by
the Holders of a majority in aggregate principal amount of Notes or the
managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security, that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 6(c)(iii)(D)
hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
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<PAGE> 17
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time period regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 hereof, as applicable, shall be extended by the number
of days during the period from and including the date of the giving of such
notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by the Initial Purchaser or any Holder with the NASD and fees and
disbursements of counsel in connection therewith (including, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel, as
may be required by the rules and regulations of the NASD)); (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company and, in accordance with Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing the Senior Notes on a national exchange or automated
quotation system if required hereunder; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchaser and the Holders of
Transfer Restricted Securities being tendered in the Exchange Offer and/or
resold pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel chosen by the
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<PAGE> 18
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) any Holder (any of the persons
refereed to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (or any amendment or supplement thereto), or 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, except insofar as such
losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to any of the Holders
furnished in writing to the Company by any of the Holders expressly for use
therein.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which indemnity may be sought against
the Company, such Indemnified Holder (or the Indemnified Holder controlled by
such controlling person) shall promptly notify the Company in writing (provided,
that the failure to give such notice shall not relieve the Company of its
obligations pursuant to this Agreement). Such Indemnified Holder shall have the
right to employ its own counsel in any such action and the fees and expenses of
such counsel shall be paid, as incurred, by the Company (regardless of whether
it is ultimately determined that an Indemnified Holder is not entitled to
indemnification hereunder). The Company shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for such Indemnified Holders, which firm shall be designated by the
Holders. The Company shall be liable for any settlement of any such action or
proceeding effected with the Company's prior written consent, which consent
shall not be withheld unreasonably, and the Company agrees to indemnify and hold
harmless any Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected with
the
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<PAGE> 19
written consent of the Company. The Company shall not, without the prior
written consent of each Indemnified Holder, settle or compromise or consent to
the entry of judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and its directors,
officers, and any person controlling (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Company, and the respective officers,
directors, partners, employees, representatives and agents of each such person,
to the same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company or the manager of the Company or
any such controlling person in respect of which indemnity may be sought against
a Holder of Transfer Restricted Securities, such Holder shall have the rights
and duties given the Company or its directors or officers or such controlling
person shall have the rights and duties given to each Holder by the preceding
paragraph. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon the sale of the Transfer Restricted Securities giving rise to such
indemnification obligation.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect benefits received by the Company on the
one hand and the Holders on the other hand from their sale of Transfer
Restricted Securities or if such allocation is not permitted by applicable law,
the relative fault of the Company on the one hand and of the Indemnified Holder
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of the Indemnified Holder on the other 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
related to information supplied by the Company or by the Indemnified Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitation set
forth in the second paragraph of Section 8(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
-18-
<PAGE> 20
The Company and each Holder of Transfer Restricted Securities agree
that it would not be just and equitable if contribution pursuant to this Section
8(c) were determined by pro rata allocation (even if the Holders were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph 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, none of the
Holders (and its related Indemnified Holders) shall be required to contribute,
in the aggregate, any amount in excess of the amount by which the total discount
received by such Holder with respect to the Notes exceeds the amounts of any
damages which 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 mispresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available, upon
request of any Holder of Transfer Restricted Securities, to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements entered into
in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.
-19-
<PAGE> 21
SECTION 11. SELECTION OF UNDERWRITERS
In any Underwritten Offering, the investment banker or investment
bankers and managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities included in such offering; provided, that such investment bankers and
managers must be reasonably satisfactory to the Company. Such investment
bankers and managers are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or related
agreements or granted by law, including recovery of liquidated or other damages,
will be entitled to specific performance of its rights under this Agreement.
The Company agrees that monetary damages (including the liquidated damages
contemplated hereby) would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. 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 securities under any agreement in effect on the date
hereof.
(c) ADJUSTMENTS AFFECTING THE SENIOR NOTES. The Company will not
take any action, or permit any change to occur, with respect to the Senior Notes
that would materially adversely affect the ability of the Holders to Consummate
any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities that are subject to such Exchange Offer.
-20-
<PAGE> 22
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, all the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the Indenture;
and
(ii) if to the Company:
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Attention: Kenneth L. Kramer
Vice President and
Chief Financial Officer
Telecopier No.: 313-259-0154
With a copy to:
Frank Zinn, Esq.
Dykema Gossett
400 Renaissance Center
Detroit, Michigan 48243
Telecopier No.: 313-568-6915
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
receipt 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.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign
acquired Transfer Restricted Securities directly from such Holder.
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<PAGE> 23
(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 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 AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(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.
(k) ENTIRE AGREEMENT. This Agreement together with the other Transaction
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
<TABLE>
<S><C>
THE MAJESTIC STAR CASINO, LLC.
By: Barden Development, Inc.
By: Kenneth L. Kramer
-----------------------------
Name: Kenneth L. Kramer
Title: Vice President
WASSERSTEIN PERELLA SECURITIES, INC.
By: James C. Kingsbury
-------------------------------
Name: James C. Kingsbury
Title: Treasurer
</TABLE>
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<PAGE> 1
EXHIBIT 5.1
[DYKEMA GOSSETT LETTERHEAD]
June 20, 1996
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, Michigan 48243
Re: Registration Statement on Form S-4 in Connection
With the Exchange Offer of 12-3/4% Senior Exchange
Secured Notes due 2003 With Contingent Interest
for 12-3/4% Senior Secured Notes due 2003 With
Contingent Interest
--------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for The Majestic Star Casino, LLC, an Indiana
limited liability company (the "Company"), in connection with the preparation
and filing with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"), of a Registration Statement on Form S-4 (the
"Registration Statement") relating to the Exchange Offer by the Company of
$105,000,000 aggregate principal amount of 12-3/4% Senior Exchange Secured
Notes due 2003 With Contingent Interest (the "Notes") for $105,000,000
aggregate principal amount of 12-3/4% Senior Secured Notes due 2003 With
Contingent Interest. The Notes are to be issued pursuant to an Indenture (the
"Indenture") by and between the Company and IBJ Schroder Bank & Trust Company,
as Trustee.
In so acting, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such company records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinions expressed below.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly organized and is validly existing as a
limited liability company in good standing under the laws of the
State of Indiana.
<PAGE> 2
DYKEMA GOSSETT
PLLC
The Majestic Star Casino, LLC
June 20, 1996
Page 2
2. The Notes, when executed and authenticated in accordance
with the terms of the Indenture, and upon issuance in
accordance with the terms of the Exchange Offer in the
Prospectus constituting a part of the Registration Statement,
will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms, except as (a) the enforceability thereof may be limited
by or subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or
hereafter affecting creditors' rights generally and (b) rights
of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.
The opinions expressed herein are limited to the federal law of the
United States and the law of the State of Michigan. In rendering the opinion
set forth in paragraph 2 above, we have assumed that the laws of the State of
New York as to the enforceability of the Notes are not different from the laws
of the State of Michigan (excluding the choice of law rules).
We hereby consent to the use of this opinion as Exhibit 5.1 of the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement. In giving such consent, we do not concede that we are experts within
the meaning of the Act or the rules or regulations thereunder or that this
consent is required by Section 7 of the Act.
Very truly yours,
DYKEMA GOSSETT PLLC
/s/ Carol H. Rodriguez
Carol H. Rodriguez
<PAGE> 1
EXHIBIT 10.1
April 25, 1996
Mr. Don H. Barden
18240 Fairway Drive
Detroit, MI 48221
Dear Mr. Barden:
This letter constitutes an employment agreement between The Majestic Star
Casino LLC, an Indiana limited liability company (or its successor company)
("MSC") and you, pursuant to which you will serve as an employee of MSC and
will perform those duties generally associated with the duties of a president
and chief executive officer of a company. Your duties may be changed from time
to time by MSC, but any new responsibilities or title shall be consistent with
your experience, knowledge and skills. MSC agrees to pay you compensation of
$275,000 annually, payable in substantially equal weekly payments with usual
and customary payroll deductions.
If this letter accurately sets forth the terms of our agreement, sign and
return the enclosed copy to us. We look forward to your joining our
organization and to a long and mutually beneficial relationship.
Very truly yours,
THE MAJESTIC STAR CASINO, LLC
By: BARDEN DEVELOPMENT, INC.
Kenneth L. Kramer
---------------------------
By: Kenneth L. Kramer
Vice President
Agreed to and accepted on this 25th day of April, 1996.
Don H. Barden
---------------------------
Don H. Barden
<PAGE> 1
EXHIBIT 10.2
BARDEN-DAVIS CASINO, L.L.C.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
November 9, 1995
Mr. Thomas C. Bonner
4201 W. 61st Avenue
Hobart, IN 46342
Dear Mr. Bonner:
This letter constitutes an employment agreement between Barden-Davis
Casino, L.L.C. (or its successor company) ("Barden") and you ("Employee") with
respect to Barden's development, construction and operation of a casino gaming
vessel at Buffington Harbor in Gary, Indiana (the "Project").
1. Term. The term of this Agreement is three (3) years commencing on the
Effective Date set forth below the signature lines at the end of this
Agreement.
2. Base Compensation. Barden agrees to pay you a base compensation of
$198,500 annually, payable in substantially equal bi-weekly payments with usual
and customary payroll deductions allocable to the following items:
Base salary: $179,200
Housing allowance: $ 12,000
Automobile allowance: $ 6,000
Meal allowance: $ 1,300
3. Bonus and Incentive Compensation. You have advised that you currently
receive various forms of incentive compensation from your current employer.
Intending to replace those incentives with items of equal or greater potential
value, Barden agrees to develop and provide to you an incentive compensation
plan that will be based upon your personal performance and the Project's
performance, with a minimum value at the end of each year of the agreement of
$169,500. Barden and you will mutually agree on the payment schedule for this
bonus and incentive compensation. This incentive compensation is calculated as
follows:
<PAGE> 2
Mr. Thomas C. Bonner
November 9, 1995
Page 2
Value of stock grant: 1,500 shares @ $25 = $37,500
Value of stock options: 2,000 options @ $25 - $14.50 = $21,000
4,000 options @ $25 - $20.25 = $19,000
Bonus: $92,000
4. Title and Responsibilities. You will initially be employed to serve in
an executive capacity and to perform those duties generally associated with the
duties of Executive Vice President of Gaming Operations for the Project and you
may be asked to serve in a similar capacity for other projects in which Barden
and its related companies may become involved. Your duties and title may be
changed from time to time by Barden, but any new responsibilities or title
shall be consistent with your experience, knowledge and skills. Barden
reserves the right, in its sole discretion, to hire or place someone in a
position superior to you at the Project. Barden agrees to reimburse to you all
reasonable expenses incurred by you in the performance of your duties of
employment incurred in accordance with company policies. You will not be
assigned responsibilities that will require you to maintain a residence outside
of the area of Lake County, Indiana, without your consent.
5. Termination of Employment. Barden shall be permitted to terminate this
Agreement and your employment only upon occurrence of any of the following:
(a) your death;
(b) your permanent disability (defined as continuous disability and
inability to perform the duties and functions of your position for
thirty (30) continuous days;
(c) your inability to obtain and/or maintain licensure required by Indiana
or other gaming authorities; or
(d) cause, which shall mean (i) Employee's willful misconduct which
directly, materially and adversely affects Barden or personal
dishonesty; (ii) breach of fiduciary duty to Barden resulting in
Employee's
<PAGE> 3
Mr. Thomas C. Bonner
November 9, 1995
Page 3
personal profit; (iii) Criminal conviction for violation (after a trial
and final nonappealable judgment) of any law, rule or regulation (other
than traffic violations or other minor offenses); or (v) Employee
repeatedly and intentionally fails to reasonably perform his stated
duties and fails to cure such non-performance within 30 days after his
receipt of written notice from Barden specifically identifying the
manner in which Employee has failed to reasonably perform such stated
duties.
6. Benefits. Barden will provide you with benefits. These benefits
shall include, at a minimum:
(a) health and disability insurance covering you and your dependents,
including medical, dental, and prescription coverage. Since you
currently receive reimbursement for out-of-pocket health-related
expenses up to $5,000 each year, Barden agrees to provide a sum of
$5,000 from which you will be reimbursed for health related expenses
not otherwise compensable by Barden's medical insurance plan.
(b) access, within six (6) months of the Effective Date, to a 401(k)
plan, or similar retirement plan, to which Barden will make annual
matching contributions equal to three (3%) percent of your base and
cash bonus compensation.
(c) life insurance equal to four times your annual base salary, which
shall automatically be adjusted upward annually in the event of
increases to your base salary.
(d) three (3) weeks of paid vacation annually.
7. Non-Competition. You, as consideration for your employment and the
information you will obtain as an employee of Barden agree that during the term
of this Agreement and for a period of 18 months thereafter, you will not,
directly or indirectly, individually or as an employee, partner, officer,
director or stockholder or in any other capacity whatsoever of any person,
firm, partnership or corporation, (i) recruit,
<PAGE> 4
Mr. Thomas C. Bonner
November 9, 1995
Page 4
hire, assist otherwise in recruiting or hiring, discuss employment with, or
refer to others concerning employment, any person who is, or within the
preceding twelve (12) months was, an employee of Barden, or any parent,
subsidiary, or affiliated company, (ii) compete with Barden or any parent,
subsidiary, or affiliated company in any location i n Illinois north of
Springfield, Illinois or any location in Indiana north of Indianapolis,
Indiana, or (iii) use in competition with Barden, or parent, or subsidiary, or
affiliated company any of the methods, information, or systems developed by
Barden or any parent, or subsidiary, or affiliated company.
8. Other Obligations. You have represented that you have no contract,
agreement, or obligation which may be in conflict with any obligation you have
taken under this letter agreement.
9. Confidentiality. Except as your assigned duties may require or as
Barden may otherwise consent in writing, you will not disclose at any time
either during or subsequent to my employment, any information, knowledge or
data of Barden which you may develop or receive during the course of my
employment relating to financial data, writings, computer software, policies,
plans, designs, business processes, methods, data, trade secrets, know-how,
plans and programs, or any other knowledge of Barden which is of a proprietary
or confidential nature, and upon termination of my employment with Barden for
any reason, you agree to immediately deliver to Barden all physical property,
plans, designs, computer programs or software, customer lists, prospect lists,
manuals, letters, notes, reports and any other materials relating to Barden in
your possession or under my control.
10. Arbitration. Any dispute or controversy arising under or in
connection with this agreement or any other aspect of your employment, shall be
settled exclusively by arbitration in Chicago, Illinois, in accordance with
voluntary labor arbitration rules of the American Arbitration Association then
in effect. The arbitrator's sole authority shall be to interpret or apply the
provisions of this agreement. The arbitrator shall not change, add to or
subtract from any of the provisions of this agreement. The arbitrator shall
have the power to compel attendance of witnesses at any hearing. The
<PAGE> 5
Mr. Thomas C. Bonner
November 9, 1995
Page 5
arbitration award shall be final and binding and shall be the sole remedy for
any claimed breach of this agreement except for claims that the arbitrator has
exceeded his jurisdiction and except for any alleged violation by Employee of
the nondisclosure of confidential information provisions of this agreement.
The expense of any arbitration shall be borne equally by Employee and Barden.
Judgment may be entered on the arbitrators award in any court having
jurisdiction, but neither party may otherwise resort to any court or
administrative agency with respect to any dispute that is arbitrable under this
section except for claims that the arbitrator has exceeded his jurisdiction.
11. Entire Agreement. You agree that this letter supersedes any and all
prior agreements and understandings between you and Barden. No representations
have been made by Barden concerning the terms and conditions of employment
other than those representations contained in this letter. This letter may be
modified only by a written document signed by both you and a duly authorized
officer of Barden.
12. Acknowledgment. You have read this letter before signing it and
acknowledge receipt of a copy.
13. Effective Date. This agreement shall take effect and Employee shall
be deemed an employee on December 4, 1995 or on an earlier date if mutually
agreed upon by Employee and Barden.
If this letter accurately sets forth the terms of our agreement, sign and
return the enclosed copy to us. We look forward to your joining our
organization and to a long and mutually beneficial relationship.
Very truly yours,
BARDEN-DAVIS CASINO, L.L.C.
By: Don H. Barden
Agreed to and accepted on this ___ day of November, 1995.
Thomas C. Bonner
--------------------------------
Thomas C. Bonner
<PAGE> 1
EXHIBIT 10.3
BARDEN-DAVIS CASINO, L.L.C.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
November 9, 1995
Mr. Paul W. Sykes
4940 Oriole Drive
Schererville, IN 46375
Dear Mr. Sykes:
This letter constitutes an employment agreement between Barden-Davis
Casino, L.L.C. (or its successor company) ("Barden") and you ("Employee") with
respect to Barden's development, construction and operation of a casino gaming
vessel at Buffington Harbor in Gary, Indiana (the "Project").
1. Term. The term of this Agreement is three (3) years commencing on the
Effective Date set forth below the signature lines at the end of this
Agreement.
2. Base Salary. Barden agrees to pay you a base salary of $175,000
annually, payable in substantially equal bi-weekly payments with usual and
customary payroll deductions.
3. Bonus and Incentive Compensation. You have advised that you currently
receive various forms of incentive compensation from your current employer.
Intending to replace those incentives with items of equal or greater potential
value, Barden agrees to develop and provide to you an incentive compensation
plan that will be based upon your personal performance and the Project's
performance, with a minimum payment at the end of each year of the agreement of
$72,000 and you will mutually agree on the payment schedule for this bonus and
incentive compensation.
4. Reimbursement of Unvested 401(k) Employer Contributions. Barden agrees
to pay you one year from the Effective Date $27,500 provided you are still
employed by Barden.
<PAGE> 2
Mr. Paul W. Sykes
November 9, 1995
Page 2
5. Title and Responsibilities. You will initially be employed to serve in
an executive capacity and to perform those duties generally associated with the
duties of Vice President and General Manager of Project operations. Your
duties and title may be changed from time to time by Barden, but any new
responsibilities or title shall be consistent with your experience, knowledge
and skills. Barden reserves the right, in its sole discretion, to hire or
place someone in a position superior to you at the Project. Barden agrees to
reimburse to you all reasonable expenses incurred by you in the performance of
your duties of employment incurred in accordance with company policies. You
will not be assigned responsibilities that will require you to maintain a
residence outside of the area of Lake County, Indiana, without your consent.
6. Termination of Employment. Barden shall be permitted to terminate this
Agreement and your employment only upon occurrence of any of the following:
(a) your death;
(b) your permanent disability (defined as continuous
disability and inability to perform the duties and functions of your
position for thirty (30) continuous days);
(c) your inability to obtain and/or maintain licensure required by
Indiana or other gaming authorities; or
(d) cause, which shall mean (i) Employee's willful misconduct which
directly, materially and adversely affects Barden or personal
dishonesty; (ii) breach of fiduciary duty to Barden resulting in
Employee's personal profit; (iii) criminal conviction for violation
(after a trial and final nonappealable judgment) of any law, rule or
regulation <other than traffic violations or other minor offenses); or
(v) Employee repeatedly and intentionally fails to reasonably perform
his stated duties and fails to cure such non-performance within 30 days
after his receipt of written notice from Barden specifically
identifying the manner in which Employee has- failed to reasonably
perform such stated duties.
<PAGE> 3
Mr. Paul W. Sykes
November 9, 1995
Page 3
7. Benefits. Barden will provide you with benefits. These benefits shall
include, at a minimum:
(a) health and disability insurance covering you and your dependents,
including medical, dental, and prescription coverage. Since you
currently receive reimbursement for out-of-pocket health-related
expenses up to $5,000 each year, Barden agrees to provide a sum of
$5,000 from which you will be reimbursed for health related expenses
not otherwise compensable by Barden's medical insurance plan.
(b) access, within six (6) months of the Effective Date, to a 401(k)
plan, or similar retirement plan, to which Barden will make annual
matching contributions equal to three (3%) percent of your base and
cash bonus compensation.
(c) life insurance equal to four times your annual base salary, which
shall automatically be adjusted upward annually in the event of
increases to your base salary.
(d) three (3) weeks of paid vacation annually.
8. Non-Competition. You, as consideration for your employment and the
information you will obtain as an employee of Barden agree that during the term
of this Agreement and for a period of 18 months thereafter, you will not,
directly or indirectly, individually or as an employee, partner, officer,
director or stockholder or in any other capacity whatsoever of any person,
firm, partnership or corporation, (i) recruit, hire, assist otherwise in
recruiting or hiring, discuss employment with, or refer to others concerning
employment, any person who is, or within the preceding twelve (12) months was,
an employee of Barden, or any parent, subsidiary, or affiliated company, (ii)
compete with Barden or any parent, subsidiary, or affiliated company in any
location in Illinois north of Springfield, Illinois or any location in Indiana
north of Indianapolis, Indiana, or (iii) use in competition with Barden, or
parent, or subsidiary, or affiliated company any of the methods, information,
or systems developed by Barden or any parent, or subsidiary, or affiliated
company.
9. Other Obligations. You have represented that you have no contract,
agreement, or obligation which may be in conflict with any obligation you have
taken under this letter agreement.
<PAGE> 4
Mr. Paul W. Sykes
November 9, 1995
Page 4
10. Confidentiality. Except as your assigned duties may require or as
Barden may otherwise consent in writing, you will not disclose at any time
either during or subsequent to my employment, any information, knowledge or
data of Barden which you may develop or receive during the course of my
employment relating to financial data, writings, computer software, policies,
plans, designs, business processes, methods, data, trade secrets, know-how,
plans and programs, or any other knowledge of Barden which is of a proprietary
or confidential nature, and upon termination of my employment with Barden for
any reason, you agree to immediately deliver to Barden all physical property,
plans, designs, computer programs or software, customer lists, prospect lists,
manuals, letters, notes, reports and any other materials relating to Barden in
your possession or under my control.
11. Arbitration, Any dispute or controversy arising under or in connection
with this agreement or any other aspect of your employment, shall be settled
exclusively by arbitration in Chicago, Illinois, in accordance with voluntary
labor arbitration rules of the American Arbitration Association then in effect.
The arbitrator's sole authority shall be to interpret or apply the provisions
of this agreement. The arbitrator shall not change, add to or subtract from
any of the provisions of this agreement. The arbitrator shall have the power
to compel attendance of witnesses at any hearing. The arbitration award shall
be final and binding and shall be the sole remedy for any claimed breach of
this agreement except for claims that the arbitrator has exceeded his
jurisdiction and except for any alleged violation by Employee of the
nondisclosure of confidential information provisions of this agreement. The
expense of any arbitration shall be borne equally by Employee and Barden.
Judgment may be entered on the arbitrators award in any court having
jurisdiction, but neither party may otherwise resort to any court or
administrative agency with respect to any dispute that is arbitrable under this
section except for claims that the arbitrator has exceeded his jurisdiction.
12. Entire Agreement. You agree that this letter supersedes any and all
prior agreements and understandings between you and Barden. No representations
have been made by Barden concerning the terms and conditions of employment
other than those representations contained in this letter. This letter may be
modified only by a written document signed by both you and a duly authorized
officer of Barden.
<PAGE> 5
Mr. Paul W. Sykes
November 9, 1995
Page 5
13. Acknowledgment. You have read this letter before signing it and
acknowledge receipt of a copy.
14. Effective Date. This agreement shall take effect and Employee shall
be deemed an employee on December 4, 1995 or on an earlier date if mutually
agreed upon by Employee and Barden.
If this letter accurately sets forth the terms of our agreement, sign and
return the enclosed copy to us. We look forward to your joining our
organization and to a long and mutually beneficial relationship.
Very truly yours,
BARDEN-DAVIS CASINO, L.L.C.
By: Don H. Barden
Agreed to and accepted on this ___ day of November, 1995.
Paul W. Sykes
------------------------------
Paul W. Sykes
<PAGE> 1
EXHIBIT 10.4
THE MAJESTIC STAR CASINO, L.L.C.
400 RENAISSANCE CENTER
SUITE 2400
DETROIT, MICHIGAN 48243
April 12, 1996
Mr. Michael E. Kelly
1324 Elk River Circle
Las Vegas, NV 89134
Dear Mr. Kelly:
This letter constitutes an employment agreement between The Majestic Star
Casino, L.L.C. (or its successor company) ("Majestic") and you ("Employee")
with respect to Majestic's development construction and operation of a casino
gaming vessel at Buffington Harbor in Gary, Indiana (the "Project").
1. Term. The initial term of this Agreement is two (2) years (the "Period
of Employment") commencing on the Effective Date set forth below the signature
lines at the end of this Agreement. The Period of Employment may be extended
on terms and conditions agreed to by Majestic and Employee.
2. Base Salary. Majestic agrees to pay you a base salary of $180,000
annually, payable in substantially equal bi-weekly payments with usual and
customary payroll deductions.
3. Bonus and Incentive Compensation. You have advised that you currently
receive various forms of incentive compensation from your current employer.
Intending to replace those incentives with items of equal or greater potential
value, Majestic agrees to develop and provide to you an incentive compensation
plan that will be based upon your personal performance and the Project's
performance, with a minimum payment at the end of each year of the agreement of
$45,000. Majestic and you will mutually agree on the payment schedule for this
bonus and inventive compensation.
<PAGE> 2
Mr. Michael E. Kelly
April 12, 1996
Page 2
4. Reimbursement of Unvested Options. Majestic agrees to pay you six
months from the Effective Date $24,000 and additional $24,000 one year from the
Effective Date. Majestic agrees to advance you $48,000, within 15 days of the
Effective Date, in conjunction with this provision provided you execute
non-interest bearing promissory notes reflecting this arrangement.
5. Housing Allowance. Subject to our prior approval, Majestic will
reimburse you for reasonable costs incurred for Chicago area housing for a
period of 90 days from the Effective Date. Additionally, if you are unable to
sell or lease your Las Vegas home within 90 days of the Effective Date,
Majestic will pay you $2,000 per month, payable the first of the month, each
month, for a period not to exceed 3 months.
6. Title and Responsibilities. You will initially be employed to serve in
an executive capacity and to perform those duties generally associated with the
duties of Vice President and Chief Financial Officer. Your duties and title
may be changed from to time by Majestic, but any new responsibilities, or title
shall be consistent with your experience, knowledge and skills. Majestic
reserves the right, in its sole discretion, to hire or place someone in a
position superior to you at the Project. Majestic agrees to reimburse to you
all reasonable expenses incurred by you in the performance of your duties of
employment incurred in accordance with company policies. You will not be
assigned responsibilities that will require you to maintain a residence outside
of the Chicago area without your consent.
7. Termination of Employment. Majestic shall be permitted to terminate
this Agreement and your employment only upon occurrence of any of the
following:
(a) your death;
(b) your permanent disability (defined as continuous disability) and
inability to perform the duties and functions of your position for sixty (60)
continuous days;
(c) your inability to obtain and/or maintain licensure required by Indiana
or other gaming authorities; or
(d) upon a Change in Control (as defined under section g); or
(e) cause, which shall mean (i) Employee's wilful misconduct which
directly, materially and adversely affects Majestic or personal dishonesty;
(ii) breach of fiduciary duty to Majestic resulting in Employee's personal
profit; (iii) criminal conviction for violation (after a trial and final
<PAGE> 3
Mr. Michael E. Kelly
April 12, 1996
Page 3
nonappealable judgment) of any law, rule or regulation (other than traffic
violations or other minor offenses); or (iv) Employee repeatedly and
intentionally fails to reasonably perform his stated duties and fails to cure
such non-performance within 30 days after his receipt of written notice from
Majestic specifically identifying the manner in which Employee has failed to
reasonably perform such stated duties.
(f) upon termination of the Period of Employment by reason of the
Employee's disability, Majestic shall continue to pay Employee the entire
compensation (via insurance or directly) otherwise payable to him under Section
2 and 3 hereof, for the lesser of one year or the remaining Period of
Employment. Upon termination of the Period of Employment by a reason of Change
in Control, Majestic will pay Employee the present value, calculated at 8% of
all payments Majestic would have been obligated to make pursuant to Section 2,
and 3 hereof, based upon a termination date that is 12 months after the date on
which the Period of Employment would have expired but for such termination by
reason of a Change in Control.
(g) for purposes of this Agreement, "Change in Control" shall be deemed to
have occurred if (i) any "person" (as defined in Section 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended), other than (y) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company acting in such capacity, or (z) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock and voting power of the Company, or
becomes the beneficial owner (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 51% or more
of the total voting power represented by the Company's then outstanding Voting
Securities (as defined below); (ii) there shall occur a change in the
composition of a majority of the Board of Directors of the Company within a
two-year period, which change shall not have been approved by a majority of the
persons then serving as directors who were also directors immediately prior to
the commencement of such period; (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into Voting Securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company (in one transaction or a series of transactions) of all or
substantially all of the Company's assets. For purposes of this Section 7 the
term
<PAGE> 4
Mr. Michael E. Kelly
April 12, 1996
Page 4
"Voting Securities" shall mean any securities having the right under normal
circumstances to vote in an election of the board of directors.
8. Benefits. Majestic will provide you with benefits. These benefits
shall include, at a minimum:
(a) health and disability insurance covering you and your dependents,
including medical, dental, and prescription coverage.
(b) access, within six (6) months of the Effective Date, to a 401(k) plan,
or similar retirement plan, to which Majestic will make annual matching
contributions equal to three (3%) percent of your base and cash bonus
compensation.
(c) life insurance equal to four times your annual base salary, which
shall automatically be adjusted upward annually in the event of increases to
your base salary.
(d) three (3) weeks of paid vacation annually.
9. Non-Competition. You, as consideration for your employment and the
information you will obtain as an employee of Majestic agree that during the
term of this Agreement and for a period of 12 months thereafter, you will not,
directly or indirectly, individually or as an employee, partner, officer,
director or stockholder or in any other capacity whatsoever of any person,
firm, partnership or corporation, (i) recruit, hire, assist otherwise in
recruiting or hiring, discuss employment with, or refer to others concerning
employment, any person who is, or within the proceeding twelve (12) months was,
an employee of Majestic, or any parent, subsidiary, or affiliated company, (ii)
compete with Majestic or any parent, subsidiary, or affiliated company in any
location in Illinois north of Springfield, Illinois or any location in Indiana
north of Indianapolis, Indiana, or (iii) use in competition with Majestic or
parent, or subsidiary, or affiliated company any of the methods, information,
or systems developed by Majestic or any parent, or subsidiary, or affiliated
company.
10. Other Obligations. You have represented that you have no contract,
agreement, or obligation which may be in conflict with any obligation you have
taken under this letter agreement.
11. Confidentiality. Except as your assigned duties may require or as
Majestic may otherwise consent in writing, you will not disclose at any time
either during or subsequent to your employment, any information, knowledge or
data of Majestic which you may develop or receive during the course of your
employment relating to financial data, writing, computer
<PAGE> 5
Mr. Michael E. Kelly
April 12, 1996
Page 5
software, policies, plans, designs, business processes, methods, data, trade
secrets, know-how, plans and programs, or any other knowledge of Majestic which
is of a proprietary or confidential nature, and upon termination of your
employment with Majestic for any reason, you agree to immediately deliver to
Majestic all physical property, plans, designs, computer programs or software,
customer lists, prospect lists, manuals, letters, notes, reports and any other
materials relating to Majestic in your possession or under your control.
12. Arbitration. Any differences, claims or matters in dispute arising
between Majestic and Employee out of or connected with this Agreement, shall be
submitted by them to be settled exclusively by arbitration in Chicago,
Illinois, in accordance with voluntary labor arbitration rules of the American
Arbitration Association, or its successor, then in effect. The arbitrator's
sole authority shall be to interpret or apply the provisions of this agreement.
The arbitrator shall not change, add to or subtract from any of the provisions
of this agreement. The arbitrator shall have the power to compel attendance of
witnesses at any hearing. The arbitration award shall be final and binding and
shall be the sole remedy for any claimed breach of this agreement except for
claims that the arbitrator has exceeded his jurisdiction and except for any
alleged violation by Employee of the nondisclosure of confidential information
provisions of this agreement. The expense of any arbitration shall be borne
equally by Employee and Majestic. Judgment may be entered on the arbitrators
award in any court having jurisdiction, but neither party may otherwise resort
to any court or administrative agency with respect to any dispute that is
arbitrable under this section except for claims that the arbitrator has
exceeded his jurisdiction.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to the
choice of law or conflicts of laws, rules and laws of such jurisdiction.
14. Attorney Fees. In the event that any action is filed to interpret or
enforce the provisions of this Agreement, in addition to all sums that either
party may be called upon to pay, the prevailing party shall be entitled to
reasonable attorneys fees and costs.
15. Severability. The invalidity of any portion of this Agreement shall
not be deemed to affect the validity of any other provision. In the event that
any provision of this Agreement is held to be invalid, the parties agree that
the remaining provisions shall be deemed to be in full force and effect as if
they had been executed by both parties subsequent to the expungement of the
invalid portion.
<PAGE> 6
Mr. Michael E. Kelly
April 12, 1996
Page 6
16. Entire Agreement. You agree that this letter supersedes any and all
prior agreements and understandings between you and Majestic. No
representations have been made by Majestic concerning the terms and conditions
of employment other than those representations contained in this letter. This
letter may be modified only by a written document signed by both you and a duly
authorized officer of Majestic.
17. Acknowledgment. You have read this letter before signing it and
acknowledge receipt of a copy.
18. Effective Date. This agreement shall take effect and Employee shall
be deemed an employee on April 29, 1996 or on an earlier date if mutually
agreed upon by Employee and Majestic.
If this letter accurately sets forth the terms of our agreement, sign and
return the enclosed copy to us. We look forward to your joining our
organization and to a long and mutually beneficial relationship.
Very truly yours,
THE MAJESTIC STAR CASINO, LLC
By: Don H. Barden
Agreed to and accepted on this 15th day of April, 1996.
Michael E. Kelly
--------------------------
Michael E. Kelly
<PAGE> 1
EXHIBIT 10.5
MAJESTIC BERTHING AGREEMENT
This Berthing Agreement is made as of this 23rd day of April, 1996 by
and between THE MAJESTIC STAR CASINO, LLC, an Indiana limited liability company
("Operator"), the address of which is One Buffington Harbor, Gary, Indiana
46401, and BUFFINGTON HARBOR RIVERBOATS, L.L.C., a Delaware limited liability
company ("Owner"), the address of which One Buffington Harbor, Gary, Indiana
46401.
The circumstances underlining the execution of this Berthing Agreement
are as follows:
A. Operator is a Member (this and all other capitalized terms
used herein having the meanings ascribed to them below) of Owner.
B. Operator holds a Certificate of Suitability to conduct a
riverboat gaming operation in the City.
C. Owner is the owner of the Property (save for the part of the
Property which is the subject of the Harbor Lease, which Owner is leasing), and
is in the process of constructing the Initial Improvements on the Property.
D. Operator wishes to acquire from Owner the right to dock
Permitted Vessels at the Property and to allow Operator and its employees,
guests, patrons and invitees to make specified uses of the Initial Improvements
in connection with Operator's gaming operations, all on the terms and
conditions hereinafter set forth.
E. Owner is willing to obligate itself to construct and operate
the Initial Improvements, and to grant the right for Operator to make specified
uses of the Initial Improvements, all on the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
(DEFINITIONS)
As used in this Agreement, the following terms shall have the meanings
set forth below:
<PAGE> 2
1.1. "Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Person in question. For purposes of this definition, "control" shall mean
the power to direct management or policies through ownership of voting
securities or similar equity interest.
1.2 "Agreement" means this Berthing Agreement, as the same from
time to time may be amended, modified or supplemented.
1.3 "Approvals" shall have the meaning ascribed to it in Section
2.2 below.
1.4 "Bankruptcy" means, with respect to the applicable Person,
that such Person shall have (1) made an assignment for the benefit of
creditors; (2) filed a voluntary petition in bankruptcy; (3) been adjudicated a
bankrupt or insolvent; (4) filed a petition or answer seeking for himself or
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation; (5) filed
an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against him or it in any proceeding set forth
in (4) above; or (6) sought, consented to, or acquiesced in the appointment of
a trustee, receiver, or liquidator of all or any substantial part of his or its
properties; or if one hundred eighty (180) days after the commencement of any
proceeding against the Person seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law, or regulation, the proceeding has not been dismissed, or if within one
hundred fifty (150) days after the appointment without his or its consent or
acquiescence of a trustee, receiver, or liquidator of the Person or all or any
substantial part of his or its properties, the appointment is not vacated or
stayed, or within ninety (90) days after the expiration of any such stay, the
appointment is not vacated.
1.5 "Certificate of Suitability" means the Certificate of
Suitability issued to Trump or Majestic, as applicable, by the Commission, as
well as any Riverboat Owner's License issued to Trump or Majestic pursuant to
their respective Certificates of Suitability.
1.6 "City" means the City of Gary, Indiana.
1.7 "Commission" means the Indiana Gaming Commission.
1.8 "Conrail" means Consolidated Rail Corporation.
1.9 "Conrail Easement Agreement" means the proposed agreement(s)
among Owner, EJ&E, the Indiana Department of Transportation and/or Conrail
relative to the Subway.
2
<PAGE> 3
1.10 "Construction Documents" shall have the meaning ascribed to it
in Section 2.4(b) below.
1.11 "Development Agreement" means the Development Agreement to be
entered into among the City, Owner, Trump and/or Operator pursuant to or in
furtherance of the Certificates of Suitability, the Majestic Memorandum of
Understanding and the Trump Memorandum of Understanding (or, if applicable, the
separate development agreements to be entered into between the City and Trump
and the City and Operator).
1.12 "EJ&E" means the Elgin, Joliet & Eastern Railway Company.
1.13 "EJ&E Easement Agreement" means the proposed Easement
Agreement by and among Lehigh, EJ&E and Owner relative to, inter alia, an
at-grade crossing, a railroad spur relocation and related matters pertaining to
portions of the Property.
1.14 "EJ&E Exchange Agreement" means the proposed Exchange
Agreement between EJ&E and Owner pertaining to the exchange of specified
properties (with the property being received by Owner being included as part of
the Property).
1.15 "Event of Default" shall have the meaning ascribed to it in
Section 18.1 below.
1.16 "Environmental Laws" shall have the meaning ascribed to it in
Section 9.3 below.
1.17 "Force Majeure Events" means causes beyond the reasonable
control of the party claiming the same, including but not limited to: strikes;
lockouts; acts of God; restrictions, limitations, rationing, curtailments or
moratoriums imposed by any governmental authority, whether by rule, regulation,
statute, ordinance or otherwise; inability to secure materials or labor by
reason of unavailability or regulation or order of any governmental or
regulatory body; enemy action; civil disturbance; or fire, storm, earthquake or
other casualty.
1.18 "Gaming FF&E" shall have the meaning ascribed to it in Section
2.6 below.
1.19 "Harbor" means Buffington Harbor in the City.
1.20 "Harbor Lease" means the Harbor Lease Agreement dated June 29,
1995 between Lehigh, as lessor, and Trump, as lessee, and heretofore assigned
by Trump to Owner, as the same may be subsequently amended, modified or
supplemented.
3
<PAGE> 4
1.21 "Initial Improvements" means the improvements (and
corresponding land) designated as such on the Initial Improvements Site Plan,
which improvements include, but are not limited to: (a) roads providing ingress
and egress to, and circulation within, the Property, including the Subway; (b)
parking lots and related improvements, including curbs, gutters, aisles,
driveways, limousine stands and associated infrastructure; (c) the Pavilion;
(d) landscaping, lighting and signage; (e) applicable utilities (whether
constructed on the Property or property subject to easements or leases in favor
of Owner), including electricity, sanitary sewer, natural gas, telephone,
water, cable and storm water drainage, each in capacities identified below; (f)
the Mooring Barge; (g) the Pedestrian Bridge and pedestrian walkways associated
with the improvements referred to in subsections (a), (b), (c) and (f) of this
Section; (h) the Gaming FF&E; and (i) the improvements to the Harbor that are
necessary to permit the construction of the Mooring Barge and the operation of
Permitted Vessels from the Mooring Barge (including cruising operations);
provided, the Initial Improvements shall not be deemed to include roads, access
drives, signs, landscaping, utilities or like improvements of the foregoing
nature that are intended to serve only a Majestic Project, a Trump Project or
another distinct component of the Project.
1.22 "Initial Improvements Site Plan" means the site plan set forth
on attached Exhibit A.
1.23 "Lehigh" means Lehigh Portland Cement Company.
1.24 "Lender" shall have the meaning ascribed to it in Section 21.2
below.
1.25 "Majestic" means The Majestic Star Casino, LLC.
1.26 "Majestic Exclusive Areas" shall have the meaning ascribed to
it in Section 3.4 below.
1.27 "Majestic Memorandum of Understanding" means the Memorandum of
Understanding dated as of September 5, 1995 between Majestic and the City.
1.28 "Majestic Projects" means the projects which Operator is to
develop in its own name and right in order to satisfy its obligations under its
Certificate of Suitability, the Majestic Memorandum of Understanding and/or the
Development Agreement, but specifically excluding any obligations of Owner
under the Development Agreement to develop projects in its name and right.
1.29 "Majestic Vessel" means the Permitted Vessel which Operator
has the right to berth at the Harbor and/or the
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New Harbor (as applicable) pursuant to this Agreement, and from which Operator
will conduct its gaming operations as part of the Project.
1.30 "Master Plan" shall have the meaning ascribed to it in Section
7.1 below.
1.31 "Master Plan Improvements" shall have the meaning ascribed to
it in Section 7.1 below.
1.32 "Member" means any Person who is a member of Owner pursuant to
the provisions of the Operating Agreement. The initial Members of Owner are
Trump and Operator.
1.33 "Mooring Barge" means the mooring barge which is to be part of
the Initial Improvements Site Plan, which is Vessel EMC 424 (purchased by Owner
from Egan Marine Corporation) and is being improved by Owner to serve such
function.
1.34 "Mooring Requirements" shall have the meaning ascribed to it
in Section 3.1(b) below.
1.35 "Navigational Requirements" shall have the meaning ascribed to
it in Section 3.1(d) below.
1.36 "New Agreement" shall have the meaning ascribed to it in
Section 21.6(a) below.
1.37 "New Harbor" shall have the meaning ascribed to it in Section
7.1 below.
1.38 "Operating Agreement" means the First Amended and Restated
Operating Agreement dated as of October 31, 1995 for Buffington Harbor
Riverboats, L.L.C., as hereinafter amended, modified, supplemented or restated.
1.39 "Operating Plan and Budget" shall have the meaning ascribed to
it in Section 5.4 below.
1.40 "Operator" means The Majestic Star Casino, LLC, an Indiana
limited liability company, as well as any entity succeeding to Operator's
interest as a Member and as a party to this Agreement in accordance with the
terms of the Operating Agreement and this Agreement, as applicable.
1.41 "Owner" means Buffington Harbor Riverboats, L.L.C., a Delaware
limited liability company, as well as any entity succeeding to its interest in
this Agreement in accordance with the terms of this Agreement.
1.42 "Owner's Default" shall have the meaning ascribed to it in
Article 24 below.
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1.43 "Pavilion" means the pavilion depicted on the Initial
Improvements Site Plan.
1.44 "Pedestrian Bridge" means the pedestrian walking bridge and
related improvements as authorized to be built pursuant to the EJ&E Exchange
Agreement.
1.45 "Permitted Exceptions" shall have the meaning ascribed to it
in Section 3.6 below.
1.46 "Permitted Vessel" means (a) in the case of all vessels, a
vessel that is suitable for (i) docking at the Mooring Barge (or another
docking facility constructed as part of the Master Plan Improvements, as
applicable), and (ii) cruising in the Harbor (or the New Harbor, as
applicable), but only if Operator elects (or is required by the Commission) to
conduct cruises, and (b) in the case of a vessel approved by the Commission for
gaming operations, a vessel that also (i) complies with the Mooring
Requirements, and (ii) complies with the Vessel Utility Connections
Specifications (unless, at its sole cost, Operator makes the revisions to the
utility connections that are necessary to permit the vessel to be connected
thereto, which revisions may not have a material adverse effect on the
suitability of the utility connections or service available to Owner, Trump and
others permitted to use the same).
1.47 "Person" means any individual, corporation, partnership
(general or limited), association, limited liability company, trust, estate or
other entity.
1.48 "Prime Rate" shall have the meaning ascribed to it in Section
19.1(e) below.
1.49 "Project" means the overall development of the Property,
consisting of the amenities, infrastructure and related improvements shown on
the Initial Improvements Site Plan, the Trump Projects, the Majestic Projects
and such other projects as Owner may determine to develop or permit to be
developed on the Property.
1.50 "Project Expenses" shall have the meaning ascribed to it in
Section 5.2 below.
1.51 "Project Revenues" shall have the meaning ascribed to it in
Section 5.3 below.
1.52 "Property" means the real property interests described in
attached Exhibit B, as the same may change from time to time by virtue of
Owner's disposition of part of the Property or Owner's acquisition (and
incorporation as part of the Project) of additional property.
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1.53 "Shared Facilities" shall have the meaning ascribed to it in
Section 3.3 below.
1.54 "Special Events" shall have the meaning ascribed to it in
Section 4.7 below.
1.55 "State" means the State of Indiana.
1.56 "Substantial Completion" shall have the meaning ascribed to it
in Section 2.3 below.
1.57 "Subway" means the road and related improvements to be
constructed pursuant to the Conrail Easement Agreement.
1.58 "Third Party Agreements" shall have the meaning ascribed to it
in Section 2.2 below.
1.59 "Trump" means Trump Indiana, Inc., a Delaware corporation,
which is a Member in Owner and is executing the Trump Berthing Agreement
contemporaneously with the execution of this Agreement, as well as any entity
succeeding to Trump's interest as a Member and as a party to the Trump Berthing
Agreement in accordance with the terms of the Operating Agreement and the Trump
Berthing Agreement, as applicable.
1.60 "Trump Berthing Agreement" means that certain Berthing
Agreement of even date between Trump, as Operator, and Owner, as Owner, which
Berthing Agreement is substantially identical to this Agreement and is being
executed contemporaneously herewith.
1.61 "Trump Exclusive Areas" shall have the meaning ascribed to it
in Section 3.2 below.
1.62 "Trump Memorandum of Understanding" means the Memorandum of
Understanding dated as of May 27, 1995 between Trump and the City.
1.63 "Trump Projects" means the projects which Trump is to develop
in its own name and right in order to satisfy its obligations under its
Certificate of Suitability, the Trump Memorandum of Understanding and/or the
Development Agreement, but specifically excluding any obligations of Owner
under the Development Agreement to develop projects in its name and right.
1.64 "Trump Vessel" means the Permitted Vessel which Trump has the
right to berth at the Harbor (and/or the New Harbor, as applicable) pursuant to
the Trump Berthing Agreement, and from which Trump will conduct its gaming
operations as part of the Project.
1.65 "Vessel Utility Connections" shall have the meaning ascribed
to it in Section 3.1(c) below.
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ARTICLE 2
(OWNER'S OBLIGATION TO CONSTRUCT
INITIAL IMPROVEMENTS)
2.1 Obligation to Construct. Owner shall construct the Initial
Improvements in accordance with the provisions of this Article.
2.2 Commencement and Completion of Construction. Owner has
commenced construction of the Initial Improvements, although Owner's obligation
to continue and complete construction shall be subject to its ability to
procure: applicable permits, licenses and other governmental approvals
sufficient to permit the construction of the Initial Improvements (the
"Approvals"), and the execution and delivery of the Conrail Easement Agreement,
the EJ&E Easement Agreement and the EJ&E Exchange Agreement (the "Third Party
Agreements"), each on terms acceptable to Owner. If Owner does not procure the
Approvals and Third Party Agreements on or before March 1, 1997, Owner shall
have the right to either terminate any further obligation on its part under
this Agreement to continue or complete construction of the Initial
Improvements, or to reconfigure the Initial Improvements to take into account
the Approvals and/or Third Party Agreements not yet procured, as well as
variations thereof from the terms presently contemplated by the parties. Owner
shall prosecute construction of the Initial Improvements with diligence, and
shall use best efforts to achieve Substantial Completion thereof by May 17,
1996 to the point where Operator may commence gaming operations (although
certain ancillary operations or services, including the restaurants, need not
be completed by such date), subject to delays occasioned by Force Majeure
Events. Owner shall complete the Initial Improvements, including punch list
items and the like, as soon as practical thereafter.
2.3 Substantial Completion. "Substantial Completion" as to the
Initial Improvements shall mean construction of same to the point where (a) all
applicable governmental approvals, licenses and permits, including certificates
of occupancy for the Pavilion and the Mooring Barge (temporary, if sufficient
to permit the commencement of gaming operations), have been obtained (or, if
the same are to be issued to Operator, are available), and (b) the Initial
Improvements can be opened to the public and used in support of the gaming
operations of Operator at the Majestic Vessel. Substantial Completion shall
not require the completion of punch list items, decorative finishings and like
construction items the completion of which are not necessary to permit Operator
to commence its gaming operations. "Substantial Completion" as to any other
improvements shall mean construction of same to the point where (i) all
applicable governmental approvals, licenses and
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permits, including certificates of occupancy (temporary, if sufficient to
permit the commencement of gaming operations), have been obtained (or, if the
same are to be issued to Operator, are available), and (ii) such improvements
can be used for their intended purposes. Substantial Completion shall not
require the completion of punch list items, decorative finishings and like
construction items the completion of which are not necessary to permit the use
of the improvement for their intended purposes.
2.4 Construction Standards. All Initial Improvements shall be
constructed so as to:
(a) Comply with applicable laws, rules and regulations
(including without limitation the Americans with Disabilities Act,
rules, regulations or other requirements imposed by the Commission and
any requirements on either Operator or Trump under their respective
Certificates of Suitability) of governmental authorities having
jurisdiction over the Property or the Initial Improvements; and
(b) Be constructed in a good and workmanlike fashion,
consistent with the standards and specifications, and inclusive of the
items, described in attached Exhibit C (the "Construction Documents").
2.5 Limitation on Owner's Construction Obligations.
Notwithstanding anything contained herein to the contrary, in no event shall
Owner be obligated to spend more than the amount set forth for Common Area
construction costs in the Improvements Budget (as such terms are defined in the
Operating Agreement) in constructing the Initial Improvements unless an
increase in the Improvements Budget (or other funds) is authorized pursuant to
the terms of the Operating Agreement. Furthermore, if each Member approves
particular features of or changes to the Initial Improvements as complying with
the standards set forth above, and Operator does not object in writing to the
applicable features or changes within three (3) business days after becoming
aware of the same, such approval shall conclusively establish that the
applicable features or changes comply with the requirements of this Agreement.
2.6 Furnishings, Fixtures and Equipment. The Pavilion shall
include the furnishings, furniture and equipment that are specified in attached
Exhibit D (the "Gaming FF&E").
ARTICLE 3
(GRANT OF LEASES AND LICENSES)
3.1 Grant of Lease for Berthing. Owner hereby grants a leasehold
interest to Operator for the berthing of a
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Permitted Vessel at the east side of the Mooring Barge. The rights attendant
to such leasehold interest shall include:
(a) The exclusive right to dock the Majestic Vessel on
the east side of the Mooring Barge;
(b) The exclusive right to attach lines, cables and other
apparatus to the east side of the Mooring Barge and other adjacent
areas of the Property at the locations shown, and in accordance with
the docking parameters set forth, on attached Exhibit E (the "Mooring
Requirements");
(c) The exclusive right to connect to the electricity
lines, waste water discharge lines, telephone lines and other
utilities at the specific locations shown, in the capacities and
subject to the specifications and other requirements set forth, on
attached Exhibit F (the "Vessel Utility Connections");
(d) To the extent Owner has the right to grant the same,
the non-exclusive right to navigate Permitted Vessels within and
through the Harbor or the New Harbor, as applicable, subject to the
specifications and requirements set forth on attached Exhibit G (the
"Navigational Requirements");
(e) The right to make repairs and/or to replace Permitted
Vessels and any equipment, furniture, fixtures and facilities related
thereto or any portion of any of the foregoing, provided such repairs
or related activities are conducted in such a manner as to not
unreasonably or unnecessarily interfere with the operations of Owner
or Trump; and
(f) The right to have Permitted Vessels that support the
business or operations of the Majestic Vessel (such as tenders,
shuttle vessels and vessels of VIP guests, but excluding vessels on
which gaming operations are conducted) to moor temporarily on the east
side of the Mooring Barge for access to the Initial Improvements in
the course of providing the relevant support; provided, that in no
event shall Owner have any obligation to construct facilities or
improvements to accommodate the mooring or navigation of such vessels;
and further provided, in no event shall any such vessel be used in
such a manner, or at such times, as to unreasonably, unnecessarily or
improperly interfere with the rights of Trump, Owner or others under
the Permitted Exceptions to use the Harbor.
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3.2 Grant of Lease to Use Majestic Exclusive Areas. Owner hereby
grants Operator a leasehold interest to use the areas within the Pavilion and
the Mooring Barge which are designated as the Majestic Exclusive Areas on
attached Exhibit A (the "Majestic Exclusive Areas"). The leasehold interest
granted in this Section authorizes Operator to use the Majestic Exclusive Areas
in connection with Operator's gaming operations at the Majestic Vessel, which
use shall be exclusive save for the following uses by others: (a) the exercise
of any rights of Persons pursuant to Permitted Exceptions, (b) the exercise by
Owner of its rights under Article 17 below, and (c) such other arrangements as
Owner and Operator may agree upon in a separate written agreement.
3.3 Grant of License to Use Shared Facilities. Owner hereby
grants Operator a license to use the areas within the Mooring Barge which are
designated as the Shared Facilities on attached Exhibit A (the "Shared
Facilities"). The license granted in this Section authorizes Operator and its
employees, contractors and consultants to enter upon and use the Shared
Facilities in connection with Operator's gaming operations at the Majestic
Vessel, provided such use shall be in common with Owner and Trump and the
respective employees, contractors, agents and consultants thereof and further
subject to the rights of others pursuant to the Permitted Exceptions.
3.4. Grant of License to Use Remainder of Initial Improvements.
Owner hereby grants Operator a non-exclusive license for Operator and its
patrons, employees, consultants, representatives and invitees to use the
remaining portions of the Initial Improvements for their intended purposes,
exclusive of the Trump Exclusive Areas (Trump Exclusive Areas being those areas
designated as such on attached Exhibit A) or other areas in which another
Person has been granted exclusive rights by Owner pursuant to Article 8 below,
in connection with Operator's gaming operations at the Majestic Vessel, in each
case in common with the patrons, employees, contractors, representatives and
invitees of Owner, Trump and, to the extent designated by Owner, members of the
public in general. The Initial Improvements which are the subject of the
license granted herein include but are not limited to:
(a) The entrance roads, driveways and aisle ways that are
from time to time opened for such use by Owner;
(b) The parking lots, valet services, limousine
facilities and shuttle/tram/trolley services;
(c) The Subway, the Pedestrian Bridge and associated
walkways;
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(d) The Pavilion, including the lobbies, porte cochere
and restaurants (both buffet and specialty restaurants), that are not
Trump Exclusive Areas, Majestic Exclusive Areas or other areas
designated for the exclusive use of another Person;
(e) The queuing areas and applicable walkways, bridges
and other common areas; and
(f) The common areas and passageways on the Mooring
Barge.
The use of the facilities specified in this Section by Operator and the
patrons, employees, contractors, representatives and invitees of Operator shall
be subject to such rules and regulations as Owner may prescribe from time to
time in order to ensure that the use thereof is of the same character as, and
in harmony and cooperation with, the similar uses to be made of such facilities
by Owner, Trump and their respective patrons, employees, contractors,
representatives and invitees.
3.5 Grant of License for Construction Purposes. Owner hereby
grants to Operator a temporary license for Operator and its architects,
designers, contractors and other representatives to enter upon the Property for
the purpose of designing, installing and constructing the improvements which
are to form a part of the Majestic Exclusive Areas and/or placing or installing
furniture, fixtures or equipment therein. Such temporary license shall be
subject to the following requirements and limitations:
(a) The license for construction and installation shall
commence at such time as the Initial Improvements have been completed
to the point where installation of the aforementioned items can be
done safely and without unreasonable interference with Owner's
performance of its obligations hereunder;
(b) All activities of Operator shall be performed in such
a manner as to not unreasonably interfere with the activities of Owner
or Owner's contractors;
(c) Operator shall provide, or shall cause its
contractors to provide, such insurance coverages, in such amount and
with such companies, as Owner may reasonably require;
(d) Operator shall indemnify and hold harmless Owner and
its Members, employees, contractors and agents from and against any
liability, obligation or expense resulting from or arising out of any
activities pursuant to the license; and
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(e) All work shall be performed in accordance with
applicable codes, rules, regulations, ordinances and other
requirements of applicable governmental authorities (including without
limitation any requirements of the Commission or Operator's
Certificate of Suitability).
3.6 Rights of Parties Under Permitted Exceptions. Each of the
leasehold interests and licenses granted hereunder shall be subject in all
respects to the matters (and rights arising therefrom) set forth on attached
Exhibit H (the "Permitted Exceptions").
ARTICLE 4
(SERVICES TO BE PROVIDED BY OWNER)
4.1 Services to be Provided. Owner shall provide the following
services in support of the gaming operations and related activities of Operator
at the Majestic Vessel:
(a) Security, maintenance, cleaning and janitorial
services with respect to the Initial Improvements, but exclusive of
the Majestic Exclusive Areas and the Trump Exclusive Areas, to the
standards specified in attached Exhibit I;
(b) Restaurant operations within the Pavilion or the
Mooring Barge to the standards specified in attached Exhibit J;
(c) Food and beverage services to the Shared Facilities
to the standards specified in attached Exhibit J; and
(d) Parking services, including the operation of shuttle
buses and/or trolleys from outlying parking lots on the Property to
the Pavilion, valet parking services and incidental services to the
standards specified in attached Exhibit K.
4.2 Utility Services. Owner shall cause the following utilities
to be available to the Initial Improvements (including the Majestic Exclusive
Areas but excluding the Majestic Vessel): heat, air conditioning, water,
electricity, telecommunications and related services to the standards and
capacities specified in attached Exhibit L. In connection therewith, Owner
shall install separate meters in both the Trump Exclusive Areas and the
Majestic Exclusive Areas, and Operator and Trump shall be solely responsible
for the applicable utility charges for their respective Exclusive Areas.
Operator shall be solely responsible for extending
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utilities from the Vessel Utility Connections to the Majestic Vessel, for
making the appropriate service and billing arrangements with the applicable
utility companies and for paying all utility charges applicable to the Majestic
Vessel; Owner's only responsibility with respect to such utility services shall
be to construct, install and maintain the Vessel Utility Connections.
4.3 No Other Services. Except as specifically provided in
Sections 4.1 and 4.2 above, Owner shall have no duty or obligation to provide
any other services for or in connection with the Initial Improvements. Without
limiting the generality of the foregoing, Operator shall be solely responsible
for all services and other activities associated with the operation and
maintenance of the Majestic Vessel and the Majestic Exclusive Areas.
4.4 Exculpation of Owner. Owner will not be in default hereunder,
the License Fee will not abate and Owner will not be liable for any damages
directly or indirectly as a result of the failure to furnish, or any delay in
furnishing, any of the aforementioned services, if the failure or delay is
caused by (i) Force Majeure Events, (ii) a failure of Operator, as a Member of
Owner, to authorize or approve any action by Owner required to meet its
obligations with regard to such services, (iii) maintenance, repairs or
improvements on or to the Initial Improvements, or (iv) the exercise of any of
Owner's rights under Article 8 below in a manner calculated in good faith to
reasonably minimize any disruption of service.
4.5 Owner's Right to Suspend Services or Prohibit Use of Services.
Owner shall be entitled to suspend any food and beverage service to Operator's
employees, or complimentary meals or other cash perquisites to guests, patrons
or other invitees of Operator, during any period in which an Event of Default
under this Agreement has continued for more than thirty (30) days, unless
Operator pays the charges applicable to such services in advance or, if
practical, at the same time as the relevant service is provided. Furthermore,
if an Event of Default has continued for more than one hundred twenty (120)
days, Owner shall be entitled to suspend any services under this Agreement
except for utility services that are being separately paid by Operator.
4.6 Owner's Right to Impose Charges for Services. Owner shall
impose charges for dining, parking and valet services to Persons patronizing
the restaurants or the parking facilities, and for food and beverage service to
employees, in each case at such levels and on such terms as Owner may determine
in its sole discretion. The parties agree that in the absence of a separate
written agreement to the contrary, Owner shall charge Operator for all such
services which
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Operator avails itself of on behalf of guests, employees and/or invitees (such
as by way of complimentary beverages, meals or limousine services), at the cost
to Owner of providing the same, as previously disclosed to Operator. Any such
charges shall be payable within seven (7) days after the Operator is billed for
the same by Owner or the other Member of Owner.
4.7 Additional Charges for Special Events. In the event that
Operator conducts special events or employs marketing or promotional techniques
or programs which require that any of the foregoing services must be provided
for longer periods of time, or at higher levels, or in different manner, than
the standards set forth in Exhibits I through L, inclusive, ("Special Events"),
Owner agrees to cooperate in good faith with Operator in making such services
available. Operator shall provide Owner with reasonable advance written notice
of Operator's requirements with respect to a Special Event. Owner shall have
the right to charge to Operator, in addition to the License Fee referred to
below and the payments referred to in Sections 4.2 and 4.6 above, all
incremental charges incurred by Owner in providing additional services for such
Special Event. In the event of a dispute as to the amount of the incremental
charges imposed by Owner under this Section, Owner and Operator shall submit
such dispute to arbitration by a certified public accountant having no less
than ten (10) years experience in the food and beverage industry. The
arbitration shall be conducted in accordance with the rules then in effect of
the American Arbitration Association (including rules relative to expedited
procedures), and the award of the arbitrator may be enforced by the judgment of
a court of competent jurisdiction.
4.8 Payment Terms. If Owner has the right under this Article to
impose a separate charge to Operator for any service, utility connection, food,
beverage or other benefit conferred upon Operator, in the absence of a
different time period specified herein the charge shall be payable within seven
(7) days after a demand for the same; provided, charges for food and beverages
services provided to an Operator shall be compiled and totalled not less
frequently than weekly and shall be paid within two (2) days after the
aggregate charges are submitted to Operator.
ARTICLE 5
(LICENSE FEES)
5.1 License Fee. For each calendar year during the term of this
Agreement, Operator shall pay to Owner, as a fee (the "License Fee") for its
rights under this Agreement, an amount equal to one-half (1/2) of the amount by
which the Project Expenses exceed the Project Revenues for such year.
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The License Fee shall be payable in equal monthly installments, in advance, on
the first day of each month during such calendar year, subject to adjustment as
set forth in this Article.
5.2 Project Expenses. "Project Expenses" shall mean all of the
costs incurred by Owner in owning, managing, operating, repairing, replacing,
promoting or maintaining the Initial Improvements, the Master Plan Improvements
(if and when constructed) and the Property, including without limitation costs
or expenses associated with the following:
(a) Salaries, fringe benefits and other employment costs
associated with employees of Owner to the extent they are providing
services under this Agreement or are involved in the management,
operation, repair, replacement, promotion or maintenance of the
Initial Improvements;
(b) Fees or rent paid to third parties or to Affiliates
of Owner in relation to the management, operation, repair, replacement
or maintenance of the Initial Improvements or the Property, including
rent and other amounts payable under the Harbor Lease;
(c) Amounts established by Owner as increases in the
operating reserve for the aforementioned activities pursuant to the
Operating Agreement and amounts necessary to restore or replenish the
operating reserve contemplated in the Operating Plan and Budget;
(d) Costs incurred in cleaning, restriping, maintaining,
lighting, landscaping, repairing and/or replacing applicable parts of
the Initial Improvements, including repairs or replacements resulting
from fire or other casualty to the extent not covered by insurance
(although such repairs or replacements are subject to any limitation
imposed on the amount thereof during any year under the terms of the
Operating Agreement), which costs need not be amortized over any
period of time;
(e) Costs of insurance premiums, deductible payments,
broker fees and other costs associated with maintaining such insurance
policies with regard to the Initial Improvements as Owner may secure
or maintain from time to time;
(f) Cost of all utility charges to Owner in connection
with the Initial Improvements, including without limitation charges
associated with gas, electric, water, wastewater discharge, telephone,
cable and other utility services;
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(g) Expenses incurred in connection with advertising,
marketing, publicizing or providing public relation services to or for
the Initial Improvements or the Project pursuant to Owner's marketing
plan as established under the Operating Agreement;
(h) Cost of any attorneys, accountants, engineers,
appraisers, other professionals and consultants retained by Owner in
connection with the ownership, operation, management, repair,
replacement or maintenance of the Initial Improvements and components
thereof, including without limitation the costs associated with
contesting property taxes, defending litigation (whether brought by
third parties or by employees, representatives or other Affiliates of
Owner or Operator) or otherwise;
(i) Cost of any fines, judgments, penalties, levies, or
other impositions imposed upon Owner or the Property, or any portion
thereof, as a result of the ownership, operation, maintenance, repair
or replacement of the Project, or any portion thereof, each of which
Owner shall retain the right to settle, resolve, compromise or
negotiate on such terms as Owner may determine in its sole discretion;
(j) Real and personal property taxes, general and special
assessments, payments in lieu of taxes, sales taxes, use taxes, income
taxes and similar impositions imposed on Owner, the Property or any
portion thereof in connection with the ownership, operation,
maintenance, repair or replacement of the Initial Improvements; and
(k) Costs incurred in connection with obtaining and
maintaining the Approvals and Third Party Agreements.
However, in no event shall Project Expenses include capital expenditures
incurred by Owner in connection with the construction of the Initial
Improvements as contemplated in Section 2.2 above, or other amounts included in
the Improvements Budget (as such term is defined in the Operating Agreement),
or the costs associated with the Trump Projects, the Majestic Projects or the
Master Plan Improvements.
5.3 Project Revenues. "Project Revenues" shall mean the revenues
actually received by Owner in connection with its ownership and operation of
the Initial Improvements (or, when constructed, the Master Plan Improvements),
including the
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proceeds of parking lot operations, valet services, food and beverage
operations, rents, concessions and like revenue sources, as well as insurance
proceeds, in each case net of any rebate, credit card collection charge and
like amount incurred or payable by Owner in generating and/or collecting such
revenues but not included within the definition of Project Expenses, and
exclusive of the License Fee payable hereunder or under the Trump Berthing
Agreement.
5.4 Determination of License Fee Payments. Not less than thirty
(30) days prior to the start of each calendar year during the term of this
Agreement (save for 1996), Owner shall provide Operator with a copy of the
Operating Plan and Budget (as such term is defined in the Operating Agreement)
for such year, setting forth the anticipated Project Expenses and Project
Revenues for such year. The parties contemplate that the operating reserve
(currently set at a level projected to be sufficient to maintain operations for
six [6] months) set forth in the Operating Plan and Budget is to be carried
forward from one year to the next, and to the extent the same is carried
forward it shall not be included in Project Expenses or Project Revenues. The
License Fee payable to Owner pursuant to Section 5.1 above shall be paid in
installments of one twenty-fourth (1/24th) of the net amount shown on the
Operating Plan and Budget as being the difference between the Project Expenses
and the Project Revenues, and such installments of the License Fee shall be due
and payable on the first day of each calendar month; provided, if the term of
this Agreement does not commence on January 1 of the year in question, or if
the term of this Agreement ends during the course of a calendar year, the
applicable payments on the License Fee shall be prorated during the term of the
calendar year. If Owner does not provide Operator with the Operating Plan and
Budget within the aforementioned period, pending the finalization of the
Operating Plan and Budget the monthly installments of the License Fee payable
by Operator during the following year shall be equal to one hundred five (105%)
percent of the amount of the monthly installment of the License Fee payable for
the last month of the preceding year. Once the Operating Plan and Budget for
such year is finalized, the License Fee shall be adjusted accordingly, and the
remaining monthly installments of the License Fee shall be adjusted to equal
the amounts necessary to result in the payment in full of the License Fee
during the remainder of such year.
5.5 License Fee for 1996 and Other Partial Calendar Years. The
parties acknowledge that the Operating Plan and Budget for calendar year 1996,
which is intended to cover the costs and expenses of Owner from the period May
1, 1996 through December 31, 1996, has been established by Owner. The initial
monthly installments of the License Fee payable under the terms of this
Agreement during 1996 shall be two hundred thousand
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($200,000) dollars per month, unless such Operating Plan and Budget is amended
pursuant to Section 5.6 below, which License Fee shall be payable on the first
day of each month throughout the term of this Agreement, provided no such
payment shall be payable or accrue prior to May 16, 1996. If the term of this
Agreement ends prior to the end of a calendar year, the License Fee shall be
determined on the basis of the Project Revenues and Project Expenses during the
year prior to the end of the term of this Agreement, although real property
taxes, insurance premiums, rents and other costs which typically pertain to a
fixed period of time shall be prorated on an equitable basis in calculating
Project Revenues and Project Expenses.
5.6 Revisions to Operating Plan and Budget. If the amounts
reflected in the Operating Plan and Budget are not sufficient to permit Owner
to meet its contractual obligations, to maintain the contemplated operating
reserve and to maintain and operate the Initial Improvements in the manner and
to the standards contemplated by this Agreement (e.g., if the Operating Plan
and Budget for the year in question did not accurately reflect the applicable
financial requirements, or the occurrence of some unanticipated event, such as
an uninsured casualty), Owner shall have the right to revise the Operating Plan
and Budget. In such event, Owner shall notify Operator of such revision in
writing, the License Fee shall be adjusted accordingly, and the monthly
installment of the License Fee payable after such revision shall be adjusted so
as to result in the payment in full of the License Fee during such year.
5.7 Reconciliation. On or before April 15 of each year during the
term of this Agreement, Owner shall provide to Operator a statement showing the
actual Project Expenses and Project Revenues for the preceding calendar year.
Operator shall pay an amount equal to one-half of the difference between the
(a) Project Expenses reflected in such statement, and (b) the sum of (i) the
Project Revenues reflected in such statement, (ii) the License Fee paid or
payable by Majestic during such year, and (iii) the License Fee paid or payable
by Operator during such year, within thirty (30) days after the date Operator
receives the statement. If the Project Revenues for such year exceed the sum
of items (i) through (iii) above, Operator shall be entitled to a credit
against the next installment(s) of the License Fee payable hereunder equal to
one-half (1/2) of such excess.
5.8 Reduction in License Fee. The parties acknowledge that the
Trump Berthing Agreement requires that Trump pay a License Fee equal to the
License Fee payable under this Agreement. The parties further acknowledge that
the Trump Berthing Agreement also provides that the License Fee payable
thereunder be increased by one hundred (100%) percent under the
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circumstances referred to in Section 19.1(e) below. During any period in which
(a) Trump is liable to pay such increased License Fee, and (b) Operator is not
in default under this Agreement, Operator shall be relieved of the obligation
to pay installments of the License Fee referred to in Section 5.1 above.
Operator acknowledges that the Trump Berthing Agreement contains an analogous
provision relieving Trump of the obligation to pay its License Fee during any
period in which Operator is obligated to pay an increased License Fee under
Section 19.1(f) of this Agreement.
ARTICLE 6
(TERM)
6.1 Term. The term of this Agreement shall commence on the date
hereof and shall end on December 31, 2035.
6.2 Owner's Right to Terminate. Owner shall have the right to
terminate this Agreement effective upon the expiration of the term, or other
termination, of Owner's leasehold interest under the Harbor Lease, unless at
such time Owner has constructed or has decided to construct the New Harbor as
contemplated in Article 7 below. Owner shall provide Operator with not less
than seventy (75) days written notice of the effective date of such
termination. Furthermore, promptly after receipt thereof Owner shall provide
Operator with a copy of any written notice from Lehigh seeking to terminate the
Harbor Lease or refusing or contesting any exercise by Owner of a right to
extend the term of the Harbor Lease in accordance with the provisions thereof.
ARTICLE 7
(MASTER PLAN; NEW HARBOR)
7.1 Master Plan. Operator acknowledges that Owner is in the
process of formulating a Master Plan, which shall depict the development of the
Property as including (a) the Trump Projects, (b) the Majestic Projects, (c) a
new or expanded harbor lying to the west of the Harbor, and contemplated under
the Harbor Lease as a dockage site to replace the Harbor (the "New Harbor"),
and (d) a new, expanded or relocated pavilion and related improvements intended
to replace the Pavilion and the Mooring Barge and appropriate to conduct
riverboat gaming operations at the New Harbor (the "Additional Facilities," and
together with the New Harbor, the "Master Plan Improvements").
7.2 Development of Master Plan Improvements. If Owner elects to
construct and develop the Master Plan Improvements, Owner shall have the right
to restrict the availability of and/or close down various areas of the Initial
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Improvements in order to facilitate such construction and development;
provided, Owner shall use best efforts to avoid unreasonable disruption of
Operator's gaming operations at the Initial Improvements until Operator has
transferred such gaming operations to the applicable facilities on the Master
Plan Improvements.
7.3 Termination of Leasehold Interests and Licenses; Revised
Definition of Initial Improvements. Upon Substantial Completion of the Master
Plan Improvements, Owner shall have the right to terminate the leasehold
interests and licenses granted in Sections 3.1 through 3.3 above (and
thereafter remove the applicable facilities and improvements) provided that
similar leasehold interests and licenses are simultaneously granted to Operator
in such a manner and to such extent as permits Operator, to the extent
practical, uninterrupted and continuous gaming operations at the Property,
whereupon all references in this Agreement to the term "Initial Improvements"
shall be deemed to refer to the Master Plan Improvements and such part of the
original Initial Improvements as are not affected by such construction and
development.
ARTICLE 8
(OWNER'S RESERVED RIGHTS)
8.1 Owner's Reserved Rights. Notwithstanding anything herein to
the contrary, Owner reserves the following rights, and the exercise of same
shall not be deemed to violate any leasehold interest or license granted herein
or otherwise constitute a breach of this Agreement by Owner:
(a) The right to permit the holder or beneficiary of any
rights pursuant to any Permitted Exceptions to exercise such rights,
provided that Owner shall use best efforts to induce the holder of
such rights to exercise same in such a manner as to minimize any
interference with Operator's gaming operations.
(b) The right to establish, revise (upon reasonable
advance notice) and enforce rules and regulations pertaining to the
use and enjoyment of the Initial Improvements (excluding the Trump
Exclusive Areas and the Majestic Exclusive Areas), including without
limitation rules and regulations to ensure compliance with (i) all
applicable statutes, ordinances, rules, orders and regulations of any
governmental authority having jurisdiction over such facilities, and
(ii) the rights of parties pursuant to Permitted Exceptions, as well
as for purposes of safety, convenience and the efficient delivery of
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services under Article 4 above. All such rules or regulations shall
apply equally to Operator and Trump, to the end that neither gaming
enterprise be discriminated against by reason of such rules or
regulations.
(c) The right to permit parts of the Property to be
developed for the Trump Projects, the Majestic Projects or other
projects in accordance with the Operating Agreement. Without limiting
the generality of the foregoing, Owner shall have the right:
(i) To sell, lease or otherwise transfer parts of
the Property for development as separate projects (including
Trump Projects and Majestic Projects);
(ii) To make common driveways, parking areas,
utilities and like components of infrastructure that are part
of the Initial Improvements available to the owners, tenants,
guests, employees, patrons, invitees and mortgagees of parts
of the Property being conveyed, leased or transferred for
another purpose, including for shared ingress, egress and
utility access; and
(iii) To change the location of the Initial
Improvements to other locations on the Property or on other
property; and
(d) So long as Operator is required by the Commission to
periodically restrict access to the Majestic Vessel for gaming
purposes, Owner shall have the right to coordinate and assist in
establishing or otherwise provide for the scheduling of cruises during
such periods in accordance with Section 3.2(c)(1) of the Operating
Agreement.
8.2 Limitations on Owner's Rights. Section 8.1 above
notwithstanding, in exercising its rights under this Article Owner may not
change the location of the Initial Improvements, or make the same available for
use of Persons associated with another project, if:
(a) Such action would reduce the parking spaces available
to Operator's and Trump's gaming operations below the lesser of the
minimum number of parking spaces required to meet all requirements
under applicable codes, ordinances, and zoning or safety rules or
regulations (as such requirements may be reduced or adjusted by
variance or like action of the
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applicable governmental authorities), and two thousand eight hundred
(2,800) spaces. In calculating the number of such parking spaces,
Owner shall be entitled to take into consideration the availability of
shared parking spaces to the extent permitted by the applicable
governmental authorities;
(b) Such action would result in a violation of any
requirement under Operator's Certificate of Suitability or a rule,
regulation or requirement of the Commission; or
(c) Such action would result in the capacity of any
utility falling below that specified in the Vessel Utility Connections
or in Section 4.2 above.
8.3 Operator's Obligation to Confirm Owner's Rights. Upon a
written request of Owner, Operator shall execute a document in recordable form
confirming that a particular action taken or proposed to be taken by Owner
under this Article does not constitute a breach of this Agreement. Any request
from Owner for such confirmation shall include a description of the precise
action (and part of the Initial Improvements affected by such action) as to
which Owner is seeking confirmation. Any refusal by Operator to any request
for confirmation shall be in writing and shall state with particularity the
reasons why Operator does not believe that Owner has the right to take such
action under this Article.
ARTICLE 9
(OPERATOR'S USE OF INITIAL IMPROVEMENTS)
9.1 Permissible Uses. Operator may use the Initial Improvements
only for the support of Operator's gaming operations at the Majestic Vessel and
ancillary uses in conjunction with such operations. The Initial Improvements
may not be used by Operator for any other purpose without the prior written
consent of Owner.
9.2 Compliance with Laws and Permitted Exceptions. To the extent
it is within the control of Operator to do so, and not within the control of,
or the obligation of, Trump, Operator will not permit to be done or to be
brought or kept in, on or about the Initial Improvements anything that is
prohibited by or conflicts with any law, statute, ordinance, rule or regulation
now in force or hereafter enacted or promulgated by any governmental authority,
that is prohibited by any applicable fire insurance policy, that will in any
way increase the existing rate of or affect or cause a cancellation of any fire
or other insurance upon the Initial Improvements or that will materially and
adversely affect or interfere with any
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services required to be furnished by Owner to Operator, Trump or others.
Operator will not permit anything to be done in, on or about the Initial
Improvements (including on the Majestic Vessel) that will in any way obstruct
or interfere with the rights of Trump relative thereto, or use or permit the
Initial Improvements or the Majestic Vessel to be used for any improper or
unlawful purpose. Operator will not cause, maintain or permit any nuisance in,
on or about the Initial Improvements or the Majestic Vessel, or commit or
suffer (to the extent within its control and not within the control of, or the
obligations of, Trump) to be committed any waste in, on or about the Initial
Improvements. If anything done, omitted to be done or so suffered to be done
by Operator or kept or suffered by Operator to be kept in, on or about the
Initial Improvements causes the rate of fire or other insurance to be increased
beyond the rate from time to time otherwise applicable, Operator will pay the
amount of any increase to Owner within ten (10) days of demand by Owner.
Operator will at its sole cost and expense promptly comply with any standard or
regulation now or hereafter imposed on Operator and applicable exclusively to
Operator's use of the Initial Improvements by any governmental body charged
with the establishment, regulation or enforcement of occupational, health or
safety standards for employers, employees, lessors or lessees, with all laws,
statutes, ordinances and governmental rules, regulations or requirements now or
hereafter in force, with the requirements of any board of fire underwriters or
other similar body now or hereafter constituted and with any occupancy
certificate or directive issued pursuant to any law by any public officer or
officers.
9.3 Compliance with Environmental Laws. Without limiting the
generality of its obligations under Section 9.2 above, Operator shall fully
comply with, observe and discharge its obligations under any law pertaining to
the environment, health or safety, including the laws described or referred to
in attached Exhibit M (the "Environmental Laws") to the extent applicable
exclusively to Operator's use of the Initial Improvements and/or the Majestic
Vessel. Operator shall indemnify and hold harmless Owner, members of Owner,
Owner committee and Owner subcommittee representatives and officers and
directors of either members of Owner or members of members of Owner from and
against any liability, obligation or expense, including reasonable attorneys
fees and other litigation expenses, incurred or asserted against them based on
a violation by Operator, its members, or employees or agents of any
Environmental Law or any unlawful or improper discharge or release from the
Majestic Vessel into the Property, the Harbor, or otherwise, of substances or
materials that are classified as toxic or hazardous under any Environmental
Law.
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ARTICLE 10
(SIGNAGE RIGHTS)
The parties acknowledge that the Initial Improvements include certain
signs for the Project and/or the gaming operations of Operator and Trump as a
combined gaming venue. In addition to the signs shown as part of the Initial
Improvements, Operator shall have the right to construct, maintain and replace
signs for Operator's separate gaming operations at the locations and within the
specifications established by unanimous agreement of all members of the
Subcommittee to Owner's Operating Committee. Operator shall be entitled to
signage of equal prominence and visibility to the signs for Trump's separate
gaming operations established under the Trump Berthing Agreement.
ARTICLE 11
(ALTERATIONS)
11.1 Owner's Right to Make Repairs and Alterations to Initial
Improvements. Owner may make or allow to be made any repairs, maintenance,
alterations, additions or improvements to the Initial Improvements or any part
thereof, or attach or replace any fixtures or equipment thereto, without first
obtaining Operator's written consent, provided that the affected portions of
the Initial Improvements continue to comply with the applicable standards set
forth in this Agreement, and further provided that in making such repairs,
etc., Owner shall use reasonable efforts to avoid or minimize unnecessary
disruption of Operator's gaming operations.
11.2 Operator's Rights Regarding Majestic Exclusive Areas.
Operator may make such alterations, additions or improvements to the Majestic
Exclusive Areas as Operator desires, provided Operator first procures Owner's
prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed). All such alterations, additions and improvements,
except furniture, equipment and trade fixtures, shall be the property of Owner
upon their installation or completion, without compensation to Operator, upon
the expiration or termination of the Agreement.
11.3 Covenant Not to Overload. Operator shall not overload the
capacity of any utility system or line that constitutes a part of the Initial
Improvements.
11.4 Removal at End of Term. Upon the expiration of the term of
this Agreement, Operator shall remove all of its trade fixtures, furniture and
equipment from the Majestic Exclusive Areas and repair any damages caused to
the Majestic Exclusive Areas as a result of such removal. In the event
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Operator fails to remove same, they shall be deemed abandoned and Owner shall
have the right to retain them or to have them removed at Operator's expense.
ARTICLE 12
(MAINTENANCE)
12.1 Maintenance of Majestic Exclusive Areas. Operator shall be
solely and exclusively responsible for operating and maintaining the Majestic
Exclusive Areas, as well as the Majestic Vessel. Operator shall maintain the
same in a safe, clean and sightly condition commensurate to the condition in
which Owner maintains the Site Plan Improvements.
12.2 Maintenance of Other Initial Improvements. Owner shall be
solely and exclusively responsible for maintaining and cleaning the Initial
Improvements other than the Trump Exclusive Areas and the Majestic Exclusive
Areas. Owner shall maintain the same to the standards specified in attached
Exhibit I.
ARTICLE 13
(INSURANCE AND INDEMNIFICATION)
13.1 Operator's Responsibilities Regarding Majestic Exclusive Areas
and the Majestic Vessel. To the extent permitted by law, Operator waives all
claims against Owner for damage to any of Operator's property or injury to or
death of any person in, on, or about the Majestic Exclusive Areas or the
Majestic Vessel, arising at any time and from whatsoever cause. Operator will
indemnify, defend and hold Owner harmless from and against any and all claims,
demands, damages, losses, costs and expenses of whatsoever kind or nature
arising due to (a) any injury to or destruction of life or property due to the
use and occupancy of the Majestic Vessel, or (b) any injury to or destruction
of life or of Operator's property due to the use and occupancy of the Majestic
Exclusive Areas.
13.2 Operator's Liability Insurance Obligation. Operator shall
obtain and keep in effect Broad Form Commercial General Liability insurance,
including contractual liability, with minimum limits of liability of one
hundred million ($100,000,000) dollars per occurrence combined single limit of
liability for bodily injury, property damage and personal injury. Operator
shall increase these liability limits as Owner reasonably requires from time to
time, and in any event shall maintain such insurance coverages as are required
under Operator's Certificate of Suitability. This insurance shall specifically
include all liability assumed hereunder by Operator and shall provide that it
is primary insurance and not excess over or contributory with any other
insurance.
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13.3 Operator's Other Insurance Obligations.
(a) Operator shall obtain and keep in effect fire
insurance (including standard extended coverage against perils and
leakage from fire protective devices) for the full replacement cost of
all of Operator's trade fixtures, improvements, furniture, furnishings
and equipment in the Majestic Exclusive Areas.
(b) Operator shall obtain and keep in effect insurance to
adequately protect the value of Operator's business, personal property
(including inventory), equipment and contents; and insurance covering
payment of the License Fee in the event of a casualty.
(c) Operator shall obtain and keep in effect any
workmen's compensation or like insurance coverage required in respect
of Operator's employees, as well as applicable insurance coverages
required under Maritime Law.
(d) Operator may not use the Initial Improvements until
Operator has delivered to Owner the policies of insurance required
hereunder and Owner has approved the form and content of these
policies and the insurance company issuing the policies, which
approval shall not be unreasonably withheld, conditioned or delayed.
13.4 Owner's Responsibilities Regarding Initial Improvements. To
the extent permitted by law, Owner waives all claims against Operator for
damage to any of Owner's property or for injury to or death of any person in,
on, or about the Initial Improvements (other than the Majestic Exclusive
Areas), and for damage to any property (other than Operator's property) in the
Majestic Exclusive Areas, arising at any time and from whatsoever cause. Owner
will indemnify, defend and hold Operator harmless from and against any and all
claims, demands, damages, losses, costs and expenses of whatsoever kind or
nature arising due to any injury to or destruction of life or property due to
the use and occupancy of the Initial Improvements by Owner.
13.5 Owner's Liability Insurance Obligation. Owner shall obtain
and keep in effect Broad Form Commercial General Liability insurance, including
contractual liability, with minimum limits of liability of one hundred million
($100,000,000) dollars per occurrence combined single limit of liability for
bodily injury, property damage and personal injury. Owner shall increase these
liability limits to the
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limits Owner requires Operator to maintain from time to time pursuant to
Section 13.2 above. This insurance shall specifically include all liability
assumed hereunder by Owner and shall provide that it is primary insurance and
not excess over or contributory with any other insurance.
13.6 Owner's Other Insurance Obligations.
(a) Owner shall obtain and keep in effect fire insurance
(including standard extended coverage against perils and leakage from
fire protective devices) for the full replacement cost of the Initial
Improvements other than the Trump Exclusive Areas and the Majestic
Exclusive Areas.
(b) Owner shall obtain and keep in effect insurance to
adequately protect the value of Owner's business, personal property
(including inventory), equipment and contents.
(c) Owner shall obtain and keep in effect any workmen's
compensation or like insurance coverage required in respect of Owner's
employees, as well as applicable insurance coverages required under
Maritime Laws.
13.7 Insurance Requirements. To the extent commercially practical
Operator, Trump and Owner shall procure insurance coverages on the Majestic
Exclusive Areas, the Trump Exclusive Areas and the remainder of the Initial
Improvements, respectively, from the same insurance company (which company
shall be reasonably acceptable to Owner, Trump and Operator) in order that the
applicable insurance coverages may be properly coordinated and to reduce their
respective premiums. All insurance required hereunder shall be carried with
responsible insurance companies qualified to issue the applicable coverages in
the State and having a Best's rating of A+ or better. All liability and loss
of rents insurance required to be maintained hereunder by Operator must
designate Trump, Owner and Owner's mortgagee and any other parties reasonably
designated by Owner as additional insureds and must provide that it may not be
cancelled or modified without thirty (30) days prior written notice to the
additional insureds. Within ten (10) days of the date hereof, and within ten
(10) days prior to each anniversary date of this Agreement thereafter, each
party shall provide to the other party one or more certificates (as necessary)
from its insurance companies confirming that the insurance coverages required
under this Agreement are in full force and effect.
13.8 Waiver of Subrogation. Owner and Operator shall each obtain
from their respective insurers under all policies of insurance required
hereunder a waiver of all rights or
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subrogation that the insurer of one party has against the other party. Owner
and Operator shall indemnify the other against any loss or expense, including
reasonable attorneys' fees, resulting from a failure to obtain this waiver. So
long as this waiver is outstanding and to the extent of any proceeds received
under its policy, each party waives any right of recovery against the other
party for any loss covered by the policy containing the waiver.
ARTICLE 14
(DAMAGE OR DESTRUCTION)
If the Initial Improvements or any portion thereof are destroyed or
damaged by fire, tornado or other casualty, Owner shall commence to rebuild or
repair the same (save for trade fixtures, furnishings, equipment or like
improvements in or to the Trump Exclusive Areas and the Majestic Exclusive
Areas) as promptly as reasonably possible to substantially the same condition
that existed immediately prior to the damage or as otherwise render the same in
conformity with this Agreement; provided, the aggregate amount which Owner is
obligated to expend to rebuild or repair during any year in excess of available
insurance proceeds shall be subject to any limitation thereon that is set forth
in the Operating Agreement. Operator shall not be allowed an abatement of the
License Fee during such reconstruction or repair period.
ARTICLE 15
(EMINENT DOMAIN)
If all or any part of the Initial Improvements are taken as a result
of the exercise of the power of eminent domain, or by private sale in lieu of a
taking, this Agreement and the leasehold interests and licenses granted herein
shall terminate as to the part so taken as of the date that the condemning
authority takes possession. In no event shall any taking result in a
termination of, or give rise to a right to terminate, this Agreement. Any and
all compensation, damages, income, rent or awards paid or made in connection
with any taking shall be the sole and exclusive property of Owner except that
Owner shall not be entitled to any portion of the award made to Operator for
loss of business, moving expenses or fixture removal damages.
ARTICLE 16
(ASSIGNMENT OR OTHER TRANSFER)
16.1 No Assignment or Transfer Without Approval. Except as
expressly permitted under this Article, Operator may
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not assign, sublease, encumber or hypothecate this Agreement or the leasehold
interests or licenses granted hereunder. The interest of Operator in and to
this Agreement and the leasehold interests and licenses granted hereunder are
not assignable or transferrable, other than pursuant to Sections 16.2 or 16.3
below, without the prior written consent of Owner.
16.2 Permitted Sale or Transfer of Interest. Operator may assign
this Agreement to any Person which is simultaneously acquiring or has acquired
a Certificate of Suitability or a Riverboat Owner's License from the Commission
for use at the location of the Majestic Vessel, provided that contemporaneously
therewith Operator sells or transfers its entire interest in Owner to the same
Person and complies (or causes the buyer or transferee to comply) with all
requirements with respect thereto set forth in the Operating Agreement.
16.3 Permitted Pledge of Interest. Operator may pledge, grant a
security interest in or make a collateral assignment of its interest under this
Agreement and the leasehold interests and licenses granted herein as security
for a loan, a surety bond, an extension of credit or a guaranty on behalf of,
by or to Operator; provided such loan, surety bond, credit or guaranty is
extended or issued in connection with Operator's financial or performance
obligations with respect to its gaming operations at the Project or with
respect to Owner, including in connection with Operator's (a) ownership,
chartering, equipping or operation of its riverboat, (b) gaming equipment or
other improvements, (c) working capital needs, and (d) past or future capital
contributions to Owner, as well as for the extension, reimbursement or
refinancing of the foregoing; provided that (i) the loan, surety bond, credit
or guaranty (or extension or refinancing of the foregoing) does not serve as
security for, and is not cross-collateralized with, a loan that is not made in
respect of Operator's aforementioned obligations; and (ii) contemporaneously
therewith Operator complies (or causes the lender, surety, lessor or transferee
to comply) with all requirements with respect thereto set forth in Sections
8(a)(i), (ii) and (iv) of the Operating Agreement.
16.4 Effect of Impermissible Assignment. Any purported sale,
transfer, pledge, encumbrance, hypothecation, grant of a security interest,
assignment, sublease or grant of a right of use with respect to the Initial
Improvements or any part thereof in violation of this Article shall be void and
of no force or effect and shall in no way limit, modify, alter or impair
Operator's obligations under this Agreement or create any rights on the part of
the purported transferee, assignee or other Person against Owner.
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ARTICLE 17
(OWNER'S RIGHT OF ENTRY TO MAJESTIC EXCLUSIVE AREAS)
Except to the extent such right of entry is prohibited or limited by
the rules, regulations or requirements of the Commission, Owner shall have the
right to enter the Majestic Exclusive Areas, and to have its contractors and
representatives enter into such areas, in order to fulfill any of Owner's
responsibilities under this Agreement or to respond to any emergency involving
injury or damage to person or property. Operator waives any claim for damages
for any injury or inconvenience to or interference with Operator's business,
any loss of occupancy or quiet enjoyment of the Initial Improvements or any
other loss occasioned by entry by Owner in accordance with the foregoing.
ARTICLE 18
(EVENTS OF DEFAULT; BANKRUPTCY)
18.1 Definition. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) A default hereunder by Operator involving the payment
of money which continues for ten (10) or more days after Owner (or
Trump or another Member of Owner) provides Operator with written
notice thereof;
(b) A default hereunder by Operator not involving the
payment of money which continues for thirty (30) or more days after
Owner (or Trump or another Member of Owner) provides Operator with
written notice thereof, although if the default is of a nature that
can not reasonably be cured within thirty (30) days, an Event of
Default shall not be deemed to have occurred so long as within such
thirty (30) day period Operator commences (and thereafter diligently
pursues to completion) appropriate measures to cure such default;
(c) A default by Operator of its obligation to make any
capital contributions to Owner under Section 4.1(a)(3) or (4) or
Section 4.1(h) of the Operating Agreement, which default continues for
thirty (30) or more days; or
(d) Operator suffers Bankruptcy.
18.2 Certain Provisions Regarding Bankruptcy. Notwithstanding
anything else to the contrary in this Agreement, the parties acknowledge and
agree that this
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Agreement is intended to be treated as a "lease" in any bankruptcy proceeding,
and shall be construed to effectuate this intent and agreement.
ARTICLE 19
(REMEDIES)
19.1 Remedies. If an Event of Default occurs, Owner shall have the
following rights and remedies, along with such other rights and remedies as are
otherwise provided in this Agreement or are otherwise available at law or in
equity:
(a) If the Event of Default continues for a period of one
hundred twenty (120) days, Owner shall have the right to suspend
Operator's rights under any leasehold interest or license granted
hereunder and prohibit Operator or its employees, contractors,
patrons, invitees or agents from entering on the Initial Improvements
or any part thereof and/or from docking the Majestic Vessel at the
Mooring Barge until such time as the Event of Default have been cured;
provided, if during any such period Owner does not require Operator to
remove the Majestic Vessel from its moorings at the Mooring Barge,
Operator shall have access to the Majestic Vessel for the limited
purposes of maintaining the same or removing it from the Mooring
Barge.
(b) If the Event of Default continues for a period of one
hundred twenty (120) days and Operator continues to conduct, or
attempt to conduct, gaming operations from the Majestic Vessel despite
a request by Owner for the suspension of such gaming activities, Owner
may terminate this Agreement by providing Operator with written notice
to such effect. No such termination shall diminish, release or
discharge any obligation of Operator arising under this Agreement
prior to the date of termination.
(c) If an Event of Default continues for a period of more
than two hundred seventy (270) days but Owner has not elected (or has
not had the right) to terminate this Agreement pursuant to subsection
(b) of this Section, Owner (or Trump, at Trump's election) shall have
the right to acquire (or to have its designee acquire) all of
Operator's right, title and interest in this Agreement in connection
with the acquisition pursuant to Section 7.2(b) of the Operating
Agreement of Operator's interest as a Member in Owner.
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The parties acknowledge that Owner or Trump (as determined by Trump) shall have
a right to obtain specific performance of its rights under Subsection (a) of
this Section, or of the obligations of Operator to transfer its right, title
and interest in and under this Agreement under the circumstances referred to in
Subsection (c) of this Section, it being recognized that such rights and
interests are unique and have been specifically bargained for, and that there
would be no adequate remedy at law or in damages for a failure or refusal by
Operator to honor and perform its applicable obligations in a timely fashion.
The foregoing sentence shall not be construed to imply that the remedy of
specific performance or other equitable relief is not available, or should not
be ordered, as remedies for other breaches under this Agreement.
(d) If and to the extent required under applicable laws,
and only after the exercise of the right specified in subsections (a),
(b) or (c) above, as applicable, the right to evict and dispossess
Operator from the Initial Improvements by appropriate proceedings;
provided, no such eviction, of itself, shall prevent Operator from
curing a default under this Agreement that is otherwise curable under
the terms hereof within two hundred seventy (270) days of an Event of
Default.
(e) If any installment of a License Fee or any other
payment due hereunder is not paid within ten (10) days after the same
has become an Event of Default, interest on such amount shall commence
to accrue on such amount and shall become immediately due and payable
at the rate of interest announced from time to time by Chase Manhattan
Bank as its "prime rate" (the "Prime Rate") plus five (5%) percent,
but in no event shall the rate exceed the maximum interest rate
permitted by applicable law.
(f) If any installment of a License Fee is not paid
within thirty (30) days after the same has become an Event of Default,
the License Fee payable thereafter, and until payment in full of all
installments of the License Fee (including interest thereon or
increases thereof), shall be increased by one hundred (100%) percent.
19.2 No Termination of Obligation to Pay License Fees. Unless and
until Operator's right, title and interest under this Agreement has been
acquired pursuant to Section 19.1(c) above, or Owner has terminated this
Agreement as provided in Section 19.1(b) above or Section 22 below, Owner may
recover from Operator any installments of the License Fee and other amounts
payable by Operator hereunder as they become
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<PAGE> 34
due, together with all other damages incurred by Owner as the result of any
Event of Default.
19.3 Remedies Cumulative. The remedies provided for in this
Agreement are cumulative and are in addition to any other remedies available to
Owner at law, in equity, by statute or otherwise.
ARTICLE 20
(LIMITATION ON OWNER'S LIABILITY)
Notwithstanding anything herein to the contrary, in no event shall
Owner have responsibility or liability to Operator or Operator's members,
parents, Affiliates, shareholders, employees, directors or other
representatives, or Affiliates thereof, for damages for any alleged or actual
breach of this Agreement or any alleged or actual breach of any duty (whether
such duty arises or is alleged to arise from contract, statute, common law or
otherwise). Without limiting the generality of the foregoing, Owner shall not
have liability or responsibility for (a) indirect damages, (b) consequential
damages, (c) lost profits or revenues, or (d) damages for diminution or loss of
public image, reputation or goodwill, even if the same result from or are
caused by a breach by Owner of this Agreement or of the aforementioned duties.
The parties acknowledge that they have specifically bargained for this
limitation on liability based on the relationship between and among Owner,
Operator and Trump, and the determination of the License Fee as set forth in
Article 5, and that absent this limitation Owner would not enter into this
Agreement or undertake the obligations herein set forth.
ARTICLE 21
(PROTECTIONS FOR OPERATOR'S LENDER)
21.1 General Applicability. If Operator shall mortgage, pledge
or assign its interest hereunder pursuant to and in compliance with the
provisions of Article 16 above, then, as long as any such mortgage or pledge or
assignment shall remain unsatisfied of record, the following Sections shall
apply; provided such Sections shall apply only if the mortgage, pledge or
assignment is made to and is held by a third party lender, surety or guarantor
that is not an Affiliate of Operator.
21.2 No Termination Without Notice. There shall be no
cancellation, surrender, acceptance of surrender or modification of this
Agreement or attornment of any assignee to Owner without the prior written
consent of the holder of such mortgage, pledge or assignment (the "Lender"),
which consent shall not be unreasonably withheld.
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<PAGE> 35
21.3 Lender's Right to Receive Notices. If the Lender shall
register with Owner his or its name and address in writing, Owner, on serving
on Operator any notice of default or a termination of this Agreement or a
matter on which Owner may predicate or claim a default, shall at the same time
serve a duplicate counterpart of such notice on the Lender by Registered Mail,
Return Receipt Requested, addressed to the Lender at the address registered
with Owner, and no notice by Owner to Operator hereunder shall be deemed to
have been duly given to Operator unless and until such duplicate counterpart
thereof has been so served on the Lender.
21.4 Lender's Right to Cure Defaults. The Lender, in the event
Operator shall be in default hereunder, shall have the right within the period
and otherwise as herein provided to remedy or cause to be remedied such
default, and Owner shall accept such performance by or at the instigation of
the Lender as if the same had been performed by Operator. No default by
Operator in performing any obligation required hereby shall be deemed to exist
if steps, in good faith, shall have been promptly commenced by Operator or by
the Lender or by any other party, person or entity to rectify the same and
prosecuted to completion with diligence and continuity.
21.5 Effect of Lender's Cure. Anything herein contained to the
contrary notwithstanding, during such time as any obligation to the Lender
remains unsatisfied of record, if an event or events shall occur which shall
entitle Owner to terminate this Agreement, and if before the expiration of the
applicable cure period Lender shall have paid to Owner all installments of the
License Fee (including increases thereof or interest thereon) and other
payments herein provided for then in default and shall have complied or shall
be engaged in the work of complying with all other requirements of this
Agreement, if any, then in default, then Owner shall not be entitled to
terminate this Agreement and any notice of termination theretofore given shall
be void and of no effect; provided, however, that nothing herein contained
shall in any way affect, diminish or impair Owner's right to terminate this
Agreement (if such default is not cured within the applicable cure period or in
the process of being cured) or to enforce any other remedy in the event of the
nonpayment of any such amounts payable by Operator or in case of any other
subsequent default in the performance of any of the obligations of Operator
hereunder in accordance with this Agreement, subject, however, to all of the
provisions of this Article.
21.6 Obligation to Enter into New Agreement. In the event this
Agreement is terminated before the natural expiration of its term, whether by
summary dispossession proceedings, service of notice to terminate, or
otherwise, due to Operator's default, Owner shall, by Registered Mail, Return
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<PAGE> 36
Receipt Requested, serve on the Lender written notice of such termination,
together with a statement of any and all sums which would at that time be due
under this Agreement but for such termination, and of all other defaults, if
any, under this Agreement then known to Owner. The Lender shall thereupon have
the option to obtain a new or direct agreement substantially identical to this
Agreement on the following terms and conditions:
(a) On the written request of the Lender, within sixty
(60) days after service of the aforementioned notice of termination,
Owner shall enter into a new or direct agreement with the Lender, or
its designee (the "New Agreement"), as provided in Subsection (b).
(b) The New Agreement shall be effective as of the
date of termination of this Agreement, shall be for the remainder of
the term of this Agreement (had it not been terminated) and otherwise
upon the same terms, covenants and conditions of this Agreement. On
the execution of the New Agreement, the operator named therein shall
pay any and all sums which would at the time of the execution thereof
be due under this Agreement but for the termination as aforesaid and
shall otherwise fully remedy or agree in writing to remedy any
existing defaults under this Agreement, other than a default which is
not susceptible of being cured by such new operator, which such
defaults shall be and shall be deemed to be waived. The new operator
shall pay all necessary and reasonable expenses, including reasonable
counsel fees and court costs, incurred in terminating this Agreement,
as well as in the preparation, execution and delivery of the New
Agreement. Nothing contained herein shall release Operator from any
of its obligations under this Agreement which may not have been
discharged or fully performed by the Lender.
(c) Notwithstanding the provisions of this Agreement,
if Owner shall elect to terminate this Agreement by reason of
Operator being in default of any term or condition hereunder which is
not reasonably susceptible of being cured by the Lender, including
but not limited to the default referred to in Article 18 relating to
bankruptcy and insolvency, then the Lender shall have the right to
postpone and extend the specified date for the termination of this
Agreement, fixed by Owner in a notice given pursuant thereto, for a
period of not more than six (6) months, provided the Lender promptly
shall cure or be engaged in curing any then existing defaults of
Operator (other than the defaults hereinbefore referred which are not
susceptible to cure) and shall forthwith take steps to acquire
Operator's
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<PAGE> 37
interest in the Agreement by appropriate legal proceedings. If,
before the date specified for the termination of this Agreement as
extended by the Lender, the Lender shall deliver to Owner its
agreement and obligation to perform and observe the covenants and
conditions to be performed by Operator in this Agreement, then, and
in such event, any such noncurable defaults on the part of Operator
shall be and shall be deemed to be waived, provided further that if
at the end of said six (6) month period the Lender shall be actively
engaged in steps to acquire Operator's interest herein, the time of
the Lender to comply with the provisions of this Article shall be
extended for such period as shall be necessary to complete such steps
with diligence and continuity, provided that nothing herein shall
preclude Owner from exercising any rights or remedies under this
Agreement with respect to any other default hereunder during such
extension period (subject, in the case of such other defaults, to all
the provisions of this Agreement).
21.7 Insurance Coverages for Lender. A standard mortgagee
clause naming the Lender shall be added to any and all insurance policies
required to be carried by Operator hereunder on condition that the insurance
proceeds are to be applied in the manner specified in this Agreement and
Operator's agreement with the Lender shall so provide.
21.8 Notice of Condemnation. The parties hereto shall give the
Lender written notice of any condemnation proceedings affecting the Initial
Improvements. The Lender shall have the right to intervene and be made a party
to any such condemnation proceedings. Operator's interest in any award or
damages for such taking is hereby set-over, transferred and assigned by
Operator to the Lender to the extent of the balance of any principal, interest
or other payment due or which shall thereafter accrue or become due to the
Lender.
21.9 No Obligation on Part of Lender. The Lender shall not be
liable to perform any of Operator's obligations under this Agreement unless and
until the Lender shall become the owner of Operator's interest hereunder, and
then only for as long as it remains such owner.
21.10 Obligation to Modify. Owner, on request of Operator, shall
execute such reasonable modifications or amendments of this Agreement as shall
be required by the Lender, provided that such proposed amendments do not
materially or adversely affect the rights of Owner hereunder or Trump under the
Trump Berthing Agreement.
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<PAGE> 38
ARTICLE 22
(TERMINATION)
If Operator withdraws or resigns as a Member of Owner in violation of
the terms of the Operating Agreement, Owner may terminate this Agreement and
Operator shall have no further right to use (or to have other Persons use) the
Initial Improvements.
ARTICLE 23
(OWNER'S RIGHT TO CURE DEFAULTS)
If Operator fails to pay any sum of money required to be paid by
Operator hereunder, or fails to perform any other act on its part to be
performed hereunder for fifteen (15) days after notice thereof by Owner, Owner
may make the payment or perform the act without waiving or releasing Operator
from any obligations of Operator under this Agreement. All sums so paid or
costs so incurred shall accrue interest at the Prime Rate plus five (5%)
percent and shall be payable to Owner on demand. In addition to any other
right or remedy of Owner hereunder, Owner shall have the same rights and
remedies in the case of a default by Operator in the payment of such amounts as
in the case of default in the payment of the License Fee.
ARTICLE 24
(OPERATOR'S RIGHT TO CURE DEFAULTS)
Notwithstanding anything contained herein to the contrary, if Owner
defaults in the performance of an obligation of Owner under Articles 2 or 4
above, Operator shall have the right to cure such default for the account of
Owner; provided, however, that Operator first shall provide Owner with written
notice of such claimed default, whereupon Owner shall have thirty (30) days to
cure such default or such reasonable additional period as is necessary to cure
such default if such default is incapable of being cured within such thirty
(30) day period and Owner is proceeding with due diligence to cure such
default. If Owner fails to cure any such default after written notice and
within the aforesaid cure period ("Owner's Default"), then any reasonable
expenditure made by Operator to cure Owner's Default, together with interest
thereon at the Prime Rate plus five (5%) percent, shall be credited by Owner to
Operator as a set off against the next installment(s) of the License Fee
payable under this Agreement.
ARTICLE 25
(LIENS)
Any lien filed or claimed against the Initial
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<PAGE> 39
Improvements or any part thereof or interest therein for work, labor, services
or materials claimed to have been done or furnished will be fully satisfied (or
bonded off) and discharged of record by Owner, Trump or Operator, whichever
contracted for the work, labor, services or material, within sixty (60) days
after a notice of lien or similar notice has been recorded. If any action,
suit, or proceeding is brought upon any lien for the enforcement or foreclosure
of the same, Owner, Trump or Operator, as the case may be, shall defend the
others therein and indemnify and hold each of them harmless from and against
any and all judgments, damages, costs, fees and expenses asserted against or
incurred by such party on account thereof, including court costs and reasonable
attorneys' fees. Each party shall notify the other party and Trump in writing
of any such lien promptly after the party learns of such filing or claim.
ARTICLE 26
(ATTORNEYS' FEES)
If a dispute under this Agreement becomes the subject of litigation
or arbitration, the prevailing party shall be entitled to recover as part of
its damages the reasonable attorneys' fees and expenses incurred by such party
in connection with such litigation or arbitration proceeding.
ARTICLE 27
(SUBORDINATION TO LENDERS)
This Agreement and all leasehold interests or licenses granted
hereunder are and shall be subject and subordinate at all times to the lien of
any mortgage granted by Owner that now or hereafter affects the Property or any
part thereof, and any and all advances made or hereafter made upon the security
thereof, together with any interest thereon and all other sums secured by such
mortgage, and to any agreement at any time modifying, supplementing, restating,
extending or replacing any such mortgage; provided, such mortgagee agrees in
writing that it shall not disturb Operator's rights under this Agreement so
long as Operator is not in default under this Agreement. Notwithstanding the
foregoing, at the request of the holder of any such mortgage, this Agreement
may be made prior and superior to such mortgage. If any mortgagee under any
mortgage referred to above succeeds to Owner's interest in the Property or the
Initial Improvements, then, at the election of such mortgagee, Operator will
attorn to and recognize the mortgagee as Owner and this Agreement will continue
as a direct agreement between Operator and such mortgagee, except that such
mortgagee shall not (i) be liable for any act or omission of Owner prior to
such succession, or (ii) be subject to any offset, defense or claim in favor of
Operator accruing prior to such succession.
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<PAGE> 40
ARTICLE 28
(MERGER)
Neither the voluntary or other surrender of this Agreement by
Operator, nor the mutual cancellation of this Agreement, nor a termination of
this Agreement by Owner pursuant to the terms hereof, shall constitute a
merger, and at the option of Owner any of such events shall terminate all or
any existing subleases or sublicenses or operate as an assignment to Owner of
any or all existing subleases or sublicenses.
ARTICLE 29
(ESTOPPEL CERTIFICATE)
Within ten (10) days after written request from either party (the
"Requesting Party"), the other party shall execute and deliver to the
Requesting Party or its designee a written statement certifying (a) that this
Agreement is unmodified and in full force and effect, or is in full force and
effect as modified and stating the modifications, (b) the amount of the License
Fee and the date to which the License Fee has been paid in advance, and (c)
that the Requesting Party is not in default hereunder or if the Requesting
Party is claimed to be in default, stating the nature of any claimed default.
This statement may be relied upon by any prospective purchaser, assignee or
lender.
ARTICLE 30
(HOLDING OVER)
Operator shall have no right to use or have possession of all or any
part of the Initial Improvements after the expiration of the term of this
Agreement without the prior written consent of Owner.
ARTICLE 31
(NOTICES)
31.1 Notices. All notices, demands or requests provided for or
permitted to be given pursuant to this Agreement must be in writing. All
notices, demands and requests to be sent by any party hereto or to any other
party shall be deemed to have been properly given or served by depositing the
same in the United States Mail, postpaid and registered or certified, with
return receipt requested, or by delivering the same to an overnight delivery
service of nationally recognized standing, and addressed to the party to whom
the notice, demand or request is intended, at its address designated
hereinbelow or
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<PAGE> 41
to such other address as such party may hereafter designate by notice in
accordance herewith.
31.2 Effective Date of Notice. All notices, demands and
requests shall be effective upon being deposited in the United States Mail or
being delivered to an overnight delivery service of nationally recognized
standing. However, the time period in which a response to any such notice,
demand or request must be given shall commence to run three (3) days from the
date of such mailing or two (2) days from the date of such delivery.
31.3 Routine Communications. Notwithstanding the foregoing,
routine communications, distribution checks, copies of financial statements,
etc., may be sent by ordinary first-class mail.
31.4 Notice to Operator. Copies of all notices to Operator
shall be sent to Don H. Barden, The Barden Companies, 400 Renaissance Center,
24th Floor, Detroit, Michigan 48243; and Cameron H. Piggott, Esq., Dykema
Gossett, PLLC, 400 Renaissance Center, Detroit, Michigan 48243.
31.5 Notices to Owner. Copies of all notices to Owner shall be
sent to Buffington Harbor Riverboats, L.L.C., at its address as stated in the
Preamble to this Agreement. Copies thereof concurrently shall be sent to
Nicholas L. Ribis, President, Trump Indiana, Inc., 725 Fifth Avenue, New York
10022; Robert M. Pickus, Executive Vice President - Corporate and Legal
Affairs, Trump Indiana, Inc., c/o Trump Plaza Hotel & Casino, The Boardwalk at
Mississippi Avenue, Atlantic City, New Jersey 08401; and Peter Michael
Laughlin, Esq., Graham, Curtin & Sheridan, 4 Headquarters Plaza, Morristown,
New Jersey 07962-1991
ARTICLE 32
(COMPLETE AGREEMENT)
This Agreement, the exhibits attached hereto and incorporated herein
by reference, the Trump Berthing Agreement and the Operating Agreement embody
the entire agreement between Owner and Operator regarding the subject matter of
this Agreement. There are no oral agreements between Owner and Operator
affecting this Agreement and this Agreement supercedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and understandings
between Owner and Operator.
ARTICLE 33
(RECORDING)
Neither Owner nor Operator shall record this Agreement
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without the prior written consent of the other party. Upon the request of
either party, both parties shall execute a "short form" memorandum of this
Agreement which either party shall have the right to record.
ARTICLE 34
(MISCELLANEOUS)
34.1 Binding on Successors, Etc. The agreements, conditions and
provisions herein contained inure to the benefit of and bind the heirs,
executors, administrators, successors and permitted assigns of the parties.
34.2 Severability. If any provision of this Agreement is
determined to be illegal or unenforceable, that determination shall not affect
any other provisions of this Agreement and all other provisions of this
Agreement shall remain in full force and effect.
34.3 Governing Law. This Agreement shall be governed by and
shall be construed under the laws of the State of Indiana.
34.4 Time of Essence. Time is of the essence of this Agreement.
34.5 Captions. The captions set forth herein are for
convenience only and do not signify the meaning of the Section that they
identify.
34.6 No Third Party Beneficiaries. Except as otherwise
specifically stated herein, the terms and conditions of this Agreement shall
not be deemed to inure to the benefit of, or be enforceable by, any other
party. Owner and Operator may amend, terminate or otherwise modify this
Agreement only by written instrument.
34.7 No Presumption Against Drafter. This Agreement has been
fully negotiated by the parties, and the terms hereof shall not be construed
more strictly against one party than the other party.
34.8 No Modification of Operating Agreement. Nothing in this
Agreement shall be deemed to modify or amend the terms of the Operating
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
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"OPERATOR"
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.,
Member
By: Kenneth L. Kramer
-------------------------
Kenneth L. Kramer
Vice President
And
By: Gary Riverboat Gaming, LLC,
Member
By: Barden Management, Inc.,
Its: Manager
By: Kenneth L. Kramer
-------------------------
Kenneth L. Kramer
Vice President
"OWNER"
BUFFINGTON HARBOR RIVERBOATS,
L.L.C.
By: Trump Indiana, Inc.
Its: Member
By: Robert M. Pickus
------------------------
Robert M. Pickus
Its: Vice President
And
By: The Majestic Star Casino, LLC
Its: Member
By: Barden Development, Inc.,
Its: Member
By: Kenneth L. Kramer
-------------------------
Kenneth L. Kramer
Vice President
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<PAGE> 44
And
By: Gary Riverboat Gaming, LLC,
Its: Member
By: Barden Management, Inc.,
Its: Manager
By: Kenneth L. Kramer
----------------------------
Kenneth L. Kramer
Vice President
44
<PAGE> 1
EXHIBIT 10.6
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
of
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
by and between
TRUMP INDIANA, INC.
and
BARDEN-DAVIS CASINO, L.L.C.
DATED: As of October 31, 1995
<PAGE> 2
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
of
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
THIS FIRST AMENDED AND RESTATED OPERATING AGREEMENT (the
"Agreement") is made as of the 31st day of October, 1995 by and between
TRUMP INDIANA, INC., a Delaware corporation, having an office at 6012
W. Industrial Highway, Gary, Indiana 46406 (hereinafter sometimes
referred to as "Trump"), and BARDEN-DAVIS CASINO, L.L.C., an Indiana
limited liability company, having an office at Suite 2400, 400
Renaissance Center, Detroit, Michigan 48243 (hereinafter sometimes
referred to as "BDC"; Trump and BDC are hereinafter sometimes referred
to as the "Members" and individually as a "Member").
WITNESSETH:
WHEREAS, Trump and BDC have entered into certain agreements with
the City (this and all other capitalized terms having the meanings
ascribed to them below) and have been awarded Certificates of
Suitability by the Commission to conduct separate but coordinated
riverboat gaming operations in the City; and
WHEREAS, to acquire control over the common site from which the
aforementioned riverboat gaming operations are to be conducted, and in
anticipation of assigning the same to the LLC, Trump has acquired the
Lehigh Property, has entered into the Pre-Formation Agreements, and has
commenced development of the site for riverboat gaming operations in
accordance with the Site Plan; and
WHEREAS, Trump and BDC have formed Buffington Harbor Riverboats,
L.L.C., a Delaware limited liability company (the "LLC") pursuant to
the terms of an Operating Agreement dated as of September 27, 1995 (the
"Original Agreement"), for the purpose of acquiring the LLC Property
(including by accepting the contributions to the LLC by Trump as set
forth below), constructing common roadways, utilities and other
infrastructure improvements on the LLC Property in accordance with the
Site Plan, operating, maintaining, repairing and replacing the Common
Areas, and entering into agreements with each of Trump and BDC pursuant
to which each of Trump and BDC shall have the right to conduct separate
riverboat gaming operations and construct separate facilities, all as
more particularly described below; and
<PAGE> 3
WHEREAS, Trump and BDC desire to enter into this Agreement to
define and express all of the terms, covenants and conditions of the
LLC and their respective rights and obligations with respect thereto
and to, among other things amend and restate the Original Agreement to
reflect the facts that (i) the Members did not make the Initial
Contributions specified in Sections 4.1(a)(1) and (2) of the Original
Agreement upon execution of the Original Agreement, as the same were
delayed for reasons beyond the control of the Members; (ii) subsequent
to the execution of the Original Agreement, the Members entered into an
Agreement dated as of September 29, 1995 with the City, whereby certain
payments are to be made (or have been made) by each Member to the City
in lieu of the LLC conveying the City Property (as defined in the
Original Agreement) to the City; (iii) the Members desire to reduce the
number of Construction Representatives on the Construction Committee;
and (iv) the Members wish to restate Exhibits B-1, B-2, E, F and G to
include additional items; and
WHEREAS, Trump and BDC desire to be bound by this Agreement
pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
1.1 "Act" means the Delaware Limited Liability Company Act, as
amended from time to time.
1.2 "Additional Facilities" shall have the meaning ascribed to it
in Section 3.1(e) below.
1.3 "Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control
with such Person. For purposes of this definition, "control" shall
mean the power to direct management or policies through ownership of
voting securities or similar equity interest.
1.4 "Agreement" means this First Amended and Restated Operating
Agreement, as the same from time to time may be amended, modified,
supplemented or restated.
1.5 "Bankruptcy" means, with respect to the applicable Person,
that such Person shall have (1) made an assignment for the benefit of
creditors; (2) filed a voluntary petition in bankruptcy; (3) been
adjudicated a bankrupt or insolvent; (4) filed a petition or answer
seeking for himself or itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under
2
<PAGE> 4
any statute, law or regulation; (5) filed an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against him or it in any proceeding set forth in (4) above; or
(6) sought, consented to, or acquiesced in the appointment of a
trustee, receiver, or liquidator of all or any substantial part of his
or its properties; or if 180 days after the commencement of any
proceeding against the Person seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any statute, law, or regulation, the proceeding has not been
dismissed, or if within 150 days after the appointment without his or
its consent or acquiescence of a trustee, receiver, or liquidator of
the Person or all or any substantial part of his or its properties, the
appointment is not vacated or stayed, or within 90 days after the
expiration of any such stay, the appointment is not vacated.
1.6 "BDC Costs" shall have the meaning ascribed to it in Section
4.1(c) below.
1.7 "BDC Memorandum of Understanding" means the Memorandum of
Understanding dated as of September 5, 1995 between BDC and the City.
1.8 "BDC Projects" means the projects which BDC is to develop on
parts of the LLC Property in its own name and right in order to satisfy
its obligations under its Certificate of Suitability, the BDC
Memorandum of Understanding and/or the Development Agreement, but
specifically excluding any obligations under the Development Agreement
of the LLC to develop projects in its name and right.
1.9 "Berthing Agreements" shall have the meaning ascribed to it in
Section 2.3(h) below.
1.10 "Capital Account" shall have the meaning ascribed to it in
Section 4.1(f) below.
1.11 "Cash Needs" of the LLC shall have the meaning ascribed to it
in Section 4.3(a)(3) below.
1.12 "Certificate" means the Certificate of Formation iled with
respect to the LLC in the office of the Delaware Secretary of State, as
the same may be from time to time amended, modified or supplemented in
accordance with the provisions of this Agreement.
1.13 "Certificate of Suitability" means the Certificate of
Suitability issued to BDC or Trump, as applicable, by the Indiana
Gaming Commission, as well as any Riverboat Owner's License issued to
BDC or Trump pursuant to their respective Certificates of Suitability.
3
<PAGE> 5
1.14 "City" means the City of Gary, Indiana.
1.15 "Code" means the Internal Revenue Code of 1986, as amended,
or any corresponding provision of any succeeding law.
1.16 "Commission" means the Indiana Gaming Commission.
1.17 "Common Areas" means that part of the LLC Property which is
intended to serve the gaming operations of Trump and BDC together with
the improvements to be constructed thereon, all as designated on the
Site Plan or as the same are to be designated on the Master Plan.
1.18 "Common Area Development Approvals" means the applications
for permits, licenses or approvals, together with any such permits,
licenses or approvals, which either Trump or BDC have applied for or
procured prior to the date of this Agreement, which pertain to the
development or construction of the Common Areas, including without
limitation the applications, permits, licenses and other approvals
listed on Exhibit A.
1.19 "Construction Committee" shall have the meaning ascribed to
it in Section 3.1(b) below.
1.20 "Development Agreement" means the Development Agreement to be
entered into among the City, the LLC, BDC and Trump pursuant to or in
furtherance of the Certificates of Suitability, the BDC Memorandum of
Understanding and the Trump Memorandum of Understanding (or, if
applicable, both of the separate development agreements to be entered
into between the City and BDC and the City and Trump).
1.21 "Event of Default" shall have the meaning ascribed to it in
Section 7.1(a) below.
1.22 "Harbor" means Buffington Harbor in the City of Gary,
Indiana.
1.23 "Harbor Lease Agreement" means the Harbor Lease Agreement
dated June 29, 1995 between Lehigh Portland Cement Company, as lessor,
and Trump, as lessee.
1.24 "Improvements Budget" shall have the meaning ascribed to it
in Section 3.10 below.
1.25 "Lehigh Property" means the real property interests purchased
by Trump from Lehigh Portland Cement Company, including the lessee's
interest under the Harbor Lease Agreement.
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1.26 "LLC" means the limited liability company to which this
Agreement pertains, as such limited liability company may from time to
time be constituted.
1.27 "LLC Property" means the Lehigh Property and any other real
property interests which the LLC acquires or leases, less any part of
the foregoing which is exchanged or otherwise disposed of by the LLC.
1.28 "Master Plan" shall have the meaning ascribed to it in
Section 3.1(e) below.
1.29 "Master Plan Improvements" shall have the meaning ascribed to
it in Section 3.1(e) below.
1.30 "Member" means any Person who is admitted to the LLC pursuant
to the provisions of this Agreement. The initial Members of the LLC
are Trump and BDC.
1.31 "New Harbor" shall have the meaning ascribed to it in Section
3.1(e) below.
1.32 "Operating Committee" shall have the meaning ascribed to it
in Section 3.2 below.
1.33 "Operating Plan and Budget" shall have the meaning ascribed
to it in Section 3.9(a) below.
1.34 "Operating Reserve" means a reserve to be maintained by the
LLC (initially to be funded as part of the Improvements Budget and
thereafter to be reflected in each year's Operating Plan and Budget and
funded under the Berthing Agreements) equal to one-half of the
projected funds (net of anticipated revenues other than borrowings)
required by the LLC in connection with its operations for the
applicable year, but excluding any funds required for construction of
the Site Plan Improvements or the Master Plan Improvements.
1.35 "Original Agreement" shall mean the Operating Agreement for
the LLC dated as of September 27, 1995.
1.36 "Percentage Interest" shall have the meaning ascribed to it
in Section 4.2 below.
1.37 "Person" means any individual, corporation, partnership
(general or limited), association, limited liability company, trust,
estate or other entity.
1.38 "Pre-Formation Agreements" means the agreements listed on
attached Exhibit B-1.
1.39 "Prime Rate" shall have the meaning ascribed to it in Section
4.1(e)(4) below.
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1.40 "Required Amount" shall have the meaning ascribed to it in
Section 4.3(a)(1) below.
1.41 "Site Plan" means the site plan attached as Exhibit C, as the
same may be modified or revised. The Site Plan depicts the Site Plan
Improvements on the LLC Property.
1.42 "Site Plan Improvements" means all of the improvements shown
on or contemplated by the Site Plan, including improvements to the
Harbor, a pavilion, parking areas and other improvements (save for
riverboats) necessary to serve the gaming operations of BDC and Trump.
1.43 "State" means the State of Delaware.
1.44 "Studies" means the agreements or studies listed on attached
Exhibit B-2.
1.45 "Trump Costs" shall have the meaning ascribed to it in
Section 4.1(b) below.
1.46 "Trump Memorandum of Understanding" means the Memorandum of
Understanding dated as of May 27, 1995 between Trump and the City.
1.47 "Trump Projects" means the projects which Trump is to develop
on parts of the LLC Property in its own name and right in order to
satisfy its obligations under its Certificate of Suitability, the Trump
Memorandum of Understanding and/or the Development Agreement, but
specifically excluding any obligations under the Development Agreement
of the LLC to develop projects in its name and right.
1.48 "Uncontrollable Expenses" shall have the meaning ascribed to
it in Section 3.9(a).
2. ORGANIZATION.
2.1 Name. The name of the LLC is Buffington Harbor Riverboats,
L.L.C., and such name shall be used at all times in connection with the
business and affairs of the LLC.
2.2 Organization of the LLC. The LLC has been organized under the
laws of the State and is qualified to transact business in the State of
Indiana. The LLC has been organized on the date of the filing of the
Certificate. The Members shall execute or cause to be executed and
filed such other documents and instruments with such appropriate
authorities as may be necessary or appropriate from time to time to
comply with all requirements for the formation
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and operation of a limited liability company in the State and for the
qualification of a limited liability company to transact business in
the State of Indiana.
2.3 Purpose of the LLC. The business and purposes of the LLC
shall be:
(a) To accept the contribution of the Lehigh Property and the
assignment of the Pre-Formation Agreements by Trump as contemplated
below, to accept the assignment of the Studies by BDC as contemplated
below, and to assume all obligations arising under the Pre-Formation
Agreements and/or the Studies so assigned, and to indemnify Trump or
BDC, as the case may be, with respect to liability under the
Pre-Formation Agreements and/or the Studies as provided below;
(b) To enter into leases, subleases or other arrangements
regarding the use or occupancy of all or part of the LLC Property with
BDC, Trump or any other Person, upon such terms and conditions as are
specified herein or are otherwise approved by the LLC;
(c) To make application for, process and negotiate all
governmental approvals or permits and/or private rights for land use,
utility services, drainage rights, dockage rights, access rights and
similar rights as may be necessary or desirable for implementing the
Site Plan;
(d) To construct the Site Plan Improvements;
(e) To obtain all necessary permits, licenses and approvals with
respect to the construction, operation, maintenance, repair and
replacement of the Common Areas;
(f) To construct, operate, maintain, repair and replace the Common
Areas;
(g) To enter into license agreements (each a "Berthing Agreement"
and both being the "Berthing Agreements") with each of Trump and BDC
with respect to the berthing of their respective riverboats within or
adjacent to the Common Areas and the terms on which such parties may
otherwise enjoy a license to use the Common Areas;
(h) To revise and refine the Site Plan and to develop, revise and
refine the Master Plan;
(i) Subject to the provisions of Section 3.1(e) below, to make
application for, process and negotiate all governmental approvals or
permits and/or private rights for land use, utility services, drainage
rights, dockage rights, access rights and similar rights as may be
necessary or desirable for implementing the Master Plan, and to
construct the Master Plan Improvements;
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(j) To otherwise develop, improve, manage, exchange, finance,
operate and deal with and in every way exercise complete control and
dominion over the Common Areas and all assets acquired and facilities
constructed in connection therewith; and
(k) To do all things necessary or desirable in connection with the
foregoing or as otherwise contemplated in this Agreement, including but
not limited to executing and delivering such documents and instruments
as are necessary to effectuate or memorialize any of the foregoing.
2.4 No Other Purpose. The LLC shall have no other purpose
(including, without limitation, no purpose having to do with the
operation of casinos, BDC Projects or Trump Projects), unless approved
by both Members in writing. The LLC shall not assume any obligation of
either or both of the Members to the City, the Commission or the State
of Indiana unless approved by both Members in writing.
2.5 Property for Resale; Terms of Ground Leases or Subleases. The
LLC shall not hold any real property primarily for resale to customers
in the ordinary course of its trade or business, but may lease,
sublease or exchange certain portions thereof in furtherance of the
LLC's activities. Unless otherwise agreed in writing by both Members,
any ground lease or sublease of part of the LLC Property by the LLC to
a Member or its Affiliate shall be for a nominal amount of rent (i.e.,
$1.00 per year), shall have a term ending ninety nine (99) years from
the date of this Agreement (or at such earlier date as the LLC's
interest or leasehold interest in the relevant property expires), shall
contain such customary terms as will facilitate the financing of the
contemplated improvements on the applicable part of the LLC Property by
the Member or its Affiliate, and shall obligate the tenant to pay
impositions (if any) on the applicable property.
2.6 Term. The term of the LLC commenced on the date of the filing
of the Certificate, and shall continue in existence until terminated
pursuant to this Agreement.
2.7 Registered Agent and Office. The registered agent is
Prentice-Hall Corporation Systems, Inc. The registered office is at 32
Loockerman Square, Suite L-100, Dover, Delaware 19901. The principal
place of business and mailing address of the LLC shall be determined by
the Members. The LLC may maintain additional offices at such locations
as the Operating Committee deems advisable.
2.8 Title to LLC Property. All of the LLC's right, title and
interest in tangible property, intangible property, real property,
personal property and other assets acquired by
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the LLC shall be held in the name of the LLC as an entity. The Members
shall execute such documents as may be necessary to reflect the LLC's
ownership interest in such property and shall record the same in such
public offices as shall be necessary to reflect such ownership interest
by the LLC. No Member shall have an ownership interest in any property
of the LLC in its individual name or right except any such right held
pursuant to a separate written agreement approved by both Members
(e.g., ground leases, subleases or Berthing Agreements), and each
Member's LLC interest shall be personal property for all purposes.
2.9 Tradename. The LLC shall adopt such tradename as may be agreed
upon by the Members in writing, consistent with a marketing strategy,
if any, adopted by the Operating Committee.
2.10 Mutual Representations and Warranties. Each Member and, in
the case of an organization, the persons executing this Agreement,
represents and warrants to the LLC and to the other Member that as of
the date of this Agreement:
(a) It is a corporation (or in the case of BDC, a limited
liability company) duly organized and validly existing under the laws
of the state of its organization and is qualified to do business in the
State of Indiana; has all necessary power and authority under its
Articles of Incorporation and Bylaws or other applicable organizational
documents and the laws of the state of organization to own its
properties and assets, to conduct its business as now conducted or as
contemplated by this Agreement, and to execute and deliver and perform
its obligations under this Agreement.
(b) The execution and delivery of this Agreement, the formation of
the LLC and the performance of all obligations hereunder required to be
performed by such Member have been duly authorized by all necessary
corporate (or other organizational) action and do not and will not
result in a breach or violation of, or default under, or will not with
the giving of notice or passage of time, or both, result in a default
under, its Articles of Incorporation and Bylaws (or other applicable
organizational documents), any agreement, commitment, order, judgment
or decree by which it or any of its constituent shareholders or members
or any of its respective properties is or are bound, or any statute,
regulation, order or other law by which it or any of its constituent
shareholders or members is or are subject.
(c) This Agreement is binding upon each Member and is enforceable
against it in accordance with its terms.
(d) It is not a "foreign person" within the meaning of Section
1445(f) of the Code.
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(e) It is the holder of a Certificate of Suitability and there is
no default thereunder by such Member.
2.11 Certain Trump Representations and Warranties. Trump hereby
represents and warrants to BDC that as of the date of this Agreement:
the Lehigh Property has not been previously pledged, assigned,
mortgaged, transferred or hypothecated by Trump and has not been
encumbered by Trump except for (i) property rights granted of record to
Lehigh Portland Cement Company contemporaneously with Trump's
acquisition of the Lehigh Property, and (ii) possible mechanic's liens
arising under Pre-Formation Agreements; Trump has provided to BDC true,
correct and complete copies of the Pre-Formation Agreements to which it
is a party; Trump has not made or executed any amendment, modification
or termination of the Pre-Formation Agreements, and each remains in
full force and effect; neither Trump nor an Affiliate of Trump has
entered into or is bound by any agreements, written or oral, pertaining
to the construction or development of the Common Areas or affecting the
LLC Property, other than the Pre-Formation Agreements, the Trump
Memorandum of Understanding and Trump's Certificate of Suitability; and
except as disclosed in writing on or prior to the date hereof, Trump is
not in material default under any Pre-Formation Agreement.
2.12 Certain BDC Representations and Warranties. BDC hereby
represents and warrants to Trump that as of the date of this Agreement
neither BDC nor an Affiliate of BDC has entered into or is bound by any
agreements, written or oral, pertaining to the construction or
development of the Common Areas or affecting the LLC Property, other
than the Studies, the BDC Memorandum of Understanding and BDC's
Certificate of Suitability, and BDC is not in material default under
any of the Studies.
3. MANAGEMENT AND DEVELOPMENT
3.1 Implementation of Site Plan
Construction Committee; Preparation of Master Plan.
(a) The Members agree that the LLC Property is to be developed in
accordance with the Site Plan, although in no event shall Trump or the
LLC have any responsibility for any BDC Project nor shall BDC or the
LLC have any responsibility for any Trump Project. Each Member agrees
to cooperate with the other in causing the LLC to construct the Site
Plan Improvements at the earliest practical time and at a cost within
the amounts budgeted therefor in the Improvements Budget. The Members
acknowledge that they must use every effort to reach timely agreement
on such construction plans and specifications as are necessary to
implement the construction
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of the Site Plan Improvements within the Improvements Budget. The
Members also shall use every effort to agree upon any modifications to
the Site Plan (and applicable construction plans and specifications)
which are necessary to complete the Site Plan Improvements in a timely
fashion within the Improvements Budget or in accordance with applicable
laws, rules and regulations, but the Site Plan shall not be modified
otherwise unless such modification is agreed to in writing by the
Members.
(b) In order to facilitate the construction of the Site Plan
Improvements, the management and control of such construction
activities shall be vested in a committee (the "Construction
Committee") consisting of one voting representative appointed by each
Member (each such representative, a "Construction Representative," and
both such representatives, collectively, the "Construction
Representatives").
(c) In the absence of a contrary direction from the Operating
Committee or both Members, the Construction Committee shall have
day-to-day authority over the construction of the Site Plan
Improvements, including oversight over and administration of the
applicable architect, engineering and construction contracts;
architect, supplier, engineer or contractor payments; and the award of
contracts in an amount less than two hundred fifty thousand ($250,000)
dollars; all provided that the same are in accordance with budgets and
schedules previously approved by the Operating Committee. All payments
shall be made in accordance with the disbursement procedures set forth
in Section 3.8(c) below. The LLC will retain or utilize the services
of the Persons in the capacities identified in attached Exhibit D,
unless the Members agree to the contrary.
(d) It is contemplated that each Construction Representative shall
have an ongoing presence in the City during the construction process,
and shall meet at the construction site (or at such other location as
the Construction Representatives agree upon) not less than twice each
week. The presence of both Construction Representatives at a meeting
of the Construction Committee shall constitute a quorum, and the
Construction Committee shall act only upon the affirmative approval of
both Construction Representatives. No Member shall be entitled to
compensation for the services of the Construction Representative
appointed by it. The LLC is a member-managed limited liability
company. Each Construction Representative shall be deemed to be the
agent of, and to represent, the Member that appointed him and her, and
shall owe his or her loyalty and duty to such Member.
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(e) The Members acknowledge that the Site Plan does not depict (i)
the BDC Projects, (ii) the Trump Projects, (iii) common areas ancillary
thereto which must be constructed on the LLC Property to satisfy each
Member's obligations to the City and the Commission, (iv) a new harbor,
lying to the west of the Harbor, which is contemplated under the Harbor
Lease Agreement as a dockage site to replace the Harbor (the "New
Harbor"), or (v) a new pavilion and related improvements which would be
appropriate to conduct riverboat gaming operations at the New Harbor
(the "Additional Facilities"). (The New Harbor and the Additional
Facilities collectively are referred to herein as the "Master Plan
Improvements"). The Members shall endeavor to prepare a site plan (the
"Master Plan") designating the areas in which the Trump Projects and
the BDC Projects are to be constructed and establishing the nature and
location of the Master Plan Improvements. The following provisions
apply to the Master Plan and the Master Plan Improvements:
(1) Unless otherwise agreed to in writing by the Members, the
areas to be designated on the Master Plan as the areas for the Trump
Projects and the BDC Projects shall be sufficient for each Member to
comply with its obligations to the Commission and/or the City, and the
desirability and fitness for its purpose of the areas to be ground
leased (or subleased) to each Member shall be reasonably equivalent.
(2) The Members acknowledge that the Master Plan Improvements
cannot be constructed unless the LLC receives the necessary permits,
licenses and other governmental approvals, including permits from the
Army Corps of Engineers.
(3) Pending a final determination by the Members as to whether the
LLC can and should construct the Master Plan Improvements, the Members
shall prepare the Master Plan to show the location and general nature
of the Master Plan Improvements and the BDC Projects and Trump
Projects, shall engage in preliminary design and engineering of the
Master Plan Improvements, and shall procure estimates of the costs of
construction associated with the Master Plan Improvements. In
connection with such activities, the Members shall establish and
approve a budget for the construction and development of the Master
Plan Improvements, in form similar to the Improvements Budget. Unless
otherwise agreed to the contrary, the Master Plan Improvements shall be
of at least the same capacity and quality as the Site Plan
Improvements.
(4) The LLC shall proceed with the construction and development of
the Master Plan Improvements if it receives all applicable permits,
licenses and other approvals necessary for such construction and
development, and if both Members agree in writing to do so.
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(5) The Members shall endeavor to finalize the Master Plan as soon
as practical after the date of this Agreement, and to formulate cost
estimates or projections for the Master Plan Improvements as soon as
practical after the Master Plan has been finalized.
(6) If due to requirements applicable to the LLC or both Members
under the Certificates of Suitability, the BDC and Trump Memoranda of
Understanding or the Development Agreement, the LLC or both Members are
required to relocate their gaming operations to the Master Plan
Improvements, and both Members do not agree that the LLC should
construct the Master Plan Improvements, then a Member that wishes to
construct the Master Plan Improvements shall have the right to enter
into a ground lease or sublease with the LLC for the applicable part of
the LLC Property on which the Master Plan Improvements are to be
located, and to construct the same in its own name and right and at its
own cost. Any such ground lease or sublease shall be on the terms and
conditions set forth in Section 2.5 above, although the ground lease or
sublease may include a right on behalf of the Member and the LLC to
share parts of the Common Areas that may service both the Site Plan
Improvements (for such duration as the same may be used for riverboat
gaming operations) and the Master Plan Improvements.
3.2 Operating Committee.
(a) The management and control of the ordinary business and
affairs of the LLC shall be vested in the Members. The Members shall
manage and control the business and affairs of the LLC (other than the
affairs managed by the Construction Committee established pursuant to
Section 3.1 above) through a committee (the "Operating Committee")
consisting of two voting representatives appointed by each Member (each
such representative, a "Representative," and all of such
representatives, collectively, the "Representatives"). Except as
otherwise provided in this Agreement the Operating Committee shall have
full and exclusive authority and discretion over the business of the
LLC. The presence of all four Representatives at a meeting of the
Operating Committee shall constitute a quorum.
(b) In connection with the development and construction of the
improvements on the Common Areas as designated in the Site Plan, and
the Master Plan Improvements, if applicable, the Operating Committee
shall:
(1) review and, if appropriate, refine or revise the Site Plan,
and approve constructions plans and specifications for the Site Plan
Improvements;
(2) develop traffic and circulation plans;
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(3) address environmental remediation issues, if any;
(4) obtain necessary permits, licenses and approvals, including
without limitation the permits or approvals required from the Army
Corps of Engineers in order to construct the Site Plan Improvements or
the Master Plan Improvements;
(5) arrange for construction and property insurance and contractor
bonding;
(6) engage necessary architects, engineers, designers, suppliers
and contractors required in connection with the design and construction
of the improvements that are to be part of the Common Areas;
(7) oversee compliance with any affirmative action, equal
employment opportunity or like requirements imposed on the LLC under
the terms of a Certificate of Suitability or the Development Agreement;
(8) make any decisions that otherwise are within the authority of
the Construction Committee to make, but upon which the Construction
Committee can not agree;
(9) oversee and manage aspects of project scheduling or
construction that are outside of the authority of the Construction
Committee; and
(10) develop the Master Plan.
(c) In connection with the operation, maintenance, repair and
replacement of the Common Areas, the Operating Committee shall
coordinate and assist in establishing or shall otherwise provide for
the:
(1) scheduling of cruises. Unless the Members agree otherwise in
writing, cruises shall be staggered, and the schedules for each
Member's riverboat shall be equivalent in terms of the overall
desirability of their cruise times (e.g., each shall get an equal share
of the prime schedule slots);
(2) security for the Common Areas;
(3) transportation within the LLC Property;
(4) maintenance of Common Areas;
(5) hiring and training of employees and managing the Common Areas
on a day-to-day basis in a manner
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complying with the requirements of applicable laws, rules and
regulations, the Berthing Agreements and any other obligations of the
LLC;
(6) development and implementation of a name, theme and marketing
strategy for the LLC Property as a gaming destination. Absent
agreement by the Members on a different name, the name shall be
"Buffington Harbor." The overall project shall be promoted by the LLC
as a project by the name so selected, and while each Member may
separately advertise or market its riverboat, any reference in such
separate advertising to the location of the riverboat shall mention the
name of the overall project (e.g., the "Trump Boat" or the "BDC Boat"
at Buffington Harbor); and
(7) insurance and bonding for Common Areas.
(d) Except as provided in Section 3.3, in addition to and not in
limitation of the foregoing, the Operating Committee shall take such
other actions as may be reasonably necessary and desirable in
connection with the purposes of the LLC as provided in Section 2 of
this Agreement.
(e) The Members agree as follows with respect to Operating
Committee meetings:
(1) The Operating Committee shall meet on a regular basis, not
less frequently than bi-monthly. At such meetings the Operating
Committee shall: review the affairs and operations of the LLC,
including the status of the Site Plan, the Berthing Agreements and the
construction of the Site Plan Improvements; review and, if appropriate,
revise in light of actual experience the annual budget theretofore
approved by the Operating Committee; and consider and pass upon such
other matters which, pursuant to the provisions of this Agreement, are
to be submitted to the Operating Committee for its approval. All such
meetings shall be held in the vicinity of the Lehigh Property or at
such other location upon which the Members shall agree. Actions of the
Operating Committee shall be reflected in written consents, which may
be faxed or telephoned if confirmed in writing.
(2) Any Member shall have the right from time to time to call a
special meeting of the Operating Committee on not less than ten (10)
days' prior written notice to the other Member; provided, a special
meeting may be called upon three (3) days' prior telephonic notice if
the meeting is required to allow the LLC to make timely decisions
necessary to maintain construction or development progress or to
address other exigent circumstances. Each special meeting shall be
held at the principal office of the LLC or at such other location upon
which the Members shall agree.
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(3) All meetings hereinabove provided for may be conducted by
telephone.
(f) The Operating Committee may employ any Person, whether
directly or indirectly affiliated with or related to any Member, on
behalf of the LLC to render or perform a service (including but not
limited to leasing and financing) or to purchase merchandise or other
property, and neither the LLC nor any of the Members shall have any
rights in or to any income or profits derived therefrom by such Person
as a result of this Agreement. Any contract proposed to be entered
into between the LLC and such Person shall be disclosed in writing as
such to the Members in advance and (except as specifically waived in
writing by the Members) shall be on terms and conditions which are no
less favorable to the LLC than would be available from third parties.
(g) Except as specifically set forth herein, the Members shall not
be entitled to any compensation with respect to any duties performed
for or on behalf of the LLC. Each Member shall bear the cost of its
own personnel, the fees of its own legal counsel and overhead
(including any costs incurred in the name of an entity other than the
LLC unless such costs are incurred to third parties with the prior
written approval of the Operating Committee or the Members), which
costs shall not be charged to the LLC.
(h) The LLC is a member-managed limited liability company. Each
Representative shall be deemed to be the agent of, and to represent,
the Member that appointed him and her, and shall owe his or her loyalty
and duty to such Member. The two Representatives appointed by each
Member shall act in concert with one another in approving, or declining
to approve, any action of the Operating Committee.
3.3 Matters Requiring Special Approval of the Members. The
following shall require the unanimous approval of the Members, which
approval shall be evidenced by a written memorandum executed by an
authorized officer or member of each Member:
(a) The establishment and approval of the initial business plan
and budget;
(b) Approval of changes to the Site Plan or approval of the Master
Plan;
(c) Approval of changes to the Improvements Budget or to any
similar budget approved with respect to the Master Plan Improvements;
(d) Approval of a material change in the schedule for completion
of the Site Plan Improvements;
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(e) Subject to the provisions of Section 2.5 above, approval or
modification of the terms of any ground lease, sublease or other
agreement with respect to the BDC Projects or the Trump Projects;
(f) Approval of the terms of any financing for the construction of
improvements constituting part of the Common Areas;
(g) Establishment of the timing and amounts of any distributions
to the Members;
(h) Any decision to amend, renew, extend or otherwise change the
terms and conditions of a Berthing Agreement;
(i) The selection of the legal counsel and certified public
accountants for the LLC, although the certified public accountants
shall be a Big 6 accounting firm;
(k) The approval or modification of the terms of any development
agreement or other agreement between the LLC and the City or the State
of Indiana; and
(l) Any other matter which BDC and Trump both shall deem, in
writing, to be of fundamental importance to the LLC.
Notwithstanding the foregoing, if a Member or an Affiliate of a Member
causes, suffers or permits an Event of Default under the terms of its
Berthing Agreement or under any other agreement between the LLC and
such Member (or its Affiliate), the other Member shall have the power
and authority to determine whether, how and when the LLC will enforce
its rights or invoke its remedies with respect to such Event of
Default.
3.4 Members May Engage in Other Businesses.
The Members and each of the Construction Representatives and
Representatives and their respective Affiliates may engage
independently or with others in other business ventures of every kind
and nature including, but not limited to, the ownership, financing,
leasing, operation, management, brokerage, sale and development of real
property, or gaming operations, whether or not competitive with the
business of the LLC or any of its assets or facilities, and neither the
LLC, the Members, the Construction Representatives, the Representatives
nor their respective Affiliates, shall have any rights by virtue of
this Agreement in and to said independent ventures or to the income or
profits derived therefrom. Notwithstanding the foregoing, (a) any
direct or indirect interest of a Member or an Affiliate of a Member in
any contract or other act with or in respect of the LLC, other than its
interest as a Member, shall be disclosed in writing to
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the other Member, (b) a Member shall account to the LLC for any
property, profit or benefit derived by such Member or its Affiliate
from a use or appropriation of property of the LLC, including
information developed exclusively for the LLC, and (c) if a Member or
an Affiliate of a Member acquires or has acquired in its own name, any
property, permit, license or approval that is required by the LLC to
(i) construct and develop the Site Plan Improvements, (ii) construct
and develop the Master Plan Improvements, (iii) operate the Common
Areas, or (iv) otherwise carry out the purposes of the LLC, such Member
shall make, or shall cause its Affiliate to make, such property,
permit, license or approval available to the LLC on the terms and
conditions on which the Member or its Affiliate acquired the same.
3.5 Members' Liability.
(a) The Members, Construction Representatives and Representatives
shall not be responsible or accountable in damages or otherwise to the
LLC, any Member, Construction Representative, Representative or any
other Person for any acts performed in good faith within the scope of
authority conferred on them by this Agreement, or for their performance
of, or failure or refusal to perform, any acts required by or
prohibited or inhibited by any governmental act or decree of any
nature. The Members, Construction Representatives and Representatives
shall be entitled to indemnity from the LLC on account of any claim,
liability, action or damage arising from or relating to any action
taken by them, in good faith, for or on behalf of the LLC as aforesaid.
(b) Notwithstanding the foregoing, and subject to the management
prerogatives of each of the Members under this Agreement, each Member
agrees to act in good faith in participating in the affairs of the LLC
and in approving and taking actions required for the LLC to efficiently
conduct its operations so as to accomplish the purposes of the LLC,
including by (i) attending, or causing its Construction Representative
and Representatives to attend, meetings of the Members, the
Construction Committee or the Operating Committee, as applicable, (ii)
executing contracts and other documents that have been approved under
this Agreement, including checks for expenses that have been approved
during the budgeting process or otherwise, and (iii) otherwise not
impeding the ability of the LLC to accomplish its purposes so as to
permit the efficient construction and operation of the Common Areas.
(c) In the event any action or proceeding is instituted or
threatened against any Member, Construction Representative,
Representative or any of them, or any officer, director, shareholder,
guarantor or employee of a Member, in connection with the LLC Property
or the business or affairs of
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the LLC (except actions or proceedings between the Members or by the
LLC) or to which any of the foregoing may be a party on behalf of the
LLC, each Member, Construction Representative or Representative, as the
case may be, shall be entitled to retain legal counsel and other
experts at the expense of the LLC and (subject to the limitation of
liability set forth in Section 3.5(a)) any of the foregoing shall be
immediately reimbursed for, indemnified against and held harmless by
the LLC with respect to all liabilities, costs and expenses arising out
of, or in connection with, such action or proceeding, and whether or
not any of the foregoing is serving in such capacity as of the date
that such liability, costs or expenses are fixed or incurred and
without awaiting determination of the actual proceeding. In any action
commenced against the LLC, no Member, Construction Representative or
Representative shall be joined or named as a party, except as an
indispensable party as may be required by applicable statute or court
rule. In the event the indemnified Person is judicially determined not
to have acted in good faith with regard to the claim asserted against
it, such Person shall, in addition to its liability in respect of such
wrongful actions, forthwith reimburse the LLC for payments made to such
Person under this Section 3.5(c).
3.6 Bank Accounts.
All funds of the LLC shall be deposited and maintained in a bank
or banks designated by the Operating Committee and in accounts
established in the LLC's name. The Operating Committee shall pay out
of such accounts, to the extent of the funds from time to time therein,
all costs and expenses incurred in connection with the development,
construction, operation and management of the Common Areas and all
costs and expenses incurred in connection with the purposes of the LLC
as provided in Section 2. Checks or other documents of withdrawal
drawn upon the accounts shall be signed by two members of the Operating
Committee, one each from Trump and BDC, or by persons designated as
signatories on behalf of each Member.
3.7 Books and Records.
The Operating Committee shall keep full and adequate books of
account and other records reflecting the results of the LLC from
inception of the LLC. Such books and records shall be kept at the
offices of the LLC and shall at all times be kept in accordance with
(i) generally accepted accounting principles, consistently applied, and
(ii) such laws, rules, regulations and orders applicable to the LLC.
3.8 Financial Reports and Records.
(a) Financial Reports. The Operating Committee shall deliver to
the LLC within thirty (30) days after the end of each calendar month,
an unaudited financial statement prepared
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from the books and records of account maintained by the Operating
Committee which financial statement shall be set forth on an accrual
basis, containing (i) a balance sheet as of the end of such calendar
quarter; (ii) an income and loss statement; and (iii) copies of all
statements, if any, filed with the Commission. The Operating Committee
shall also deliver to the LLC, within ninety (90) days after the end of
each calendar year, an audited financial statement prepared by an
independent certified public accounting firm containing (i) a balance
sheet as of the end of such year; (ii) an income and loss statement for
such year; (iii) a statement of cash flows for such year; and (iv)
copies of all statements, if any, filed with the Commission. Once
received by the LLC, copies of all reports shall immediately be
delivered to each Member.
(b) Records. The Operating Committee shall keep complete records
of all revenues and expenses with respect to the management and
operation of the LLC Property and the Common Areas. Each Member shall
have the right, itself or through its representatives or accountants,
at its own expense, to inspect the books of account and records of the
LLC and audit the statements required by this Section 3.8, at any time
and from time to time during business hours of the LLC. Such
inspections and audits shall take place at the offices of the LLC and
out-of-pocket expenses incurred by the inspecting Member relative to
such audit shall be the responsibility of the inspecting Member.
(c) Construction Procedures. In connection with paying any
amounts payable in respect of construction of the Common Areas, the LLC
shall procure such sworn statements, waivers of lien, architect's
certificates, inspection reports and like documents as are typically
procured as part of prudent construction draw practices and procedures,
both to ensure that the applicable funds are being disbursed in
accordance with the relevant construction contract, architect's
agreement and/or construction management agreement (including
requirements relative to retainage and keeping the contracts in
balance) and to prevent mechanic's liens or similar impositions from
being imposed on the LLC Property or any part thereof. Also in
connection with such construction activities the LLC will prepare and
distribute to the Members cash flow statements on a periodic (not less
frequently than monthly) basis for each applicable construction
project, showing payments made to date, available funds, the
anticipated costs of completion and cost comparisons relative to
budget.
3.9 Annual Budget.
(a) The Operating Committee will prepare an annual business plan
and operating budget for each year (the "Operating Plan and Budget"),
which shall be submitted to the
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Members for approval and formal adoption. The Operating Plan and
Budget shall include the Operating Reserve. Upon approval by the
Members of the Operating Plan and Budget, the Operating Committee shall
have the right, without the further consent or approval of the Members,
to incur and pay the operating expenses and capital improvement costs
set forth therein, including Uncontrollable Expenses whether or not
they exceed the amounts reflected for them in the Operating Plan and
Budget; provided that in the case of any operating expense which is not
an Uncontrollable Expense, the Operating Committee shall not have the
right to incur or pay the same if it exceeds by more than 10% the
amount set forth on the appropriate line for the category of expense or
cost involved in the Operating Plan and Budget or if such expenditure
will cause the aggregate amount of operating expenses which are not
Uncontrollable Expenses to exceed by more than 5% the aggregate amount
of such operating expenses provided for in the Operating Plan and
Budget. As used in this Section 3.9, the term "Uncontrollable Expense"
shall mean an item of expense, the amount of which is not within the
power of the Operating Committee to control and shall consist of real
estate taxes, debt service payable in respect of any mortgage or other
loans obtained in accordance with the terms of this Agreement, amounts
required to meet the LLC's obligations under the "Lehigh Agreements"
(as defined in a certain Consent and Acknowledgement of even date
between the LLC, Lehigh Portland Cement Company and BDC), premiums for
insurance, fixed charges under contracts, utility charges and such
other costs and expenses as may hereafter be designated as
Uncontrollable Expenses by the Members.
(b) If at any time the Operating Committee desires to make a
capital improvement, repair, replacement or alteration, or to incur an
operating expense, which is not provided for in an Operating Plan and
Budget, the Operating Committee shall not proceed with such
improvement, repair, replacement or alteration, and shall not incur
such expense, without the Members' prior written consent. If at any
time it becomes evident to the Operating Committee that the cost of any
capital improvement, repair, replacement or alteration provided for in
the Operating Plan and Budget will exceed by more than 10% the amount
budgeted therefor in such budget, or the aggregate amount of the cost
of all capital improvements, repairs, replacements and alterations
provided for in such budget will exceed by more than 5% the amount
budgeted therefor in such budget, the Operating Committee shall not
proceed further with the making of such improvement, repair,
replacement or alteration or, where the aggregate amount set forth in
the Operating Plan and Budget will be exceeded by more than 5%, with
any of such capital improvements, repairs, replacements or alterations,
without the written consent of the Members. Similarly, if at any time
it becomes evident to the Operating Committee that the cost of any
operating expense which is not an Uncontrollable Expense will exceed by
more than 10% of the
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amount set forth in respect thereof in the Operating Plan and Budget,
or the cost of all such expenses will exceed by more than 5% the
aggregate amount budgeted therefor in such Operating Plan and Budget,
the Operating Committee shall not incur the operating expense in
question, or, where the aggregate amount of such expenses will exceed
by more than 5% the aggregate amount budgeted for in such approved
Operating Plan and Budget, any of such operating expenses, without the
written consent of the Members.
(c) Notwithstanding anything to the contrary set forth in this
subsection, if in the reasonable good-faith judgment of the Operating
Committee any capital improvement, repair, replacement or alteration
must at any time immediately be undertaken, or any operating cost
immediately incurred, in order to protect any property or to avoid
accident or injury to Persons, the Operating Committee shall be free to
make such capital improvement, repair, replacement or alteration or to
incur such operating expense without regard to the approved Operating
Plan and Budget and without first securing the approval of the Members,
provided that the Operating Committee shall use its reasonable efforts
to limit the work performed to the minimum required to remedy the
emergency condition pending approval by the Members of more extensive
work and the Operating Committee shall notify the Members promptly of
any such expenditure made or incurred which exceeds $20,000.
(d) The initial Operating Plan and Budget shall be agreed to
within thirty (30) days after the date of this Agreement. Subsequent
Operating Plans and Budgets shall be agreed to prior to the
commencement of the applicable fiscal year of the LLC. If the Members
can not reach agreement on the Operating Plan and Budget for a fiscal
year, the Operating Plan and Budget shall be determined by (i)
adjusting Uncontrollable Expenses to the levels the Members anticipate
will be incurred or for which the LLC is contractually obligated, (ii)
establishing the Operating Reserve, and (iii) increasing the remaining
line items in the Operating Plan and Budget for the prior fiscal year
by five (5%) percent.
(e) If during any year it becomes apparent that the Operating Plan
and Budget does not reflect the amounts of money the LLC will have to
spend to (i) meet its contractural obligations under the Lehigh
Agreements or its obligations to a Member or an Affiliate of a Member
under the Assignment and Assumption Agreement of even date, or (ii)
maintain and operate the Common Areas in the manner and to the
standards contemplated by this Agreement (e.g., the Operating Plan and
Budget for the year in question did not accurately reflect the
applicable financial requirements or the occurrence of some
unanticipated event, such as an uninsured casualty), the Members shall
revise the Operating Plan and Budget for such
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year to reflect the amounts necessary for the LLC to meet such
contractural obligations or to maintain and operate the Common Areas in
the manner and to the standards contemplated by this Agreement;
provided, in no event shall such an obligatory increase or increases in
respect of expenses of the nature specified in subclause (ii) of this
subsection (e) be greater than two million five hundred thousand
($2,500,000) dollars during any fiscal year. In the event the
Operating Plan and Budget is increased in order to enable the LLC to
reimburse a Member for payments made by the Member as to which the
Member is entitled to indemnification or reimbursement from the LLC
under the Assignment and Assumption Agreement of even date, such Member
shall be entitled to a credit against amounts payable under its
Berthing Agreement in an amount equal to one-half of the payment so
made by the Member, which credit also shall serve to reduce the
indemnification or reimbursement obligation of the LLC to the Member.
3.10 Improvements Budget.
The Members have established a budget, a copy of which is attached
as Exhibit E (the "Improvements Budget") reflecting the costs (both
"hard" and "soft," but exclusive of Trump Costs and BDC Costs)
anticipated to be required from and after the date hereof to develop
and construct all the Site Plan Improvements and to fund the initial
Operating Reserve, but excluding costs associated with the construction
of the Master Plan Improvements. In refining such anticipated costs,
the LLC shall consult with (and if feasible procure bids or quotations
from) unaffiliated architects, engineers and contractors to confirm the
level of quality contemplated in the Site Plan and the anticipated
costs thereof. The Improvements Budget includes a contingency for
unanticipated conditions and/or inflationary increases. The initial
amount established for the Improvements Budget may be adjusted upward
or downward by a written agreement confirming such adjustment.
Notwithstanding the foregoing, if the LLC requires additional funds to
complete construction of and open the Site Plan Improvements, the
Members must increase the Improvements Budget to reflect the amounts so
needed, provided such obligatory increase shall in no event be more
than fifteen (15%) percent of the initial amount of the Improvements
Budget.
3.11 Decisions of the Operating Committee.
All decisions of the Operating Committee shall require the consent
of all of the Representatives. In the event that the Representatives
do not concur in any action, the arbitration procedures set forth in
Section 13 shall become applicable unless the Members agree upon the
action.
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4. CAPITAL CONTRIBUTIONS, PROFITS AND
LOSSES, AND DISTRIBUTIONS
4.1. Capital Contributions.
(a) Initial Capital Contributions. Each Member is making or shall
make the following contributions to the LLC (the "Initial
Contributions") at the times indicated below:
(1) Upon the execution of this Agreement Trump shall (i)
contribute the Lehigh Property to the LLC by transferring title to the
same by special warranty deed (or, in the case of the Harbor Lease
Agreement, by an assignment of the same), (ii) cause a title insurance
policy to be issued to the LLC, insuring the LLC's interest in the
Lehigh Property, each with a non-imputation endorsement and all at the
LLC's expense, (iii) cause the survey and environmental reports issued
to Trump in connection with its acquisition of the Lehigh Property to
be assigned or recertified to the LLC, and (iv) assign to the LLC
Trump's right, title and interest in and under the Pre-Formation
Agreements and the Common Area Development Approvals;
(2) Also upon execution of this Agreement BDC shall assign to the
LLC its right, title and interest in and under the Studies and have the
same certified to the LLC (to the extent reasonably required by Trump),
and shall contribute in cash or immediately available funds the sum of
six million seven hundred fifty thousand ($6,750,000) dollars;
(3) BDC shall from time to time after the date of this Agreement
make additional cash contributions to the LLC totalling thirteen
million nine hundred eighty nine thousand nine hundred ninety one
($13,989,991) dollars, which is the difference between the Trump Costs
and the contributions being made by BDC pursuant to subsection (2)
above (including the BDC Costs), as and when needed by the LLC to fund
construction of the Site Plan Improvements;
(4) After BDC has made additional cash contributions in the amount
specified in Subsection (3) above, each of Trump and BDC shall
contribute one-half (1/2) of the amounts needed from time to time by
the LLC to fund construction of the Site Plan Improvements and the
Operating Reserve until such time as each has contributed the aggregate
sum of eighteen million nine hundred ninety three thousand four hundred
fifteen ($18,993,415) dollars pursuant to this Subsection; and
(5) In connection with planning the construction of the Site Plan
Improvements the Members shall prepare or cause to be prepared cash
flow projections for such activities
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which identify the amounts needed from time to time by the LLC to fund
construction of the Site Plan Improvements. Such cash flow projections
shall determine the times at which capital contributions shall be
payable under Subsections (3) and (4) above absent any further
agreement of the Members. Notwithstanding the foregoing, in any event
the full amount of all capital contributions payable under Subsection
(3) shall be due and payable no later than December 1, 1995, and the
full amount of all capital contributions payable under Subsection (4)
shall be due and payable no later than March 1, 1996.
(b) Trump Costs. "Trump Costs" are hereby defined as the purchase
price of thirteen million five hundred thousand ($13,500,000) dollars
paid by Trump for the Lehigh Property plus or minus the closing
adjustments (such as tax prorations, transfer taxes, utility prorations
and like adjustments) paid or received by Trump in connection with such
acquisition, plus the other costs incurred by Trump on or after
December 9, 1994 in connection with such acquisition and development of
the LLC Property, all as listed on attached Exhibit F.
(c) BDC Costs. "BDC's Costs" are hereby defined as the fees or
other costs paid or incurred by BDC (or its Affiliates) on or after
December 9, 1994 for the design and engineering studies and surveys
obtained by BDC (or its Affiliates) for the Lehigh Property or the
Harbor or otherwise in connection with the development of the LLC
Property, all as those costs are listed on attached Exhibit G.
(d) Credits to Initial Capital Accounts. For the purposes of
determining the initial capital accounts of each Member resulting from
the capital contributions to be made pursuant to Section 4.1(a) above,
the parties agree that (i) the fair market value of the Lehigh Property
and the Pre-Formation Agreements, and the amount to be credited to
Trump's capital account in respect of the contribution thereof to the
LLC, is equal to the Trump Costs, and (ii) the fair market value of the
Studies, and the amount to be credited to BDC's capital account in
respect of the contribution thereof to the LLC, is equal to the BDC
Costs. Accordingly, the capital contributions of each Member after
each has made all of the capital contributions required under Section
4.1(a) shall be forty million eight hundred sixteen thousand four
hundred thirty three ($40,816,433) dollars.
(e) Other Actions in Connection With the Execution of this
Agreement. Within thirty (30) days of the date of this Agreement each
Member shall enter into a Berthing Agreement with the LLC on terms and
conditions that are the same for each Member and have been approved by
each of the Members. Each Berthing Agreement shall:
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(1) call for monthly payments in respect of the use of the
improvements on the Common Areas which, when taken with the payments
under the Berthing Agreement with the other Member, are sufficient to
enable the LLC to fund all costs and expenses of the LLC other than the
capital contributions referred to in Section 4.1(a) above and Section
4.1(h) below. The monthly payments under the Berthing Agreements shall
be determined by the Operating Plan and Budget. If the Operating Plan
and Budget is amended by the Members pursuant to Section 3.9, any
increase or decrease therein shall be spread evenly among the remaining
monthly payments due under each Berthing Agreement;
(2) provide the Member with the exclusive use of certain aspects
of the Site Plan Improvements (such as ticketing booths, money counting
facilities or marshalling facilities) which are designed to service the
gaming operations of such Member (with corollary facilities for the
exclusive use of the other Member under its Berthing Agreement);
(3) define an "Event of Default" thereunder as (i) a default
involving the payment of money which continues for ten (10) or more
days after the LLC (or the other Member) provides written notice of
such default, or (ii) a default not involving the payment of money
which continues for thirty (30) or more days after the LLC (or the
other Member) provides written notice of such default, although if the
default is of a nature that can not be cured within 30 days, an Event
of Default shall not be deemed to have occurred so long as within such
30 day period the Member commences (and thereafter diligently pursues
to completion) appropriate measures to cure the default;
(4) call for interest to accrue (and be payable immediately) at a
rate per annum equal to the prime rate published from time to time by
Chase Manhattan Bank (the "Prime Rate") plus five (5%) percent
(although in no event shall the rate exceed the maximum interest rate
permitted by applicable law), from the due date until final payment
thereof, on any amount that remains unpaid for more than ten (10) days
after the same constitutes an Event of Default;
(5) call for any payments of the nature referred to in subsection
(1) above which are payable during the period during which an Event of
Default has continued for thirty (30) or more days to be increased by
one hundred (100%) percent (and provide that the Member is relieved
from the obligation to make such payments during any period in which
the other Member is obligated to make increased payments under the
corresponding provision in its Berthing Agreement);
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(6) authorize the LLC to suspend the right of the Member to use
the Common Areas (including its right to dock its boat) if an Event of
Default continues for one hundred twenty (120) or more days or if the
Member is in default of its obligations under Section 4.1(a)(3) or (4)
or Section 4.1(h) of this Agreement for a period of thirty (30) or more
days, although such suspension shall cease if such defaulting Member
cures any and all defaults under the Berthing Agreement, under Section
4.1(a)(3) or (4) above or under Section 4.1(h) below within sixty (60)
days of the commencement of such suspension. Furthermore, if the
defaulting Member sells its entire interest in the LLC to a Person that
is not an Affiliate in accordance with Section 8(b) below, the
purchaser may lift the suspensions by curing any and all defaults under
the Berthing Agreement, under Section 4.1(a) above or under Section
4.1(h) below within thirty (30) days of the date on which such sale
occurs;
(7) authorize the other Member (or its designee) to acquire the
Member's right, title and interest under the Berthing Agreement on the
terms set forth in Section 7.2(b) below;
(8) obligate the LLC to maintain the improvements on the Common
Areas to an agreed upon standard consistent with the obligations of
each Member under its Certificate of Suitability; and
(9) contain notice and cure provisions that will provide customary
protections to a lender to the Member in order that the lender may cure
any default that could otherwise result in a suspension or termination
of the rights of the Member under the Berthing Agreement.
(f) Capital Accounts. There shall be established on the books of
the LLC for each Member a capital account (the "Capital Account"),
which shall consist of the value of such Member's capital contributions
pursuant to Section 4.1(a)(1) and (2), increased by (i) the amount of
all additional contributions, if any, to the capital of the LLC made by
such Member pursuant to Sections 4.1(a)(3) and (4), 4.1(h), 4.4 or
otherwise, and (ii) the amount of all Net Income credited to the
account of such Member pursuant to Section 4.5 and decreased by (x) the
amount of all Net Losses charged to the account of such Member pursuant
to Section 4.5, and (y) the amount of all distributions, if any, made
to such Member pursuant to Section 4.9 or otherwise. It is agreed that
the Initial Contributions of the Members pursuant to Section 4.1(a)
above shall result in the Capital Accounts of each Member being equal
after all such Initial Contributions have been made. Payments by the
LLC on account of an indemnification obligation of the LLC to a Member
shall not be deemed distributions to such Member.
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(g) Maintenance of Capital Accounts. Notwithstanding anything
herein to the contrary, it is the intention of the members to maintain
each Member's Capital Account in accordance with Treas. Reg. Section
1.704-1(b)(2)(iv).
(h) Additional Capital Contributions. The Members as such shall
not be bound by the obligations of the LLC, and shall not be obligated
to make contributions to the LLC in excess of the amounts provided for
in Section 4.1(a). Notwithstanding the foregoing, the Members hereby
agree to contribute additional funds in the form of capital
contributions to the LLC as follows: (i) on a pro rata basis in
proportion to their respective Percentage Interests, whenever the
Operating Committee discretionarily elects, but in no event unless such
additional funds are necessary to accomplish the business or purpose of
the LLC, (ii) if the Members approve (or are obligated under Section
3.10 above to approve) an increase in the Improvements Budget, each
Member shall contribute one-half of the difference within ten (10) days
after the approval of the increase in the Improvements Budget, and
(iii) if both Members agree in writing that the LLC is to construct the
Master Plan Improvements, each Member shall contribute one-half of the
funds necessary to permit the LLC to construct the Master Plan
Improvements within such time frame as the Members may establish in
connection with their agreement to construct the Master Plan
Improvements.
4.2 Percentage Interest in the LLC.
Each Member shall have an interest in the LLC ("the Percentage
Interest") of fifty (50%) percent.
4.3 Cash Needs, Contributions and Loans.
(a) It is understood that the LLC may from time to time require
funds in addition to the funds which may then be available to the LLC
out of (i) gross revenues generated from its operations (including
without limitation payments under the Berthing Agreements), (ii) loans
made to the LLC (not including loans made by the Members pursuant to
this Section 4 but including loans available to the LLC within the time
period the funds in question are required for use by the LLC), (iii)
contributions made by BDC and Trump to the capital of the LLC pursuant
to this Section 4, and (iv) in the event of a fire, other casualty or
condemnation, the amount of insurance proceeds or condemnation awards
available to the LLC to pay the costs of such repairs or restoration.
In order to help ensure that the LLC will have funds in amounts
sufficient to meet its needs at all times the Members agree as follows:
(1) If at any time either Member determines, in the exercise of
reasonable business judgment and good faith,
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that funds in an amount less than $100,000.00 are required to meet Cash
Needs of the LLC, such Member may, by notice (the "Cash Needs Notice")
to the Members, specify the entire amount of the Cash Needs of the LLC
at such time (the "Required Amount") and call upon the Members to
advance to the LLC their respective proportionate share, determined in
accordance with each Member's Percentage Interest, of the Required
Amount (each Member's "Requested Contribution"). The Cash Needs Notice
given to the Members shall be accompanied by documentation reasonably
satisfactory to the Members confirming the actual or estimated amount
of such Cash Needs of the LLC (and the Required Amount) for the period
for which such demand is being made (which period shall not be less
than thirty (30) days and shall not exceed ninety (90) days) and
itemizing how the Required Amount will be applied. Within thirty (30)
days after the date of the Cash Needs Notice, each Member shall advance
as a capital contribution to the LLC its Requested Contribution. Any
funds advanced by either Member to the LLC pursuant to this Subsection
4.3(a)(1) and not refunded to such Member shall, subject to the
provisions of Subsection 4.3(a)(2), constitute "Cash Needs
Contributions" and shall constitute contributions to the capital of the
LLC. No Member shall be personally liable to the LLC or the other
Member for its failure to advance funds to the LLC pursuant to this
Subsection 4.3(a)(1), but any Member who fails to advance a part of its
share of the Required Amount shall thereby become subject to the
provisions of Subsection 4.3(a)(2).
(2) If either Member (such Member being hereinafter referred to as
the "Non-Contributing Member") shall fail to advance all or any part of
its share of the Required Amount which it is called upon and requested
to advance pursuant to a Cash Needs Notice within thirty (30) days
after the date of such Cash Needs Notice (the "Due Date" shall be
deemed to be the last day of said 30 day period), the other Member (the
"Contributing Member") shall have the following rights and remedies
(which rights and remedies shall be exclusive):
(a) If the Non-Contributing Member shall have advanced none of its
share of the Required Amount on or before the Due Date, the
Contributing Member shall be relieved of any obligation to advance any
portion of its share of the Required Amount and shall be entitled, if
it so elects, to receive a refund from the LLC of all amounts which it
may have advanced to the LLC pursuant to the Cash Needs Notice.
(b) If the Non-Contributing Member shall have advanced part, but
not all, of its share of the Required Amount on or before the Due Date,
the Contributing Member shall be relieved of any obligation to advance
any portion of its share of the Required Amount in excess of its
Percentage
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Interest of the Base Amount and shall be entitled, if it so elects, to
receive a refund from the LLC of all amounts which it may have advanced
to the LLC pursuant to the Cash Needs Notice in excess of its
Percentage Interest of the Base Amount. As used in this Subsection
4.3(a)(2)(B), the term "Base Amount" shall mean the amount of the
Required Amount actually contributed by the Non-Contributing Member on
or before the Due Date, divided by the Percentage Interest of the
Non-Contributing Member.
(c) The Contributing Member shall be entitled, but shall not be
obligated, within sixty (60) days of the date of the Cash Needs Notice
to advance to the LLC (which for this purpose shall include not
electing to receive any refund to which it is entitled pursuant to
Subsections 4.3(a)(2)(a) or (b) above, as applicable) an amount equal
to all or any part of the excess of (i) the Requested Funds over (ii)
the Base Amount, if any, and such advance shall constitute a loan (a
"Cash Needs Loan") to the LLC, which Loan shall bear interest at the
Prime Rate plus five (5%) percent (although in no event shall such
interest rate exceed the maximum interest rate permitted by applicable
law), and shall be repayable, as to interest and principal, before any
other distributions are made to the Members as hereinafter provided in
Section 4.10.
(3) As used in this Section 4.3, "Cash Needs of the LLC" shall
mean and include any cash needs or requirements of the LLC of whatever
kind or nature subsequent to the date hereof for which sufficient funds
are not available to it from the sources described in Subsections
4.3(a)(i) through (iv), and shall include, without limiting the
generality of the foregoing, costs of repairs, alterations and
improvements to the LLC Property, operating costs of the LLC Property,
debt service payable under mortgages and other loans (other than Cash
Needs Loans) made to the LLC, real estate taxes and any other payments
which are necessary or appropriate to make in the ordinary course of
business to protect or further the interests of the LLC.
4.4 Income and Losses.
(a) For the purposes of this Agreement:
(1) "Net Income" and "Net Losses" with respect to any fiscal
period shall mean the net income or net losses of the LLC for that
period from the construction, operation and management of the LLC
Property (including the amount of any tax exempt income received or
accrued) after all operating expenses incurred in connection with the
LLC's business (including, without limitation, real estate taxes,
utilities, repairs and maintenance, management fees, insurance, labor
costs and interest on Cash Needs Loans and any other loans to the LLC)
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have been paid or accrued and after making allowance for depreciation
or amortization of the cost of the LLC Property and assets of the LLC
and expenditures of the LLC of the nature described in Section
705(a)(2)(B) of the Code (including expenditures treated as described
in Section 705(a)(2)(B) of the Code under Treas. Reg. Section
1.704-1(b)(2)(iv)(i) ("Section 705(a)(2)(B) Expenditures")) and after
taking into account any gain or loss arising from capital transactions.
Consistent with the foregoing definition, income, net losses, gain and
loss shall be determined on the same basis as reported by the LLC for
federal income tax purposes; provided, however, that in computing net
income, net loss, gain and loss of the LLC it shall be assumed that the
agreed fair market value of any property contributed to the LLC by any
Member is an amount equal to its initial tax basis.
4.5 Allocation of Net Income and Net Losses.
From and after the date of this Agreement, the Net Income and Net
Losses of the LLC for each calendar year or fraction thereof shall be
allocated to the Capital Accounts of the Members in accordance with
their Percentage Interests.
4.6 Special Allocations. From and after the date of this
Agreement, the following special allocation provisions shall apply:
(a) Qualified Income Offset. Notwithstanding the allocation
provided in Section 4.5 and except as otherwise provided in this
Section 4.6, in the event any Member receives an unexpected allocation
of Net Loss or deduction or an unexpected distribution as described in
Treasury Regulations 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that results
in a deficit balance in its Capital Account (after taking into account
reductions for the items set forth in Treasury Regulations
1.704-1(b)(2)(ii)(d)(4), (5), or (6)) in excess of (i) the amount such
Member is obligated to restore, if any, and (ii) the amount such Member
is deemed to be obligated to restore pursuant to the penultimate
sentence of Treasury Regulations l.704-2(g)(1) and Section
l.704-2(i)(5), such Member shall be allocated items of gross income or
gain in the amount necessary to eliminate such excess as quickly as
possible. This provision is intended to satisfy the definition of
"qualified income offset", as defined in Treasury Regulation
1.704-1(b)(2)(ii)(d).
(b) Minimum Gain. Notwithstanding the allocation provided in
Section 4.5 and except as otherwise provided in this Section 4.6, if
there is a net decrease in LLC Minimum Gain during any fiscal year,
each Member with a deficit Capital Account balance at the end of such
fiscal year (decreased by the amount such Member is obligated to
restore and the amount
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such Member is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations 1.704-2(g)(1) and
1.704-(2)(i)(5), and increased by the items set forth in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)) shall be
allocated items of gross income and gain for such fiscal year and, if
necessary, for subsequent fiscal years, in an amount equal to such
Member's share of the net decrease in such LLC Minimum Gain, determined
in accordance with Treasury Regulations Section 1.704-2(g)(2). This
provision is intended to satisfy the definition of a "minimum gain
chargeback" as defined in Treasury Regulations Section 1.704-2(f), and
the term "LLC Minimum Gain" shall have the meaning ascribed to the term
"Partnership Minimum Gain" in Treasury Regulation l.704-2(d).
(c) Gross Income Allocation. Notwithstanding the allocation
provided in Section 4.5 and except as otherwise provided in this
Section 4.6, in the event any Member has a deficit Capital Account at
the close of any fiscal year which is in excess of the sum of (i) the
amount. if any, such member is obligated to restore pursuant to any
provision of this Agreement, and (ii) the amount such Member is deemed
to be obligated to restore pursuant to the penultimate sentences of
Treasury Regulations Section l.704-2(g)(1) and 1.704-2(i)(5), each
Member shall be specially allocated items of gross income and gain in
the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 4.6 shall be made only if and to
the extent that such Member would have a deficit Capital Account in
excess of such sum after all other allocations provided for in this
Section 4.6 have been made as if Section 4.6(a) and this Section 4.6(c)
were inoperative.
(d) Member Nonrecourse Deductions. Notwithstanding the allocation
provided for in Section 4.5 and except as otherwise provided in this
Section 4.6, any "Member Nonrecourse Deduction", defined as having the
meaning ascribed to the term "Partner Nonrecourse Deduction" in
Treasury Regulation Section 1.704-2(i)(2), for any fiscal year shall be
allocated to the Member who bears the economic risk of loss in
accordance with Treasury Regulation 1.704-2(i)(1), and if there is a
net decrease in Member Nonrecourse Debt Minimum Gain during any fiscal
year, each Member with a deficit Capital Account balance at the end of
such fiscal year (decreased by the amount, if any, such Member is
obligated to restore and the amount such Member is deemed to be
obligated to restore pursuant to the penultimate sentences of Treasury
Regulation 1.704-2(g)(1) and 1.704-2(i)(5), and increased by the items
set forth in Treasury Regulations 1.704-1(b)(2)(ii)(d)(4), (5) or (6))
shall be allocated items of gross income and gain for such fiscal year
and, if necessary, for subsequent fiscal years, in an amount equal to
such Member's share of the net decrease in such Member Nonrecourse Debt
Minimum Gain, determined in accordance with Treasury Regulation
1.704-2(i)(4). This provision is intended
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to comply with the chargeback provisions of Treasury Regulation
1.704-2(i)(4), and the term "Member Nonrecourse Debt Minimum Gain"
shall have the meaning ascribed to the term "Partner Nonrecourse Debt
Minimum Gain" in Treasury Regulation 1.704-2(i)(3).
(e) LLC Nonrecourse Deductions. Notwithstanding the allocations
provided for in Section 4.5 and except as otherwise provided in this
Section 4.6, any "LLC Nonrecourse Deductions", defined as having the
meaning ascribed to the term "Partnership Nonrecourse Deductions" in
Treasury Regulation 1.704-2(c), for any fiscal year shall be allocated
to the Members in accordance with their Percentage Interests as
provided under Treasury Regulation 1.704-2(e).
(f) Limitation on Loss Allocations. The Net Losses allocated
pursuant to Section 4.5 shall not exceed the maximum amount of Net
Losses that can be allocated without causing any Member to have a
deficit balance in such Member's Capital Account at the end of any
fiscal year (decreased by the amount,
if any, such Member is obligated to restore to the LLC and the amount
such Member is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations 1.704-2(g)(1) and
1.704-2(i)(5), and increased by the items set forth in Treasury
Regulations 1.704-1(b)(2)(ii)(d)(4), (5) or (6)). All Net Losses in
excess of the limitations set forth in this paragraph shall be
allocated among the Members, pro-rata, to the extent each,
respectively, is liable or otherwise bears the economic risk of loss
with respect to any debt or other obligation of the LLC.
(g) Curative Allocations. The allocations set forth in Section
4.6 (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulations 1.704-1 and 1.704-2.
Notwithstanding any provision of Section 4.6 (other than the Regulatory
Allocations and the provisions of Section 4.7), the Regulatory
Allocations shall be taken into account in allocating Net Losses and
Net Income and items of gross income, gain and deduction among the
Members so that, to the extent possible, the net amount of such
allocations to the Members shall be equal to the net amount that would
have been allocated to the Members if the Regulatory Allocations had
not occurred.
(h) In-Kind Contributions. In accordance with Code Section 704(c)
and the Treasury Regulations thereunder, Net Income, gain, Net Loss and
deduction with respect to any property contributed to the capital of
the LLC shall, solely for tax purposes, be allocated among the Members
so as to take account of any variation between the adjusted basis of
such property to the LLC for federal income tax purposes and its
initial fair market value. Any elections or other decisions
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relating to such allocation shall be made by the Operating Committee in
any manner that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 4.6(h) are solely for
purposes of federal, state and local taxes and shall not affect, or in
any way be taken into account in computing, any Member's Capital
Account or share of Net Income, Net Losses, other items or
distributions pursuant to any provision of this Agreement.
4.7 Authority To Vary Allocations. The Members intend that each
Member's distributive share of gross income, Net Income, gain, Net Loss
or deduction (or item thereof) shall be determined and allocated in
accordance with Sections 4.5 and 4.6 to the fullest extent permitted by
Code Section 704(b). To preserve and protect the determinations and
allocations provided for in Sections 4.5 and 4.6, the Operating
Committee shall, and hereby is authorized and directed to, allocate Net
Income, gross income, gain, Net Loss or deduction (or item thereof)
arising in any year differently than otherwise provided for in Sections
4.5 and 4.6, if, and to the extent that, allocating Net Income, gross
income, gain, Net Loss or deduction (or item thereof) in the manner
provided for in Sections 4.5 and 4.6 would cause the determinations and
allocations of each Member's distributive share of Net Income, gross
income, gain, Net Loss or deduction (or item thereof) not to be
permitted by Code Section 704(b) or any Treasury Regulations
promulgated thereunder. Any allocation made by the Operating Committee
pursuant to this Section 4.7 shall be deemed to be a complete
substitute for any allocation otherwise provided for in Section 4.5 or
4.6 and no amendment of this Agreement or approval of any Member shall
be required.
4.8 Members' Interest in Profits.
Pursuant to Treas. Reg. Section 1.752-3(a)(3), the Members'
interests in LLC profits shall be the Percentage interests of the
Members.
4.9 Distributions to Members.
(a) As used in this Agreement, the term "Excess Cash Flow" for any
calendar year or fraction thereof shall mean the amount, if any, of
cash available to the LLC after (i) payment of all operating expenses,
and (ii) the establishment of the Operating Reserve and such other
reserves as may determined in the sole discretion of the Operating
Committee. Any cash included as part of the Improvements Budget shall
not be deemed to be available to the LLC for distribution under this
Section until such time as the Site Plan Improvements have been
completed and all construction and development costs associated
therewith have been paid; thereafter, any surplus funds from the
Improvements Budget shall be available for distribution under this
Section.
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(b) From and after the date of this Agreement, but subject to the
provisions of Section 9.2, the Excess Cash Flow for each calendar year
or fraction thereof shall be distributed to the Members as follows, and
in the following order of priority:
(1) An amount of Excess Cash Flow up to the amount of the accrued
and unpaid interest on Cash Needs Loans shall first be paid as interest
to the Members in proportion to the amount of such interest owed to
each;
(2) An amount of Excess Cash Flow up to the then aggregate unpaid
principal balance of Cash Needs Loans shall next be distributed to the
Members in proportion to the amount of such principal owed to each; and
(3) The balance, if any, of Excess Cash Flow shall be distributed
to the Members in proportion to their respective Percentage Interests
in the LLC.
5. ACCOUNTING
5.1 Accounting Decisions.
All decisions as to accounting principles and elections, whether
for book or tax purposes (and such decisions
may be different for each such purpose), shall be approved by the
Operating Committee.
5.2 Tax Returns.
The LLC, under the supervision of the Operating Committee, will
prepare and timely file federal and state income tax returns of the
LLC. As promptly as practicable, and in any event, in sufficient time
to permit timely preparation and filing by each Member of its
respective federal and state tax returns, the LLC shall deliver to each
Member a copy of each federal and state tax return or tax report filed
by the LLC.
5.3 Elections.
To the extent that the LLC may or is required to make elections
for federal, state or local tax purposes, and to the extent that
Members may or are required to make such elections concerning the
business and properties of the LLC and such elections may not be made
in different ways by different Members, such elections shall be made in
such manner as is best calculated, in the judgment of the Operating
Committee, to minimize taxable income of the LLC and maximize
deductions therefrom. In the event of the transfer of all or part of
the interest of a Member, the Members shall elect pursuant to
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Section 754 of the Code to adjust the basis of the LLC's property.
5.4 Information Concerning Basis.
Each Member shall furnish to the LLC information as to its
adjusted basis for federal income tax purposes of all property
contributed by such Member to the LLC pursuant to Section 4.
6. WITHDRAWAL; ADJUDICATION; DISSOLUTION
6.1 Withdrawal.
Except as specifically permitted under the terms of this
Agreement, no Member may withdraw or resign from the LLC. If a Member
shall withdraw or resign from the LLC (the "Withdrawn Member"), then at
the election of the other Member (a) the Berthing Agreement with the
Withdrawn Member shall immediately terminate, (b) the Withdrawn Member
shall have no right to use any of the Common Areas, (c) the
Construction Representative selected by the Withdrawn Member shall
immediately be removed from the Construction Committee, (d) the
Representatives selected by the Withdrawn Member shall immediately be
removed from the Operating Committee, (e) the business theretofore
conducted by the LLC shall thereafter be controlled by the Construction
Representative or the Representatives selected by the remaining Member,
(e) the Withdrawn Member shall remain liable to other Members as if it
were a Member but shall no longer have the rights and powers of a
Member, (f) the Withdrawn Member shall be liable to other Members for
any loss or damages resulting from such withdrawal, and (g) the
Withdrawn Member shall be entitled to, and only to,
(i) those distributions to which the Withdrawn Member would
otherwise be entitled, as and when made, until such time, if ever, the
LLC (at the direction of the remaining Member) elects to pay the
Withdrawn Member, in 24 interest-free installments, the sum described
in Section 604 of the Act, less
(ii) any amounts owing by the Withdrawn Member pursuant to this
Subsections 6.1, as may be set off by the LLC for the account of the
LLC or the other Member.
6.2 Adjudication of Incompetency;
Death, Disability or Dissolution of a Member.
In the event any Member (the "Terminating Member") voluntarily
withdraws from the LLC or suffers death, mental incapacity or
dissolution, then the other Member (the "Non-Terminating Member") or
its designee, shall succeed to the
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rights and obligations of the Terminating Member, the Berthing
Agreement with the Terminating Member shall immediately terminate and
the Terminating Member shall have no right to use any of the Common
Areas.
7. EVENTS OF DEFAULT; REMEDIES.
7.1 Events of Default.
(a) The following shall constitute events of default under this
Agreement ("Events of Default"):
(1) The failure of any Member to make a capital contribution to
the LLC as required by the provisions of Section 4.1(a)(3) or (4) or
Section 4.1(h); or
(2) The failure of any Member to fulfill any of its other
obligations under this Agreement within thirty (30) days after written
notice from the other Member, which default may be cured during such
thirty (30) day period; or
(3) A Member causes, permits or suffers an Event of Default under
its Berthing Agreement; or
(4) A Member suffers Bankruptcy.
7.2 Remedies in the Event of a Default by a Member. If a Member
causes, permits or suffers an Event of Default under this Agreement,
such Member (the "Defaulting Member") shall be subject to the following
remedies, each of which shall be cumulative and not exclusive of any
other right or remedy of the other Member:
(a) During any period in which an Event of Default continues: (i)
the Defaulting Member's approval shall no longer be required for any
action by the LLC which is specified under Section 3.3 above, and (ii)
the Construction Representative and the Representatives selected by the
Defaulting Member which is in default or deemed to be in default under
this Agreement shall be suspended from participation in the
Construction Committee and the Operating Committee, and (iii) the
Construction Committee and the Operating Committee shall thereafter be
controlled by the Construction Representative or the Representatives
selected by the other Member.
(b) If such Event of Default continues for a period of more than
two hundred seventy (270) days, the other Member shall have a right to
acquire (or to have its designee acquire) the interest of the
Defaulting Member in the LLC and all of the Defaulting Member's right,
title and interest in its Berthing Agreement on the following terms and
conditions:
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(1) The purchase price shall be one million ($1,000,000) dollars.
(2) Any such acquisition shall be subject to the approval of the
Commission.
(3) In connection with such acquisition the Defaulting Member
shall be removed as a Member and the acquiring party shall be
substituted as a Member.
(4) Such right may only be exercised by the other Member by
providing a written notice to the Defaulting Member within ninety (90)
days of the date which is 270 days after the commencement of the Event
of Default. Such notice shall specify a closing date for the
acquisition, which closing date shall be not less than thirty (30) days
or more than ninety (90) days after the date of the notice.
The parties acknowledge that the other Member shall have a right to
obtain specific performance of the obligations of the Defaulting
Member's to transfer its interest as a Member in the LLC and its right,
title and interest in and under its Berthing Agreement, it being
recognized that such interests are unique and that there would be no
adequate remedy at law or in damages for a failure or refusal by the
Defaulting Member to honor and perform such obligations in a timely
fashion. The foregoing sentence shall not be construed to imply that
the remedy of specific performance or other equitable relief is not
available, or should not be ordered, for breaches of other obligations
of the Members under this Agreement.
(c) If such Event of Default is a failure to make an obligatory
capital contribution under Sections 4.1(a)(3) or (4) or 4.1(h), in
addition to any other remedy, the other Member shall have the right to
invoke the rights and remedies set forth in Sections 4.3(a)(2)(a)
through (c), in which event the Required Amount shall be deemed to be
the amount of the capital contributions to be made by the Members.
Notwithstanding the last parenthetical clause of the introductory
paragraph of Section 4.3(a)(2), in connection with exercising any right
or remedy under the subsection a Member may exercise any other right or
remedy available to it under this Agreement.
(d) If the Event of Default is a failure to make an obligatory
capital contribution under Section 4.1(a)(3) or (4) above, in addition
to the remedies referred to above, and as a condition to curing such
Event of Default, the Defaulting Member shall pay to the other Member
an amount equal to five (5%) percent of the amount by which it is in
default in making the applicable capital contribution.
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8. SALE OR ASSIGNMENT OF INTEREST
(a) No interest of any Member in the LLC or otherwise under this
Agreement shall be sold, transferred, pledged, encumbered, hypothecated
or assigned, unless (i) such transaction complies with any relevant
provisions of Section 8(b), (ii) any sale or other assignment of the
interest subsumes the Member's entire interest in the LLC (including
all of the Member's voting rights, powers of appointment, informational
rights, Percentage Interest and Capital Account), (iii) the
counterparty to the transaction expressly acknowledges that it acquires
its rights in or against the interest subject to the terms of this
Agreement (which shall continue to govern) and such counterparty
assumes in writing any obligations of the selling Member from and after
the date of such assumption under this Agreement and the Assignment and
Assumption Agreement of even date, (iv) reasonable assurances are
provided to the remaining Member that all monetary obligations
hereunder of the selling Member prior to the date of such assumption
have been or will be satisfied, and (v) such transaction would not
result in a breach or default under any agreement to which the LLC is a
party or give rise to the right to accelerate the maturity of any LLC
indebtedness or result in any fees or penalties to the LLC (unless the
transferee or assignor indemnifies the LLC against such fees or
penalties in a manner reasonably satisfactory to the non-transferring
Member or pays such fees or penalties).
(b) A Member may sell its entire interest in the LLC to any Person
which simultaneously acquires or has acquired a Certificate of
Suitability or a Riverboat Owner's License issued by the Commission for
use at the LLC Property. A Member may pledge its entire interest in
the LLC as additional security to a lender which has made a loan to the
Member which is secured by the Member's interest in its riverboat(s)
being berthed pursuant to a Berthing Agreement with the LLC and the
proceeds of which are being applied to the payment (or reimbursement)
of costs associated with this project, including the refinancing of
such loans; provided, in no event shall any such loan (or refinancing)
serve as security for, or be cross-collateralized with, a loan that is
not made in respect of this project.
(c) Any purported sale, transfer, pledge, encumbrance,
hypothecation, grant of a security interest or assignment in violation
of this Agreement shall be void and of no force or effect and shall in
no way limit, modify, alter or impair the Member's obligations under
this Agreement or create any rights on the part of the purported
transferee, assignee or creditor against the LLC or the other Member.
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9. TERMINATION AND LIQUIDATION OF THE LLC
9.1 Dissolution. The LLC shall be dissolved upon the occurrence
of any of the following events:
(a) December 31, 2035;
(b) The sale or other disposition of substantially all of the
LLC's assets;
(c) The written consent of all Members;
(d) The withdrawal, Bankruptcy or dissolution of any Member;
provided, however, that the LLC's existence shall not terminate if,
within ninety (90) days after such event, (i) the LLC has at least two
(2) Members, and (ii) a majority in interest of the Members (determined
independently by reference to Percentage Interests and by reference to
Capital Accounts) elects to continue the LLC's existence, or
(e) Upon entry of a decree of judicial dissolution.
9.2 Winding-Up.
(a) Upon dissolution of the LLC, the Operating Committee shall
conclude the affairs of the LLC. The LLC's assets may be liquidated
and distributed in cash, or, if the Operating Committee unanimously so
determines, distributed in kind. To the extent such assets cannot
either be sold without undue loss or readily divided for distribution
in kind to the Members, the LLC may, as determined by the Operating
Committee, convey those assets to a trust or other suitable holding
entity established for the benefit of the Members in order to permit
the assets to be sold without undue loss and the proceeds thereof
distributed to the Members at a future date. The legal form of the
holding entity, the identity of the trustee or other fiduciary, and the
terms of its governing instrument shall be determined by the Operating
Committee.
(b) Pursuant to the winding-up of the LLC, the LLC's assets shall
first be applied to the payment of, or to a reserve for the payment of,
LLC liabilities (including Cash Needs Loans and other debts to Members
and their Affiliates and further including such provision for
contingent or unforeseen liabilities as the Operating Committee deems
appropriate), and then shall be distributed to the Members in
accordance with their respective positive Capital Accounts after the
allocations pursuant to Sections 4.5 through 4.8 and after any
distributions pursuant to Section 4.9 for the then-current fiscal year.
If assets are distributed in kind, the assets so distributed shall be
valued at their then-current fair-market values and the unrealized
appreciation or depreciation in value of such assets shall be allocated
to the Members' respective
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Capital Accounts as if such assets had been sold, and such assets shall
then be distributed to the Members in accordance with their respective
positive Capital Accounts as so adjusted.
(c) A taking of all or substantially all of the LLC's property and
assets in condemnation or by eminent domain shall be treated in all
respects as a sale of the LLC's assets upon the dissolution and
liquidation of the LLC pursuant to this Section 9. In such event any
portion of the property and
assets of the LLC not so taken shall be sold and the proceeds, together
with the condemnation award, distributed in the manner provided for in
this Section 9.
(d) The amount by which the fair market value of any property to
be distributed in kind to the Members exceeds or is less than the basis
of such property (determined without regard to any election under
Section 754 of the Code) shall, to the extent not otherwise recognized
to the LLC, be taken into, account in computing gain or loss of the LLC
for purposes of crediting or charging the Capital Accounts of, and
distributing proceeds to, the Members under this Section 9.
(e) If, following the termination of the LLC, any asset of the LLC
is sold in a transaction in which, by reason of the provisions of
Section 453 of the Code, gain is realized but not recognized, such
realized gain shall be taken into account in computing gain of the LLC
for the purposes of making allocations under Section 9.2(b) hereof and
distributions of proceeds to the Members under Sections 9.2 hereof.
10. NOTICES
10.1 Notices by Registered or Certified Mail.
(a) All notices, demands or requests provided for or permitted to
be given pursuant to this Agreement must be in writing. All notices,
demands and requests to be sent by any party hereto or to any other
party shall be deemed to have been properly given or served by
depositing the same in the United States Mail, postpaid and registered
or certified, with return receipt requested, or by delivering the same
to an overnight delivery service of nationally recognized standing, and
addressed to the party to whom the notice, demand or request is
intended, at its address designated hereinbelow or to such other
address as such party may hereafter designate by written notice.
(b) All notices, demands and requests shall be effective upon
being deposited in the United States Mail or being delivered to an
overnight delivery service of nationally recognized standing. However,
the time period in which a response to any such notice, demand or
request must be given
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shall commence to run three (3) days from the date of such mailing or
two (2) days from the date of such delivery.
10.2 Routine Communications.
Notwithstanding the foregoing, routine communications,
distribution checks, copies of financial statements, etc., may be sent
by ordinary first-class mail.
10.3 Notice to Trump.
Copies of all notices to Trump shall be sent to Nicholas L. Ribis,
President, Trump Indiana, Inc., 725 Fifth Avenue, New York 10022.
Copies thereof shall concurrently be sent to Robert M. Pickus,
Executive Vice President - Corporate and Legal Affairs, Trump Indiana,
Inc., c/o Trump Plaza Hotel & Casino, The Boardwalk at Mississippi
Avenue, Atlantic City, New Jersey 08401; and Peter Michael Laughlin,
Esq., Ribis, Graham & Curtin, 4 Headquarters Plaza, Morristown, New
Jersey 07962-1991.
10.4 Notices to BDC.
Copies of all notices to BDC shall be sent to Don H. Barden, The
Barden Companies, 400 Renaissance Center, 24th Floor, Detroit, Michigan
48243. Copies thereof shall concurrently by sent to Cameron H.
Piggott, Esq., Dykema Gossett, PLLC, 400 Renaissance Center, Detroit,
Michigan 48243.
11. NO RIGHT TO OBLIGATE OR INCUR LIABILITIES
FOR OTHER MEMBERS
Each of the Members hereby covenants and agrees that it will not,
during the term of this LLC, do any act or incur any obligation on
behalf of the LLC of any kind whatsoever, except as herein expressly
authorized and permitted in this Agreement and each Member hereby
agrees to indemnify and hold harmless the other Members from any
obligation or liability, including the reasonable expenses of defense
thereof, arising out of its breach of any of the provisions hereof.
12. COMPLIANCE WITH INDIANA GAMING REGULATIONS
12.1 Transfer of LLC Interest.
Notwithstanding anything to the contrary contained in this
Agreement, any sale, transfer, assignment or other conveyance of all or
any part of the interest (whether legal or beneficial) of any Member in
the LLC shall be subject to and conditioned upon, to the extent
applicable, the provisions of the Indiana Riverboat Gambling Act and
the regulations of the Commission.
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12.2 Licensing.
If it is determined by any agency or regulatory body or by the
provisions of any applicable law or regulation that the LLC or any
Member must be licensed or qualified in order to participate in the
affairs and ownership of the LLC, then each Member hereby agrees to
cooperate reasonably and promptly with the other in obtaining any and
all licenses, permits or approvals required by such governmental
authority or deemed expedient by the Members in connection with
applicable law or regulation.
13. ARBITRATION
13.1 Agreement to Arbitrate. Any controversy, dispute or claim
arising out of, in connection with, or in relation to the
interpretation, performance or breach of this Agreement shall be
resolved by binding arbitration conducted in Indianapolis, Indiana in
accordance with the then existing Commercial Arbitration Rules (the
"Rules") of the American Arbitration Association ("AAA"), specifically
including the Rules relating to "Expedited Procedures" (the "Expedited
Procedures").
13.2 Selection of Arbitrators. Each party to the dispute shall
by notice to the other party name an arbitrator and the two (2)
arbitrators so named shall decide upon a third (3rd) arbitrator. The
second (2nd) arbitrator to be appointed must be appointed by notice to
the party who appointed the first (1st) arbitrator within five (5)
business days after the notice of the appointment of the first (1st)
arbitrator, failing which the first (1st) arbitrator so appointed shall
act as the sole arbitrator. If pursuant to the preceding two (2)
sentences, two (2) arbitrators have been appointed by the parties and
if the two (2) so appointed do not agree upon a third (3rd) arbitrator,
the AAA in Indianapolis, Indiana shall be requested to submit a list of
five (5) persons to serve as the third (3rd) arbitrator. The parties
shall select the third (3rd) arbitrator from the list submitted,
provided that if the parties cannot agree upon the third (3rd)
arbitrator, then the third (3rd) arbitrator shall be selected from the
list of five (5) through the process of the two (2) arbitrators jointly
striking names from the list until one (1) name remains. The decision
of any two (2) of the arbitrators shall be final and binding upon all
parties. A judgment upon any award rendered by a majority of the
arbitrators may be entered and enforced in any court of competent
jurisdiction. Unless the arbitrators determine otherwise (which they
shall have the right to do), all costs and expenses of the arbitrators
shall be borne equally by the parties with the exception that the cost
of the arbitrator selected by each party shall be paid by the selecting
party. The arbitrators shall be requested to render an opinion within
thirty (30) days after the date the
43
<PAGE> 45
controversy (within fifteen (15) days in the case of any expedited
proceeding) is submitted to them. The above procedures contemplate
that there will only be two (2) parties to the arbitration proceeding;
if there are more, and the parties cannot agree upon the method of
choosing arbitrators, the method of proceeding shall be determined
pursuant to the then existing Commercial Arbitration Rules of the AAA.
13.3 Expenses. The arbitrator shall award to the prevailing party
in any arbitration proceeding commenced hereunder the prevailing
party's costs and expenses (including expert witness expenses and
reasonable attorneys' fees but excluding the cost of the arbitrator
selected by the prevailing party) of investigating, preparing and
presenting such arbitration claim.
13.4 Expedited Procedures. Each party hereto hereby consents to
the use of the Expedited Procedures without regard to the amount in
controversy and agrees to cooperate in all respects with the arbitrator
in order to permit a speedy resolution to such disputes. The arbitrator
shall convene a hearing as quickly as practicable after his or her
appointment, and in any event no later than fifteen (15) days after
such appointment. There shall be only one hearing, which shall not
exceed five (5) consecutive business days in length.
13.5 Submission to Jurisdiction; Agent to Service. EACH OF THE
PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE CITY OF INDIANAPOLIS, STATE OF INDIANA, AND
IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR ANY AGREEMENT OR INSTRUMENT EXECUTED HEREUNDER, OTHER THAN
ANY ACTION OR PROCEEDING REQUIRED BY SECTION 13(a) HEREOF TO BE
SUBMITTED TO ARBITRATION, SHALL BE LITIGATED IN SUCH COURTS, AND EACH
OF THE PARTIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, AND CONSENTS TO ALL SUCH SERVICE OR PROCESS MADE IN
THE MANNER SET FORTH IN SECTION 10 HEREOF. Nothing contained in this
Section shall affect the right of any party to serve legal process on
any other party in any other manner permitted by law. Nothing contained
in this Section shall affect the obligations of the parties with
respect to the arbitration of disputes under Section 13.1 hereof.
13.6 Certain Decisions or Disputes Not Subject to Arbitration.
Notwithstanding anything to the contrary in the foregoing, the
following decisions or disputes shall not be subject to arbitration:
44
<PAGE> 46
(a) any amendment to, renewal or extension of, or other change in
the terms and conditions of the Berthing Agreements;
(b) any decision by a Member to cause the LLC to enforce its
rights under a Berthing Agreement;
(c) approval of a change in the Improvements Budget, other than an
obligatory increase under the circumstances referred to in Section 3.10
above;
(d) a change in the Site Plan that is not required in order to
complete the Site Plan Improvements (i) in a timely fashion, (ii)
within the Improvements Budget, or (iii) in accordance with applicable
laws, rules and regulations;
(e) approval of the Master Plan, or the agreement of the Members
that the LLC should construct the Master Plan Improvements; and
(f) a change in the Master Plan Improvements that is not required
in order to complete the Master Plan Improvements (i) in a timely
fashion, (ii) within the agreed upon budget, or (iii) in accordance
with applicable laws, rules and regulations.
13.7 Certain Limitations on the Authority of Arbitrators.
Notwithstanding Sections 13.1 and 13.2 above, the arbitrator(s) shall
not have the authority to determine that the Site Plan or Master Plan
will include any improvements (temporary or permanent) that cost more
or are more extensive than the minimum amount reasonably necessary to
properly serve the operations of the riverboats, to meet any
contractual requirements undertaken by the LLC, or to enable the
Members to meet their respective obligations under the Development
Agreement or any obligations under the Certificates of Suitability or
Riverboat Owner's Licenses issued to the Members.
14. MISCELLANEOUS
14.1 Governing Law.
The LLC is and shall be a limited liability company existing under
and governed by the laws of the State of Delaware.
14.2 Waivers.
No consent or waiver, expressed or implied, by any Member to or of
any breach or default by the other of its obligations hereunder shall
be deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such other party of the same or
any other
45
<PAGE> 47
obligations of such Member hereunder. Failure on the part of any Member
to complain of any act or failure to act of another Member or to
declare a Member in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Member of its rights
hereunder.
14.3 Severability.
If any provision of this Agreement or the application thereof to
any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
14.4 Covenant Against Partition.
Except as otherwise provided in this Agreement, the Members, on
behalf of themselves, their legal representatives successors and
assigns, hereby specifically renounce, waive and forfeit all rights
whether arising under statute, or by operation of law, to seek, bring,
or maintain any action in any court of law or equity for partition of
the Property, or any interest which is considered to be LLC property,
regardless of the manner in which title to any such property may be
held, and upon any breach of the provisions of this Section 14.4, the
other Member, in addition to all rights and remedies in law and equity,
shall be entitled to a decree or order restraining or enjoining such
application, action or proceeding.
14.5 Pronouns, etc.
All pronouns or any variations thereof shall be deemed to refer to
the masculine, feminine, or neuter, singular or plural, as to the
identity of the person or persons may require.
14.6 Entire Agreement.
This Agreement, together with other documents being executed of
even date, contain the entire agreement between the parties hereto
relative to the formation of the LLC and the LLC's ownership of the
Property as of the date of this Agreement, and all prior understandings
and agreements between the parties are merged in this Agreement.
Without limiting the foregoing, this Agreement amends, restates and
supercedes the Original Agreement, and supercedes any other agreements
regarding the Original Agreement executed in connection therewith.
Each Member acknowledges that it is not relying upon any statement or
representation made by the other Member not embodied herein or in the
Exhibits attached hereto, in instruments delivered pursuant to specific
provisions hereof, or in other instruments signed or delivered by the
parties (or the other party) in connection with the execution of the
46
<PAGE> 48
Original Agreement or the formation of the LLC or being signed or
delivered by the parties (or the other party) in connection with the
execution of this Agreement or the contributions referred to in Section
4.1(a) above. No variations, modifications or changes herein or hereof
shall be binding upon any Member hereto unless set forth in a document
duly executed by or on behalf of such Member.
14.7 Binding Agreement; No Third Party Beneficiaries.
Subject to the restrictions on transfers and encumbrances set
forth herein, this Agreement shall inure to the benefit of and be
binding upon the undersigned Members and their respective legal
representatives, successors and assigns. Whenever in this instrument, a
reference to any Member is made, such reference shall be deemed to
include a reference to the legal representatives, successors and
permitted assigns of such Member. However, in no event shall any third
party be deemed to be a third party beneficiary of this Agreement or
otherwise be entitled to enforce the terms and conditions of this
Agreement against the Members.
14.8 Force Majeure.
All obligations set forth in this Agreement shall be subject to
impossibility of performance as a consequence of any strike, lock-out,
fire, destruction, acts of God, restrictions of any governmental
authority, civil commotion or unavoidable casualty.
14.9 Captions; Exhibits.
The captions used herein are for convenience only and do not in
any way affect, limit, amplify or otherwise modify the terms and
provisions hereof. Exhibits A through G, inclusive, attached hereto
are a material part of this Agreement and are hereby incorporated
herein by reference.
14.10 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which as executed shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument.
14.11 Time of the Essence.
Time is of the essence in the performance by the Members of their
obligations under this Agreement.
47
<PAGE> 49
14.12 Tax Matters Partner.
Trump shall be the Tax Matters Partner of the LLC for all purposes
under the Code, under the direction of the Operating Committee.
However, Trump shall not cause the LLC to exercise any election
available to the LLC under the Code, or take any other action in such
capacity, without the prior written consent of the other Member.
IN WITNESS WHEREOF, this Agreement is executed effective as of the
date first set forth above.
"TRUMP"
TRUMP INDIANA, INC.
By: Nicholas L. Ribis
--------------------------------
Nicholas L. Ribis
President
"BDC"
BARDEN-DAVIS CASINO, LLC
By: BARDEN DEVELOPMENT, INC.,
Member
By: Don H. Barden
--------------------------------
Don H. Barden
President
And
By: GARY RIVERBOAT GAMING, LLC
Member
By: BARDEN MANAGEMENT, INC.,
Its Manager
By: Don H. Barden
--------------------------------
Don H. Barden
President
48
<PAGE> 50
AMENDMENT NO. 1 TO FIRST AMENDED
AND RESTATED OPERATING AGREEMENT OF
BUFFINGTON HARBOR RIVERBOATS, L.L.C.
This Amendment No. 1 to First Amended and Restated Operating
Agreement (the "Amendment") is entered into as of this 23rd day of
April, 1996 by and between TRUMP INDIANA, INC., a Delaware corporation,
having an office at 6012 W. Industrial Highway, Gary, Indiana 46406
(hereinafter sometimes referred to as "Trump"), and THE MAJESTIC STAR
CASINO, LLC (formerly Barden-Davis Casino, LLC), an Indiana limited
liability company, having an office at Suite 2400, 400 Renaissance
Center, Detroit, Michigan 48243 (hereinafter sometimes referred to as
"Majestic"; Trump and Majestic are hereinafter sometimes referred to as
the "Members" and individually as a "Member").
WITNESSETH
WHEREAS, Trump and Majestic have formed Buffington Harbor
Riverboats, L.L.C., a Delaware limited liability company (the "LLC"),
pursuant to the terms of an Operating Agreement dated as of September
27, 1995 (the "Operating Agreement");
WHEREAS, Trump and Majestic amended and restated the Operating
Agreement by a First Amended and Restated Operating Agreement dated as
of October 31, 1995 (the Operating Agreement, as so amended and
restated, is hereinafter referred to as the "Agreement"); and
WHEREAS, the Members wish to amend the Agreement in the respects
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and
conditions hereafter contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. Capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings ascribed to them in
the Agreement.
2. Change of Member's Name. Majestic represents to Trump, and
Trump acknowledges, that Barden-Davis Casino, LLC has changed its name
to "The Majestic Star Casino, LLC" by filing with the Indiana Secretary
of State an amendment to its Articles of Organization. Majestic and
Trump agree to file with the Delaware Secretary of State an amendment
to the Certificate of Formation of Buffington Harbor Riverboats, L.L.C.
confirming Majestic's name change. Unless the context clearly requires
otherwise, all references in the Agreement to "BDC" shall be deemed to
refer to "Majestic".
<PAGE> 51
3. Establishment of Operating Subcommittee. The Members acknowledge and
agree that the Operating Committee can more effectively carry out and discharge
certain of its responsibilities relative to the operation and management of the
LLC through a subcommittee comprised of on-site personnel. Accordingly, a
subcommittee (the "Subcommittee") of the Operating Committee is hereby
established on the following terms:
(a) The Subcommittee shall have responsibility for the day-to-day
operations, management and maintenance of the Common Areas, and the
day-to-day delivery and supervision of services to be provided by the LLC
from time to time under any Berthing Agreement.
(b) The Subcommittee shall consist of two voting representatives, one
of whom shall be the general manager of Trump's on-site gaming operations,
and the other of whom shall be the general manager of Majestic's on-site
gaming operations. Each representative shall be employed on a full time
basis at the site of the LLC Property.
(c) Subject to overall direction from the Operating Committee, the
Subcommittee shall have the power and authority to perform the functions
and responsibilities of the Operating Committee as set forth in Section 3.2
of the Agreement, insofar as such functions and responsibilities pertain to
the matters referred to in subparagraph (a) above, provided that the
subcommittee shall not have the authority to enter into any contract or
other obligation or commitment in the name of or on behalf of the LLC that
involves an expenditure in excess of two hundred fifty thousand ($250,000)
dollars, or any employment contract or arrangement that involves the
payment of a salary or other compensation in excess of fifty thousand
($50,000) dollars per year.
(d) The Subcommittee shall submit periodic reports (not less than
monthly) to the Operating Committee, which shall include a summary of
operations, revenues, expenses, significant new contracts, obligations and
commitments and matters that should be acted upon by the Operating
Committee. The representatives of the Subcommittee shall endeavor to
attend the meetings of the Operating Committee, but shall not (i) be
members of the Operating Committee, (ii) vote on matters before the
Operating Committee, or (iii) be included in any determination of whether
or not a quorum of the Operating Committee has been constituted, unless
(and then only to the extent that) one or both representatives to the
Subcommittee also
2
<PAGE> 52
have been separately named under the terms of the Agreement as member(s) of
the Operating Committee. The presence and/or absence of any member(s) of
the Subcommittee, in their capacities as such, shall not affect the
validity of any action taken by the Operating Committee.
(e) The Subcommittee may act only by the affirmative vote of both
representatives; provided, that during any period in which an Event of
Default continues, the representative appointed by the Defaulting Member
shall be suspended from participating on the Subcommittee and the
Subcommittee may act by the affirmative vote of the other representative.
(f) The LLC is a member-managed limited liability company. Each
representative of the Subcommittee shall be deemed to be the agent of, and
to represent, the Member that employed him or her, and show all his or her
loyalty and duty to such Member.
4. Extension of Time for Agreement Upon Initial Operating Plan and Budget.
Section 3.9(d) of the Agreement is amended to provide that the date by which the
initial Operating Plan and Budget is to be agreed upon shall be April 30, 1996.
5. Amendment Regarding Increases in the Operating Plan and Budget. The
limitation on obligatory increases in the Operating Plan and Budget during any
fiscal year set forth in Section 3.9(e) of the Agreement shall be increased from
two million five hundred thousand ($2,500,000) dollars to five million
($5,000,000) dollars, if and to the extent the LLC requires funds in excess of
the amount of available insurance proceeds to repair or restore the Common Areas
following a casualty.
6. Amendment to Timing of Additional Capital Contributions. The parties
acknowledge that each Member has made the capital contributions required to be
made by it pursuant to Sections 4.1(a)(1), (2) and (3) of the Agreement
(although such acknowledgement shall not constitute a waiver of any claim or
right the LLC or the other Member may have with regard to any representation or
warranty with respect to any capital contribution). Section 4.1(a)(5) of the
Agreement is hereby deleted in its entirety and replaced with the following new
Section 4.1(a)(5):
Each of Trump and Majestic shall contribute one-half (1/2) of the
amount shown on the 60 Day Projection (as hereinafter defined) on or
before the fifth (5th) day of each month following issuance of a 60
Day Projection, and each such contribution shall apply
3
<PAGE> 53
against the Member's additional capital contribution due under Subsection
(4) above; provided, in any event each Member shall contribute the balance
of its additional capital contribution due under Subsection (4) above
(i.e., $18,993,415 less prior capital contributions by the Member under
Subsection (4) above or this Subsection) on or before June 1, 1996. For
purposes hereof the "60 Day Projection" shall mean the cash flow projection
forecasting the amount of additional funds required to construct the Site
Plan Improvements and to otherwise conduct the LLC's contemplated
operations during the sixty (60) days following such projection, all in
accordance with the Improvements Budget, taking into account cash on hand
and projected revenues for the applicable period. Each 60 Day Projection
shall be prepared by the Subcommittee on or before the first (1st) day of
each month commencing March 1, 1996. Notwithstanding anything herein to the
contrary, no member shall be obligated to make aggregate contributions
under this Section 4.1 in excess of one-half (1/2) of the Improvements
Budget.
7. Extension of Time For Berthing Agreements. Section 4.1(e) of the
Agreement is amended to provide that the date by which each Member shall enter
into a Berthing Agreement shall be April 30, 1996.
8. Amendment to Section 8(a) and (b). Section 8(a) and (b) of the
Agreement are hereby deleted and replaced with the following new Sections 8(a)
and (b):
(a) No interest of any Member in the LLC or otherwise under this
Agreement shall be sold, transferred, pledged, encumbered, hypothecated or
assigned, unless (i) such transaction complies with any relevant provisions
of Section 8(b), (ii) any sale or other assignment of the interest subsumes
the Member's entire interest in the LLC (including all of the Member's
voting rights, powers of appointment, informational rights, Percentage
Interest and Capital Account), (iii) except as to a pledge, granting of a
security interest or collateral assignment for security purposes (as to
which this subclause shall not apply), the counterparty to the transaction
expressly acknowledges that it acquires its rights in the interest subject
to the terms of this Agreement (which shall continue to govern) and such
counterparty assumes in writing any obligations of the selling Member from
and after the date of such assumption under this Agreement and the
Assignment and Assumption Agreement of even date, and reasonable assurances
are provided to the remaining Member that all monetary
4
<PAGE> 54
obligations hereunder of the selling Member prior to the date of such
assumption have been or will be satisfied, and (iv) such transaction would
not result in a breach or default under any agreement to which the LLC is a
party or give rise to the right to accelerate the maturity of any LLC
indebtedness or result in any fees or penalties to the LLC (unless the
transferee or assignor indemnifies the LLC against such fees or penalties
in a manner reasonably satisfactory to the non-transferring Member or pays
such fees or penalties).
(b) A Member may sell its entire interest in the LLC to any Person
which simultaneously acquires or has acquired a Certificate of Suitability
or a Riverboat Owner's License issued by the Commission for use at the LLC
Property. A Member may pledge, grant a security interest in or make a
collateral assignment of its entire interest in the LLC as security for a
loan, a surety bond, an extension of credit or a guaranty on behalf of, by
or to the Member; provided such loan, surety bond, credit or guaranty is
extended or issued in connection with the Member's financial or performance
obligations with respect to its gaming operations at the Property or with
respect to the LLC, including in connection with the Member's (i)
ownership, chartering, equipping or operation of its riverboat, (ii) gaming
equipment or other improvements, (iii) working capital needs, and (iv) past
or future capital contributions to the LLC, as well as for the extension,
reimbursement or refinancing of the foregoing; and further provided that
the loan, surety bond, credito or guaranty (or extension or refinancing of
the foregoing) does not serve as security for, and is not
cross-collateralized with, a loan that is not made in respect of the
Member's aforementioned obligations.
9. No Other Amendment. Except as amended and modified in the respects
specifically set forth above, the Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
"TRUMP"
TRUMP INDIANA, INC.
By: Robert M. Pickus
------------------------------
Robert M. Pickus
Its: Vice President
<PAGE> 55
"MAJESTIC"
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.,
Member
By: Don H. Barden
-------------------------------
Don H. Barden
President
And
By: Gary Riverboat Gaming, LLC,
Member
By: Barden Management, Inc.,
Its Manager
By:
Don H. Barden
-------------------------------
Don H. Barden
President
<PAGE> 1
EXHIBIT 10.7
CHARTER AGREEMENT
THIS CHARTER AGREEMENT ("Charter") is made and entered into as of the
17th day of August, 1995 by and among NEW YORKER ACQUISITION CORPORATION, a
Delaware corporation (hereinafter referred to as the "Owner"); BARDEN-DAVIS
CASINO, L.L.C., an Indiana limited liability company (hereinafter referred to
as the "Charterer"); and PRESIDENT CASINOS, INC. ("Guarantor"), a Delaware
corporation and the holder of all of the issued and outstanding capital stock
of President Riverboat Casino - New York, Inc., a Delaware corporation and the
holder of all of the issued and outstanding capital stock of Owner.
WITNESSETH:
WHEREAS, the Owner is the owner of the casino gaming vessel,
"President Casino V" U.S.O.C. No. 538911 (together with all improvements,
furniture, fixtures and equipment (the "Equipment") listed or generally
described on Schedule 1(d) hereto, the "Vessel");
WHEREAS, the Charterer desires to charter the Vessel from the Owner,
and the Owner desires to charter the Vessel to the Charterer, on the terms and
conditions set forth in this Charter; and
WHEREAS, Guarantor has agreed to guaranty Owner's obligations under
this Charter;
NOW, THEREFORE, in exchange for the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
SECTION 1. SECURITY DEPOSIT; DELIVERY AND ACCEPTANCE; EQUIPMENT.
Owner does hereby agree to furnish and charter to the Charterer, and
Charterer does hereby agree to hire and charter from the Owner, under the terms
and conditions set out in this Charter, the Vessel.
(a) Within five (5) days following written notice from
Charterer to Owner requesting delivery of the Vessel ("Delivery Notice"),
Charterer shall deposit the amount of $250,000 (the "Security Deposit"), in
escrow (the "Escrow Account"), pursuant to the terms of an escrow agreement in
form and substance reasonably satisfactory to Owner and Charterer (the "Escrow
Agreement") as security for the performance of Charterer's obligations
hereunder, including, without limitation, Charterer's obligation to redeliver
the Vessel to the Owner in as good condition and working order (ordinary wear
and tear excepted) as when it is first delivered to Charterer pursuant to
Section 1(b) hereof. The Security Deposit, less any amounts deducted therefrom
in accordance with the terms of this Charter, shall be paid to the Charterer
pursuant to the terms of the Escrow Agreement within thirty (30) days after the
Vessel is redelivered to the Owner in accordance with Section 12 hereof.
(b) (i) Attached hereto as Schedule 1(b) is a schedule of
the improvements, with estimated costs, which Owner shall make to the Vessel,
at Owner's cost, in order to meet the requirements for the Vessel contained
herein (the "Pre-Charter
<PAGE> 2
Alterations"). Schedule 1(b) also contains a timetable for completion
of the Pre-Charter Alterations. Owner shall cause work on the Pre-Charter
Alterations to commence within fifteen (15) days of receipt of the Delivery
Notice. Within thirty (30) days of receipt of the Delivery Notice, Owner shall
furnish Charterer with a schedule of contracts to complete the Pre-Charter
Alterations.
(ii) Unless the Owner and the Charterer otherwise agree, the
Vessel, outfitted with the equipment as set forth on Schedule 1(d) hereto, with
all Pre-Charter Alterations, and Changes (as defined in clause (iii)
hereinbelow), completed and in a condition satisfying Owner's representations
and warranties set forth in the first sentence of Section 1(c) below
("Seaworthy Condition") and all other representations and warranties of Owner
contained herein regarding the condition of the Vessel on the date of delivery,
shall be tendered for delivery by the Owner to the Charterer afloat at Gary,
Indiana (the "Gaming Site"), subject to weather conditions, within three (3)
weeks after the Vessel ready for move date set forth in Schedule 1(b).
(iii) Both prior to commencement of the Pre-Charter Alterations and
during the process of completing this work, Charterer shall be entitled to have
its representatives, including its Naval Architects, inspect and survey the
Vessel, its seaworthiness and the work in completing the Pre-Charter
Alterations, and Charterer shall be entitled to request a change to the
Pre-Charter Alterations ("Changes"). All such inspections and Changes shall be
at Charterer's sole cost and expense. All Changes shall be subject to Owner's
prior approval, which shall not be unreasonably withheld. Owner shall have the
right to condition its approval to any Change upon Charterer's agreement to
remove such item at the time of Charter termination (provided Owner notifies
Charterer in writing at the time of approval). Any Change as to which approval
is not so conditioned shall be referred to as a "Permanent Change." As a
condition to making any Changes, Charterer shall deposit into the Escrow
Account an amount equal to 150% of the proposed additional cost of the Changes
and the timetable set forth in Schedule 1(b)(i) shall be amended, if necessary,
to accommodate any Changes. Any amounts so deposited in the Escrow Account
shall be withdrawn to pay for Changes. Upon completion of and payment in full
of all Changes, any of such amount remaining in the Escrow Account, in excess
of the Security Deposit, shall be delivered to Charterer.
(iv) Owner shall cause the Pre-Charter Alterations and Changes to be
made in a workmanlike manner, such that the seaworthiness and value of the
Vessel shall not be impaired. The Pre-Charter Alterations and Changes shall
otherwise be effected in a manner that meets the Charterer's approval, which
approval shall not be unreasonably withheld. In the event that Owner is in
breach of its obligations under this Section 1(b) (other than such breaches
which are the result of matters beyond the control of Owner, including without
limitation, delays of contractors and inclement weather), and fails to cure
such breach within seven (7) days of written notice thereof, Charterer shall
have the right, but not the obligation, to deliver written notice to Owner that
it elects to control the performance of all Pre-Charter Alterations and
Changes. In such event, (i) Charterer shall cause the Pre-Charter Alterations
and Changes to be made in a workmanlike manner, such that the seaworthiness and
value of the Vessel shall not be impaired and otherwise shall be effected in a
manner that meets Owner's approval, which approval, shall not be unreasonably
withheld and (ii) Owner shall execute and
2
<PAGE> 3
deliver a limited power-of-attorney in order to enable Charterer to
complete the Pre-Charter Alterations and Changes in accordance with this
Section 1(b). Owner shall have the right to inspect and cause Charterer to
make reasonable modifications to all Pre-Charter Alterations, including all
plans and specifications relating thereto. Upon completion of the Pre-Charter
Alterations, Owner or Charterer, as the case may be, shall notify the other of
such completion.
(v) Charterer agrees to execute and deliver to Owner a Certificate
of Acceptance in the form attached hereto as Exhibit ("A") hereto (the
"Certificate of Acceptance") on the date of acceptance by the Charterer of the
Vessel at the Gaming Site (the "Acceptance Date"), which date shall be no more
than five (5) days following the tender of the Vessel at the Gaming Site. The
earlier of (i) the date thirty (30) days after the Pre-Charter Alterations and
Changes are completed and (ii) the Acceptance Date is hereinafter referred to
as (the "Commencement Date"). On the Commencement Date, Charterer shall
deliver to Owner immediately available funds in the amount of the Charter Hire
(as described in Section 3 hereof) payable hereunder in respect of the period
beginning on the Commencement Date and ending on the last day of the first full
month of the Charter Period (as defined in Section 2 hereof).
(vi) Owner shall deliver the Vessel afloat at the Gaming
Site no later than ninety (90) days after receipt of Delivery Notice, subject
to a reasonable extension to account for any contractor delays or weather
conditions beyond Owner's control which make delivery by such ninetieth (90th)
day impracticable. Owner shall be solely responsible for the cost and expense
of transportation of the Vessel to the Gaming Site and for making all
arrangements in connection therewith; provided, however, if this Charter is
terminated by Charterer pursuant to Section 27 below or as a result of an Event
of Default prior to the one (1) year anniversary of the Commencement Date,
Charterer shall reimburse Owner for the cost and expense incurred by Owner in
connection with such transportation from Erie, Pennsylvania. Unless the
parties hereto shall otherwise agree, if the Delivery Notice is not given
before April 1, 1996, this Charter shall terminate.
(c) Owner represents and warrants that as of the Acceptance Date
the Vessel will be in all material respects seaworthy, in good working order
and repair and without defect or inherent defect in title, seaworthiness or
design. Acceptance by the Charterer of the Vessel under this Charter will
constitute conclusive evidence, as between Owner and Charterer (and their
affiliates), that the Vessel satisfies the criteria set forth in this Section
1(c) whether or not any defect therein is discoverable by Charterer as of the
date of such acceptance; provided that nothing herein contained shall be
construed as a waiver of any rights that either Owner or the Charterer may have
against any other person. Except as set forth in this Section 1(c) and Section
6(b) below, Owner makes no representation or warranty whatsoever as to the
condition, suitability for the service intended and/or fitness of the Vessel
for a particular purpose. If the Charterer does not accept delivery of the
Vessel upon tender of the Vessel by the Owner at the Gaming Site, the Owner
shall be solely responsible for the cost and expense of removal of the Vessel
to such site as the Owner may determine; provided, however, that in addition to
such other remedies to which the Owner may be entitled hereunder or at law or
in equity, the Owner shall be entitled to retain the Security Deposit, unless
the Charterer can properly document that the condition of the Vessel failed in
any material respect to meet the standards as to which the Owner has made
representations and warranties pursuant to this Section 1(c) and Owner shall
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have failed to correct such defects or to provide adequate assurances that it
will correct such defects, at Owner's sole cost and expense, as soon as
practicable thereafter.
(d) For purposes of this Charter, the Equipment listed on Schedule
1(d) hereto is specifically included as part of the Vessel.
SECTION 2. CHARTER PERIOD.
The charter period for the Vessel (the "Charter Period") shall commence
on the Commencement Date in accordance with Section 1(b) hereof and shall
continue until the earlier of (i) one hundred eighty (180) days following
receipt by the Owner of a written notice of termination from Charterer and (ii)
the last day of the month during which the fifth anniversary of the
Commencement Date occurs (the "Charter Expiration Date"). Upon the Charter
Expiration Date, the Vessel shall be returned to Owner in accordance with the
terms of Section 12 hereof. Solely for purposes of enforcing the Charterer's
obligations hereunder, including, without limitation, its obligation to
maintain insurance in accordance with Section 5 and to indemnify the Owner in
accordance with Section 7, the Charter Period shall be extended to include the
period of time, if any, beginning on the Charter Expiration Date and ending on
the date on which the Vessel is properly redelivered in accordance with Section
12.
SECTION 3. CHARTER HIRE.
(a) The Charter Hire owed by the Charterer to the Owner with
respect to the Vessel throughout the Charter Period shall be equal to the sum
of $125,000 (plus applicable sales tax) for each month during the period
beginning on the Commencement Date and ending on the Charter Expiration Date
(subject to adjustment, on an annual basis, in the case of Charter Hire payable
following the twenty-fourth monthly payment due hereunder, so that such Charter
Hire will be equal to the fair market rental value of the Vessel determined
from time to time in accordance with Exhibit B hereto). The Charter Hire owed
by the Charterer to the Owner for any partial month during the Charter Period
shall be equal to the then monthly Charter Hire multiplied by a fraction the
numerator of which is the number of days in such partial month and the
denominator of which is the total number of days in such month. The Charter
Hire payable pursuant to this Section 3 shall be exclusive of, and in addition
to (i) any and all expenses required to be paid by Charterer hereunder,
including, without limitation, any sales or excise taxes payable by Charterer
pursuant to Section 14 hereof and (ii) any and all expenses incurred by Owner
as a result of Charterer's failure to satisfy its obligations hereunder,
including without limitation, expenses incurred to maintain or repair the
Vessel or to obtain or maintain insurance as required by the terms of this
Charter, which expenses shall be paid in full not more than fifteen (15) days
after Owner provides notice to Charterer of the incurrence by Owner of such
expenses, accompanied by adequate proof of payment, if applicable.
(b) Except as otherwise provided in Section 1(b) hereof, all
payments of Charter Hire due under this Charter shall be paid by the Charterer
not less than three (3) business days in advance of the month in respect of
which it is owed to the Owner at its address set forth in Section 17 below or
at such other place or address as the Owner may from time to time specify to
the Charterer in writing. All payments of Charter Hire shall be made
punctually
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by the Charterer without need of invoice, notice or demand by the Owner and,
except as provided in Sections 1(b), 4(e) and 6(a)(vii), shall be free and
clear of, and without deduction for, or on account of, any and all present or
future taxes, levies, imposts, deductions or other charges whatsoever imposed
or levied by any governmental or taxing authority wheresoever located.
(c) This Charter is a net charter. Subject to Sections 1(b), 4(e)
and 6(a)(vii), (i) all payments of Charter Hire and other payments required to
be made by Charterer by the terms of this Charter shall be absolute and
unconditional, (ii) no payments to be made by the Charterer under this Charter
shall be subject to any abatement, reduction, adjustment, right to set-off,
counterclaim, suspension, deferment, recoupment or defense due to any present
or future claims of the Charterer against the Owner under this Charter or
otherwise, or against any other party, or for any other reason whatsoever, nor
shall the Charterer be entitled to retain any interest in or with respect to
Charter Hire which has already been paid to the Owner or to assert any right to
any refund or adjustment in the event of termination of this Charter or
otherwise and (iii) the Charterer shall have no right to terminate this Charter
before the end of the Charter Period, or be released, relieved or discharged
from the obligation or liability to make all payments due hereunder for any
reason whatsoever. Each payment of Charter Hire hereunder, as well as any other
amount required to be paid by Charterer hereunder, shall be final and not
subject to any retained interest. Notwithstanding anything herein to the
contrary, Charterer shall have no obligation to pay the Charter Hire for any
period during which the Vessel is not available for use by Charterer for
Charterer's operations as contemplated by this Charter as a result of an action
by a holder of a Non-Charterer Lien (as hereinafter defined) on the Vessel.
SECTION 4. TITLE TO AND USE OF THE VESSEL; DOCUMENTATION
OF THE GAMING VESSEL; NO LIENS.
(a) The Owner retains full legal title to the Vessel
notwithstanding its delivery to and possession and use by the Charterer
hereunder, and Charterer obtains no rights in the Vessel other than those set
forth herein. So long as no Event of Default (as defined herein) shall have
occurred and be continuing, Charterer shall have exclusive possession, control
and use of the Vessel without hindrance or molestation by the Owner during the
Charter Period; provided, however, that Owner shall have the right to have a
representative or representatives board the Vessel for purposes of inspecting
the Vessel in order to monitor Charterer's compliance with Charterer's
obligations under this Charter. So long as no Event of Default shall have
occurred and be continuing, Owner's right to conduct inspections pursuant to
the proviso set forth in the immediately preceding sentence shall be limited to
such times during regular business days as are reasonably convenient to
Charterer (following reasonable notice to Charterer) and shall be at Owner's
sole cost and expense. Charterer shall, at its own expense, operate, supply
and maintain the Vessel. Charterer shall pay all port charges, all cleaning,
fleeting and shifting charges and each and every other expense and cost
incident to the use and operation of the Vessel, and shall pay any and all
fines or penalties levied against the Vessel during the Charter Period by any
governmental authority, it being understood and agreed that Charterer shall
assume all costs of operation. As more particularly set forth in Section 13
below, Charterer will not make any modifications to the Vessel (structural or
otherwise) without the prior express written approval of Owner, which approval
may not be unreasonably withheld, and any
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<PAGE> 6
modifications that are made shall not impair the seaworthiness or value
of the Vessel; provided, however, that Charterer shall have the right to make
the Pre-Charter Alterations and Changes in accordance with the terms of Section
1(b) above if Owner shall fail to cure a default as provided therein. Unless
otherwise agreed (and subject to the provisions of Section 13 below), any
structural modifications that are made to the Vessel shall become the property
of Owner, and shall be provided to Owner upon redelivery of the Vessel.
Notwithstanding anything herein to the contrary, Owner shall be permitted to
place a preferred ship mortgage or other lien or encumbrance on the Vessel;
provided, however, that the mortgagee or lien holder shall have executed and
delivered to the Charterer a non-disturbance agreement in form and substance
reasonably acceptable to the Charterer. Subject to the terms of the
non-disturbance agreement referred to in the immediately preceding sentence,
Charterer agrees that this Charter shall be subject and subordinate to any such
mortgage, lien or encumbrance and that it will execute, upon the request of
Owner, any and all documents reasonably required by the mortgagor or lien
holder in connection with the transaction giving rise to such mortgage, lien or
encumbrance.
(b) The Vessel shall be employed at the Gaming Site in such manner
as the Charterer shall determine, so long as such employment is not
inconsistent with the physical characteristics of the Vessel (as modified in
accordance with Schedule 1(b) hereto). In no event shall the Vessel be removed
from the Gaming Site following delivery of the Vessel thereto by the Owner,
except (i) upon redelivery to the Owner in accordance with the terms hereof,
(ii) in the ordinary course of Charterer's business operations consistent with
the manner in which the Vessel may be used in accordance with Section 11 below,
(iii) as required for inspections, maintenance and repairs undertaken in
accordance with this Charter or (iv) as the Owner shall otherwise agree in
writing.
(c) Owner shall obtain, and throughout the Charter Period shall
maintain, the documentation of the Vessel in the Owner's name under the laws
and flag of the United States of America. Charterer will, at its expense,
execute such documents and furnish such information as Owner may reasonably
require to enable Owner to obtain and maintain such documentation. Neither
Owner nor Charterer will permit to be done anything which can or might
injuriously affect such documentation.
(d) Neither the Charterer, nor any of its officers, agents or
employees, nor anyone acting on behalf of Charterer nor the master or any other
officer or crew member of any towboat towing the Vessel, shall have any right,
power or authority to create, incur, suffer or permit to be placed or imposed
upon or asserted against the Vessel any maritime or other lien (other than any
maritime lien arising by operation of law during the Charterer's ordinary
course of business in connection with the operation of the Vessel, so long as,
and only to the extent that, the obligation giving rise to such maritime lien
is satisfied in a timely manner and is otherwise not delinquent and liens
against Owner), libel, mortgage, encumbrance, pledge, lease, security interest,
claim or charge whatsoever, or to incur any debt, obligation or charge upon the
credit of the Vessel or to otherwise pledge or place any encumbrance on the
Vessel (hereinafter referred to as a "Lien" and collectively as "Liens").
Charterer will promptly notify the Owner of any Lien that shall attach to any
of the Vessel, or part thereof, or interest therein, upon the Charterer's
learning of such attachment, together with full particulars thereof.
Notwithstanding the foregoing, in the event any Lien (other than a
"Non-Charterer Lien," as
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defined in Section 4(f) hereof) shall be placed upon the Vessel during
the Charter Period, or after redelivery, or in the event the Vessel shall be
levied against or taken into custody by virtue of any legal proceedings in any
court, based upon a claim or cause of action (other than a claim or cause of
action against Owner which is not related in any manner to Charterer's
operation hereunder or the use of the Vessel by Charterer), valid or invalid,
founded or unfounded, alleged to have arisen during the term of this Charter,
Charterer shall, at its sole cost and expense, as soon as practicable, but in
any event within fifteen (15) days thereof, cause the Vessel to be released
and/or the asserted Lien to be discharged.
(e) Owner will promptly notify Charterer of any Non-Charterer Lien
filed against, or otherwise encumbering, the Vessel. Such notice shall contain
a brief description of the nature of the Non-Charterer Lien. In the event any
Non-Charterer Lien (other than those permitted under Section 4(a) and those
which otherwise do not affect this Charter) shall be placed upon the Vessel, or
in the event the Vessel shall be levied against or taken into custody by virtue
of any legal proceedings, based upon a claim or cause of action against Owner
or claims or causes of action other than those arising out of (i) the operation
of the Vessel by Charterer, or (ii) any act or failure to act by the Charterer
in relation to the Vessel or the use or operation thereof, valid or invalid,
founded or unfounded, Owner shall, at its sole cost and expense, as soon as
practicable, but in any event within fifteen (15) days thereof, cause the
Vessel to be released and/or the asserted lien to be discharged. In the event
that a foreclosure proceeding is commenced by the holder of the Non-Charterer
Lien, Charterer may, but shall not be obligated to, satisfy the obligation
giving rise to the Non-Charterer Lien (but only to the extent the holder of
such Non-Charterer Lien permits Charterer to make such payment) upon ten (10)
days advance written notice from Charterer to Owner of its intention to make
such payment. Any payment made by Charterer pursuant to this Section 4(e), as
well as any payment made by Charterer for any fine or penalty for which Owner
is responsible under Section 6(a)(vii) hereof, shall be credited against the
Charter Hire otherwise payable under this Charter or, at Charterer's election,
the Charterer shall be entitled to be reimbursed by the Owner for any payments
of Non-Charterer Liens made by Charterer under this Section 4(e), within
fifteen (15) days of receipt of written notice by Owner of such payments
accompanied by satisfactory proof of payment.
(f) For purposes of this Charter, Non-Charterer Lien is defined as
a lien encumbering the Vessel which arises from any transaction or occurrence
not caused by or related to (i) any action or inaction on the part of Charterer
or (ii) Charterer's operations or Charterer's use or possession of the Vessel,
and includes maritime liens which arose prior to the Commencement Date.
SECTION 5. INSURANCE. (a) Charterer shall obtain and maintain during
the Charter Period, at Charterer's sole cost and expense, insurance in such
amounts covering the Vessel against such risks as Owner shall reasonably
determine to be desirable to fully protect its economic interests in the Vessel
(which amounts shall in no event be less than $32,000,000) and shall obtain and
maintain during the Charter Period at Charterer's sole cost and expense,
general liability, breach of warranty, marine hull, marine protection and
indemnity and such other insurance policies with respect to the Vessel and the
operations to be conducted on the Vessel, and in such amounts, as Owner shall
deem necessary or appropriate; provided, however, in no
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<PAGE> 8
event shall the amount of general liability and marine protection and indemnity
insurance be less then $100,000,000 each. Both the Owner and Charterer shall
be named as insureds with waiver of subrogation under the general liability,
breach of warranty and marine protection and indemnity insurance policies (and
such other policies as the Owner shall deem appropriate) and as loss payees
under all other insurance policies so obtained and maintained. Charterer's
responsibility for the cost of the insurance required to be obtained and
maintained under this Section 5 shall commence on the Commencement Date.
(b) The Charterer shall carry, at its own expense, such workmen's
compensation insurance as shall be required under applicable law, with an
endorsement for United States longshoremen and harbor workers coverage, if
applicable, in an amount of not less than $50,000,000, if available, or such
lesser amount which is available or such other amount as Owner shall determine
to be prudent, in its sole discretion.
(c) The Charterer will not do any act nor cause to occur any act
whereby any insurance required herein shall or may be suspended, impaired or
defeated, and will not cause the Vessel to: (i) be operated in any illegal
manner; (ii) be operated except as licensed by the appropriate governmental
authorities; (iii) carry any cargo not permitted by applicable law, regulation
or rules of the insurers or governmental authorities; or (iv) be operated other
than as contemplated in Section 11 hereof and, in particular, in a manner or in
a location where it will not be covered under the insurance policies then in
effect.
(d) Each insurance policy obtained and maintained hereunder shall
be issued by an insurer of recognized standing in the maritime insurance
industry, and such insurer shall have been approved by the Owner, which
approval shall not be unreasonably withheld. Copies of all insurance policies
required hereunder shall be provided to the Owner sufficiently prior to the
payment of any premium thereunder to allow Owner to review and approve such
policies, which approval will not be unreasonably withheld. Charterer shall
provide Owner with such evidence as Owner may from time to time request in
order for it to determine that the insurance required to be obtained and
maintained hereunder continues to be in full force and effect. As between
Owner and Charterer (and their affiliates), Charterer shall be responsible for
any and all costs and expenses for which insurance coverage is not provided or
for which insurance coverage is inadequate (whether because of a deductible or
any other failure of the insurance policies to provide coverage).
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Charterer hereby represents, warrants and covenants that:
(i) The Charterer is a limited liability company duly
organized, validly existing in good standing under the laws of the State of
Indiana with full power to enter into and to pay and perform its obligations
under this Charter. The Charterer is duly qualified to do business and is in
good standing as a foreign corporation in all of the jurisdictions where its
failure to so qualify could adversely affect the conduct of its business or the
performance of its obligations under this Charter;
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(ii) This Charter and all related documents have been
duly authorized, executed and delivered by the Charterer, are enforceable
against the Charterer in accordance with their terms and do not and will not
contravene any provisions of or constitute a default under the certificate of
incorporation or bylaws of the Charterer or any agreement to which the
Charterer is a party or by which it or any of its property is bound;
(iii) There are no suits or proceedings pending or
threatened before any court or governmental body or agency against or affecting
the Charterer which, if decided adversely to its interest, would materially
affect the ability of the Charterer to perform any of its obligations under
this Charter;
(iv) The Charterer is and shall remain a citizen of the
United States of America within the meaning of Chapter 313 of Title 16 of the
United States Code;
(v) The Charterer shall comply with all applicable laws,
regulations, requirements and rules, domestic and foreign, with respect to the
registration, licensing, use, maintenance and operation of the Vessel,
including, without limitation, all applicable laws, rules and regulations
administered by the United States Coast Guard, the Bureau of Customs, the
Treasury Department, the Environmental Protection Agency, the Public Health
Service, the Department of Transportation, the Indiana Gaming Commission and
any other applicable authorities and their successors;
(vi) Charterer shall not (A) cause or permit the Vessel
to be operated in any manner prohibited by law, governmental rule or regulation
or applicable insurance policies, or (B) cause or permit the Vessel to be
engaged in any unlawful trade or activity prohibited by law;
(vii) The Charterer will make any changes or additions to
the Vessel required by any applicable laws or applicable rules or regulations
thereunder provided, however, that prior notice shall have been given to the
Owner and the Owner shall have agreed to such changes or additions (it being
understood that if the Owner shall not agree to such changes it shall be
responsible for any fines or penalties levied as a result thereof and, if such
fines or levies shall materially interfere with Charterer's use of the Vessel,
Charterer may pay such fines or levies and may, in accordance with Section
4(c) hereof, offset such amounts against an equal amount of Charter Hire
otherwise payable under this Charter). Where such compliance requires the
execution and delivery by the Owner of any instruments or the taking of any
other action by the Owner, the Charterer will in a timely manner prepare and
submit to the Owner such instruments and specify in writing to the Owner the
action by it so required. Upon request of the Owner, the Charterer shall
provide the Owner with photostatic copies or originals, if available, of any
such instruments; and
(viii) Charterer shall make the Pre-Charter Alteration and repair and
maintain the Vessel in accordance with Charterer's obligations hereunder and
shall moor the Vessel at the Gaming Site in a safe and responsible manner
consistent with the Vessel's intended use pursuant to Section 11 hereof.
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(b) The Owner hereby represents, warrants and covenants that:
(i) Owner is the owner of a 100% interest in the Vessel, free
and clear of all liens and encumbrances (in addition to any other future
transfer of title to the Vessel, title may be transferred from Owner to
President Riverboat Casino-New York, Inc. or any other affiliate of Guarantor);
(ii) The Vessel is documented with the United States Coast Guard,
being official number U.S.O.C. 538911. The Vessel, at the time of delivery,
will meet ABS classification 10 foot seas within 5 miles of the Lake Michigan
Coast and will be able to be certified by the United States Coast Guard for
carrying 1,900 passengers and crew;
(iii) This Charter and all related documents have been duly
authorized, executed and delivered by Owner and Guarantor, are enforceable
against Owner and Guarantor in accordance with their terms and do not and will
not contravene any provisions of or constitute a default under the
certification of incorporation or bylaws of the Owner or Guarantor or any
agreement to which the Owner or Guarantor is a party or by which they or any of
their property is bound;
(iv) Owner is a corporation duly organized, existing in good
standing under the laws of the State of Delaware with full power to enter into
and perform its obligations under this Charter. The Owner is duly qualified to
do business and is in good standing as a foreign corporation in all of the
jurisdictions where its failure to do so qualify could adversely effect the
conduct of its business or the performance of its obligation under this
Charter;
(v) There are no suits, or proceedings pending or threatened before
any court or governmental body or agency against or affecting the Owner or
Guarantor which, if decided adversely to their interest, would materially
affect the ability of the Owner or Guarantor to perform any of their
obligations under this Charter;
(vi) Owner and Guarantor shall not take any action which would cause
or permit the Vessel to lose her documentation, violate her licenses or
certifications, or otherwise engage in any unlawful trade or activity
prohibited by law; and
(vii) Subject to the other applicable terms of this Charter,
including Section 1(b) above and Section 13 below, Owner and Guarantor
authorize all changes or additions to the Vessel required to meet the terms of
Schedule 1(b), to continue Coast Guard certification, or to meet Owner's
representations, warranties and covenants set forth in this Charter; provided,
however, that all such changes shall be subject to the approval of Owner, which
approval may not be unreasonably withheld.
(viii) The Vessel loaded for gaming, in accordance with configurations
set forth on Schedule 6(b)(viii) will be trimmed in accordance with the naval
architect's calculations on Schedule 6(b)(viii).
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SECTION 7. INDEMNIFICATION.
(a) During the Charter Period, Charterer assumes all risks of
liability for the Vessel and for the use and operation thereof, and for
injuries to or deaths of any persons and/or loss of or damage to any property
arising from or incident to such use or operation of the Vessel. The Charterer
shall defend, indemnify and save harmless the Owner and its affiliates,
successors and assigns, officers, directors and agents and the Vessel from and
against any claim, penalty, cause of action, damage, liability (including
without limitation, any claim for any tax, assessment, excess, levy, duty, fee
or other governmental charge, and, except as otherwise provided in Section
6(a)(vii) hereof, any fine or penalty arising from any violation of any law,
rule or regulation) or expense (including, without limitation, legal fees and
expenses) in any manner arising out of or relating to: the acceptance,
rejection, delivery, possession, chartering, maintenance, use, repair,
operation, or redelivery of the Vessel, or by reason of the condition of the
Vessel, including, without limitation, (x) any loss or any damage to the Vessel
or any equipment, fittings or facilities located thereon; (y) damage to any
other craft or barges or other property belonging to third parties; or (z)
death or injury to any person.
(b) During the Charter Period, subject to Section 4(a), Owner shall
have the obligation of providing Charterer with undisturbed possession of the
Vessel, other than disturbances arising as a result of or related to any action
or failure to act on the part of Charterer. Owner shall defend, indemnify and
save harmless the Charterer and its affiliates, successors and assigns,
officers, directors and agents and the Charterer's right to the use of the
Vessel pursuant to the terms of this Charter against any claim or expense
(including reasonable legal fees) arising out of or relating to a breach by
Owner of its obligation set forth in the first sentence of this Section 7(b).
Notwithstanding anything to the contrary contained in this Section 7(b), except
for Owner's breach of its duties under Section 1(b) hereof, the Owner's
liability to indemnify the Charterer pursuant to this Section 7(b) shall be
limited to (i) the costs of remedying any breach of Owner's obligation to
provide Charterer with undisturbed possession of the Vessel, other than
disturbances arising as a result of or related to any action or failure to act
on the part of Charterer and (ii) Charterer's liability in respect of third
party claims against Charterer arising as a result of a breach of Owner's
obligation to provide Charterer with undisturbed possession of the Vessel,
other than disturbances arising as a result of or related to any action or
failure to act on the part of Charterer (a "Covered Third Party Claim"), and it
specifically does not include any right for indemnification in connection with
any consequential damages other than Charterer's liability to any third party
arising out of a Covered Third Party Claim.
(c) If any action shall be commenced, or any claim shall be
asserted, against a party in respect of which it is entitled to be indemnified
hereunder (the "Indemnitee"), the party from whom indemnification is sought
(the " Indemnitor ") shall be promptly notified to that effect ("Notice") and
shall assume (or assign to its insurer) control of the defense and/or
settlement thereof, including, at the Indemnitor's (or its insurer's) expense,
employment of counsel, and, in connection therewith, the Indemnitee shall
cooperate to make available all pertinent information under its control. Upon
the request of Indemnitee, Indemnitor shall promptly provide all pertinent
information regarding the status of the action or claim to Indemnitee. If the
Indemnitor fails to assume such defense (or assign such defense to the
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Indemnitor's insurer) within fifteen (15) days after Notice, Indemnitee shall
have the right to assume and control such defense. All costs (including
attorneys' fees and costs) of any such defense shall be paid by the Indemnitor
as incurred by the Indemnitee. Any failure to promptly give Notice shall not
result in the forfeiture of rights under this Section 7 (unless and only to the
extent that such delay shall have materially compromised the defense of the
claim), provided that the Indemnitor's liability shall not be deemed to exist
until Notice has been given in accordance with Section 17 hereof.
(d) The indemnities and assumptions of liabilities and obligations
provided for in this Section 7 shall continue in full force and effect for
applicable claims or causes of action arising during the Charter Period and
before redelivery notwithstanding the expiration or other termination of this
Charter until the expiration of the applicable statute of limitations in
respect to claims of that type.
SECTION 8. MAINTENANCE AND REPAIRS.
(a) Prior to the Commencement Date:
Owner shall, at its sole cost and expense, make such repairs and
alterations to the Vessel as are necessary to put the Vessel in Seaworthy
Condition on the Acceptance Date. Except with respect to Owner's representation
set forth in Section 6(b)(ii), Charterer's delivery of the Certificate of
Acceptance in the form attached hereto as Exhibit A shall constitute conclusive
evidence, as between Owner and Charterer (and their affiliates), that the
Vessel is, in all respects, acceptable to the Charterer, and the Owner shall
have no liability to the Charterer for any deficiency in such repairs or
alterations, whether or not discoverable by the Charterer as of the date of
delivery, following Charterer's delivery of such Certificate.
(b) During the Charter Period:
(i) The Charterer shall, at its sole cost and expense,
maintain the Vessel in accordance with good commercial marine maintenance
practices and shall maintain and preserve the Vessel, in as good condition,
working order and repair as when first delivered to the Charterer for service
hereunder (reasonable wear and tear excepted). The Charterer shall, from time
to time, perform all customary, advisable and necessary maintenance of the
Vessel and carry out all necessary or advisable repairs thereto. All
maintenance and repairs of the Vessel shall be undertaken and performed in such
manner and with such frequency as is commensurate with the Vessel's intended
use as set forth in Section 11 hereof.
(ii) The Vessel shall be repaired, dry-docked and cleaned
by the Charterer at its expense whenever necessary to maintain and preserve the
Vessel in accordance with this Section 8(b).
(iii) The Owner (or its agents or authorized representative)
shall have the right but not the obligation, on reasonable notice, to inspect
the Vessel in a reasonable manner and at reasonable times in order to ascertain
whether the Vessel is being repaired and maintained. The Charterer shall also
permit the Owner (or its agents or authorized
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representative) to inspect the Charterer's records with respect to the
maintenance of the Vessel, whenever requested, on reasonable notice.
(c) Notwithstanding anything to the contrary contained herein,
after the Security Deposit has been made and prior to the Acceptance Date,
Charterer shall be permitted to, at its sole cost and expense, dry-dock the
Vessel in order to make such inspections as it deems necessary. Charterer shall
indemnify and hold Owner harmless for any loss, cost, damages or expenses
incurred by Owner relating to such dry-docking. Any such inspection shall be
coordinated to not disrupt the Pre-Charter Alterations and the timelines set
forth on Schedule 1(b) shall be extended by the time taken to perform a
dry-dock inspection.
SECTION 9. DEFAULT.
(a) Each of the following events (each an "Event of Default")
shall constitute Events of Default under this Charter:
(i) Failure to pay in full any Charter Hire, or other sum
of money which the Charterer is obligated to pay to Owner under this Charter,
as and when due and such failure continues for ten (10) days following notice
from Owner; or
(ii) The Charterer shall default in the due observance or
performance of any other covenant, obligation, condition or requirement
undertaken by the Charterer in this Charter and such default is not cured to
the reasonable satisfaction of Owner within thirty (30) days after the date
upon which Charterer receives written notice from Owner of such breach; or
(iii) Charterer shall cease to be a citizen of the United
States for the purpose of operating in the coastwise trade; or
(iv) Charterer shall (i) apply for a consent to the
appointment of a receiver, trustee or liquidator of Charterer or of all or a
substantial part of the assets of Charterer, or (ii) be unable, or admit in
writing its inability, to pay its debts as they mature, or (iii) make a general
assignment for the benefit of creditors, or (iv) be adjudicated a bankrupt or
insolvent, or be dissolved, or (v) file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to the Bankruptcy Code (11 U.S.C.
Sections 101- 1330) or under any similar federal or state law, now or
hereafter in effect, or (vi) file an answer admitting the material allegations
of, or consent to, or default in answering, a petition filed against Charterer
in any bankruptcy, reorganization or insolvency proceeding, or action shall be
taken by Charterer for the purpose of effecting any of the foregoing; or
(v) An order, judgment or decree shall be entered, without
the application, approval or consent of Charterer, by any court of competent
jurisdiction, approving a petition seeking reorganization of Charterer or
appointing a receive, trustee or liquidator of Charterer or of all or a
substantial part of the assets of Charterer, and such order, judgment or decree
shall continue unstayed and in effect for any period of thirty (30) consecutive
days, other than such orders, judgments or decrees which, individually or in
the aggregate, represent
13
<PAGE> 14
liabilities of less than $100,000 and which, in Owner's sole judgment, do not
affect the use of the Vessel or Charterer's ability to make required payments
hereunder; or
(vi) Charterer shall be declared to be in default on, or
pursuant to the terms of, (i) any other present or future obligation, including,
without limitation, any other loan, line of credit, revolving credit, guaranty
or letter of credit, reimbursement obligation, or (ii) any other present or
future agreement purporting to convey a lien upon any of the property or assets
of Charterer, other than trade accounts and vendor agreements and any
obligations or agreements which, individually or in the aggregate, represent
liabilities of less than $100,000 and which, in Owner's sole judgment, do not
affect the use of the Vessel or Charterer's ability to make required payments
hereunder; or
(vii) Any property of the Charterer shall be sold for the
satisfaction of any lien thereon or shall be seized and not released within
fifteen (15) days (provided that the Event of Default shall be accelerated to
the date of seizure in the event the Charterer is not proceeding in good faith
and by appropriate proceedings to obtain such release), other than property
which, individually or in the aggregate, is valued at less than $100,000 and
which, in Owner's sole judgment, do not affect the use of the Vessel or
Charterer's ability to make required payments hereunder.
(b) If an Event of Default exists, then in any such case, Owner at
its option may:
(i) Proceed by appropriate court action or actions either
at law, in admiralty or in equity to enforce performance by Charterer of the
applicable duties and obligations of Charterer under this Charter or to recover
from Charterer any and all damages or expenses, including reasonable attorneys'
fees and costs, which Owner shall have sustained by reason of an Event of
Default or on account of Owner's enforcement of its remedies hereunder; or
(ii) By notice in writing to Charterer, terminate this
Charter, whereupon, except as provided below, all rights of Charterer to the
use of the Vessel shall absolutely cease and terminate as though this Charter
had never been made, but Charterer shall redeliver possession of the Vessel to
Owner in accordance with Section 12 hereof and Charterer shall remain liable as
hereinafter provided; and thereupon, Owner may by its agents and without notice
to Charterer retake the Vessel, without prior demand and without legal process,
and for that purpose enter upon the Vessel and take possession thereof, or
require Charterer, at Charterer's sole expense, forthwith to redeliver the
Vessel to Owner in accordance with Section 12 hereof for or by reason of such
entry, redelivery or retaking. Thereafter Owner shall hold, possess and enjoy
the Vessel free from any right of Charterer, or its successors or assigns, to
use the Vessel for any purpose whatever; or
(iii) Pursue any other remedy or remedies which may be
provided under the applicable law, including without limitation, all attorneys'
fees, costs and expenses incurred in enforcing such remedies.
14
<PAGE> 15
(c) Upon termination pursuant to Section 9(b), Owner shall have
the right to recover forthwith from Charterer the sum of the following:
(i) all unpaid Charter Hire for the Vessel pro-rated through
and including the date of termination;
(ii) an amount equal to accrued taxes and other amounts payable
hereunder by Charterer with respect to the Vessel; and
(iii) without duplication, all other costs, expenses, losses
and damages incurred or sustained by Owner (including, without limitation, (i)
reasonable attorneys' fees, (ii) any costs and expenses incurred in connection
with placing the Vessel in the condition required by Sections 8(b), 12(a)
and/or 13, and (iii) any unpaid Charter Hire through the Charter Expiration
Date, less amounts, if any, recovered by Owner in mitigating its damages) by
reason of such Event or Default.
(d) Each and every power and remedy hereby specifically given to
Owner shall be in addition to every other power and remedy specifically so
given or now or hereafter existing in admiralty, at law or in equity, and each
and every power and remedy may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by Owner. All such
powers and remedies shall be cumulative and the exercise of one shall not be
deemed a waiver of the right to exercise any other or others. No delay or
omission of Owner in the exercise of any such power or remedy shall be
construed to be a waiver or any default of an acquiescence therein.
(e) In addition to the rights granted to Owner under any other
Section of this Charter, if Charterer shall fail to comply with any of the
covenants herein contained, Owner may, but shall not be obligated to, make
advances to perform the same and take all such action as may be necessary to
obtain such performance. Any payment so made by Owner and all costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, incurred in connection therewith shall be and become due and payable
by Charterer to Owner as Charter Hire.
SECTION 10. DAMAGES AND REPAIRS.
(a) In the event of damage to the Vessel, Charterer shall
repair and restore or cause to be repaired and restored the Vessel with new
and/or used components to at least the condition the Vessel was in immediately
prior to such damage (assuming the Vessel was maintained in accordance with the
terms of this Charter) as soon as is commercially reasonable and in any event
within thirty (30) days after Charterer shall have acquired knowledge of such
damage; provided, however, if such repair and restoration can not be completed
within such thirty (30) day period, Charterer shall begin such repair within
such period and shall use its best efforts to complete such repair or
restoration as soon as is practicable. If no Event of Default shall have
occurred and be continuing and Charterer shall have made all payments of
Charter Hire which have become due and Owner is subsequently reimbursed by a
third party for such
15
<PAGE> 16
damage, Owner shall promptly pay to Charterer all amounts received by Owner
from such third party on account of such damage or requisition of use.
(b) In the event that insurance becomes payable under policies
maintained as required by Section 5 on account of an accident, occurrence or
event, (A) if there is no existing Event of Default, Owner shall, upon the
written request of Charterer (i) apply the proceeds of insurance to pay, or
consent that the underwriters pay, directly for repairs, liabilities, salvage
claims, or other charges and expenses (including labor charges due or paid by
Charterer) covered by the policies, or (ii) to the extent that Charterer shall
have repaired the damage and paid the cost thereof or discharged or paid such
liabilities, salvage claims or other charges and expenses (such fact having
been certified to in a certificate of an authorized officer of Charterer
("Officer's Certificate") delivered to Owner, accompanied by written
confirmation by the underwriter, a surveyor, an adjuster or a marine insurance
broker), apply the proceeds of insurance to reimburse, or consent that the
underwriters reimburse, Charterer therefor, and (iii) (after all known damages
with respect to the particular loss shall have been repaired, and all known
costs, liabilities, salvage claims, charges and expenses covered by the
policies with respect to such loss shall have been discharged or paid, such
fact having been certified to by an Officer's Certificate delivered to Owner,
accompanied by written confirmation by the underwriter, a surveyor, an adjuster
or a marine insurance broker) pay, or consent that the underwriters pay, any
balance of the proceeds of insurance to Charterer; or (B) if there is an
existing Event of Default, all proceeds of insurance received by Owner may, at
its option, be retained by Owner as additional security for Charterer's
obligations hereunder (whereupon it shall be added to the Security Deposit)
and/or may be applied to any past due Charter Hire and/or future Charter Hire
due hereunder in inverse order of their maturity.
SECTION 11. USE OF VESSEL.
The Charterer shall arrange for, oversee and provide for the
use of the Vessel as a casino gaming facility cruising from the Gaming Site in
accordance with the applicable laws and regulations of the State of Indiana.
The Charterer's use of the Vessel shall be limited to such uses as are in
furtherance of and are in accordance with or incidental to the use described in
the immediately preceding sentence. Subject to such limitation and the other
terms and provisions of this Charter, Charterer shall have full use and
exclusive possession and control of the Vessel and shall man, supply, equip,
upkeep and operate the Vessel throughout the Charter Period; provided, however,
that in connection with the operation and maintenance of the engine, maritime
and related systems of the Vessel, the Owner shall, from time to time, appoint
(subject to Charterer's approval, which approval may not be unreasonably
withheld) a captain and senior crew members, each of whom shall be employed by
the Charterer during the Charter Period. The master, officers and crew of the
Vessel shall be engaged and employed by Charterer, at Charterer's sole expense,
and shall remain Charterer's servants or employees, and, subject to Owner's
obligation to make appointments pursuant to the proviso set forth in the
immediately preceding sentence, shall be in Charterer's direct control and
direction. Owner agrees that it shall provide Charterer, upon Charterer's
written request, with all reasonably available information in Owner's
possession which is necessary for the use and operation of the Vessel in
accordance with the terms hereof.
16
<PAGE> 17
SECTION 12. REDELIVERY.
(a) Upon the expiration of this Charter, the Vessel shall
be redelivered afloat, at the Charterer's sole cost and expense, to the Owner,
at Norfolk, Virginia or such other site as the Owner shall designate in writing
to Charterer not less than two (2) months prior to the expiration of this
Charter (provided such other site is no further in nautical miles from the
Gaming Site than Norfolk, Virginia), in as good condition and working order
(reasonable wear and tear excepted) as when first delivered to the Charterer
for service under this Charter. In the event Charterer fails to redeliver the
Vessel to Owner upon the Charter Expiration Date as provided in the preceding
sentence and as provided in Section 13 below, in addition to all other remedies
available to Owner at law or in equity, Owner shall receive from Charterer all
amounts which would be due Owner hereunder (including, without limitation, the
Charter Hire) as if this Charter had not been terminated.
(b) Upon redelivery or repossession, if requested by Owner,
the Vessel shall be surveyed by a qualified independent marine surveyor
mutually acceptable to the Owner and the Charterer. The cost of such survey
shall be borne by Charterer. If repairs are necessary in order to bring the
Vessel into the condition required on redelivery under this Charter, said
repairs shall be immediately made by the Charterer, at its sole expense and
cost. Subject to the compliance by Charterer of its obligations with respect
to redelivery of the Vessel, Owner shall execute and deliver to Charterer a
notice of any defect, repair or breach, within twenty (20) days following the
tender of the Vessel for redelivery by Charterer.
SECTION 13. STRUCTURAL CHANGES. The Charterer shall not, without the
prior express written approval of the Owner, which approval shall not be
unreasonably withheld, make any structural changes in the Vessel or any
material changes in the Equipment, other than Pre-Charter Alterations or Changes
in accordance with Section 1(b) hereof. All structural modifications shall be
done under the direction of and to the satisfaction of a certified naval
architect engaged by Charterer (with architectural plans therefor to be
provided to Owner), whose selection and which plans shall be subject to the
prior approval of Owner. All structural changes that are made to the Vessel or
the Equipment shall become the property of Owner, and shall be provided to
Owner upon redelivery of the Vessel; provided, however, if, prior to the
commencement of any such change, Owner notifies Charterer in writing that Owner
will require such change to be modified by Charterer prior to redelivery, in
lieu of accepting redelivery of the Vessel with any structural changes made to
the Vessel or the Equipment during the Charter Period, Owner shall have the
right to require that any or all of such changes be modified by Charterer, at
its sole cost and expense, to put the Vessel back into its original structural
condition when first delivered to Charterer on the Acceptance Date and;
provided, further, such obligation to modify changes prior to redelivery shall
not apply to Pre-Charter Alterations set forth on Schedule 1(b) hereto and
Permanent Changes. All gaming equipment and equipment ancillary to the
operation of a gaming concern (including surveillance cameras) installed by
Charterer on the Vessel shall remain the property of Charterer and shall be
removed by Charterer prior to redelivery of the Vessel.
SECTION 14. TAXES. Charterer shall pay and discharge promptly, when
and as due and payable, and before the non-payment of same shall result in the
penalty or imposition of any
17
<PAGE> 18
lien, all taxes, assessments, excises, levies, fees, duties, fines and
penalties and other governmental charges including, without limitation, gaming,
sales, use, franchise, property, gross receipts and occupation taxes lawfully
imposed upon or with respect to Owner, the Vessel or the ownership, delivery,
possession, use and operation thereof during the Charter Period, or on any
Charter Hire (provided that sales tax on Charter Hire shall be paid to the
Owner monthly, together with Charter Hire, in accordance with Section 3 above
and Owner shall be responsible for the remittance of such tax to the
appropriate governmental authorities) and all fines and penalties levied or
charged in consequence of the failure of Charterer to comply with any
applicable law, treaty or convention, or any rule or regulation issued
thereunder, and all other amounts payable hereunder. Nothing contained in this
Section 14 shall require the payment by Charterer of any income or franchise
tax (including any income tax payable by Owner which is attributable to the
receipt of the Charter Hire) of or with respect to Owner unless any such income
or franchise tax (A) is in lieu of or a substitute for any other tax,
assessment, excise, levy, fee, duty, fine, penalty or other governmental charge
upon or with respect to the Vessel, or (B) is imposed on or with respect to
Owner solely because of its ownership, use, operation, registration,
documentation or maintenance of the Vessel during the Charter Period.
SECTION 15. ASSIGNMENT. The Charterer shall not sell, assign,
hypothecate, mortgage or pledge any of its rights or interest under this
Charter or subcharter the Vessel without the prior written consent of the
Owner; provided, however, Charterer may sell or assign any of its rights or
interests hereunder, or subcharter the Vessel, to an entity, the majority
equity interest of which is, directly or indirectly, owned by Don Barden.
Owner may assign its rights and obligations hereunder in accordance with
applicable law.
SECTION 16. INSPECTION OF RECORDS. Charterer shall maintain records
pertaining to the revenues, expenses, use, maintenance, costs and repairs with
respect to the Vessel. Upon the reasonable request of Owner, Charterer shall
make records relating to the use, maintenance and repairs of the Vessel
available to Owner and its duly authorized agents to review and extract
information. Such inspections shall be scheduled at mutually convenient times
during normal business hours, and shall be conducted in a manner so as to
minimize the disruption to Charterer's normal business operations. Upon the
occurrence of an Event of Default hereunder, Charterer shall make such other
records with respect to the Vessel available to Owner and its duly authorized
agents as Owner may from time to time reasonably request.
SECTION 17. NOTICES. All notices, requests, consents and other
communications under this Charter shall be in writing and shall be deemed to
have been duly given if personally delivered or if sent by telex, telecopy,
telegram, recognized overnight mail courier or certified or registered mail,
return receipt requested, postage prepaid, to the intended recipient at said
party's address hereinbelow set forth:
18
<PAGE> 19
If to the Owner:
NEW YORKER ACQUISITION CORPORATION
c/o President Casinos, Inc.
802 North First Street
St. Louis, Missouri 63102
Attention: John S. Aylsworth
If to the Charterer:
BARDEN-DAVIS CASINO, L.L.C.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
Attention: Ken Kramer
If to the Guarantor:
PRESIDENT CASINOS, INC.
802 North First Street
St. Louis, Missouri 63102
Attention: John S. Aylsworth
Any party hereto may change its address for receiving notices and other
communications under this Charter by giving the other parties hereto
appropriate written notice in accordance with the provisions of this section.
In all instances in this Agreement where the approval of a party is required
and there is no specific time frame set forth herein for such approval, such
party may not unreasonably delay such approval or disapproval and, in all such
instances, such party shall be deemed to approve a matter if it does not
approve or disapprove such matter within thirty (30)days of the request for
such approval.
SECTION 18. ATTORNEYS' FEES. In the event that any party hereto
violates or breaches the terms of this Charter and any other party hereto
engages legal counsel for purposes of enforcing its rights and remedies
hereunder or otherwise protecting its interests in connection with this
Charter, said nondefaulting party, in addition to all other relief to which it
may be entitled, shall also be entitled, in the event it prevails against the
breaching party, to recover all of the reasonable costs and expenses it incurs
in enforcing this Charter and protecting its interests, including its
reasonable attorneys' fees and costs.
SECTION 19. ENTIRE AGREEMENT. This Charter supersedes all prior
agreements and understandings of the parties with respect to the transactions
contemplated hereby and thereby and sets forth the entire understanding of the
parties with respect thereto. No attempted modification, termination or waiver
of any of the provisions hereof or thereof (insofar as they bear on this
Charter) shall be effective unless in writing and signed by all of the parties
hereto.
19
<PAGE> 20
SECTION 20. GOVERNING LAW. The admiralty and maritime laws of the
United States, and to the extent applicable and not inconsistent therewith, the
laws of the State of Indiana shall govern the construction, interpretation,
performance and enforcement of this Charter.
SECTION 21. CAPTIONS. The captions and other section headings contained
in this Charter are for reference purposes only and shall not affect the
interpretation or meaning of this Charter.
SECTION 22. PARTIES IN INTEREST. Subject to the provisions of Section
15 above, this Charter shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. The relationship
between Owner and Charterer is that of lessor and lessee and nothing in this
Charter is intended or shall be deemed to constitute Owner and Charter to be
joint venturers or partners.
SECTION 23. SEVERABILITY. If any term, covenant, condition or provision
of this Charter or the application thereof to any person or circumstances
shall, at any time or to any extent, be held invalid or unenforceable, the
remainder of this Charter, or the application of such term, covenant, condition
or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term,
covenant, condition and provision of this Charter shall be valid and enforced
to the fullest extent possible so as to accomplish the manifest purposes
hereof.
SECTION 24. JOINT PARTICIPATION. Charterer has participated in the
drafting of this entire Charter and expressly acknowledges such joint
participation, to avoid application of any rule construing contractual language
against the party which drafted the language.
SECTION 25. TIME OF ESSENCE. Time shall be of the essence with respect
to performance of all obligations under this Charter.
SECTION 26. BROKER'S OR FINDER'S FEES. No party hereto has retained a
broker or finder in connection with the transactions contemplated by this
Charter.
SECTION 27. EARLY TERMINATION. As set forth under Section 2 above,
Charterer may, at any time, upon one hundred eighty (180) days notice to Owner,
terminate this Charter.
SECTION 28. GUARANTEE. Guarantor guarantees the due and punctual
performance by the Owner of all of the terms, covenants, obligations,
conditions and agreements of Owner under this Charter including any payments,
or other amounts which may be due or may become due from Owner under this
Charter, or as a result of Owner's breach of any representation warranty or
covenant hereunder. No delay on the part of Charterer in exercising its rights
hereunder or in taking any action to collect or enforce any covenants or the
payment of any obligations hereby guaranteed shall operate as a waiver of any
such rights or in any manner prejudice the rights of Charterer. Guarantor
hereby expressly waives presentment, demand, protest and notice of protest of
any obligations under this Charter or its breach of any representation,
warranty or covenant hereunder. No extension of time or other indulgence
granted by Charterer shall release or affect the guarantee by Guarantor
hereunder.
20
<PAGE> 21
SECTION 29. NET WORTH. At all times from and after the date of
the Delivery Notice during the term of this Agreement, Charterer and any entity
to which Charterer sells or assigns any of its rights or interests hereunder or
to which Charterer subcharters the Vessel, shall maintain a Net Worth (as
defined below) of not less than $10 million. Net Worth shall mean total assets
less total liabilities, calculated in accordance with generally accepted
accounting principles, consistently applied. Charterer and any party to which
it sells or assigns any of its rights or interests hereunder, shall deliver to
Owner (i) quarterly financial statements within thirty (30) days of the end of
each calendar quarter, and (ii) audited year end financial statements by March
31 of each year. All such financial statements shall be prepared in accordance
with generally accepted accounting principles, consistently applied.
21
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have executed this Charter as
of the date first above written.
NEW YORKER ACQUISITION CORPORATION
By: John S. Aylsworth
---------------------------------
Name: John S. Aylsworth
Title: Executive Vice President
BARDEN-DAVIS CASINO, L.L.C.
By: BARDEN DEVELOPMENT, INC., A
MEMBER
By: Don H. Barden
----------------------------------
Name:
Title:
BY: GARY RIVERBOAT GAMING, L.L.C., A MEMBER
BY: BARDEN MANAGEMENT, INC., ITS
MANAGER
By: Don H. Barden
-----------------------------------
Name:
Title:
By: DAVIS GAMING COMPANY
By:
----------------------------------
Name:
Title:
PRESIDENT CASINOS, INC., AS GUARANTOR
PURSUANT TO SECTION 28 ABOVE
By: John S. Aylsworth
----------------------------------
Name: John S. Aylsworth
Title: Executive Vice President
22
<PAGE> 23
EXHIBIT A
CERTIFICATE OF ACCEPTANCE
PURSUANT TO CHARTER AGREEMENT
DATED AS OF ___________,1995
AMONG
NEW YORKER ACQUISITION CORPORATION
BARDEN-DAVIS CASINO, L.L.C,
AND
PRESIDENT CASINOS, INC,
The undersigned Charterer under the Charter Agreement described in the
caption hereof (the "Charter") acknowledges and agrees that the Vessel
described in the Charter has been delivered to, and is now in the possession
of, and has been accepted by, the Charterer under and pursuant to and subject
to all the terms and conditions of the Charter.
Dated: ___________________, 199_
Charterer
By: ___________________________
Title:_________________________
<PAGE> 24
EXHIBIT B
During the Charter Period, not less than one hundred twenty (120) days
nor more than one hundred eighty (180) days prior to the second, third and
fourth anniversary of the Commencement Date (each such period of days being
hereinafter referred to as a "Charter Hire Evaluation Period"), the Owner shall
engage an appraiser, of nationally recognized standing in the maritime/gaming
industry, to evaluate the fair market rental value of the Vessel for the
12 month period immediately following the applicable Charter Hire Evaluation
Period. Owner shall be obligated to consult with Charterer regarding such
engagement and such engagement shall be subject to the prior written approval
of Charterer, provided that such approval may not be unreasonably withheld.
Prior to the end of the applicable Charter Hire Evaluation Period, the
appraiser so engaged shall provide to Owner and Charterer a written appraisal
of the fair market rental value of the Vessel for the ensuing 12-month period
and such appraisal shall be binding upon the parties hereto and the Charter
Hire payable pursuant to Section 3(a) of the Charter shall be adjusted
accordingly; provided, however, that in lieu of engaging an appraiser in
accordance with the terms hereof or at any time after the engagement of an
appraiser, the parties shall be free to establish the Charter Hire for the
ensuing 12-month period, or any other period of time during the Charter, by
mutual written agreement. The fair market rental value of the Vessel shall be
determined by the appraiser by taking into consideration (i) the replacement
value of the Vessel less depreciation and obsolescence from all causes; (ii)
the annual rental income producing capabilities of the Vessel, taking into
account its suitability for and use in connection with gaming operations; and
(iii) comparable rental values for similar vessels; but shall not take into
consideration the specific profits or losses generated by the gaming operation
utilizing the Vessel under this Charter.
<PAGE> 25
Estimated Costs of Scheduled Items
Scheduled Items Costs
Completed HVAC 70,000
Watertight doors 15,000
Clips on hull framing 30,000
Directional signage 15,000
Complete electrical 130,000
Complete 4th deck restroom 22,607
Plates for windows 45,000
Complete interior fit-out 190,000
Complete surveillance rough-in 18,000
Install beverage lines 10,000
Service safety equipment 16,000
<PAGE> 26
Galley Equipment
HOLD
Manf. Item Qty
1. Gladco- Vertical Trash Compactor (1)
2. Garland- Convection Oven (4)
3. Garland- Modular Floor Kettles (2)
4. Garland- Modular Electric Fry pans (2)
5. Garland- Cyclone Pressureless Cooker (1)
6. Garland- GE series Electric Steam generator (1)
7. Garland- Heavy Duty Electric Range and Boiler (3)
8. Garland- Electric Deep Fat Fryer (2)
9. Hobart- A 200 Mixer (1)
10. Traulsen- Fish File (1)
11. Stainless- Sink with 2 bowls (3)
12. Stainless- Table with Cooler beneath 2 door (1)
13. Stainless- Table w/cooler and pot rack and hand sink (1)
14. Stainless- Table with warming light and 4 door bun warmer
& 4 door cooler
<PAGE> 27
MAIN
Manf. Item Qty
----------------------------------------------------
1. Hatco- Glo-Ray Heat lamp (1)
2. Hobart- AM 14 Dishwasher w/in-line (1)
Hatco water heater
3. Perlick- Under Bar Refrig. Cabinet (1)
4. Wells- Built-in Drawer warmer (1)
5. Perlick- Bar Sinks (3)
6. Hobart- Reach-in Refrigerators (2)
7. Scotsman- FM 800 Icemaker (1)
2ND
Manf. Item Qty
----------------------------------------------------
1. Perlick- Bar Sinks (2)
2. Perlick- Beer Towers (2)
3RD
Manf. Item Qty
----------------------------------------------------
1. Traulsen- Glass Front Refrig. (1)
<PAGE> 28
DRAFT BEER COOLER ROOM
Manf. Item Qty
- -----------------------------------------------------------------
1. Manitowac- 1700 Icemaker (2)
2. Perlick- Compressor/beverage (3)
3. Hobart- AM 14 Dishwasher w/in-line heater (1)
SUN DECK BAR
Manf. Item Qty
- -----------------------------------------------------------------
1. Traulsen- Glass Front Refrig. (1)
2. Stainless- Sinks w/beer spigots (2)
4TH BEER COOLER
Manf. Item Qty
- -----------------------------------------------------------------
1. Manitowac- 1700 Icemaker (1)
2. Perlick- Compressors (3)
<PAGE> 29
================================================================================
ENGINE ROOM
MAIN ENGINES
16 Cylinder MDL-645 EMD
Horsepower 2 x 1950
MAIN GENERATORS
8 Cylinder MDL 645 EMD
Power 2 x 750 KW
#3 GENERATOR
Detroit 6 Cylinder, 92 series (270 KW)
EMERGENCY GENERATOR
Detroit 8 Cylinder, V 71 series (150 KW)
BOWTHRUSTER
Detroit 8V71
STORAGE TANKS
DIESEL TANK, 16,700 gallons
DAY TANK, 2 x 752 gallons
LUBE OIL TANK, 2 x 278 gallons
POTABLE WATER, 2 X 7875 gallons
SEWAGE, 10112 gallons
================================================================================
SAFETY EQUIPMENT
PFD 1,800
LIFE BOATS/LIFE RAFTS 1 Motorized Rescue Boat-4 per.
1 Rescue Skiff under oars-4 per.
INFLATABLE 1 B.F. Goodrich MK3 - 25 per.
1 Viking RDV - 25 per.
12 Viking Rdv - 50 per.
================================================================================
PAGE 2
<PAGE> 30
================================================================================
FIRE EXTINGUISHERS
31 All Dry Chem. 5 lbs
1 All Dry Chem 10 lbs
1 CII Co2 10 lbs
1 CII Co2 15 lbs
7 BII Co2 15 lbs
FIXED SYSTEMS 26 Co2 75 lbs (engine room)
2 Co2 50 lbs (engine room)
2 Wet 75 lbs (Galley)
2 Co2 75 lbs (Emerg. Gen.)
FIRE STATIONS Hold 8
Main Deck 8
2nd Deck 7
3rd Deck 8
4th Deck 4
RING BUOYS 2nd Deck 4- w/lite and 90' life line (2 bow-
2 stern)
4th Deck 2-stern (1 port- 1 stbd)
<PAGE> 31
PCV - EQUIPMENT LIST
A/C CHILLER UNIT #1 CARRIER 30H9196A80OKGE
A/C CHILLER UNIT #2 CARRIER 3OH909OD90O
A/C CHILLER UNIT #3 CARRIER 30H8O80D60O
AIR COMPRESSOR #1 QUINCY 32613721936L
AIR COMPRESSOR #2 QUINCY 32613721837L
ANCHOR WINGLASS MCELROY MACHINE M6V78-88
AUTOMATIC ANTENNA TUNER SEA, INC. SEA 16128
BATTERY CHARGER LAMARCHE CONSTAVOLT A40 10 12V A1
BATTERY CHARGER LAMARCHE CONSTAVOLT A 22 10 12V
BILGE PUMP #1 MARLOW-ITT 32HEL8B
BILGE PUMP #2 MARLOW-ITT 32HEL8B
BOWTHUSTER BRUNVOLL SPK30D
CHILL WATER CIRC. PUMP #1 DEMING PUMP BF 8 3/4
CHILL WATER CIRC. PUMP #2 DEMING PUMP BF 8 1/2
CHILL WATER CIRC. PUMP #3 DEMING PUMP 8F 8 1/2
CHILLER RAW WATER PUMP #1 DEMING PUMP 8F 10"
CHILLER RAW WATER PUMP #2 DEMING PUMP BF 10"
DIATY LUBE OIL PUMP BLACKMER MS 1 111/2N
ECHOSOUNDER FURUNO FE 908
ELEVATOR, FREIGHT, PORT CANTON ELEVATOR DUAL TELESCOPING
ELEVATOR, FREIGHT, STBD. CANTON ELEVATOR DUAL TELESCOPING
ELEVATOR, PASSENGER CANTON ELEVATOR DUAL TELESCOPING
EMERGENCY GENERATOR DELCO EB264
ENGINE TELEGRAPH HENSCHEL 101063 ALT 7
EPIR6 ACR ELECTRONICS ACFURLB-23
EXHAUST FAN #01 SP-127
EXHAUST FAN #02 SP-127
EXHAUST FAN #03 SP-127
EXHAUST FAN #04 SP-127
EXHAUST FAN #06 SP-127
EXHAUST FAN #06 SP-127
EXHAUST FAN #07 SP-127
EXHAUST FAN #06 SP-127
EXHAUST FAN #09 SP-127
EXHAUST FAN #10 SP-127
EXHAUST FAN #11 SP-127
EXHAUST FAN #12 SP-127
EXHAUST FAN #13 SP-127
EXHAUST FAN #14 SP-127
EXHAUST FAN #15 SP-127
EXHAUST FAN #16 SP-127
EXHAUST FAN #17 SP-127
EXHAUST FAN #18 SP-127
EXHAUST FAN #19 SP-127
EXHAUST FAN #20 SP-127
EXHAUST FAN #21 SP-127
EXHAUST FAN #22 SP-127
EXHAUST FAN #23 SP-127
EXHAUST FAN #24 SP-127
EXHAUST FAN #25 SP-127
FIRE PUMP #1 TRENCH & MARINE 421
FIRE PUMP #2 TRENCH & MARINE 421
FIRE/SMOKE ALARM PYROTECHNICS SYSTEM 3, MOD35
FOG SIGNAL TIMER KAHLENBERG M423
FREEZER COMPRESSOR #1 COPELMATIC
FREEZER COMPRESSOR #2 COPELMATIC
FUEL TRANSER PUMP #1 VIKING
FUEL TRANSER PUMP #2 VIKING
GALLEY GREY WATER PUMP TRENCH & MARINE
GENERATOR #3 MAGNA ONE
GPS NAVIGATOR MICROLOGIC
GREY WATER TRANSFER PUMP TRENCH & MARINE
GYROCOMPASS OPERAY MARINE
HOT WATER BOILER ALDRICH
HAND MOBIL RADIO STANDARD
MAIN ENGINE GOVERNOR, PORT WOODWARD
MAIN ENGINE GOVERNOR, STBD WOOWARD
MAIN ENGINE, PORT EMD
MAIN ENGINE, STARBOARD EMD
POTABLE WATER PUMP #1 BURKS PUMPS
POTABLE WATER PUMP #2 BURKS PUMPS
PRE-LUB PUMP, PORT M.E. VIKING-IBEX
PRE-LUB PUMP, PORT SSDG DELCO
PRE-LUB PUMP, STBD M.E. VIKING-IBEX
PRE-LUB PUMP, STBD SSDG DELCO
PRIMING PUMP, PORT IABSCO
PRIMIN GPUMP, STARBOARD JAISCO
RADAR BACAL DECCA
<PAGE> 32
REDUCTION GEAR, PORT FALX 1235
REDUCTION GEAR, STBD D1235
REEFER COOLING PUMP #1 TEEL 1P831
REEFER COOLING PUMP #2 TEEL 1P831
REEFER COOLING PUMP #3 TEEL 1P831
SANITARY PRESSURE PUMP #1 TRENCH & MARINE
SANITARY PRESSURE PUMP #2 TRENCH & MARINE
SEWAGE PUMP #1 HERBORNER/ENVIROVAC
SEWAGE PUMP #2 HERBORNER/ENVIROVAC
SEWAGE TRANSFER PUMP GORMAN-RUPP
SINGLE SIDE BAND RADIO SEA, INC. SEA 222
SOUND POWERED TELEPHONE HOSE MCCANN SWLR
SSDG GENERATOR, STBD KATO 1060-873361111
SSDG GENERATOR, PORT KATO 1060-873361111
SSDG GOVERNOR, PORT WOODWARD EGB 9240 805 US
SSDG GOVERNOR, STBD WOODWARD EGB 9240 805 US
SSDG, PORT EMO/KATO 8-646E1
SSDG, STARBOARD EMO/KATO 8-646E1
STANDARD MERCHANT BINNACLE E.S. RITCHIE 8135M
STEERING GEAR AUX PUMP GEROTOR H5-P
STEERING GEAR MAIN PUMP GEROTOR V3621V25A8
STEERING GEAR MOTORS FRYDENBO H9 40
STERN TUBE PUMP #1 WHEELER-ECONOMY
STERN TUBE PUMP #2 WHEELER-ECONOMY
VHF MARINE RADIO STANDARD GALAXY 23005
VHF MARINE RADIO MODAR MODAR VHF
W/T DOOR HYD. PUMP #1 VICKERS A-90
W/T DOOR HYD. PUMP #2 VICKERS A-90
WINDOW DE-ICER CORNELL CARR CC-5200
<PAGE> 33
[FLOOR PLAN OF SHIP]
<PAGE> 34
[FLOOR PLAN OF SHIP]
<PAGE> 35
[FLOOR PLAN OF SHIP]
<PAGE> 36
STABILITY TEST M/V NEW YORKER
<PAGE> 37
STABILITY TEST M/V NEW YORKER
<PAGE> 38
STABILITY TEST M/V NEW YORKER
<PAGE> 39
WEIGHT SCHEDULE
VESSEL: M/V NEW YORKER O.N. 538911
OWNER: PRESIDENT RIVERBOAT CASINOS
CONDITION: BURN-OUT 10% FUEL & WATER/10% SEWAGE/1900 PASS & CREW
DATE: 10-05-1994 D&L CONTRACT 92-433
ITEM WEIGHT X-POS Y-POS Z-POS
LBS. STA FT FT
1 LIGHTSHIP 1751.70 1.38 0.00 26.12
2 PASS/CREW MAIN DECK 0.00 0.00 0.00 0.00
3 STORES 19.00 17.46 0.00 31.74
4 FURNITURE 2.14 -96.00 0.00 31.00
5 SMALLWARE/CATERING EQ 4.89 -40.00 0.00 35.00
6 D.O. STORAGE 1675 GAL 5.30 5.00 0.00 5.65
7 D.O. DAY P/S 75 GAL 0.50 -1.25 0.00 8.00
8 L.O. P/S @ 28 GAL 0.20 -1.25 0.00 10.93
9 GREY WATER 687 GAL 2.55 17.00 0.00 5.43
10 SEWAGE 991 GAL 3.68 35.00 0.00 5.70
11 POTWTR P/S 788 GAL 5.85 5.00 0.00 8.70
12 WASTE OIL 52 GAL 0.16 -4.50 0.00 5.40
13 600 PAS/CRW@160# 3RD DK 42.86 10.34 0.00 40.75
14 700 PAS/CRW#160# SUN DK 50.00 10.34 0.00 52.25
15 COINS 24.37 31.00 0.00 28.00
16 COINS HARD COUNT 10.46 -64.00 0.00 22.00
17 CHIPS 0.22 31.00 0.00 28.00
18 600 PAS/CRW@160# 2ND DK 42.86 10.34 0.00 22.00
TOTALS 1966.74 1.07 0.00 27.13
<PAGE> 40
WEIGHT SCHEDULE
- --------------------------------------------------------------------------
WEIGHT SCHEDULE
VESSEL: M/V NEW YORKER O.N. 538911
OWNER: PRESIDENT RIVERBOAT CASINOS
CONDITION: DEPARTURE 100% FUEL & WATER/10% SEWAGE/1900 PASS & CREW
DATE: 10-05-1994 D&L CONTRACT #92-433
ITEM WEIGHT X-POS Y-POS Z-POS
LBS. STA FT FT
1 LIGHTSHIP 1751.70 1.38 0.00 26.12
2 PASS/CREW MAIN DECK 0.00 0.00 0.00 0.00
3 STORES 19.00 17.16 0.00 31.74
4 FURNITURE 2.14 -96.00 0.00 31.00
5 SMALLWARE/CATERING EQ 4.89 -40.00 0.00 35.00
6 D.O. STORAGE 1675 GAL 53.30 5.00 0.00 12.49
7 D.O. DAY P/S 75 GAL 4.78 -1.25 0.00 11.67
8 L.O. P/S 28 GAL 1.72 -1.25 0.00 13.17
9 GREY WATER 687 GAL 2.55 17.00 0.00 5.43
10 SEWAGE 991 GAL 3.68 35.00 0.00 5.70
11 POTWTR P/S 788 GAL 58.48 5.00 0.00 12.75
12 WASTE OIL 52 GAL 0.16 -4.50 0.00 5.40
13 600 PAS/CRW 160# 3RD DK 42.86 10.34 0.00 40.75
14 700 PAS/CRW 160# SUN DK 50.00 10.34 0.00 52.25
15 COINS 24.37 31.00 0.00 28.00
16 COINS HARD COUNT 10.46 -64.00 0.00 28.00
17 CHIPS 0.22 31.00 0.00 28.00
18 600 PAS/CRW@160# 2ND DK 42.86 10.34 0.00 32.00
TOTALS 2073.17 2.20 0.00 26.48
<PAGE> 41
CONSTRUCTION SCHEDULE
<TABLE>
<S> <C> <C>
1000 Complete HVAC Complete HVAC
1010 Order & Install Watertight Doors Order & Install Watertight Doors
1020 Clips on Hull Framing Clips on Hull Framing
1050 Directional Signage Directional Signage
1040 Complete Electrical Complete Electrical
1060 Complete 4th Deck Restrooms Complete 4th Deck Restrooms
1030 Plates for Windows Plates for Windows
1080 Complete Interior Fit-Out Complete Interior Fit-Out
1070 Complete Surveillance Sys Rough-in Complete Surveillance Sys Rough-in
1075 Install Beverage Lines Install Beverage Lines
1025 Service Safety Equipment Service Safety Equipment
1090 Vessel Ready for Move Vessel Ready for Move
</TABLE>
Notes to Schedule:
August 16 Start Date Assumed
Delay in starting results in day for day increase in finish date until September
15, beyond which the finish date could be subject to weather delays.
Completion of
M?V New Yorker U.S.O.C. No. 538911
START DATE 15AUG95
FINISH DATE 14NOV95
RUN DATE 28JUL95
(C) PRIMAVERA SYSTEMS, INC.
<PAGE> 42
[GUIDO PERLA & ASSOCIATES LETTERHEAD]
FAX MESSAGE SHEET
DATE: October 31, 1995 TIME: 6:06 PM Ref: 76695
TO: DON BARDEN 313-259-0154
DWIGHT BELYUE Same
MIKE JOHNSON 810-954-1785
Company: Barden Development
FROM: Larry Sund
RE: New Vessel Design
Number of pages including cover sheet: 1
Dear Don:
Based on our meeting on October 13th, and Michael Johnson's letter of 10/15/95,
we have proceeded with a preliminary vessel design. We recognize that we have
not received written direction to proceed, but, we also understand that you
would like to see the process started. If there is any problem with our
actions please let us know as soon as possible.
Our first cone vessel design is nearing completion and we would like to arrange
a meeting to present our plans. If you can find the time we would like to
invite you to our office in Seattle. We would also be happy to travel to
Detroit. We suggest a date of either Thursday, November 9th, in Detroit, or
Friday, November 10th, in Seattle.
Please let us know if either of these dates are possible.
Best Regards,
Larry Sund
Larry Sund
Page 1
<PAGE> 43
M/V President V
BARDEN DEVELOPMENT
(General Contractor)
RMI OWNER'S REPRESENTATIVE
DAVID SEYMOUR-OWNER'S NAVAL ARCHITECT
GPA-ADVISOR
Project Manager
(Reports to RMI)
DESIGN-ENGINEERING-PROCUREMENT-CONSTRUCTION-COST & SCHEDULING-CONTROL
- - DESIGN & ENGINEERING
David Seymour-GPA-DeJong & LeBet-Vendors
- - PROCUREMENT & PURCHASING
Procurement Manager
Bidding Process-Contract Administration-Purchasing
- - CONSTRUCTION
Construction Superintendant
Production-Quality-Safety
- - COST & SCHEDULING
Supervisor
Change Orders-Budget-Actual Costs
- - ADMINISTRATION & CONTROL
Approve vouchers-reports-warranties-guarantees
<PAGE> 44
[DYKEMA GOSSETT-LETTERHEAD]
TELECOPIER: (313) 568-6915
JUDY A. O'NEILL DIRECT DIAL
(313) 568-6786
MAY 2, 1996
VIA FACSIMILE
Henry Gusky, Esquire
Sable, Makoroff & Gusky, P.C.
Seventh Floor, Frick Building
Pittsburgh, PA 15219-5003
Re: Charter Agreement
Dear Henry:
This letter confirms the agreement of our clients regarding certain
amendments to the Charter Agreement between New York Acquisition Corporation
("NYAC"), Barden-Davis Casino, L.L.C., now known as The Majestic Star Casino,
LLC ("Majestic") and President Casinos, Inc., ("President"), dated as of August
17, 1995 (the "Charter Agreement"). Subject to the execution of this letter by
duly authorized officers of each of the parties whose names appear below
(execution by an officer constitutes a representation that such officer is so
authorized):
(A) NYAC agrees to move the Vessel to Gary, Indiana promptly upon
Majestic's written request without a Certificate of Inspection, provided that a
Permit to Proceed regarding such move is obtained from the United States Coast
Guard; provided further that such move and
<PAGE> 45
[DYKEMA GOSSETT
PLLG LETTERHEAD]
Mr. Henry Gusky
May 2, 1996
Page 2
the arrival date in Gary, Indiana are subject to weather conditions as
specified in the Charter Agreement; and (B) Majestic agrees that, in the event
the Vessel proceeds from Erie, Pennsylvania to Gary, Indiana, with such Permit
to Proceed, (1) Majestic irrevocably waives all of the representations by NYAC
contained in Section 6(b)(ii) of the Charter Agreement; (2) Majestic agrees to
assume all risks whatsoever and hereby releases and forever discharges NYAC and
President from all liability resulting from the failure to obtain a Certificate
of Inspection from the United States Coast Guard prior to departure of the
Vessel from Erie, Pennsylvania; and further (3) Majestic, on May 3, 1996, shall
accept delivery of the vessel in Erie, Pennsylvania and, immediately upon such
acceptance of delivery, shall issue a Certificate of Acceptance to NYAC
pursuant to the Charter Agreement, thereby triggering the "Commencement Date"
and the obligations to pay the Charter Hire in accordance with the terms of the
Charter Agreement, provided, however, that NYAC shall bear the cost and
obligation to deliver the Vessel afloat to Gary, Indiana to the same extent as
is required under the Charter Agreement, provided a Permit to Proceed is
obtained. Majestic further agrees to pay to Erie Petroleum, on or before May
3, 1996, by check, $7700, which is the difference between (a) the cost of a
full tank of fuel, and (b) the cost of the fuel needed to deliver the Vessel
from Erie, Pennsylvania to Gary, Indiana as estimated by agreement of John Cook
and Tom Schneider; and further Majestic agrees to reimburse NYAC the cost for a
crew necessary for delivery of the Vessel, during the period from and after
May 2, 1996 until the earlier of (a) the day on which the Vessel departs Erie,
Pennsylvania, or (b) the day following the day Majestic notifies NYAC to
release such crew, which costs shall be an amount equal to $4,595 per day plus
the reasonable costs of hotels, meals and transportation for the crew while
awaiting departure from Erie Pennsylvania plus a $.35 per diem for each crew
member.
NYAC and President further agree that the last sentence of Section
1(b)(iii) of the Charter Agreement shall be amended in its entirety to read as
follows:
Upon completion of and payment in full
of all Changes, any amount remaining in
the Escrow Account in excess of
$500,000 shall be delivered to
Charterer and such $500,000 shall be
thereafter the Security Deposit, for
all purposes under the Charter
Agreement.
Please have your clients execute where indicated below
Teresa Way
K. L. Kramer
<PAGE> 46
[DYKEMA GOSSETT
PLLC LETTERHEAD]
Mr. Henry Gusky
May 2, 1996
Page 3
and return a copy of the executed letter to me by facsimile and mail.
Sincerely,
DYKEMA GOSSETT PLLC
Judy A. O'Neill
Judy A. O'Neill
JAO:6303:sls
cc: Don Barden
Kenneth Kramer
(Signatures on next page)
<PAGE> 47
[DYKEMA GOSSETT
PLLC LETTERHEAD]
Mr. Henry Gusky
May 2, 1996
Page 4
The Majestic Star Casino, LLC
By: Barden Development, Inc., its manager
By: Kenneth L. Kramer
------------------------
Its: Vice President
------------------------
New Yorker Acquisition Corporation
By: John E. Connelly
------------------------
Its: President
------------------------
President Casinos, Inc., as guarantor
By: Teresa Way
-------------------------
Its: Vice President
-------------------------
<PAGE> 48
Dear Ken,
After signing, please fax copy back to Henry Gusky at
412/335-7987.
Thank you,
Terry Wirginis
<PAGE> 49
[GUIDO PERLA & ASSOCIATES LETTERHEAD]
FAX MESSAGE SHEET
DATE: October 31, 1995 TIME: 6:06 PM Ref: 76695
TO: DON BARDEN 313-259-0154
DWIGHT BELYUE Same
MIKE JOHNSON 810-954-1785
Company: Barden Development
FROM: Larry Sund
RE: New Vessel Design
Number of pages including cover sheet: 1
Dear Don:
Based on our meeting on October 13th, and Michael Johnson's letter of 10/15/95,
we have proceeded with a preliminary vessel design. We recognize that we have
not received written direction to proceed, but, we also understand that you
would like to see the process started. If there is any problem with our
actions please let us know as soon as possible.
Our first cone vessel design is nearing completion and we would like to arrange
a meeting to present our plans. If you can find the time we would like to
invite you to our office in Seattle. We would also be happy to travel to
Detroit. We suggest a date of either Thursday, November 9th, in Detroit, or
Friday, November 10th, in Seattle.
Please let us know if either of these dates are possible.
Best Regards,
Larry Sund
Larry Sund
Page 1
<PAGE> 50
M/V President V
BARDEN DEVELOPMENT
(General Contractor)
RMI OWNER'S REPRESENTATIVE
DAVID SEYMOUR-OWNER'S NAVAL ARCHITECT
GPA-ADVISOR
Project Manager
(Reports to RMI)
DESIGN-ENGINEERING-PROCUREMENT-CONSTRUCTION-COST & SCHEDULING-CONTROL
- - DESIGN & ENGINEERING
David Seymour-GPA-DeJong & LeBet-Vendors
- - PROCUREMENT & PURCHASING
Procurement Manager
Bidding Process-Contract Administration-Purchasing
- - CONSTRUCTION
Construction Superintendant
Production-Quality-Safety
- - COST & SCHEDULING
Supervisor
Change Orders-Budget-Actual Costs
- - ADMINISTRATION & CONTROL
Approve vouchers-reports-warranties-guarantees
<PAGE> 1
EXHIBIT 10.8
DEVELOPMENT AGREEMENT BETWEEN THE CITY
AND THE MAJESTIC STAR CASINO, LLC
THIS AGREEMENT ("Agreement") is made and entered into as of this day
of March, 1996 by and between the City of Gary, an Indiana municipal
corporation, (the "City"), and The Majestic Star Casino, LLC, formerly known as
Barden-Davis Casino, LLC, and also as Barden PRC-Gary, LLC, an Indiana limited
liability company ("Developer").
RECITALS
1) WHEREAS, the General Assembly of the State of Indiana has promulgated
the Indiana Riverboat Gambling Act (the "Act"); and
2) WHEREAS, the principal purposes of the Act are to promote economic
development, urban redevelopment and employment in the State of Indiana,
generally, and the City of Gary, Indiana, specifically, among other
municipalities; and
3) WHEREAS, the City and the Developer desire to promote the economic
development, urban development and employment of the citizens of the City
through riverboat gaming facilities and certain other amenities (collectively,
the "Project") in the City on or near certain property commonly referred to as
Buffington Harbor which Harbor is described on attached Schedule A (the
"Property"); and
4) WHEREAS, the Developer has made certain representations and commitments
to the City and to the IGC relative to proposed economic development projects
in the City and the State of Indiana, which have been more particularly
described in a Binding Memorandum of Understanding Between the City and
Barden-Davis Casino, LLC, dated September 7, 1995 (the "Majestic MOU"), the
Certificate of Suitability to Barden PRC-Gary, LLC For A Riverboat Owner's
License To Be Docked in Gary, Indiana, dated December 27, 1994 (the "Majestic
Certificate") and the September 29, 1995 Agreement, and the City and Developer
2 desire to set forth their obligations to each other herein; and
5) WHEREAS, the Developer and Trump Indiana, Inc.
1
<PAGE> 2
("Trump") have formed Buffington Harbor Riverboats, L.L.C., a Delaware limited
liability company (the "LLC"), which will satisfy certain of the obligations
of the Developer hereunder concerning the development, construction and
operation of certain of the common facilities and amenities attendant to the
Developer's riverboat gaming operations as required by 2.01; and
2
<PAGE> 3
6) WHEREAS, the Developer and Trump have entered into a First Amended and
Restated Operating Agreement for the LLC dated October 31, 1995, as amended
(the "Operating Agreement"); and
7) WHEREAS, the Developer had caused a Phase I Harbor Modification Plan to
be approved by the United States Army Corps. of Engineers and the Indiana
Department of Natural Resources; and
8) WHEREAS, the Developer contemplates a Phase II Plan as more
particularly described in the Operating Agreement; and
9) WHEREAS, the Majestic MOU contemplates the execution of this Agreement
embodying the agreements described in the Majestic MOU;
10) WHEREAS, Majestic has made representations, guarantees and promises as
set forth in its Applications, Amendments thereto and presentations to the
Commission in furtherance of its request for a Certificate of Suitability and
for the ultimate issuance of its license;
NOW THEREFORE, for good and valuable consideration, the receipt and legal
adequacy of which are acknowledged, and in further consideration of the mutual
promises contained herein, the parties to this Agreement (collectively, the
"Parties" and, individually, a "Party") agree as follows:
ARTICLE I
GENERAL
Section 1.01 Verification of Recitals; Purpose of Agreement. Each of the
foregoing recitals is true and correct. The purpose of this Agreement is to
set forth the agreements of the Developer with the City.
Section 1.02 Other Business. Each of the Developer and the LLC shall
have the free and unrestricted right, independently, to engage in and receive
full benefits of any and all business ventures within the jurisdictional
boundaries of the City, including those which are competitive, except as
3
<PAGE> 4
provided below, without consulting with (or allowing participation by) the
City. The Developer shall, in its sole discretion, independently operate a
riverboat gaming vessel pursuant to the Act ("Riverboat Gaming Operations"),
but the City shall not have an interest in or rights not specified herein with
respect to the Developer's Riverboat Gaming Operation, unless the Developer
otherwise agrees.
4
<PAGE> 5
The Developer agrees not to engage in any gaming operations in any market
within 100 miles of the City other than Riverboat Gaming Operations at the
Property, prior to the opening of Riverboat Gaming Operations at the Property.
In the event that the Developer engages in gaming operations in another market
within 100 miles from the City, subsequent to the opening of the Riverboat
Gaming Operations at the Property, (a) the Developer independently or through
the LLC, shall maintain the level of its marketing expenditures for five years
after the date of commencement of gaming operations in such other market (the
"Competition Commencement Date"), and (b) for each year during the three year
period after the Competition Commencement Date, the Developer's aggregate
annual AGR Commitment, as defined below, before offsets and reductions
permitted by this Agreement, shall not be less than the Developer's aggregate
annual AGR Commitment, before offsets and reductions permitted by this
Agreement, during the 12-month period preceding the Competition Commencement
Date.
Section 1.03 Scope of Authority. Except as specifically provided in this
Agreement, no Party shall have any authority to bind or act for or assume any
obligations or responsibilities on behalf of any other Party; provided,
however, that the LLC may perform certain obligations or responsibilities of
the Developer pursuant to agreements between the Developer and Trump. Neither
the Developer nor the LLC shall be responsible or liable for any indebtedness,
obligation or expense of any other party, whether or not related to the
Property or the Project, incurred or arising either before or after the
execution of this Agreement, by virtue of this Agreement. This Agreement shall
not be deemed to create a joint venture, a general partnership or other
business relationship between the Parties with respect to any activities
whatsoever.
Section 1.04 Term. The obligations of the Developer shall continue with
respect to the Developer until the cessation of Riverboat Gaming Operations by
the Developer.
ARTICLE II
DEVELOPER MONETARY OBLIGATIONS
Section 2.01 Developer's Investment Commitments. The Parties acknowledge
and agree that the following are the
5
<PAGE> 6
Developer's commitments for capital improvements and/or expenditures in
connection with the Project or for such other matters as set forth below (the
"Investment Commitment(s)"):
6
<PAGE> 7
Developer shall cause the following Investment Commitments to be
satisfied:
<TABLE>
<S> <C>
Lakeside (dock improvements)* $ 6,000,000
Pavilions & other gaming $25,916,433
related developments*
Other enhancements $12,023,567
Buffington Harbor
Land* $ 6,900,000
Demolition $ 2,200,000
Vessel (agreed lease value) $20,000,000
Gaming, data processing and $21,050,000
other equipment
Pre-opening deferred costs $ 6,660,000
Payments-City $ 5,250,000
Off-site developments** $10,000,000
-----------
TOTAL $116,000,000
============
</TABLE>
*Funds expended by or to be expended by the LLC for pre-opening
requirements. Allocation may change based on actual costs incurred.
**The City agrees that the Investment Commitment with respect
to off-site developments shall be fully satisfied by the Developer
expending $5,000,000 toward off-site developments by the Developer
during each of the years 1998 and 1999 for a total of $10,000,000
(the "Off-Site Developments").
Subject to "Unavoidable Delays", the anticipated timing for the
Investment Commitments is set forth in attached Schedule 2.01.
Section 2.02 Joint Development. The Developer and Trump are members of
the LLC. The operating agreement of the LLC contemplates that the LLC shall
perform certain of the Investment Commitments and the City acknowledges and
agrees that such Investment Commitments may be satisfied in whole or in part by
capital improvements and expenditures by or on behalf of the LLC.
Section 2.03 Computation. The City acknowledges and
7
<PAGE> 8
agrees that the Developer has paid the sum of $250,000 to the City for
reimbursement of pre-license, technical, oversight, negotiations, legal work,
including litigation, appraisal work, site acquisition efforts and engineering,
permitting and environmental activities (the "City Expenses"). Subject to
pre-approval by the Developer, which pre-approval shall not be unreasonably
withheld, the Developer shall reimburse the City 50% of the City Expenses
incurred by the City on or from May
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<PAGE> 9
27, 1995 to the date of this Agreement, in connection with the development of
the Property. The Parties agree that the on-site Investment Commitments (i.e.
the Investment Commitments other than the Off-Site Developments) shall be
reallocated by applying the amount of the City Expenses reimbursed by the
Developer against the line item "other enhancements", described above.
Section 2.04 Reallocation. The City acknowledges and agrees that, in
accordance with the terms of the Majestic Certificate, such line item figures
set forth in Section 2.01 and the attached Schedule are subject to reasonable
reallocation, subject to the review and comment of the City, after prior notice
and an opportunity for comment to the City, and the approval of the IGC.
Additionally, the City acknowledges and agrees, that in the event any other
gaming facility, other than those of the Developer and Trump, commences
operations in the City, the impact of such other gaming operations shall be
quantified by the Developer and if such other gaming adversely impacts the
Developer's operations, the Developer and the City shall, in good faith,
negotiate an equitable adjustment of the Investment Commitments.
Section 2.05 Additional Payments.
(a) Pursuant to the Majestic Certificate it is agreed that the Developer
shall pay the City an amount equal to 3% of its adjusted gross receipts, as
defined in I.C. 4-33-2-2 ("AGR"), for each month in which the Developer
conducts Riverboat Gaming Operations (the "AGR Commitment"). The AGR
Commitment for a given month shall be paid on the 10th day of the following
month. The City and Developer agree to reconcile the payments made by the
Developer toward its AGR Commitment with the actual AGR within thirty (30) days
of the close of each calendar quarter. Any overpayment of the AGR Commitment
for the preceding quarter shall be applied toward the next installment(s) of
the Developer's AGR Commitment due the City. The Developer agrees to pay any
underpayment of its AGR Commitment with the next monthly installment due the
City. If, upon agreement of the City and the Developer, the Developer expends
or causes to be expended an amount in excess of the aggregate amount of the
Investment Commitments, the AGR Commitment for the Developer shall be reduced,
dollar-for-dollar, by the amount of such excess, by reducing the amount of such
Developer's monthly installments of AGR until
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<PAGE> 10
such excess is completely offset.
(b) Except as otherwise explicitly provided in this Agreement, it is
agreed between the Parties that the additional incentive payments provided in
(a) above are separate and apart from the total Investment Commitments and,
except as explicitly provided in this Agreement, shall be made in addition to
and
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not instead of payments and expenditures required by the Majestic Certificate
as part of its Investment Commitments.
Section 2.06 Impositions. If the Developer is obligated to pay an
imposition, as hereinafter defined, by the City, that is Targeted, as
hereinafter defined, the amount of such Targeted Imposition paid by the
Developer shall be credited against the next succeeding monthly installment(s)
of the AGR Commitment due from the Developer. As used herein, Targeted shall
mean those acts or things which adversely affect the Developer, the LLC, the
Property or the Project (or any part of use thereof), as the context permits to
the exclusion of other property owners or lessees, or which treat the
Developer, the LLC, the Property or the Project (or any part or use thereof)
and other projects conducting gaming or similar operations as a class. As used
herein an Imposition shall mean any of the following: (a) personal property
taxes; (b) water, water meter and sewer rents, rates and charges; (c) license
and permit fees; (d) charges for utilities, communications and other services
rendered or used in or about the Project; (e) real property taxes and
assessments; and (f) any and all federal, state, county and municipal
governmental and quasi-governmental levies, fees, rents, assessments or taxes
and charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every kind and nature whatsoever, and any interest or costs with
respect thereto, which are (1) assessed, levied, confirmed, imposed upon, or
would grow or become due and payable out of or in respect of, or would be
charged with respect to, the Project or the Developer or the LLC and/or (2)
encumbrances or liens on (i) the Project; (ii) any other appurtenances of the
Project; or (iii) any personal property, equipment or other facility used in
the operation thereof. The Developer acknowledges that the City has no
control over any other governmental entity or quasi-governmental entity in its
taxing or fee charging. If any other body or entity, which is not under the
City's control, is successful in imposing any tax or fee on the Developer, this
does not affect the payments due the City from the Developer under this
agreement.
Section 2.07 Commencement of Investment. The City acknowledges and agrees
that the Developer has expended substantial monies and otherwise commenced
efforts to satisfy the Investment Commitments and other obligations prior to
the date hereof pursuant to the terms of the Majestic MOU, the
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<PAGE> 12
Majestic Certificate and the September 29, 1995 Agreement, as
applicable, which monies and efforts shall be credited against the Investment
Commitments and other obligations of the Developer as described herein and in
the Majestic MOU, the Majestic Certificate and/or the September 29, 1995
Agreement except as herein otherwise provided. The Developer shall
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provide the City with a statement reflecting such expenditures to date,
promptly after execution of this Agreement.
Section 2.08 The Developer's Investment Commitment Plans. Developer
agrees to discuss with the City its plans for its 2.01 pavilions and other
gaming related developments and other enhancements and its City's economic
development and infrastructure projects.
ARTICLE III
NON-MONETARY OBLIGATIONS
Section 3.01 Performance and Payment Bonds. In accordance with the
Majestic Certificate, the Developer shall comply with I.C. 4-33-6-9(b)(3) and
IAC 2-1-7.
Section 3.02 Insurance. In accordance with the Majestic Certificate, the
Developer shall secure, at its sole cost and expense, the insurance required by
I.C. 4-33-4-11 and 68 IAC 2-1-8, in minimum amounts determined by the IGC,
prior to the commencement of Riverboat Gaming Operations. The Developer shall
name the City on any commercial general liability insurance it obtains as an
additional insured. The Developer shall obtain all workers' compensation
insurance required by applicable statutes. Upon written request of the City,
the Developer shall obtain all-risk business interruption insurance with an
extended liability endorsement insuring the City for the continued payment of
the AGR Commitment, and name the City as the insured on such insurance,
provided that the cost of such insurance shall constitute a dollar-for-dollar
reduction against the monthly installment of the AGR Commitment for the
Developer, until such cost is completely offset.
Section 3.03 Employment. The Developer shall endeavor to create 800 new
full-time jobs in connection with the Project. The Developer shall have as a
goal and endeavor to fill sixty-seven percent (67%) of such jobs with City
residents and ninety percent (90%) of such jobs with residents from Lake
County, Indiana. The Developer shall have as a goal and shall endeavor to
employ a permanent workforce comprised of seventy percent (70%) from racial
minority groups and fifty-two percent (52%) females. The Developer shall set
forth policies to establish the statutory preferential hiring of residents of
the
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City, pursuant to I.C. 4-33-14-9. The Developer shall set forth policies
to achieve the goals of Minority and Women's Business participation in excess
of those set forth in I.C. 4-33-14, et. seq. The Developer shall cooperate
with the Gaming Advisory Committee, which may be established by the City to
assist the Developer in achieving the employment goals set forth herein.
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Section 3.04 Unionized Labor. The Developer will endeavor to maximize
the use of unionized labor, paid at prevailing rates, consistent with the
appropriate trade in connection with the construction of the Project, to the
extent that such unionized labor can provide quality labor at competitive
prices. Both the City and Developers agree to use their best efforts to
encourage building trade unions to enter into project agreements with local
contractors. The Developer shall cooperate with the Gaming Advisory Committee,
which may be established by the City to assist the Developer in achieving the
labor goals set forth herein.
Section 3.05 Local Vendors. The Developer shall endeavor to use local
suppliers and vendors in the development, construction, and equipping of the
Project, with particular emphasis upon the inclusion of minority-owned ("MBE")
and women-owned ("WBE") business enterprises as those terms are defined in the
Act, provided that such suppliers and vendors can provide quality goods and/or
services at competitive prices. The City encourages and the Developers agree
they will use their best efforts to create the formation of joint ventures as
that term is defined in I.C. 4-33-14-3 and to utilize the same as contractors
and vendors in the project. For purposes of this Section, "local vendors"
shall be deemed to be vendors located in the City of Gary or Lake County,
Indiana. The Developer shall cooperate with the Gaming Advisory Committee,
which may be established by the City to assist the Developer in achieving the
supplier and vendor goals set forth herein.
Section 3.06 Governmental Permits. The Developer shall endeavor to
obtain and maintain all licensing, permitting and certification requirements
for the lawful construction of the Project and operation of riverboat gaming,
including but not limited to, zoning reclassifications and/or variances, site
plan approval, Army Corps. of Engineers permitting United States Coast Guard
certification and such other federal, state and local agency licensing,
demolition, construction, permitting or certification requirements as are
necessary for alcoholic beverage service, food service, construction, operation
and maintenance and the overall public health (collectively, "Governmental
Permits"). The City agrees to cooperate with the Developer's efforts to secure
and maintain the Governmental Permits as required by this Section 3.06. Such
cooperation shall include, but not be limited to, the City's joinder in such
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proceedings and applications as may be necessary to obtain or maintain
Governmental Permits, the Developer's right to bring such proceedings and
applications in the City's name, the City's provision of such Governmental
Permits from the City and the City's commencement and prosecution of such
condemnation and other proceedings as may be necessary to furnish utilities or
otherwise property rights
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to or for the Project, provided that the City shall not be liable for the
payment of any costs or expenses in connection with any such proceedings or
applications and the Developer shall reimburse and indemnify the City for its
share of any and all reasonable costs or expenses that the City may incur in
connection with any such proceedings or applications. In no event, however,
shall the City's cooperation be deemed to require the City, or any agency or
instrumentality thereof, to surrender or refrain from exercising its customary
municipal authority regarding zoning approval, site plan approval, demolition
and/or building permits or certificates of inspection and/or occupancy.
Section 3.07 Compliance Reporting. The Developer shall, at its own
expense, provide the City, as and when provided, the IGC information showing
the amounts, percentages, identity, and nature of work of the work force of,
and unionized labor utilized by the Developer, and the goods and services
purchased from local vendors. The Developer shall submit to the City a report
setting forth its disadvantaged hiring and contracting policy statement and
program, which outlines the steps such Developer will undertake to endeavor to
achieve its disadvantaged hiring and contract goals. Such report will be
provided semi-annually during the first two (2) years of gaming operations and
thereafter annually, thirty (30) days after the commencement of each fiscal
year (or thirty (30) days after each six (6) month period, as applicable). The
Developer shall (a) establish a hiring, training and promotion program that
targets minorities, females or other segments of the population; establish an
outreach program that assists minority and women business enterprises, as
defined in I.C. 4-33-14-3, 4-33-14-4, in becoming aware of the Developers'
contracting needs and requirements; and (b) specify policies concerning
disadvantaged contracting.
Section 3.08 Sanitary Sewer Access. The Developer shall utilize the
sanitary sewer system of the City of Gary Sanitary District in connection with
the Project.
Section 3.09 Emergency Response Plan. The Developer shall maintain an
emergency response plan that complies with all applicable governmental laws,
rules and regulations.
Section 3.10 Financial Reporting. The Developer shall
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provide the City accurate reports of all expenditures made to satisfy
the Investment Commitments in each calendar quarter. Such reports shall be
certified as accurate by the Developer. The City shall have the right to
audit, on an annual basis, the books and records of the Developer which pertain
to such expenditures at times mutually convenient to the City and the
Developer. In addition, each Developer shall provide the City, annually,
within forty-five (45) days after
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the commencement of each fiscal year a budget indicating the Investment
Commitments which the Developer anticipates making in such fiscal year. The
Developer shall maintain and keep, or shall cause to be maintained and kept,
full and accurate books and records within the City of Gary or such other
accessible location, of all business conducted or transacted relative to the
Project, which may reasonably assist the City in determining the expenditures
toward the Investment Commitment and the revenues supporting the AGR Commitment
of the Developers. If the Developer maintains permanent records in a
computerized or microfiche fashion, the Developer shall provide to the City,
upon reasonable requests, a detailed index to the microfiche or computerized
record, which must be indexed. The books and records shall be retained and
stored pursuant to such policies currently in effect for the City.
Section 3.11 Meeting with City. The Developer agrees to meet jointly with
the City (the City, consisting of representatives from the Mayor's office and
representatives of the Gary Common Council) on an annual basis to discuss and
explain the plans of the Developer and the Project. At such meeting, the
Developer shall also discuss (1) the status of the Investment Commitments and
the expenditures relating thereto and (2) its efforts in connection with the
matters set forth in Sections 3.03, 3.04 and 3.05, as well as the programs
established by the Developer in connection therewith.
Section 3.12 Master Site Plan. At such time as the Developer or the LLC
has completed a site plan for the development and construction of the
improvements necessary to operate gaming operations at a permanent harbor to be
located on the Property (the "Master Site Plan"), the Developer shall submit
such Master Site Plan to the City. The City shall have thirty (30) days from
the receipt of the Master Site Plan to present to the Developer any comments in
writing to the Master Site Plan.
Section 3.13 Utility Relocation. The Developer acknowledges that certain
gas, electric, water, telephone or other utility lines and facilities will be
relocated as a result of the construction of the Project. The City shall
assist the Developer or the LLC in negotiations with the appropriate utility
companies for the relocation of their utility lines and facilities and use its
best efforts to effect such relocation at
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no cost to the Developer. As and to the extent required by the Developer or
the LLC, the Developer or the LLC shall, at its own expense, relocate any
utilities not relocated through the City's efforts as described above.
Section 3.14 Marketing Program. The Developer shall cooperate with the
City in formulating and executing a
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marketing program for the City which will promote both the Project and the
City.
ARTICLE IV
SALE OR TRANSFER
Section 4.01 Non-Licensure or Transfer. The Developer may transfer or
assign its rights and obligations under this Agreement to an entity that is an
applicant for or the holder of a license to own and operate a riverboat gaming
venture in Gary, Indiana (a "License"), in the event that (i) the IGC does not
grant a License to the Developer, (ii) the Developer's License is terminated or
revoked, or (iii) the Developer transfers its interest in the Project, provided
that the transferee assumes the transferring Developer's obligations to the
City under this Agreement. In such event(s), the City shall, upon its written
consent, which shall not be unreasonably withheld, concurrently with such
assignment, release the Developer from its obligations under this Agreement.
ARTICLE V
REMEDIES
Section 5.01 Damages for Abandonment.
As the sole and exclusive remedy by the City against the Developer for (1)
the Developer's abandonment of the Project after receiving a License, or (2)
breach by the Developer of its obligations hereunder to satisfy the Investment
Commitments within the time set forth in Schedule 2.01:
(i) the Developer agrees to pay a "default payment" in the
amount of the City's damages for the Developer's failure to
complete the "other enhancements-Buffington Harbor" in the time
provided in Schedule 2.01, which damages shall not exceed (i)
$12,000,000 from the date of opening of Riverboat Gaming
Operations by the Developer at the Property ("the Opening Date")
until the first anniversary thereof, (ii) $11,000,000 from and
after the first anniversary of the Opening Date until the second
anniversary of the Opening Date,
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(iii) $9,000,000 from and after the second anniversary of the
Opening Date until the third anniversary of the Opening Date, (iv)
$6,000,000 from and after the third anniversary of the Opening
Date until the fourth anniversary of the Opening Date, and (v)
$3,000,000 from and after the fourth anniversary of the Opening
Date until the fifth anniversary
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of the Opening Date, after which time said liability shall be
extinguished. The liability of the Developer hereunder shall be
guaranteed by Barden Development, Inc. pursuant to a Guaranty in
the form of Schedule 5.01 attached hereto.
(ii) In addition, the City would have the right to obtain
the benefits of the letter of credit or bond required pursuant to
Section 3.01 of this Agreement, as permitted by the IGC and
applicable Indiana law, for damages resulting from the Developer's
failure to complete the Off-Site Developments as set forth in
Section 2.01.
Section 5.02 Other Defaults. Should the Developer default in the
performance of any obligation under this Agreement other than those
contemplated under Section 5.01 and (i) such default continues uncured for a
period of more than thirty (30) days after the receipt by such Developer of
written notice from the City regarding the nature of said default, or (ii) if
the default is of such a character as to require more than thirty (30) days to
cure, then if the Developer shall fail within said thirty (30) day period to
commence and thereafter proceed diligently to cure such default, then the City
shall have the right to pursue such remedies as may be available at law or in
equity in accordance with the provisions of Section 6.06 below.
Section 5.03 Effect of Default By Trump. The City acknowledges and
agrees that a default by a Trump under its agreements with the City shall not:
(a) create a default by the Developer, or (b) provide the City with any rights
or remedies against the Developer or the LLC.
ARTICLE VI
MISCELLANEOUS
Section 6.01 Prior Agreements, Amendments, and Captions. This Agreement
and the September 29, 1995 Agreement, including the Schedules attached hereto,
sets forth the entire agreement between the Parties and supersedes all prior
and contemporaneous agreements, understandings, warranties or
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representations and may be cancelled, modified or amended only by a written
instrument executed by the Parties to be bound thereby. The captions are used
only as a matter of convenience and are not to be considered a part of this
Agreement nor to be used in determining the intent of the Parties to it.
Section 6.02 Notices; Addresses. All notices under this Agreement shall
be in writing and shall be delivered by personal service, or by certified or
registered mail, postage
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prepaid, return receipt requested, to the Parties at the addresses herein set
forth.
The addresses for notices are as follows:
Developer: Don H. Barden
Barden Development, Inc.
400 Renaissance Center, Suite 2400
Detroit, MI 48243
With a copy to its counsel:
Judy A. O'Neill, Esq.
Michael A. Lesha, Esq.
Dykema Gossett PLLC
400 Renaissance Center
Detroit, MI 48243
City: City of Gary, Indiana
Honorable Scott King, Mayor
401 Broadway, 2nd Floor
Gary, IN 46402
With a copy to its counsel:
Nick Thiros, Esq.
Cohen & Thiros
Westin Court
200 East 90th Drive
Merillville, IN 46410-8102
Section 6.03 Validity. In the event that any provision of this Agreement
shall be held to be invalid or unenforceable, the same shall not affect in any
respect whatsoever the validity or enforceability of the remainder of this
Agreement.
Section 6.04 Governing Law. This Agreement has been entered into in the
State of Indiana and all questions with respect to this Agreement and the
rights and liabilities of the Parties shall be governed by the laws of Indiana.
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Section 6.05 Timeliness. The Parties agree that time is of the essence
with respect to each and every promise, covenant, obligation and duty under
this Agreement, and will make every reasonable effort to expedite each and
every provision hereof. For purposes of this Agreement, Unavoidable Delays
shall mean any delay not caused by the Developer, including, but not limited
to, any delay caused by strikes, lockouts, pickets, inclement weather, acts of
God, contractors,
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subcontractors and suppliers, availability of materials, civil commotion,
governmental restrictions, governmental approvals or permits, including delay
in the receipt thereof, required third party consents, including delay in the
receipt thereof, fire or other casualty or other causes beyond the reasonable
control of the Developer.
Section 6.06 Arbitration. In the event that any controversy or claim,
except those pertaining to any default set forth in Section 5.01, the
controversy or claim shall be settled by binding arbitration at Indianapolis,
Indiana, in accordance with the rules of the American Arbitration Association,
and judgment on the award may be entered in any court having jurisdiction
thereof. In the event of arbitration, the Developer and the City shall select
an arbitrator. Those selected arbitrators shall in turn appoint an additional
arbitrator or arbitrators such that the number of arbitrators is an odd number,
and the arbitrators so chosen shall comprise the arbitration panel. The costs
and expenses of the arbitration shall be borne by the Party found liable by the
arbitrators in amounts as the arbitrators may award.
Section 6.07 No Third Party Beneficiaries. None of the provisions of
this Agreement shall be for the benefit of or enforceable by any third parties.
Trump shall not have any rights or remedies against the Developer or the LLC
by virtue of this Agreement.
Section 6.08 Authority. Each of the Parties represents that it has the
full right and authority to enter into this Agreement and to fully perform its
obligations hereunder. The persons executing this Agreement represent and
warrant that each has the authority to execute in the capacity stated and to
bind the Party such person purports to bind.
Section 6.09 Confidentiality. The City agrees that all reports, budgets,
business plans and other market, financial and business information furnished
to the City by or on behalf of the Developers or the LLC and the information
contained therein ("Proprietary Information") contain confidential proprietary
information. The City agrees to hold the Proprietary Information in
confidence, not to disclose the Proprietary Information to any other person or
entity and not to use the Proprietary Information for any purpose other than
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monitoring the Developer's compliance with its undertakings under this
Agreement. Prior to receiving any Proprietary Information, the City agrees to
take such action, including enacting appropriate ordinances, as necessary to
enable the City to comply with its confidentiality obligations under this
Section 6.09.
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The Parties have duly executed this Agreement as of the date first set
forth above.
"DEVELOPER":
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
Its: Member
By: Don H. Barden
-----------------------
Its:
-----------------------
GARY RIVERBOAT GAMING, LLC
By: BARDEN MANAGEMENT, INC.
Its: Manager
BY: Don H. Barden
----------------------
Don H. Barden
Its: President
"THE CITY:"
CITY OF GARY, INDIANA
By: Scott King
----------------------
Scott King, Mayor
29
<PAGE> 1
EXHIBIT 10.10
Buyer: The Majestic Star Casino, LLC SALES ORDER NO. 111513
d/b/a: The Majestic Star Casino
520 South Rock Boulevard-Reno, Nevada 89502
(702) 323-5060-FAX (702) 788-6564
This contract supersedes all other contracts
pertaining to equipment on S.O. 111513 before this date. ??????
IGT agrees to sell and Buyer agrees to accept and purchase the equipment
("Equipment") specified on the foregoing pages of this sales order contract.
Unit prices and specifications of the Equipment shall be as set forth above and
any written amendments hereto signed by both parties. Serial numbers shall be
provided by IGT at time of installation. Any blank below filled in with "N/A"
shall mean the term is not applicable and not a part of this agreement.
The total purchase price of the Equipment together with sales tax is
$ 5,951,619.95 ("Purchase Price"). Interest shall be at a variable rate
equal to 3% per annum over Prime, which shall be defined as the rate most
recently published in the Wall Street Journal "Money Rates" as the highest base
rate on corporate loans at large U.S. money center commercial banks.
1. DOWN PAYMENT/CREDITS:
a. A cash down payment of $ N/A shall be received by IGT
prior to delivery of any portion of the Equipment
purchased.
b. A total trade-in credit of $ N/A shall be applied
against the Purchase Price, for used Equipment to
be forthwith transferred by Buyer to IGT free and
clear of any liens or encumbrances.
c. A revenue participation credit of $ N/A shall be
applied against the Purchase Price.
2. BALANCE OF PURCHASE PRICE: The remaining balance of the
Purchase Price after deduction for any down payment or
credit(s) shall be due and payable as specified below:
a. In 35 consecutive monthly principal installments of
$ 165,322.78, and a final monthly payment of any
outstanding principal and interest due on the last
month. The first installment of principal shall be due
30 days following installation of one-half the units of
Equipment purchased under this Agreement and all
following installments shall be due on the same day
each month thereafter. Interest shall be paid as
provided in paragraph A on the reverse side; or
b. From the earnings of the Equipment as follows: IGT
shall receive as payment, N/A % of the Net Win of the
Equipment to be applied first to all accrued interest
and then to the outstanding principal balance due
hereunder until paid in full. "Net Win" is defined as
machine drop minus hopper fills and hand paid jackpots
and shall be determined by a count performed at least
once a week by representatives of Buyer and IGT.
Payments under this provision shall be due and payable
immediately following each count. Interest shall be
paid as provided in paragraph A on the reverse side.
3. I ACKNOWLEDGE THAT I HAVE READ AND ACCEPT THE TERMS AND
CONDITIONS AS FILLED OUT ABOVE AND AS SET FORTH ON THE
REVERSE SIDE. THIS SALES ORDER CONTRACT ("AGREEMENT")
IS NOT BINDING UNTIL SIGNED BY THE AUTHORIZED
REPRESENTATIVES OF BUYER AND IGT.
ELegal: The Majestic Star Casino, LLC
d/b/a: The Majestic Star Casino
Dated this 5th day of April, 1996.
BUYER IGT
By: TC Bonner By: Mary Mecenter
------------------------- -------------------------
Title: EXEC. V.P. Title:
------------------------- -------------------------
Authorized Representative Authorized Representative
All obligations of Buyer
hereunder are hereby
guaranteed by:
--------------------------
(Name)
--------------------------
(Signature) GUARANTOR
<PAGE> 2
SALES ORDER NO. 112276
520 South Rock Boulevard
Reno, Nevada 89502
(702) 323-5060 * FAX (702) 788-6564
d/b/a: Majestic Star Casino
IGT agrees to sell and Buyer agrees to accept and purchase the equipment
("Equipment") specified on the foregoing pages of this sales order contract.
Unit prices and specifications of the Equipment shall be as set forth above and
any written amendments hereto signed by both parties. Serial numbers shall be
provided by IGT at time of installation. Any blank below filled in with "N/A"
shall mean the term is not applicable and not a part of this agreement.
The total purchase price of the Equipment together with sales tax is $63,918.00
("Purchase Price"). Interest shall be at a variable rate equal to 3% per annum
over Prime, which shall be defined as the rate most recently published in the
Wall Street Journal "Money Rates" as the highest base rate on corporate loans at
large U.S. money center commercial banks.
1. DOWN PAYMENT/CREDITS:
a. A cash down payment of $ N/A shall be received by IGT prior to
delivery of any portion of the Equipment purchased.
b. A total trade-in credit of $ N/A shall be applied against the
Purchase Price for used Equipment to be forthwith
transferred by Buyer to IGT free and clear of any liens or
encumbrances.
c. A revenue participation credit of $ N/A shall be applied against
the Purchase Price.
2. BALANCE OF PURCHASE PRICE: The remaining balance of the Purchase
Price after deduction for any down payment or credit(s)
shall be due and payable as specified below:
a. In 35 consecutive monthly principal installments of $ 1775.50,
and a final monthly payment of any outstanding
principal and interest due on the last month. The first
installment of principal shall be due 30 days following
installation of one-half the units of Equipment purchased under
this Agreement, and all following installments shall be due on
the same day of each month thereafter. Interest shall be paid
as provided in paragraph A on the reverse side; OR
b. From the earnings of the Equipment as follows: IGT shall
receive as payment, N/A % of the Net Win of the
Equipment to be applied first to any accrued interest and then
to the outstanding principal balance due hereunder until paid
in full. "Net Win" is defined as machine drop minus hopper
fills and hand paid jackpots and shall be determined by a count
performed at least once a week by representatives of Buyer and
IGT. Payments under this provision shall be due and payable
immediately following each count. Interest shall be paid as
provided in paragraph A on the reverse side.
3. I ACKNOWLEDGE THAT I HAVE READ AND ACCEPT THE TERMS AND CONDITIONS
AS FILLED OUT ABOVE AND AS SET FORTH ON THE REVERSE SIDE. THIS
SALES ORDER CONTRACT ("AGREEMENT") IS NOT BINDING UNTIL SIGNED BY
THE AUTHORIZED REPRESENTATIVES OF BUYER AND IGT.
Legal: The Majestic Star, LLC
d/b/a: Majestic Star Casino
DATED this 11th day of April, 1996.
BUYER IGT
BY: T. C. BONNER By:
---------------------------- --------------------------
Title: EXEC. VP Title:
---------------------------- -------------------------
Authorized Representative Authorized Representative
All obligations of Buyer hereunder
are hereby guaranteed by:
- ------------------------------------------
(Name)
- ------------------------------------------ CUSTOMER
(Signature) GUARANTOR
Page ____
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Buyer: The Majestic Star, LLC
d/b/a: Majestic Star Casino
520 South Rock Boulevard - Reno, Nevada 89502
(702) 323-5060 - FAX (702) 788-6564
This contract supersedes all other contracts
pertaining to equipment on S.O. 112272 dated
before this date.
IGT agrees to sell and Buyer agrees to accept and purchase the equipment
("Equipment") specified on the foregoing pages of this sales order contract.
Unit prices and specifications of the Equipment shall be as set forth above and
any written amendments hereto signed by both parties. Serial numbers shall be
provided by IGT at time of installation. Any blank below filled in with "N/A
shall mean the term is not applicable and not a part of this agreement.
The total purchase price of the Equipment together with sales tax is
$ 295,053.10 ("Purchase Price"). Interest shall be at a variable rate equal to
3 % per annum over Prime, which shall be defined as the rate most recently
published in the Wall Street Journal "Money Rates" as the highest base rate on
corporate loans at large U.S. money center commercial banks.
1. DOWN PAYMENT/CREDITS:
a. A cash down payment of $ N/A shall be received by IGT
prior to delivery of any portion of the Equipment
purchased.
b. A total trade-in credit of $ N/A shall be applied
against the Purchase Price, for used Equipment to be
forthwith transferred by Buyer to IGT free and clear of
any liens or encumbrances.
c. A revenue participation credit of $ N/A shall be
applied against the Purchase Price.
2. BALANCE OF PURCHASE PRICE: The remaining balance of the
Purchase Price after deduction for any down payment or
credit(s) shall be due and payable as specified below.
a. In 35 consecutive monthly principal installments of
$ 8,195.92, and a final monthly payment of any
outstanding principal and interest due on the last
month. The first installment of principal shall be
due 30 days following installation of one-half the
units of Equipment purchased under this Agreement and
all following installments shall be due on the same day
of each month thereafter. Interest shall be paid as
provided in paragraph A on the reverse side; OR
b. From the earnings of the Equipment as follows: IGT
shall receive as payment, N/A % of the Net Win of the
Equipment to be applied first to an accrued interest
and then to the outstanding principal balance due
hereunder until paid in full. "Net Win" is defined as
machine drop minus hopper fills and hand paid jackpots
and shall be determined by a count performed at least
once a week by representatives of Buyer and IGT.
Payments under this provision shall be due and payable
immediately following each count. Interest shall be
paid as provided in paragraph A on the reverse side.
3. I ACKNOWLEDGE THAT I HAVE READ AND ACCEPT THE TERMS AND
CONDITIONS AS FILLED OUT ABOVE AND AS SET FORTH ON THE REVERSE
SIDE. THIS SALES ORDER CONTRACT ("AGREEMENT") IS NOT BINDING
UNTIL SIGNED BY THE AUTHORIZED REPRESENTATIVES OF BUYER AND
IGT.
Legal: The Majestic Star, LLC
d/b/a: Majestic Star Casino
DATED this 5th day of May, 1996.
BUYER IGT
By: TC Bonner By:
-------------------------- --------------------------
Title: EXEC. V.P. Title:
------------------------- --------------------------
Authorized Representative Authorized Representative
All obligations of Buyer hereunder
are hereby guaranteed by:
- --------------------------------
(Name)
- --------------------------------
(Signature) GUARANTOR CUSTOMER
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<PAGE> 1
EXHIBIT 10.11
UNITED STATES FIDELITY AND GUARANTY COMPANY
FIDELITY AND GUARANTY INSURANCE COMPANY
FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC.
MASTER SURETY AGREEMENT
This AGREEMENT is made and entered into by:
ENTER NAME, ADDRESS, AND SOCIAL SECURITY OR TAX ID NUMBER.
The Majestic Star Casino, LLC, 400 Renaissance Center, #2400,
Detroit, MI, 48243, 43-1664986
Don H. Barden, 400 Renaissance Center, #2400, Detroit, MI, 48243,
###-##-####
Bella I. Marshall, 400 Renaissance Center, #2400, Detroit, MI, 48243,
###-##-####
In favor of UNITED STATES FIDELITY AND GUARANTY COMPANY, FIDELITY AND GUARANTY
INSURANCE COMPANY, FIDELITY AND GUARANTY INSURANCE UNDERWRITERS, INC., and any
and all affiliated, associated and subsidiary companies thereof, now existing or
hereafter created, assumed or otherwise acquired (hereinafter referred to as
Surety), their successors and assigns.
In this Agreement the words BOND, PERSON, UNDERSIGNED and PRINCIPAL are defined:
BOND: (1) Contract of suretyship, guaranty or indemnity; (2) the continuation,
extension, alteration, renewal or substitution of such contract; (3) a letter
from SURETY to a PERSON or PRINCIPAL wherein SURETY represents to such PERSON
or PRINCIPAL that it is prepared and willing to execute in behalf of PRINCIPAL
the BOND(S) required by such PERSON'S invitation for bids or proposals and
referred to herein as a BID LETTER.
PERSON: Individual(s), partnerships(s), association(s), corporation(s) or any
other legal or commercial entity(ies);
UNDERSIGNED: PERSON(S) who execute this agreement.
PRINCIPAL: One or more UNDERSIGNED or any partnership, association,
corporation or other legal or commercial entity in which UNDERSIGNED have a
substantial, material and/or beneficial interest to the extent that the
partnership, association, corporation or other legal or commercial entity would
be considered a subsidiary, associated or affiliated company of UNDERSIGNED
who, alone or with other PERSON(S), have secured, or may secure the performance
and fulfillment of obligations by BOND(S) (whether or not required to do so by
statue, ordinance, contract, order of court, rule of court, or otherwise),
executed, provided, or procured by SURETY.
In consideration of SURETY'S:
(1) heretofore having executed, provided or procured BOND(S) in behalf of
PRINCIPAL; or
(2) receiving requests for BOND(S) from UNDERSIGNED and determining whether or
not SURETY will execute, provide or procure the BOND(S) requested; or
(3) hereafter executing, providing or procuring BOND(S) in behalf of PRINCIPAL;
UNDERSIGNED covenant and agree that:
I (A) this AGREEMENT binds UNDERSIGNED and the heirs, personal
representatives, successors and assigns thereof, jointly and severally, to
SURETY in connection with all BOND(S) heretofore or hereafter executed,
provided or procured by SURETY in behalf of PRINCIPAL in any penal sum and
in favor of any obligee(s);
CONT 5 (1-92) (CONTINUED)
PAGE 1 OF 4
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(B) This AGREEMENT shall not be construed as an offer by UNDERSIGNED
to indemnify SURETY which SURETY must accept prior to its
executing, providing or procuring BOND(S) in behalf of PRINCIPAL, but
shall be construed as part of the consideration on which SURETY has
relied or will rely in executing, providing or procuring BOND(S) in
behalf of PRINCIPAL; (C) SURETY has relied upon and will rely on the
covenants and agreements of UNDERSIGNED as consideration for the BOND(S)
executed, provided or procured in behalf of PRINCIPAL; (D) This
AGREEMENT inures to the benefit of any cosurety or reinsurer of SURETY
in said BOND(S) and in the event SURETY procures the execution of BOND(S)
by other sureties, this AGREEMENT shall inure to the benefit of such
other sureties.
II UNDERSIGNED will pay or cause to be paid to SURETY, its successors and
assigns, the premium charged or to be charged by SURETY for executing,
providing or procuring BOND(S) for PRINCIPAL.
III (A) UNDERSIGNED shall exonerate, hold harmless, indemnify and keep
indemnified SURETY from and against any and all demands, claims,
liabilities, losses and expenses of whatsoever kind or nature (including
but not limited to, interest, court costs and counsel fees) imposed upon,
sustained, or incurred by SURETY by reason of: (1) SURETY having
executed, provided or procured BOND(S) in behalf of PRINCIPAL, or (2)
UNDERSIGNED'S failure to perform or comply with any of the provisions of
this AGREEMENT;
(B) In order to exonerate, hold harmless, and indemnify SURETY,
UNDERSIGNED shall upon demand of SURETY, place SURETY in funds before
SURETY makes any payment; such funds shall be, at SURETY'S option, money
or property, or liens or security interests in property. (The amount of
such money or property or the value of the property to become subject to
liens or security interests, shall be determined by SURETY.)
(C) SURETY may reduce the amount of UNDERSIGNED'S liability to SURETY
hereunder by applying to such liability any money payable to UNDERSIGNED
by SURETY; (Such liability may arise from UNDERSIGNED'S obligation to
exonerate, to hold harmless and to indemnify SURETY and may be liquidated
or unliquidated; and, the "money payable to UNDERSIGNED" may be, but is
not limited to, any money payable by SURETY as an insurer of UNDERSIGNED
or another PERSON to return to UNDERSIGNED an unearned or other premium
or to settle a claim of UNDERSIGNED against SURETY or a PERSON insured by
SURETY.)
IV (A) The liability of UNDERSIGNED hereunder shall extend to and include
all amounts paid by SURETY in good faith under the belief that: (1)
SURETY was or might be liable therefor; (2) such payments were necessary
or advisable to protect any of SURETY'S rights or to avoid or lessen
SURETY'S liability or alleged liability;
(B) the liability of UNDERSIGNED to SURETY shall include interest from
the date of SURETY'S payments at the maximum rate permitted in the
jurisdiction in which this AGREEMENT is enforced, or is enforceable;
(C) the voucher(s) or other evidence of such payment(s) or an itemized
statement of payment(s) sworn to by an officer of SURETY shall be prima
facie evidence of the fact and extent of the liability of UNDERSIGNED to
SURETY.
V (A) Separate suits may be brought hereunder as causes of action accrue,
and the bringing of suit or the recovery of judgment upon any cause of
action shall not prejudice or bar the bringing of other suits upon other
causes of action, whether theretofore or thereafter arising;
(B) each UNDERSIGNED is the agent for all UNDERSIGNED for the purpose of
accepting service of any process in the jurisdiction in which the
UNDERSIGNED accepting the process resides, is domiciled, is doing
business or is found;
(C) in the event SURETY should file suit at law or in equity to enforce
the terms of this AGREEMENT, SURETY shall be entitled to recover its own
reasonable attorney's fees and expenses from UNDERSIGNED in connection
with such suit.
VI When BOND(S) secure the performance and fulfillment of contracts,
PRINCIPAL and UNDERSIGNED, agree that:
(A)(1) SURETY has the rights of indemnification, exoneration and
subrogation; and (2) SURETY'S rights of indemnification, exoneration and
subrogation may be enforced as provided by applicable law or, at option of
SURETY, as follows:
(a) with respect to each specific contract secured by BOND(S) all
money and property representing the consideration for the contract is
dedicated for: (i) the performance of the contract; (ii) the payment
of obligation(s) to subcontractor(s), laborer(s) and supplier(s) of
material(s) and service(s) incurred or to be incurred in the
performance of the contract for which SURETY is liable under BOND(S)
and, (iii) the satisfaction of the obligations herein and all other
indebtednesses and liabilities of PRINCIPAL or UNDERSIGNED to
SURETY; (b) to partially implement this dedication SURETY may, in its
sole discretion, demand that PRINCIPAL request delivery of the
consideration for the contract to a bank designated by SURETY for
deposit of the proceeds of the consideration for the contract(s) in an
account in the name of PRINCIPAL designated as a "Special Account"
and withdrawal(s) from said "Special Account" shall be by
check(s), payable to the beneficiaries of this dedication, signed by
a representative of PRINCIPAL and by a representative of SURETY; (c)
this dedication may be implemented in any other manner provided at law
or in equity;
(B) In the event of: (1) any breach of any of the agreements herein; (2)
any breach, delay or default in any contract secured by BOND(S); (3) any
breach or default of BOND(S); (4) any change or threat of change in the
character, identity, control, beneficial ownership or existence of
PRINCIPAL; (5) any assignment by PRINCIPAL for the benefit of creditors;
(6) the appointment of a receiver or trustee or any application for
appointment of a receiver or trustee for PRINCIPAL, whether insolvent or
not; (7) any proceedings or the exercise of any rights by any PERSON
which deprives or impairs PRINCIPAL'S use of its plant, machinery,
equipment, plans, drawings, tools, supplies or materials; (8) upon the
happening of any event other than those specified in (1) through (7) and
completely different from those events, which, in its sole opinion may
expose SURETY to loss, cost or expense.
(CONTINUED)
Page 2 OF 4
<PAGE> 3
(a) SURETY shall have the right, in its discretion, to take possession
of any part or all of the work under contract(s) secured by BOND(S)
(together with plant, machinery, equipment, job books and records, plans,
drawings, tools, supplies or material wherever located and owned or usable
by PRINCIPAL) and, at the expense of UNDERSIGNED, to complete or cause
completion of any such work, or relet or consent to the reletting or
completion of such contract(s), and;
(b) SURETY is authorized and empowered to assert, pursue and prosecute, in
its discretion, and at the expense of UNDERSIGNED (in the name of PRINCIPAL
or in the name of SURETY), all claim(s) of PRINCIPAL arising or growing out
of contract(s) and work done thereunder secured by BOND(S) against: (i)
Obligee(s) in BOND(S); or (ii) any PERSON, government or governmental
agency. (The authority and power to prosecute said claim(s) is deemed to
include the authority to settle said claim(s) or any part thereof; and the
money or property awarded by Obligee(s) representative, a judicial or
quasi-judicial officer or a panel or board, or the money or property to
become due in settlement of said claim(s) is deemed to be a portion of the
"money or property representing the consideration for the contract" and
subject to the dedication in subparagraph (A) of this paragraph).
VII (A) UNDERSIGNED are not obligated to request SURETY to execute, provide or
procure BOND(S) required of them in the performance and fulfillment of
obligations;
(B) SURETY has the right to decline to execute, provide or procure BOND(S)
requested by PRINCIPAL;
(C) if SURETY executes, provides or procures a bid or proposal bond or
furnishes a BID LETTER in behalf of PRINCIPAL, SURETY has the right to
decline to execute the final BOND(S) (including, but not limited to
performance, payment or maintenance bond(s)) that may be required in
connection with any award that may be made under the bid, proposal or
tender for which the bid or proposal bond or BID LETTER is given.
VIII UNDERSIGNED shall not be relieved of liability hereunder by any change,
addition, substitution, continuation, renewal, extension, successor or new
obligation in connection with BOND(S) or any contract(s) secured thereby,
whether known or consented to by SURETY, and notice of SURETY'S consent is
hereby waived.
IX (A) SURETY'S rights hereunder shall be deemed to be cumulative with, and
in addition to, all other rights of SURETY, however derived;
(B) SURETY is not required to exhaust its remedies or rights against
PRINCIPAL or to await receipt of any or final dividends from the legal
representative(s) of PRINCIPAL before asserting its rights hereunder
against UNDERSIGNED;
(C) This AGREEMENT shall be liberally construed so as to protect, hold
harmless, exonerate and indemnify SURETY.
X (A) At any time during business hours and until such time as (1) the
liability of SURETY under BOND(S) is terminated or (2) SURETY is fully
reimbursed all its losses, cost and expenses as a result of having
executed, provided, or procured BOND(S) in behalf of PRINCIPAL, SURETY
shall have access to the books, records and accounts of UNDERSIGNED;
(B) when requested by SURETY, banks, depositories, obligees in BOND(S),
materialmen, supply houses, or other PERSON(S) are hereby authorized to
furnish SURETY and information requested with respect to PRINCIPAL, or
UNDERSIGNED.
XI (A) There shall be no waiver, modification or change of the terms of this
AGREEMENT without the written approval of an officer of SURETY;
(B) if an UNDERSIGNED previously executed an agreement of indemnity or
MASTER SURETY AGREEMENT in favor of SURETY and upon which SURETY relied
when it executed, provided or procured BOND(S) in behalf of any PERSON as
PRINCIPAL, SURETY'S acceptance of this AGREEMENT neither terminates such
agreement of indemnity or MASTER SURETY AGREEMENT nor relieves such
UNDERSIGNED from liability to SURETY thereon in connection with such
BOND(S).
(C) this AGREEMENT may be terminated as to any UNDERSIGNED upon written
notice given to SURETY by such UNDERSIGNED or such UNDERSIGNED'S legal
representatives or successors by Registered or Certified Mail addressed to
SURETY at its Home Office in Baltimore, Maryland;
(D) if an UNDERSIGNED: (1) dies; (2) becomes physically or mentally
disabled to the extent that he or she is unable to perform the duties of
owner, partner, officer or employee of an UNDERSIGNED which is or may
become PRINCIPAL in BOND(S); (3) terminates his or her marriage by
annulment or divorce; or, (4) sells or disposes of his or her interest in
an UNDERSIGNED which is or may become PRINCIPAL in BOND(S); this AGREEMENT
may be terminated as to such UNDERSIGNED upon receipt by
SURETY at its Home Office in Baltimore, Maryland, of written notice of such
death, disability, annulment, divorce, sale or disposition (such written
notice shall be given as specified in Subparagraph XI (C);
(E) termination of this AGREEMENT pursuant to Subparagraph XI (C) or XI (D)
shall not be effective until thirty (30) days after receipt of said written
notice by SURETY;
(F) termination of this AGREEMENT pursuant to Subparagraph XI (C) or XI (D)
shall not relieve any UNDERSIGNED from liability of SURETY arising out of
BOND(S) executed, provided or procured by SURETY in behalf of PRINCIPAL
prior to the effective date of such termination and for which this
AGREEMENT is part of the consideration on which SURETY relied in executing,
providing or procuring such BOND(S).
XII In the event that the execution of this AGREEMENT by any one or more of
UNDERSIGNED is defective or invalid for any reason, such defect or
invalidity shall have no effect upon the validity of this AGREEMENT as to
any other UNDERSIGNED. Similarly, should any portion of this AGREEMENT be
deemed invalid or unenforceable, the remaining provisions shall be valid
and enforceable.
XIII This AGREEMENT constitutes the entire AGREEMENT between the parties and all
previous representations, negotiations, discussions and promises concerning
SURETY'S willingness to provide, procure or execute bonds in any specific
amount, single limit or aggregate work program, or concerning SURETY'S
intention to enforce or refrain from enforcing any of the terms of this
AGREEMENT or exempt any specific assets or waive any of the terms hereof
are hereby merged into this AGREEMENT.
(CONTINUED)
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CAUTION! READ BEFORE SIGNING!
The UNDERSIGNED represent to the SURETY that they have carefully read the
entire AGREEMENT and that by executing this AGREEMENT they are bound to the
SURETY with respect to all BOND(S) executed, provided, or procured or to be
executed, provided or procured by SURETY in behalf of PRINCIPAL as defined on
page 1.
IN WITNESS WHEREOF, the UNDERSIGNED who are individuals have hereunto set their
hands and seals, and the UNDERSIGNED who are partnerships, corporations or
unincorporated associations have caused this AGREEMENT to be duly executed by
their duly authorized representatives all on this 29th day of April, 1996.
The Majestic Star Casino, LLC
Attest: Kenneth L. Kramer Don H. Barden
- ------------------------------------ ---------------------------------------
Title: Secretary Title: President
WITNESS: Kenneth L. Kramer Don H. Barden
- ------------------------------------ ---------------------------------------
ADDRESS: 400 RenCen #2400, Don H. Barden
Detroit, MI 48243
WITNESS: Kenneth L. Kramer Bella I. Marshall
- ------------------------------------ ---------------------------------------
ADDRESS: 400 RenCen #2400, Bella I. Marshall
Detroit, MI 48243
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ALL SIGNATURES MUST BE WITNESSED
IF A CORPORATION, AFFIX SEAL. ATTACH COPY OF BOARD OF DIRECTORS RESOLUTION
RATIFYING OFFICER'S EXECUTION OF THIS AGREEMENT.
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EXHIBIT 10.12
Standby Letter of Credit Application and Reimbursement and Security Agreement
[NBD LOGO]
<TABLE>
<S><C>
Section A (Customer/Applicant: Complete Section A and forward to your NBD account officer. Please copy entire
agreement for your files.
To: NBD Bank N.A., International Operations, Indianapolis, Indiana 46266 (the "Issuer") Date May 16, 1996
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Please issue an irrevocable Letter of Credit (the "Credit") as set forth below: Bank use only L/C Number S2037464
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In Favor of (Beneficiary-Complete Name & Address) For Account of ("Applicant") Name and Address
United States Fidelity and Guaranty The Majestic Star Casino, LLC
Company and USF&G Corporation 400 Renaissance Center
101 Light Street - TW 3201 Suite 2400
Baltimore, Maryland 21202 Detroit, Michigan 48243
(Charge our Acct. No. 0076589-34)
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Original L/C to be Sent to: Amount and Name of Currency
/X/ Beneficiary / / Ourselves (Applicant) / / Other: Three Million Five Hundred Thousand
and 00/100 U.S. Dollars ($3,500,000.00)
- ----------------------------------------------------------
- ---------------------------------------------------------- -------------------------------------------------------------
Rosemary Quinn
Attn: Vice President-Corporate FAX #_____________________ Expiry Date: June 7, 1997, subject to automatic renewals as
Law Department set forth in the attached Letter of Credit.
Send By / / Mail /XX/ Courier / / Telex/Swift Available by drafts at sight drawn, at your opinion, on
/ / Fax & Mail / / Fax & Courier yourselves or your correspondent. (You may waive the
requirement for a draft.)
TYPE OF L/C TO BE ISSUED (ALSO SEE ATTACHMENT, IF ANY, FOR FURTHER DETAILS:)
/ / Advance Payment Guarantee } {NOTE: If country or Beneficiary requires issuance by a local bank, NBD is authorized to
/ / Bid Bond / / Performance Bond } { issue a "Clean" L/C (defined below) in favor of such local bank.
/ / "Clean" L/C (meaning Beneficiary need only present a Draft/Demand for payment)
/X/ As per attached format received from Beneficiary
/ / As per your suggested Format/Draft (your ref. no. ______________)
/ / See attached
( )
/ / Before issuing, please fax draft copy to ___________________________at___________ ____________ - ______________________.
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OTHER CONDITIONS/INSTRUCTIONS: This Application is made pursuant to the Reimbursement and
Security Agreement which appears as part of this form, and
applies to this Application and the Credit. We acknowledge
/ / Beneficiary may not draw prior to _______________________ our receipt and acceptance of the terms and conditions of the
Reimbursement and Security Agreement.
/ / Only One / / Multiple Draw(s) permitted
/x/ All charges, except NBD's for Beneficiary Acct.
/x/ Charge our account for applicable Fees/Commissions Signed for, and on behalf of, Applicant:
In case of need contact: By: The Majestic Star Casino, LLC
Name: Kenneth L. Kramer Authorized Signature
Phone: (313) 259-0050 FAX #( ) Printed Name/Title of Signer: Kenneth L. Kramer, its
authorized representative
Section B To be completed by approving NBD officer (Check/Fill in as applicable)
Com'l. Loan No. _____________ Commitment No. _______________ FRB Code ____________________ SIC Code __________________________
Book liability under ________________________________________________________________________ instead of applicant name.
/ / Credit approved - L/C may be issued / / Hold issuance pending further approval/instructions
Participation? / / Yes / / No
Charge commission at: _______________________% per annum: or $_________________flat (plus L/C processing fees)
Credit cost Center No. ______________________ ORC# ________________________ Initials (print) _________________________
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Approved By (print) |Signature |Phone
| |
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NOTE: IF THIS APPLICATION IS SENT TO "ISSUER" BY ANOTHER BANK, THE BACK PAGE HEREOF MUST BE COMPLETED/SIGNED BY SUCH BANK.)
</TABLE>
<PAGE> 2
STANBY LETTER OF CREDIT - REIMBURSEMENT AND SECURITY AGREEMENT
TERMS AND CONDITIONS
In this agreement, the terms "we," "us" and "our" refer to the applicant; and
the terms "you" and "your" refer to the issuer.
1. ISSUANCE OF CREDITS
Except for a contrary provision in the applications for Letter of Credit, these
terms and conditions shall apply to the issuance of one or more Letters of
Credit (the "Credits"), provided that until each Credit is issued, you shall be
under no obligation to issue it. The Credits may be issued containing terms in
accordance with our applications but as modified by you, provided the
modifications don't vary the principal terms of the Credits described in our
applications. We acknowledge that we have not relied on you in any manner in
connection with the wording of the Credits, including the draw conditions or
the structuring of the underlying transaction. These are our responsibility,
undertaken with the opportunity to consult with our counsel.
2. OBLIGATION TO PAY
(a) DRAFTS OR ACCEPTANCES: As to drafts or acceptances drawn or purporting to
be drawn under the Credits, we agree: (i) in the case of each sight draft, to
reimburse you at your office, on demand, in immediately available funds, the
amount paid on such draft, or, if so demanded by you, to pay to you at your
office in advance the amount required to pay such draft; and (ii) in case of
each acceptance, to pay to you at your office in immediately available funds
the amount of each acceptance, on demand but in no event later than its
maturity, or in case the acceptance is not payable at your office, then in time
to reach the place of payment at maturity. As to drafts or acceptances which
are payable in other than U.S. Currency, we agree to pay or reimburse you on
demand in immediately available funds the equivalent in U.S. Currency of the
amount payable in the other currency at your selling rate for cable transfers of
the other currency to the place of payment as of the date of payment, or if
there is no such rate at that time, then at such rate as you may reasonably fix.
(b) PAYMENT WITHOUT DRAFTS: As to documents presented for payment at sight
pursuant to the Credits without drafts, we agree that our obligation under
those documents shall be the same as though sight drafts had been presented or
had accompanied those documents.
(c) COMMISSIONS, CHARGES, EXPENSES, FEES AND INTEREST: We agree to pay on
demand: (i) a letter of credit fee equal to one half of one percent (1/2%) per
annum of the full amount of each letter of credit issued pursuant to this
agreement. (ii) all charges, expenses and legal fees paid or incurred by you in
connection with the Credits or this agreement; and (iii) interest on the amount
of any unreimbursed payment made by you under the Credits and on any
unreimbursed commissions, charges and expenses under (i) and (ii) above, and
under 8. (k) below. Charges, expenses and legal fees include, but are not
limited to, FDIC Assessments, the cost of maintaining required reserves and
capital by you or by any corporation controlling you, and the expenses of
collection, litigation and your exercise of rights under this agreement as to
Collateral or otherwise. Interest shall be charged at the rate of 3% per annum
more than the rate announced by you as your prime rate for commercial loans
then in effect (which prime rate may not necessarily be the lowest rate charged
by you to any of your customers), but not an amount greater than is allowable
under the law in effect where your main office is located.
If any change in law or any governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) or its interpretation
affects the amount of capital required or expected to be maintained by you or
any corporation controlling you, and you determine the amount of capital
required is increased based on the existence of this agreement, the Credits or
the applications, or upon agreements or letters of credit of a similar type,
then you may notify us of that fact. We and you shall attempt to negotiate an
adjustment to the commission payable which will adequately compensate you in
light of these circumstances. If we and you are unable to agree to such an
adjustment within 30 days of the date on which we receive your notice, then
commencing on the date of that notice (but not earlier than the effective date
of the change), the commission paid or payable shall increase by an amount
which will, in your sole determination, provide adequate compensation.
(d) ADVICE FROM CORRESPONDENTS: Telegraphic or other notice from your
correspondents of payment, acceptance, or other action under the Credits shall
be presumptive evidence of our liability to reimburse you.
(e) PROHIBITION OF INJUNCTIONS: We agree not to initiate or acquiesce in any
judicial, administrative or other proceeding for any injunctive or declaratory
relief to block you from paying any of the Credits. This clause shall apply
notwithstanding any fraud covered by Section 5-114 of the Uniform Commercial
Code. We acknowledge that remedies for all such fraud related risks have been
adequately considered in the agreements between the beneficiaries of the
Credits and ourselves.
3. ADMINISTRATION OF CREDITS
(a) "UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS": The Uniform Customs
and Practices for Documentary Credits (the "UCP"), 1993 revision, ICC
Publication N 500, or the most current publication of the UCP by the
International Chamber of Commerce on the date each Credit is issued or renewed
(a copy of which is available from you at our request) shall govern our
respective rights and liabilities under the Credits to the same effect as if
stated word for word in this agreement. The Credits shall be subject to and
governed by the provisions of the UCP unless the text of this agreement or the
applications shall be contrary or in addition to them. In that event, the
right, obligation or liability shall be as stated in this agreement or the
applications, and the UCP shall be superseded to the extent of the contrary or
additional provisions.
(b) DRAFT LESS THAN CREDIT AMOUNT: Unless written instructions have been
specifically given you to the contrary, a draft for less than the Credit it is
drawn against may be honored.
(c) DISCREPANCIES AND NOTICE OF DISCREPANCIES: If you send us a notice of
discrepancies in the documents, that action is for our convenience and will not
require you to send us a notice of discrepancies in other instances, and our
waiver of discrepancies will not in any instance bind you to waive the
discrepancies or pay the Credits.
(d) FORCE MAJEURE: You and your correspondents shall not be liable for any
failure by you or anyone else to pay or accept any draft or acceptance under
the Credits, or for any loss or damage resulting from any censorship, law,
control or restriction rightfully or wrongfully exercised by any de facto or de
jure domestic or foreign government or agency, declared or undeclared war, or
from any other cause beyond your or your correspondents' control, and we agree
to indemnify you and hold you harmless from any claim, loss, liability or
expense arising by these reasons.
(e) PAYMENT OR NON-PAYMENT: If you choose to pay drafts, we shall reimburse you
if documents presented with the draft are in substantial compliance with the
Credit. If you choose not to pay the draft because of documentary
discrepancies, we indemnify you from any resulting loss, damage or cost, unless
the documents presented with the draft are in strict compliance with the
Credit. You may accept as being in strict compliance, any document containing
stamped, written or typewritten provisions, whether or not signed or initialed,
and may assume conclusively that they were placed with authority on the
document at the time its issuance by the carrier or other issuer or any agent.
4. RESPONSIBILITIES:
The users of the Credits shall be deemed to be our agents, and we assume all
risks of their acts and omissions. Any action, inaction or omission taken or
suffered by you or by any of your correspondents under or in connection with the
Credits or any drafts, documents or property related to the Credits, if in
good faith and not the result of gross negligence or wilful misconduct by you
or your correspondents respectively, shall be binding on us and shall not place
you or your correspondents under any resulting liability to us. Without
limiting the generality of the foregoing, (a) you and your correspondents may
(i) act in reliance on any oral, telephonic, telegraphic, electronic or written
request or notice believed in good faith to have been authorized by us, whether
or not given or signed by an authorized person, and (ii) receive, accept or pay
as complying with the Credits any drafts or other documents, otherwise in
order, which may be signed or issued by the administrator, executor, personal
representative or conservator of, or the trustee in bankruptcy of, or the
receiver for any of the property of, or any other person or entity acting as
the representative or in the place of the beneficiary; (b) neither you nor your
correspondents shall be responsible for (i) any deviation from instructions,
delay, default or fraud by the shipper or anyone else in connection with the
property or its shipping, (ii) any breach of the contract between the shippers
or vendors and us, (iii) the performance by the beneficiary of its obligations
to us, including without limitation any claim by us that the transaction
between us and the beneficiary is tainted by fraud, forgery or other defect, or
(iv) failure of any drafts to bear any reference or adequate reference to a
Credit, or failure of any person to note the amount of any draft on the reverse
of a Credit or to send forward documents apart from drafts as required by the
terms of the Credit, each of which provision, if contained in a Credit, we
agree may be waived by you; and (c) you shall not be responsible for any
errors, neglect, or default of any of your correspondents.
5. SECURITY INTERESTS
As security for the prompt payment of all our obligations and liabilities under
this agreement, and in addition to any other security given to you by separate
agreement, we grant you a continuing security interest in, and the right to
possession and disposition of: (i) all property shipped, stored or dealt with
in connection with the Credits, or the drafts drawn under the Credits: (ii) all
drafts, documents, instruments, contracts (including shipping documents,
warehouse receipts, or policies or certificates of insurance), inventory,
accounts chattel paper or general intangibles, and their proceeds, arising from
or in connection with the Credits, regardless of whether the property,
documents, instruments, or other collateral described in this agreement are in
your actual or constructive possession, or are in transit to you, your agents,
or correspondents, or have been released to us upon our request: and (iii) a
right of set-off on all deposits and credits with you; all of which security
shall be referred to as the "Collateral." We agree that this agreement may be
filed as a financing statement or that we will execute financing statements or
other documents or writings as you deem necessary to perfect or maintain your
security interest, and to pay all costs of filing. We also agree you may
execute on our behalf the financing statement, and we irrevocably appoint you
as our attorney-in-fact for that purpose. You shall have all rights and
remedies of a secured party under the Uniform Commercial Code of the state
where your main office is located. Where any prior notice is required, you
shall give us at least seven (7) days notice in writing of the time and place
of any sale, disposition or other event giving rise to the required notice. You
may discount, settle, compromise or extend any obligation constituting the
Collateral, and may sue on the Collateral in your name. You shall not be liable
for failure to collect or demand payment of, or for failure to protest or give
notice of protest or non-payment of any obligation or relating to any part of
the Collateral, or for any delay. You shall not be liable under any obligation
to take any action in respect of the Collateral, including any obligation to
file, record, maintain or establish the validity,
<PAGE> 3
authority or enforceability of your rights in or to the collateral. Any
property or documents representing collateral may be held by you in your name or
you nominee's name, all without notice and whether a default described below
exists or not. Proceeds of sale or transfer of the Collateral shall be
applied, in order, to expenses of retaking, holding and preparing the
collateral for sale, the reasonable attorney fees and legal expenses
incurred or paid by you, and then to our obligations under this agreement until
they are paid in full. We shall continue to be liable for any remaining
deficiency, and you shall pay us any excess. As additional Collateral, you
shall be subrogated to our rights under any transaction to which the Credits
relate. If at any time you feel insecure and require additional collateral, we
will assign and deliver to you, on demand, such additional Collateral of a type
and value satisfactory to you.
REPRESENTATIONS
Each of us represents (a) that the execution and delivery of this agreement and
the applications, and the performance of the obligations they impose, do not
violate any law, conflict with any agreement by which it is bound, or require
the consent or approval of any governmental authority or any third party; (b)
that this agreement and the applications are valid, binding and enforceable
according to their terms; and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to you are accurate and
clearly reflect the financial condition of the organizations and persons to
which they apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and adversely
since those dates. Each of us, other than natural person, further represents:
(a) that we are duly organized, existing and in good standing under the laws
where we are organized; and (b) that the execution and delivery of this
agreement and the applications, and the performance of the obligations they
pose, (i) are within our powers; (ii) have been duly authorized by all
necessary action of our governing body; and (iii) do not contravene the terms of
our articles of incorporation or organization, our by-laws, or any agreement
governing our affairs.
DEFAULT
We shall be in Default under this agreement upon the occurrence of any
of the following:
We fail to pay when due any amount payable under this agreement or
under any agreement or instrument evidencing debt to any creditor;
We (i) fail to observe or perform any term of this agreement; (ii) make
any materially incorrect or misleading representation, warranty, or certificate
to you; (iii) make any materially incorrect or misleading representation in any
financial statement or other information delivered to you; or (iv) default
under the terms of any agreement or instrument relating to any debt for
borrowed money, at its maturity or such that the creditor declares the debt due
before its maturity;
We default under the terms of any loan agreement, mortgage, security
agreement, or any other document executed as part of this agreement, or any
guaranty of any agreement is in default or becomes unenforceable in whole or in
part;
A "reportable event" (as defined in the Employment Retirement Income
Security Act of 1974 as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of ours or any of
our affiliates;
We become insolvent or unable to pay our debts as they become due;
We (i) make an assignment for the benefit of creditors; (ii) consent to
the appointment of a custodian, receiver, or trustee for ourself or for a
substantial part of our assets; or (iii) commence any proceeding under any
bankruptcy, reorganization, liquidation, insolvency or similar laws of any
jurisdiction;
A custodian, receiver, or trustee is appointed for us or for a
substantial part of our assets without our consent and is not removed within 60
days after such appointment;
(h) Proceedings are commenced against us under any bankruptcy, reorganization,
liquidation, or similar laws of any jurisdiction, and such proceedings remain
undismissed for 60 days after commencement; or we consent to the commencement
of such proceedings;
(i) Any final judgment is entered against us and remains unsatisfied for 30
days, or any attachment, levy, or garnishment is issued against any of our
property;
(j) Any of us dies;
(k) We, without your written consent, (i) are dissolved, (ii) merge or
consolidate with any third party unless we are the survivor, (iii) sell a
material part of our assets or business outside the ordinary course of our
business, or (iv) agree to do any of the foregoing;
(l) There is a substantial change in our existing or prospective financial
condition which you in good faith determine to be materially adverse; or
(m) You in good faith deem yourself insecure.
In any such event even if Credits remain undrawn, all of our obligations to you
under this agreement shall be immediately due, and you shall have the right to
take possession of the Collateral, set-off against it, or exercise any right of
a secured creditor, with or without process of law, and foreclose, sell or
otherwise liquidate the Collateral both as provided in this agreement and in
the Uniform Commercial Code.
8. MISCELLANEOUS
(a) MODIFICATION OF CREDITS: All modifications of Credits, including
extensions of maturity or time for presentation of drafts, acceptances or
documents, renewals of the Credits, increases or other modifications of the
terms of the Credits, and any temporary advance or acceptance or loan in
connection with the Credits, with or without further documentation or notice or
agreement, shall continue to be governed by this agreement. If we receive a
copy of the Credit or any modification, we are required to notify you within
three business days of any error, and we agree that our silence will preclude
any claim on our part that the Credit or modification was not approved by us.
(b) WAIVER: No delay on your part in the exercise of any of your rights or
remedies shall operate as a waiver, nor shall any single or partial waiver of
any right or remedy preclude any other further exercise of that right or
remedy, or the exercise of any other right or remedy, and no waiver or
indulgence by you of any Default shall be effective unless it is in writing and
signed by you, nor shall a waiver on any one occasion be construed as a bar to,
or waiver of, any right on any future occasion.
(c) GOVERNING LAW; JURISDICTION: This Agreement is governed by the law in
effect where your main office is located. We irrevocably submit to the
jurisdiction of any federal or state court sitting in the federal district in
which your main office is located. We irrevocably waive any right to object on
grounds of inconvenient forum or improper venue. We agree that service of
process pursuant to the NOTICE section, or pursuant to court rule, will grant
personal jurisdiction over us.
(d) SEVERABILITY - BINDING EFFECT: Any provision which may prove unenforceable
under any law shall not affect the validity of any other provision. This
agreement shall inure to the benefit of, and be enforceable by you, your
successors or assigns.
(e) CONSTRUCTION: The words "we", "our" and "us" shall be read, if the
undersigned be an individual, as "I", "my" and "me" as the case may be, and
shall jointly and severally bind the two or more of us executing the
application or this agreement, as well as any obligor, maker, endorser,
acceptor, surety or guarantor or other party having an obligation under the
application or this agreement, and each of us signing shall be deemed the
agent of all others so signing. Time is of the essence. Words in the single
or plural tense shall be read as plural or single, respectively, if the
context requires.
(f) PARTICIPANT: You may sell all or any part of our obligations under this
agreement to a participant bank. The terms "you" and "your" shall refer to
you and the participant bank, jointly and severally, if any. Our obligation to
you and the participant bank shall be to each of you until our obligation under
this agreement shall be paid or otherwise be satisfied or expire, and the
participant bank shall be subrogated to your rights against us on its payment to
you of its liability to you under its agreement.
(g) DAMAGES; LIMITATION OF ACTION: Your liability, if any, for your
negligence, acts of omission or otherwise shall be limited to direct actual
damages, without any liability for general, punitive, special, incidental or
consequential damages. We must institute any claim for damages against you
within one year after the claim arises.
(h) NOTICES: Notice from you to us, or vice-versa, relating to this agreement
shall be deemed effective if made in writing (including telecommunications)
and delivered to the recipient's address, telex number or facsimile number set
forth on the applications by any of the following means: (i) hand delivery,
(ii) registered or certified mail, postage prepaid, with return receipt
requested, (iii) first class or express mail, postage prepaid, (iv) Federal
Express, Purolator Courier or like overnight courier service, or (v) facsimile,
telex or other wire transmission with request for assurance of receipt in a
manner typical with respect to communications of that type. Notice made in
accordance with this section shall be deemed delivered on receipt if delivered
by hand or wire transmission, on the third business day after mailing if mailed
by first class, registered or certified mail, or on the next business day after
mailing or deposit with an overnight courier service if delivered by express
mail or overnight courier.
(i) ENTIRE AGREEMENT: All prior negotiations and agreements between the parties
relating to the subject matter of this agreement are superseded by this
agreement, and there are no representations, warranties, understandings or
agreements other than those expressly set forth in this agreement.
(j) CAPTIONS: The captions in this agreement are solely for convenience of
reference, and are neither a part of nor intended to govern, limit or aid in
the construction of, any term or provision.
(k) INDEMNIFICATION: We will indemnify you on demand for any loss, costs,
damage or expense including reasonable attorney fees, arising out of any action
by you or us for any claims in connection with this agreement or the Credits,
unless you are finally adjudged by a court to have acted with gross negligence
or to have committed wilful misconduct.
9. WAIVER OF JURY TRIAL:
BOTH YOU AND WE, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF US
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED ON OR ARISING OUT OF THIS
AGREEMENT, ANY ANCILLARY DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED BY ANY
OF THOSE DOCUMENTS OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN), OR ACTIONS OF EITHER OF US. NEITHER YOU NOR WE SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER YOU OR US EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY BOTH...
<PAGE> 4
CORRESPONDENT PARTICIPATION AGREEMENT
To: "Issuer" - as described on
the front page hereof
Amount of Credit $ ______________________
Correspondent's Share __________________%
Issuer's Share _________________________%
We request you to issue the Letter of Credit (the "Credit") pursuant to
the application of our customer (the "Applicant" as described on the front page
hereof).
In consideration of your issuing the Credit, we purchase from you your
obligation as issuer for the account of the Applicant for the share
indicated above. If the Credit is amended and the amount is increased at our
request, our share of the participation shall be increased accordingly to the
percentage indicated above.
We also agree to make payment to you at your principal office in an
amount equivalent to our participation, plus your fee and out-of-pocket
expenses, upon your demand but in any event not later than the time of payment
provided for in terms and conditions of the Reimbursement and Security
Agreement, and we authorize you to debit our account with you for that amount.
We understand that our liability to purchase this participation from you shall
be primary, and not subject to any condition, precedent or otherwise, except
the issuance by you of the Credit.
Until you receive our participation payment, you shall be entitled to
all amounts received by either of us from the Applicant, whether by voluntary
payment, realization upon any security, exercise of the right of setoff, or by
payment from any source, except that upon the Applicant's default, all payments
received by either of us shall be applied pro-ratably on the share of each of
us in proportion to our respective interests at the time of default.
You shall not be liable to us for any action taken or omitted with
respect to the Credit unless caused by your own gross negligence or willful
misconduct. You shall exercise the same care as in dealing with your own
Credits, but you shall not be responsible in any manner to ascertain or inquire
as to the financial condition of the Applicant, or the Applicant's authority to
execute the application, or the existence or possible existence of any event of
default under the Reimbursement and Security Agreement, or be responsible to
file or record or refile or re-record to maintain or establish the validity,
priority or enforceability of any rights in and to the collateral given by the
Applicant under the terms and conditions of the Reimbursement and Security
Agreement or other security agreement given by the Applicant or by way of a
pledge.
WE ACKNOWLEDGE WE HAVE PERFORMED OUR OWN INVESTIGATION OF THE RISK
INVOLVED AND ARE NOT RELYING UPON ANY REPRESENTATION BY YOU. WE ALSO
ACKNOWLEDGE THAT IT IS OUR RESPONSIBILITY TO PERFECT ANY LIEN TAKEN AS
SECURITY.
All rights under this agreement shall be determined in accordance with
the law in effect where your main office is located.
Dated: _______________________, 19 __ __________________________________
Name of Bank
By:_______________________________
Authorized Signature
__________________________________
Printed Name/Title
Any questions concerning this Application
should be referred to: ( ) | ( )
___________________________________
Phone No. Fax No.
SPECIAL INSTRUCTIONS:
Other:
<PAGE> 5
[NBD LETTERHEAD]
CLEAN IRREVOCABLE LETTER OF CREDIT NO. S037464
BENEFICIARY:
UNITED STATES FIDELITY AND GUARANTY COMPANY
AND USF&G CORPORATION
BY ORDER OF OUR CLIENT, MAJESTIC STAR CASINO, LLC (TMSC, LLC) 400 RENAISSANCE
CENTER, SUITE 2400, DETROIT, MI 48243, WE HEREBY ESTABLISH THIS CLEAN
IRREVOCABLE LETTER OF CREDIT NO. S037464, IN YOUR FAVOR FOR AN AMOUNT UP TO BUT
NOT EXCEEDING THE AGGREGATE SUM OF THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
($3,500,000.00) EFFECTIVE IMMEDIATELY, AND EXPIRING AT THE OFFICES OF THE BANK
ON JUNE 7, 1997, UNLESS RENEWED AS HEREINAFTER PROVIDED.
WE HEREBY AUTHORIZE YOU TO DRAW UPON US AT ANY BRANCH AT ONE TIME, OR FROM TIME
TO TIME, BY YOUR DRAFT(S) AT SIGHT ACCOMPANIED BY YOUR WRITTEN CERTIFICATION
STATING YOU HAVE NOT BEEN RELEASED FROM LIABILITY UNDER SURETY BOND(S) OR
UNDERTAKING(S) YOU HAVE EXECUTED ON BEHALF OF OR UPON THE REQUEST OF THE
MAJESTIC STAR CASINO, LLC (TMSC, LLC) AND/OR ANY AND ALL SUBSIDIARIES OR
AFFILIATED COMPANIES THEREOF NOW EXISTING OR HEREAFTER CREATED, ASSUMED OR
OTHERWISE ACQUIRED.
ALL DRAFT(S) SO DRAWN MUST BE MARKED AS "DRAWN UNDER OUR CREDIT NO. S037464."
THIS CLEAN IRREVOCABLE LETTER OF CREDIT WILL BE AUTOMATICALLY RENEWED FOR A ONE
YEAR PERIOD UPON THE EXPIRATION DATE SET FORTH ABOVE AND UPON EACH ANNIVERSARY
OF SUCH DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO SUCH EXPIRATION DATE, OR
PRIOR TO ANY ANNIVERSARY OF SUCH DATE, WE NOTIFY BOTH YOU AND OUR CLIENT IN
WRITING BY CERTIFIED MAIL, THAT WE ELECT NOT TO SO RENEW THIS CLEAN IRREVOCABLE
LETTER OF CREDIT; YOU MAY THEN DRAW HEREUNDER BY YOUR SIGHT DRAFT(S) DRAWN ON
US AND BEARING THE CLAUSE "DRAWN UNDER CREDIT NO. S037464", ACCOMPANIED BY YOUR
WRITTEN CERTIFICATION STATING THAT YOU HAVE NOT BEEN RELEASED FROM LIABILITY
UNDER SAID SURETY BOND(S) OR UNDERTAKING(S).
THIS CLEAN IRREVOCABLE LETTER OF CREDIT IS ISSUED CONTEMPORANEOUSLY WITH A NEW
EXTENSION OF CREDIT, AND THE ISSUANCE AND PAYMENTS THEREUNDER ARE INDEPENDENT
FROM ANY OBLIGATIONS BETWEEN YOU AND OUR CUSTOMER. THIS CLEAN IRREVOCABLE
LETTER OF CREDIT REPRESENTS A DIRECT OBLIGATION OF OURS AND PAYMENTS MADE
THEREUNDER ARE MADE FROM OUR FUNDS, NOT FROM THE ASSETS OF OUR CUSTOMERS.
CONTINUED ON NEXT PAGE
<PAGE> 6
[NBD LETTERHEAD]
OUR REF. NO. S037464 PAGE 2
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS CLEAN IRREVOCABLE LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR
UNDERTAKING AND SUCH UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR
AMPLIFIED BY REFERENCE TO ANY DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR IN
WHICH THIS CLEAN IRREVOCABLE LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS
CLEAN IRREVOCABLE LETTER OF CREDIT RELATES AND ANY SUCH REFERENCE SHALL NOT BE
DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT OR INSTRUMENT.
ALL BANK CHARGES AND COMMISSIONS INCURRED IN THIS TRANSACTION ARE FOR THE
APPLICANT'S ACCOUNT. ANY FUNDS DRAWN HEREUNDER AND NOT EVENTUALLY APPLIED BY
YOU IN REIMBURSEMENT OF LOSS INCURRED BY YOU WILL BE REPAID TO US BY YOU.
WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS, AND BONA FIDE HOLDERS OF DRAFTS
DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF CREDIT THAT SUCH DRAFTS WILL BE
DULY HONORED UPON PRESENTATION TO THE DRAWEE.
VERY TRULY YOURS,
Kathleen M. Hatcher Glenda C. Shireman
- ----------------------- --------------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
KATHLEEN M HATCHER GLENDA C SHIREMAN
INTERNATIONAL OFFICER SECOND VICE PRESIDENT
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement of Form S-4 on our
report dated January 31, 1996, on our audit of the financial statements of The
Majestic Star Casino, L.L.C., as of December 31, 1995, and for the period
December 8, 1993 (date of inception) to December 31, 1995. We also consent to
the reference to our Firm under the caption "Experts."
Coopers & Lybrand, L.L.P.
Detroit, Michigan
June ______ , 1996
<PAGE> 1
EXHIBIT 23.3
ARTHUR ANDERSEN, L.L.P.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accounts, we hereby consent to the use of our report, and
to all references to our Firm, included in or made a part of this registration
statement.
Arthur Andersen, L.L.P.
Roseland, New Jersey
June 13, 1996
<PAGE> 1
EXHIBIT 25.1
--------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
IBJ SCHRODER BANK & TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
New York 13-5375195
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
THE MAJESTIC STAR CASINO, LLC
(Exact name of obligor as specified in its charter)
Indiana 43-1664986
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
One Buffington Harbor Drive
Gary, Indiana 46406-3000
(Address of principal executive offices) (Zip code)
12 3/4% Senior Exchange Secured Notes due May 15, 2003, with Contingent Interest
(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.
New York State Banking Department, Two
Rector Street, New York, New York
Federal Deposit Insurance Corporation,
Washington, D.C.
Federal Reserve Bank of New York Second District,
33 Liberty Street, New York, New York
(b) Whether it is authorized to exercise corporate
trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the trustee.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture. Explain
the nature of any such default.
None
(b) If the trustee is a trustee under another indenture
under which any other securities, or certificates of
interest or participation in any other securities, of the
obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture,
state whether there has been a default under any such
indenture or series, identify the indenture or series
affected, and explain the nature of any such default.
None
2
<PAGE> 3
Item 16. List of exhibits.
List below all exhibits filed as part of this
statement of eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as amended
to date. (See Exhibit 1A to Form T-1, Securities and Exchange
Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the trustee to Commence
Business (Included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise corporate trust
powers, as amended to date (See Exhibit 4 to Form T-1, Securities and
Exchange Commission File No. 22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended to date (See
Exhibit 4 to Form T-1, Securities and Exchange Commission File No.
22-19146).
5. Not Applicable
6. The consent of United States institutional trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the Securities
and Exchange Commission, to which there have been no amendments or changes.
3
<PAGE> 4
NOTE
In answering any item in this Statement of Eligibility which relates to matters
peculiarly within the knowledge of the obligor and its directors or officers,
the trustee has relied upon information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of
all facts on which to base responsive answers to Item 2, the answer to said
Item are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an amendment
to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1, 2 and
16 of this form since to the best knowledge of the trustee as indicated in Item
13, the obligor is not in default under any indenture under which the applicant
is trustee.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 13th day of June, 1996.
IBJ SCHRODER BANK & TRUST COMPANY
By: Thomas J. Bogert
-------------------------------
Thomas J. Bogert
Assistant Vice President
5
<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 13th day of June, 1996.
IBJ SCHRODER BANK & TRUST COMPANY
By: Thomas J. Bogert
----------------------------
Thomas J. Bogert
Assistant Vice President
6
<PAGE> 7
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the issue by The Majestic Star Casino,
LLC of its 12 3/4% Senior Exchange Secured Notes due 2003 with Contingent
Interest, we hereby consent that reports of examinations by Federal, State,
Territorial, or District authorities may be furnished by such authorities to
the Securities and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: Thomas J. Bogert
----------------------------
Thomas J. Bogert
Assistant Vice President
Dated: June 13, 1996
7
<PAGE> 8
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the issue by The Majestic Star Casino,
LLC of its 12 3/4% Senior Exchange Secured Notes due 2003 with Contingent
Interest, we hereby consent that reports of examinations by Federal, State,
Territorial, or District authorities may be furnished by such authorities to
the Securities and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: Thomas J. Bogert
------------------------------
Thomas J. Bogert
Assistant Vice President
Dated: June 13, 1996
T-1CT-1011
8
<PAGE> 9
EXHIBIT 25.1
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
----------------
<S> <C>
ASSETS
------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . . . . . . . . $ 27,805
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 142,919
Securities: Held to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 169,682
Available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,665
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,801
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . . . . . . . . . . . . . . . . . $ 1,575,250
LESS: Allowance for loan and lease losses . . . . . . . . . . . . . . . . . . . $ 55,396
LESS: Allocated transfer risk reserve . . . . . . . . . . . . . . . . . . . . . $ -0-
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . $ 1,519,854
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 489
Premises and fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,228
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 397
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . $ -0-
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . $ 155
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,135
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,016,130
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
LIABILITIES
-----------
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 612,376
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 174,044
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 438,332
In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . . . . . . . . . . . . . $ 793,288
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,090
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 777,198
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,588
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,522
Trading Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 390
Other borrowed money:
a) With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,333
b) With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . $ -0-
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . $ 155
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,215
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,806,867
Limited life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
EQUITY CAPITAL
Perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,649
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 217,008
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (37,419)
Plus: Net unrealized gains (losses) on marketable equity securities . . . . . . . . . . . . . . $ 25
Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 209,263
TOTAL LIABILITIES AND EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,016,130
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
TENDER OF
12 3/4% SENIOR SECURED NOTES DUE 2003 WITH CONTINGENT INTEREST
IN EXCHANGE FOR
12 3/4% SENIOR EXCHANGE SECURED NOTES DUE 2003 WITH CONTINGENT INTEREST
THE MAJESTIC STAR CASINO, LLC
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE"). SENIOR NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
Deliver to the Exchange Agent:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Mail:
By Hand/Overnight Courier: IBJ Schroder Bank & Trust Company
IBJ Schroder Bank & Trust Company P.O. Box 84
One State Street Bowling Green Station
New York, New York 10004 New York, New York 10274-0084
Attention: Securities Processing Window Subcellar Attention: Reorganization Operations
One Dept.
</TABLE>
By Facsimile:
IBJ Schroder Bank & Trust Company
Attention: Reorganization Operations Dept.
(212) 858-2611
(For Eligible Institutions Only)
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the Prospectus
dated , 1996 (the "Prospectus") of The Majestic Star Casino, LLC,
an Indiana limited liability company (the "Company") and this Letter of
Transmittal (the "Letter of Transmittal"), which together describe the Company's
offer (the "Exchange Offer") to exchange its 12 3/4% Senior Exchange Secured
Notes due May 15, 2003 With Contingent Interest (the "Senior Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part, for a like principal amount of its issued and outstanding 12 3/4%
Senior Secured Notes due May 15, 2003 With Contingent Interest (the "Senior
Notes"). Capitalized terms used but not defined herein have the respective
meaning given to them in the Prospectus.
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date in which the Exchange Offer is extended. The
Company shall notify the holders of the Senior Notes of any extension by written
notice prior to 9:00 A.M., New York City time, on the next business day after
the previously scheduled Expiration Date.
<PAGE> 2
This Letter of Transmittal is to be used by a Holder of Senior Notes either
if original Senior Notes are to be forwarded herewith or if delivery of Senior
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer-Book-Entry Transfer." Holders
of Senior Notes whose Senior Notes are not immediately available, or who are
unable to deliver their Senior Notes and all other documents required by this
Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date,
or who are unable to complete the procedure for book-entry transfer on a timely
basis, must tender their Senior Notes according to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange
Offer-Guaranteed Delivery Procedures." See Instruction 1. Delivery of documents
to the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Senior Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
Holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Senior Notes must
complete this Letter of Transmittal in its entirety.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Senior Notes to which this Letter of Transmittal relates. If
the space below is inadequate, list the registered numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of Transmittal.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SENIOR NOTES TENDERED
- ------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL AGGREGATE
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S), AMOUNT PRINCIPAL
EXACTLY AS NAME(S) APPEAR(S) ON SENIOR NOTES REGISTERED REPRESENTED BY AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* NOTE(S) TENDERED**
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, any tendering Holder of Senior Notes will be deemed to have tendered the
entire aggregate principal amount represented by such Senior Notes. All tenders must be in integral
multiples of $1,000.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
/ / CHECK HERE IF TENDERED SENIOR NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED SENIOR NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name of Tendering Institution:________________________________
Account Number:__________________________
Transaction Code Number:_________________
/ / CHECK HERE IF TENDERED SENIOR NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE
FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Holder(s) of Senior Notes:____________________________
Date of Execution of Notice of Guaranteed Delivery:_________________________
Window Ticket Number (if available):________________________________________
Name of Eligible Institution that Guaranteed Delivery:______________________
Account Number (if delivered by book-entry transfer):_______________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:________________________________________________________________________
Address:_____________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of Senior
Exchange Notes. If the undersigned is a broker-dealer that will receive Senior
Exchange Notes for its own account in exchange for Senior Notes, it acknowledges
that the Senior Notes were acquired as a result of market-making activities or
other trading activities and that it will deliver a prospectus in connection
with any resale of such Senior Exchange Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
<PAGE> 4
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Senior Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Senior Notes tendered in accordance with this Letter of
Transmittal, the undersigned hereby exchanges, assigns and transfers to the
Company all right, title and interest in and to the Senior Notes tendered for
exchange hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent, the agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company in
connection with the Exchange Offer) with respect to the tendered Senior Notes
with full power of substitution to (i) deliver such Senior Notes, or transfer
ownership of such Senior Notes on the account books maintained by the Book-Entry
Transfer Facility, to the Company and deliver all accompanying evidences of
transfer and authenticity, and (ii) present such Senior Notes for transfer on
the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Senior Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Senior
Notes tendered hereby and to acquire the Senior Exchange Notes issuable upon the
exchange of such tendered Senior Notes, and that the Company will acquire good
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim, when the same are
accepted for exchange by the Company.
The undersigned acknowledge(s) that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the
"Commission") that the Senior Exchange Notes issued in exchange for the Senior
Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by Holders thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Senior Exchange Notes are
acquired in the ordinary course of such Holders' business and such Holders are
not engaging in and do not intend to engage in a distribution of the Senior
Exchange Notes and have no arrangement or understanding with any person to
participate in a distribution of such Senior Exchange Notes. The undersigned
hereby further represent(s) to the Company that (i) any Senior Exchange Notes
acquired in exchange for Senior Notes tendered hereby are being acquired in the
ordinary course of business of the person receiving such Senior Exchange Notes,
whether or not the undersigned, (ii) neither the undersigned nor any such other
person is engaging in or intends to engage in a distribution of the Senior
Exchange Notes, (iii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such Senior Exchange Notes, and (iv) neither the Holder nor any such other
person is an "affiliate," as defined in Rule 405 under the Securities Act, of
the Company.
If the undersigned or the person receiving the Senior Exchange Notes is a
broker-dealer that is receiving Senior Exchange Notes for its own account in
exchange for Senior Notes that were acquired as a result of market-making
activities or other trading activities, the undersigned acknowledges that it or
such other person will deliver a prospectus in connection with any resale of
such Senior Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that the undersigned or
such other person is an "underwriter" within the meaning of the Securities Act.
The undersigned acknowledges that if the undersigned is participating in the
Exchange Offer for the purpose of distributing the Senior Exchange Notes (i) the
undersigned cannot rely on the position of the staff of the Commission in
certain no-action letters and, in the absence of an exemption therefrom, must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the Senior
Exchange Notes, in which case the registration statement must contain the
information required by the Securities Act, and (ii) failure to comply with such
requirements in such instance
<PAGE> 5
could result in the undersigned incurring liability under the Securities Act for
which the undersigned is not indemnified by the Company.
If the undersigned or the person receiving the Senior Exchange Notes is an
"affiliate" (as defined in Rule 405 under the Securities Act), the undersigned
represents to the Company that the undersigned understands and acknowledges that
the Senior Exchange Notes may not be offered for resale, resold or otherwise
transferred by the undersigned or such other person without registration under
the Securities Act or an exemption therefrom.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Senior Notes
tendered hereby, including the transfer of such Senior Notes on the account
books maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Senior Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Senior
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Company's acceptance of properly
tendered Senior Notes pursuant to the procedures described under the caption
"The Exchange Offer -- Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the Senior Exchange Notes issued in exchange for the Senior Notes accepted
for exchange and return any Senior Notes not tendered or not exchanged, in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail or deliver the Senior Exchange Notes issued
in exchange for the Senior Notes accepted for exchange and any Senior Notes not
tendered or not exchanges (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the Senior Exchange Notes issued in
exchange for the Senior Notes accepted for exchange in the name(s) of, and
return any Senior Notes not tendered or not exchanged to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Senior Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Senior
Notes so tendered for exchange.
<PAGE> 6
-------------------------------------------------------
SPECIAL ISSUANCE
INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Senior Notes in a principal amount not
tendered, or Senior Exchange Notes issued in exchange for Senior Notes
accepted for exchange, are to be issued in the name of someone other than the
undersigned, or (ii) if Senior Notes tendered by book-entry transfer which are
not exchanged are to be returned by credit to an account maintained by at the
Book-Entry Transfer Facility. Issue Senior Exchange Notes and/or Senior Notes
to:
Name(s): .....................................................................
(PLEASE TYPE OR PRINT)
Address: .....................................................................
..............................................................................
(INCLUDE ZIP CODE)
..............................................................................
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(COMPLETE SUBSTITUTE FORM W-9)
/ / Credit unexchanged Senior Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility set forth below:
..............................................................................
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE)
-------------------------------------------------------
-------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Senior Notes in a principal amount not tendered,
or Senior Exchange Notes issued in exchange for Senior Notes accepted for
exchange, are to be mailed or delivered to someone other than the undersigned,
or to the undersigned at an address other than that shown below the
undersigned's signature.
Mail or deliver Senior Exchange Notes and/or Senior Notes to:
Name: ........................................................................
(PLEASE TYPE OR PRINT)
Address: .....................................................................
..............................................................................
(INCLUDE ZIP CODE)
..............................................................................
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
-------------------------------------------------------
<PAGE> 7
PLEASE SIGN HERE WHETHER OR NOT
SENIOR NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 on Reverse Side)
<TABLE>
<S> <C> <C>
X .............................................................. ........
Date
X .............................................................. ........
Date
</TABLE>
Area Code and Telephone
Number: ............................................................
The above lines must be signed by the registered Holder(s) of Senior Notes as
name(s) appear(s) on the Senior Notes or on a security position listing, or by
person(s) authorized to become registered Holder(s) by a properly completed bond
power from the registered Holder(s), a copy of which must be transmitted with
this Letter of Transmittal. If Senior Notes to which this Letter of Transmittal
relate are held of record by two or more joint Holders, then all such Holders
must sign this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, then such person must
(i) set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority so to
act. See Instruction 5 regarding the completion of this Letter of Transmittal,
printed below.
Name(s): ...................................................................
.............................................................................
(Please Type or Print)
Capacity: ..................................................................
Address: ...................................................................
(Include Zip Code)
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be Guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an Eligible Institution:
..........................................
(Authorized Signature)
.............................................................................
(Title)
.............................................................................
(Name of Firm)
.............................................................................
(Address, Include Zip Code)
.............................................................................
(Area Code and Telephone Number)
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Senior Notes or Book-Entry
Confirmations. All physically delivered Senior Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Senior Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Senior Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent is
at the election and risk of the Holder and, except as otherwise provided below,
the delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the Holder
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Senior Notes should be sent to the Company.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Senior
Notes and (a) whose Senior Notes are not immediately available, or (b) who
cannot deliver their Senior Notes, this Letter of Transmittal or any other
documents required hereby to the Exchange Agent prior to the Expiration Date or
(c) who are unable to complete the procedure for book-entry transfer on a timely
basis, must tender their Senior Notes according to the guaranteed delivery
procedures set forth in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers Inc. or a commercial bank or a trust company having an office or
correspondent in the United States (an "Eligible Institution"); (ii) prior to
the Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Senior Notes, the registration number(s) of such
Senior Notes and the principal amount of Senior Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within three (3) New York
Stock Exchange, Inc. ("NYSE") trading days after the Expiration Date, this
Letter of Transmittal (or facsimile hereof) together with the Senior Notes (or a
Book-Entry Confirmation) in proper form for transfer, will be received by the
Exchange Agent within three (3) NYSE trading days after the Expiration Date; and
(iii) the certificates for all physically tendered shares of Senior Notes, in
proper form for transfer, or Book-Entry Confirmation, as the case may be, and
all other documents required by this Letter are received by the Exchange Agent
within three (3) NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
Any Holder of Senior Notes who wishes to tender Senior Notes pursuant to
the guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to Holders who wish to tender their Senior
Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a Holder of Senior Notes may tender such Senior
Notes in the Exchange Offer. Any beneficial Holder of Senior Notes who is not
the registered Holder and who wishes to tender should arrange with the
registered Holder to execute and deliver this Letter of Transmittal on his
behalf or must, prior to completing and executing this Letter of Transmittal and
delivering his Senior Notes, either make appropriate arrangements to register
ownership of the Senior Notes in such Holder's name or obtain a properly
completed bond power from the registered Holder.
4. Partial Tenders. Tenders of Senior Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Senior Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the fourth column, entitled "Principal Amount Tendered," of
the box entitled "Description of Senior Notes Tendered" above. The entire
principal amount of Senior Notes delivered to the
<PAGE> 9
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
If the entire principal amount of all Senior Notes is not tendered, then Senior
Notes for the principal amount of Senior Notes not tendered and New Notes issued
in exchange for any Senior Notes accepted will be sent to the Holder at his or
her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal, promptly after the Senior Notes
are accepted for exchange.
5. Signatures on This Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record Holder(s) of the Senior Notes tendered hereby,
the signature must correspond with the name(s) as written on the face of the
Senior Notes without alteration, enlargement or any change whatsoever. If this
Letter of Transmittal is signed by a participant in the Book-Entry Transfer
Facility, the signature must correspond with the name as it appears on the
security position listing as the Holder of the Senior Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Senior Notes listed and tendered hereby and the
New Notes issued in exchange therefor is to be issued (or any untendered
principal amount of Senior Notes is to be reissued) to the registered Holder,
the said Holder need not and should not endorse any tendered Senior Notes, nor
provide a separate bond power. In any other case, such Holder must either
properly endorse the Senior Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal, with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Senior Notes listed, such
Senior Notes must be endorsed or accompanied by appropriate bond powers, in each
case signed as the name of the registered Holder or Holders appears on the
Senior Notes.
If this Letter of Transmittal (or facsimile hereof) or any Senior Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Senior Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered holder(s) of the Senior Notes tendered herewith (or by
a participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of the tendered Senior Notes) and the
issuance of New Notes (and any Senior Notes not tendered or not accepted) are to
be issued directly to such registered holder(s) (or, if signed by a participant
in the Book-Entry Transfer Facility, any New Notes or Senior Notes not tendered
or not accepted are to be deposited to such participant's account at such
Book-Entry Transfer Facility) and neither the box entitled "Special Delivery
Instructions" nor the box entitled "Special Issuance Instructions" has been
completed, or (ii) such Senior Notes are tendered for the account of an Eligible
Institution. In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering holders should
indicate, in the applicable box or boxes, the name and address (or account at
the Book-Entry Transfer Facility) to which New Notes or substitute Senior Notes
for principal amounts not tendered or not accepted for exchange are to be issued
or sent, if different from the name and address of the person signing this
Letter of Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Senior Notes pursuant to the Exchange Offer. If,
however, New Notes or Senior Notes for principal amounts 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 Senior Notes
tendered hereby, or if tendered Senior Notes are
<PAGE> 10
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Senior Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or any other
persons) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with this Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering Holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SENIOR NOTES LISTED IN THIS LETTER OF
TRANSMITTAL.
8. Tax Identification Number. Federal income tax law requires that a holder
of any Senior Notes which are accepted for exchange must provide the Company (as
payor) with its correct taxpayer identification number ("TIN"), which, in the
case of a Holder who is an individual is his or her social security number. If
the Company is not provided with the correct TIN, the Holder may be subject to a
$50 penalty imposed by Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering Holder must provide such
Holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such Holder is awaiting a
TIN), and that (i) the Holder has not been notified by the Internal Revenue
Service that such Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the Holder that such Holder is no longer subject to backup withholding.
If the Senior Notes are registered in more than one name or are not in the name
of the actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number of Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered Senior Notes will be
determined by the Company, in its sole discretion, which determination will be
final and binding. The Company reserves the right to reject any and all Senior
Notes not validly tendered or any Senior Notes, the Company's acceptance of
which would, in the opinion of the Company or its counsel, be unlawful. The
Company also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Senior Notes as to any ineligibility of
any holder who seeks to tender Senior Notes in the Exchange Offer. The
interpretation of the terms and conditions of the Exchange Offer (includes this
Letter of Transmittal and the instructions hereto) by the Company shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Senior Notes must be cured within such time as the
Company shall determine. The Company will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Senior
Notes, but shall not incur any liability for failure to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to waive,
in whole or part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Senior Notes or transmittal of this Letter of Transmittal
will be accepted.
12. Mutilated, Lost, Stolen or Destroyed Senior Notes. Any Holder whose
Senior Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone
<PAGE> 11
number set forth on the cover page of this Letter of Transmittal. Holders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Exchange Offer.
14. Acceptance of Tendered Senior Notes and Issuance of Senior Exchange
Notes; Return of Senior Notes. Subject to the terms and conditions of the
Exchange Offer, the Company will accept for exchange all validly tendered Senior
Notes as soon as practicable after the Exchange Date and will issue Senior
Exchange Notes therefor as soon as practicable thereafter. For purposes of the
Exchange Offer, the Company shall be deemed to have accepted tendered Senior
Notes when, as and if the Company has given written and oral notice thereof to
the Exchange Agent. If any tendered Senior Notes are not exchanged pursuant to
the Exchange Offer for any reason, such unexchanged Senior Notes will be
returned, without expense, to the undersigned at the address shown above (or
credited to the undersigned's account at the Book-Entry Transfer Facility
designated above) or at a different address as may be indicated under the box
entitled "Special Delivery Instructions."
15. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE SENIOR NOTES) WHICH MUST BE DELIVERED BY BOOK-ENTRY TRANSFER
OR IN ORIGINAL HARD COPY FROM) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
<PAGE> 12
(TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5))
PAYER'S NAME: THE MAJESTIC STAR CASINO, LLC
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--TAXPAYER IDENTIFICATION
FORM W-9 NO.--For all accounts, enter
your taxpayer identification
number in the appropriate box. Social Security Number
For most individuals and sole
proprietors, this is your OR
DEPARTMENT OF THE TREASURY social security number. For
INTERNAL REVENUE SERVICE other entities, it is your
Employer Identification Number.
If you do not have a number,
see How to Obtain a TIN in the
enclosed Guidelines. Note: If
the account is in more than one
name, see the Employer
identification number the chart
on page 2 of the enclosed
Guidelines to determine what
number to enter.
---------------------------------------
PART II--FOR PAYEES EXEMPT
FROM BACKUP WITHHOLDING
(SEE ENCLOSED GUIDELINES)
- ---------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER
- ---------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and either (a) I have
mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social
Security Administration Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide
a number;
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
- --------------------------------------------------------------------------------
SIGNATURE DATE , 1996
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE NEW NOTES. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF
12 3/4% SENIOR SECURED NOTES DUE 2003 WITH CONTINGENT INTEREST
IN EXCHANGE FOR
12 3/4% SENIOR EXCHANGE SECURED NOTES DUE 2003 WITH CONTINGENT INTEREST
THE MAJESTIC STAR CASINO, LLC
This form or one substantially equivalent hereto must be used by a holder
to accept the Exchange Offer of The Majestic Star Casino, LLC (the "Company"),
who wishes to tender 12 3/4% Senior Secured Notes due 2003 With Contingent
Interest (the "Senior Notes") to the Exchange Agent pursuant to the guaranteed
delivery procedures described in "The Exchange Offer -- Guaranteed Delivery
Procedures" of the Company's Prospectus dated , 1996 (the
"Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Senior Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date (as defined below) of the
Exchange Offer. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus or the Letter of Transmittal.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE"). SENIOR NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Hand/Overnight Courier: By Mail:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
One State Street P.O. Box 84
New York, New York 10004 Bowling Green Station
Attention: Securities Processing Window Subcellar New York, New York 10274-0084
One Attention: Reorganization Operations
Dept.
By Facsimile:
IBJ Schroder Bank & Trust Company
Attention: Reorganization Operations Dept.
(212) 858-2611
(For Eligible Institutions Only)
</TABLE>
-------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE BOX ON
THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Senior Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Senior Notes listed below:
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL AMOUNT
CERTIFICATE NUMBERS(S) (IF KNOWN) OF SENIOR NOTES REPRESENTED AGGREGATE PRINCIPAL
OR ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY BY NOTE AMOUNT TENDERED
- -------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
</TABLE>
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
Signatures of Registered
Holder(s) or
Authorized Signatory:............
.................................
.................................
Name(s) of Registered
Holder(s):.......................
.................................
.................................
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Senior Notes or on a security
position listing as the owner of Senior Notes, or by person(s) authorized to
become Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Names(s):
...............................................................................
...............................................................................
...............................................................................
Capacity:
...............................................................................
Address(es):
...............................................................................
...............................................................................
Date:............................
Address:.........................
.................................
Area Code and Telephone No.......
<PAGE> 3
- --------------------------------------------------------------------------------
GUARANTEE
(Not To Be Used for Signature Guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Senior Notes tendered
hereby in proper form for transfer (or confirmation of the book-entry transfer
of such Senior Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures" and in the Letter of Transmittal and
any other required documents, all by 5:00 p.m., New York City time, within
three (3) New York Stock Exchange trading day following the Expiration Date.
Name of Firm:
------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
--------------------------------------------------------------------------
Authorized Signature:
------------------------------------------------------------------------------
Name:
------------------------------------------------------------------------------
Title:
------------------------------------------------------------------------------
(Please Type or Print)
Date:
-------------------------------------- , 1996
- --------------------------------------------------------------------------------
DO NOT SEND SENIOR NOTES WITH THIS FORM. ACTUAL SURRENDER OF SENIOR NOTES MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Senior Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Senior Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name
<PAGE> 4
appears on a security position listing as the owner of the Senior Notes, the
signature must correspond with the name shown on the security position listing
as the owner of the Senior Notes.
If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Senior Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the
registered holder(s) appears on the Senior Notes or signed as the name of
the participant shown on the Book-Entry Transfer Facility's security
position listing.
If this Notice of Guaranteed Delivery is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and submit with the
Letter of Transmittal evidence satisfactory to the Company of such person's
authority to so act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
<PAGE> 1
EXHIBIT 99.3
INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK
ENTRY TRANSFER PARTICIPANT FROM BENEFICIAL OWNER
FOR
TENDER OF
12 3/4% SENIOR SECURED NOTES DUE 2003 WITH CONTINGENT INTEREST
IN EXCHANGE FOR
12 3/4% SENIOR EXCHANGE SECURED NOTES DUE 2003 WITH CONTINGENT INTEREST
THE MAJESTIC STAR CASINO, LLC
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
DECEMBER 8, 1995, UNLESS EXTENDED (THE "EXPIRATION DATE"), SENIOR NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1996 (the "Prospectus") of The Majestic Star Casino, LLC, an
Indiana limited liability company (the "Company"), and the accompanying Letter
of Transmittal (the "Letter of Transmittal"), that together constitute the
Company's offer (the "Exchange Offer") to exchange its 12 3/4% Senior Secured
Exchange Notes Due 2003 With Contingent Interest (the "Senior Exchange Notes")
for all of its outstanding 12 3/4% Senior Notes Due 2003 With Contingent
Interest (the "Senior Notes"). Capitalized terms used but not defined herein
have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Senior Notes held by you for the account of
the undersigned.
The aggregate face amount of the Senior Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$ of the 12 3/4% Senior Secured Notes Due 2003 With
Contingent Interest.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / To TENDER the following Senior Notes held by you for the account
of the undersigned (INSERT PRINCIPAL AMOUNT OF SENIOR NOTES TO BE TENDERED
(IF ANY): $
/ / NOT to TENDER any Senior Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Senior Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
Senior Exchange Notes acquired pursuant to the Exchange Offer are being acquired
in the ordinary course of business of the undersigned, (ii) neither the
undersigned nor any such other person has an arrangement or understanding with
any person to participate in the distribution within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") of such Senior
<PAGE> 2
Exchange Notes, (iii) if the undersigned is not a broker-dealer, or is a
broker-dealer but will not receive Senior Exchange Notes for its own account in
exchange for Senior Notes, neither the undersigned nor any such other person is
engaged in or intends to participate in the distribution of such Senior Exchange
Notes and (iv) neither the undersigned nor any such other person is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act. If the undersigned is a broker-dealer (whether or not it is also an
"affiliate") that will receive Senior Exchange Notes for its own account in
exchange for Senior Notes, it represents that such Senior Notes were acquired as
a result of market-making activities or other trading activities, and it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Senior Exchange Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Senior
Exchange Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
SIGN HERE
Name of beneficial
owner(s): ...............................................................
Signature(s): ............................................................
Name(s) (please print): ..................................................
Address: ................................................................
Telephone
Number: ..................................................................
Taxpayer Identification or Social Security Number: .......................
Date: ....................................................................
<PAGE> 1
EXHIBIT 99.6
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law
8. Sole proprietorship The owner(4)
account
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<CAPTION>
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GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
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<S> <C>
9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the
identification number of
the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- -------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this
interest is $600 or more and is paid in the course of the payer's trade or
business and you have not provided your correct taxpayer identification number
to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 3
<TABLE>
<C> <S> <C>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
SUBSTITUTE PART I--Please provide your PART III--Social Security
FORM W-9 TIN in the box at right and Number OR Employer
certify by signing and dating Identification Number
below.
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
(If awaiting TIN write
"Applied For")
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
PART II--For Payees Exempt From Backup Withholding, see the
enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and complete as
instructed therein.
- ------------------------------------------------------------------------------------------------
</TABLE>
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CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
NAME
------------------------------------------------------------------------------
(Please Print)
SIGNATURE DATE
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all payments of the Offer Price made to me thereafter will be withheld until
I provide a number.
SIGNATURE DATE
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